LAST WORD 62
Virus exposes China risks Sharon Singleton
Managing Editor, AGB
The Covid-19 outbreak has highlighted once again how one of the biggest draws for casino investors in Asia can become the largest liability.
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perators and tourism authorities across the former Portuguese colony. The over reliance on China and on gambling is region have become increasingly reliant on the big spending Chinese outbound a conundrum for policymakers responsible for the traveller. Some 170 million people travelled wellbeing of the local economy and community. But outside the country last year, swelling the coffers of for the operators, after every storm there has been a rainbow which does indeed have a pot of gold waiting. IRs across Asia. Outside of Macau, there’s also likely to be significant Therefore, the impact of the lockdown of several Chinese provinces and the travel bans imposed by pain, especially in those jurisdictions where locals are authorities around the globe is not going to make for banned from gambling, such as South Korea, Cambodia pretty reading once operators begin releasing their and Vietnam. Their visitor base may be more diverse than Macau, but in most cases the big money comes financial reports. We already know that Macau, which shutdown its from China and the lack of visitors as a result of travel casinos for 15 days, saw an almost 88 percent plunge bans will significantly hurt revenue. Here, there is more that could be done to reduce in gross gambling revenue in February. Wynn Resorts the China-dependency risk if told investors it was losing $2.5 governments were willing to review million a day as a result of the their policies on local support. closures while MGM China put Both Vietnam and South Korea the figure at about $1.5 million. Macau, which would be seen as highly desirable Even though the properties markets. have now been allowed to reopen, shutdown its Vietnam is trialling a pilot albeit with restrictions, there is a casinos for 15 program, but it’s extremely limited major question mark over where and not expected to be expanded the guests are going to come from. days, saw an in the near future. For the others, Out of 39.5 million travellers almost 88 percent it’s just a pipedream. in 2019, 70 percent came from plunge in gross ThenumbersfromthePhilippines Mainland China, that rises to 90 will be interesting reading. Over percent if you include visitors from gambling revenue the past few years, the split in neighbouring Hong Kong. in February. gaming revenue between locals and The government has paid lip tourists has been evolving as the service over the years to expanding glitzy new resorts in Entertainment its visitor base and attempting to City have opened. drum up business from countries The IRs have drawn in the VIP gamers, helping to elsewhere in Asia. But at the end of the day, speak to any analyst and it’s the forecast for Chinese outbound make the Philippines one of the best-performing markets travel that really drives projections for growth for in Asia. However, the properties there still enjoy good years out into the future. The penetration of the giant support in the mass market from a large local population. Chinese market is still low, with most visitors to Macau The country has more than 100 million people with an economy that expanded at a 5.9 percent clip in 2019. still arriving from the bordering provinces. Before President Rodrigo Duterte mended ties As transport links into the Chinese hinterland improve, a whole new wave of Mainland visitors is with Beijing after his election in 2016, the country had tipped to make Macau their first destination for a a rocky relationship with China and therefore has not traditionally been reliant on Mainland travellers. South foreign vacation. Yes, there is some research showing Macau’s Koreans made up the biggest share of its more than 8 popularity may have slipped amongst more experienced million arrivals last year, with China in second place, and younger travellers, but given the sheer numbers followed by the U.S. and Japan. It won’t have escaped the coronavirus rout, though involved when talking about China’s population and wealth creation, that still leaves a lot of visitors for the its model is likely to prove more resilient than most.
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Asia Gaming Briefings | March 2020
