Having posted a Q2 loss, Macau casino giant Galaxy Entertainment is bracing for more headwinds from Covid-19. But it remains committed to existing expansion plans, including its pursuit of an integrated resort license in Japan.
Second-quarter revenues dropped 91 percent to HK$1.15 billion (US$148.3 million), while it swung to a loss on the adjusted EBITDA level of $1.37 billion compared with a $4.33 billion profit during the same period in 2019, reported Asia Gaming Brief. Hotel occupancy across the group’s five hotels was a meager 4 percent.
Galaxy Chairman Dr Lui Che Woo said it’s “premature to comment on how quickly the market may recover,” but welcomed news that individual visas will once more be in effect, allowing mainland Chinese tourists to enter Macau.
“In the medium to longer term, we continue to remain optimistic in the outlook for Macau in general and GEG specifically,” said Lui Che Woo. “We continue to make good progress with our development projects, including Cotai Phases 3 and 4 as well as existing enhancement projects at our resorts.”
“We also continue to make progress with our international expansion plans and we do acknowledge that timelines for Japan may be impacted by the worldwide pandemic of Covid-19, however we can adjust accordingly and we remain committed to our Japan expansion plans.”
Galaxy provided further comment in its results release, stating, “Our Japan based team continues with our Japan development efforts even as they deal with the Covid-19 crisis.
“We view Japan as a great long-term growth opportunity that will complement our Macau operations and our other international expansion ambitions. GEG, together with Monte-Carlo SBM from the Principality of Monaco and our Japanese partners, look forward to bringing our brand of world-class IRs to Japan.”
Other major operators now seem less enamored of the opportunity to be had in Japan. Wynn Resorts and the Las Vegas Sands Corp. have withdrawn from contention in the market; among U.S. operators, only MGM remains, but it’s also expressed reservations about the potential of a Japan IR. It’s a far cry from the days when former MGM CEO Jim Murren pledged the company’s “Osaka only” policy.
MGM’s new President and CEO Bill Hornbuckle said in late July, “We like that we are not fully ‘all-in’ on this investment and we like the fact that there is probably going to be a delay and a reopening of some of the conversations that will hopefully make this a better investment for anyone that is interested in it, most notably us.” He now is interested in a minority share of any Japan operation.
Inside Asian Gaming reported that Galaxy talked up its cash-strong position during the second-quarter results announcement, including HK$49.8 billion (US$6.4 billion) in cash and liquid investments and HK$43.6 billion (US$5.6 billion) of net cash. Lui said the company won’t need to issue debt in order to boost liquidity.
He encouraged the Macau government to utilize the SAR’s standing as “one of the safest cities in the world” to encourage tourists to return sooner rather than later.
“I hope that with the resumption of IVS we can have more promotion of Macau as a tourist destination,” he said. “For 137 days we have not had a single new case [of COVID-19] and it’s because of this achievement that the Chinese government has decided to reinstate the IVS.
“With the lead of the [Macau] government I hope we can stage more mega events so that customers will know Macau is one of the safest cities in the world and will be able to come and participate in these events staged in Macau. I think Macau still has its own competitive advantage.
“I do think Macau is one of the safest cities in the world. Other cities have not really managed to contain the pandemic so well. Customers may see Macau as their first choice, I believe.”
