acau casino operators are expected to show a 95% drop in their earnings before interest, tax, depreciation and amortization for the March quarter, according to a Bloomberg survey of analyst estimates.
All six operators are seen posting year-on-year declines in quarterly EBITDA when they start reporting earnings in the coming weeks, according to the survey of nine brokerages. The plunge underscores the deep financial damage inflicted by the coronavirus pandemic and follows a 60% drop in gaming revenue in the first quarter after casinos in Macau were shut for 15 days in February to curb the virus spread.
While 80% of the gaming tables reopened by mid-March, China continued its freeze on individual and group visas and tourist arrivals fell 71% from the year-ago quarter. Macau will urge the Chinese government to resume tourist visas and increase the number of Chinese cities covered by the individual visitor scheme “at an appropriate time,” said Ho Iat Seng, the enclave’s chief executive during his annual policy address on Monday.
Furthermore, Macau’s economy is expected to contract by 24% in 2020 due to the Covid-19 pandemic, according to Fitch Ratings, which kept the territory’s risk rating unchanged at “AA” with a negative outlook, according to a statement issued on Tuesday in Hong Kong.
The forecast of a second consecutive year of economic contraction, after a decline of 4.7% in 2019, is based on the fall of around 40% in revenue from gaming, due to the territory’s huge dependence on casino revenues.
Fitch Ratings recalled the strict measures applied by the local government to contain the spread of the new coronavirus, including the 15-day suspension of casinos in February this year, more stringent controls on the entry of visitors from China and a temporary ban on the entry of non-residents.
“These measures inevitably had a devastating impact on the gaming industry, whose revenue fell by more than 80% on year in February and March, due to the drop in the number of tourists from Mainland China, the largest source of visitors,” it said.
The Fitch Ratings forecasts are based on the idea that the pandemic will be contained in the second half of 2020, and Macau’s Gross Domestic Product will post growth of 12.6% in 2021.
The International Monetary Fund (IMF) recently projected that Macau would record a contraction of 29.6% this year, in addition to the fall of 4.7% in 2019, according to the World Economic Outlook. The report added that in 2021 Macau’s economy will grow at a rate of 32.0%, almost cancelling out the fall seen in the previous two years.