The CEOs of U.S. gaming companies in Macau say they’re confident their gaming concessions will be renewed in 2002 (or later, if the retender deadline is extended).
In a November 11 earnings call, Wynn Resorts CEO Matt Maddox said SAR authorities have been “transparent” in their communications with Macau concessionaires, though they have offered no guarantee that the operators will retain their licenses.
The concessions were originally set to expire in June 2022, but upheaval caused by Covid-19 and the intrinsic complexity of the process could push that date back.
In the earnings call, Maddox noted that Wynn has seen “fits and starts” in its Macau business, “but what has been very encouraging over the last month has been the consultation process with the government. It’s been open. It’s been transparent. It’s been productive. And we feel very good about the future of Macau and our position in Macau.”
Describing the consultation process as “constructive,” Maddox said Macau authorities are focusing “on the long-term health and stability” of the industry and the region, reported Macau Business.
“So I can’t give any specific dates or timeline, but what I can tell you is we’re very confident in the process,” he added. Maddox has since announced his intention to leave the top job next year, to be replaced by Craig Billings, currently the group’s president and chief financial officer.
On the same call, Wynn Macau President and Executive Director Ian Michael Coughlan said, “We’ve been very impressed with the partnership orientation of the government with their pragmatism and also the progress that’s been made.”
Coughlan said Wynn has shared its concern about certain amendments to the gaming law, including the installation of special delegates to gaming concessions that would give the government greater oversight of the industry; a plan to end subconcessions; and a proposal to increase the minimum share capital requirement for concessionaires from the existing MOP200 million (US$25 million) threshold.
“All of the concessions have similar concerns,” Coughlan said, “and we believe … they will be given very serious consideration by the government. Ultimately, we’re in partnership with government.
“They’re also very aware of the growing regional competition, particularly with Japan now kicking up, so there is a desire for stability going forward. And they understand that we’re businesses that needs to reinvest and continue to develop, so we feel a lot of support from the government. It’s a process, we’ll get more information further down the line, but we’re very confident that they have our best interests at heart.”
MGM Resorts President and CEO Bill Hornbuckle said the government may not have enough time complete the retender by next summer. “That’s up to their discretion when they end that … so whether or not this all gets done in time for June, we don’t know yet,” he said, adding that he “feels good” about MGM’s position in the market.
“We’ve been there for 20 years and they’ve been fair to us to date, as we have been to them. I think we’ve been good to the community and vice versa, so hopefully we continue on.”
In Melco Resorts’ third-quarter earnings call, Chairman and CEO Lawrence Ho said that operator is not “super-conservative in terms of opening up” in the Chinese territory.
“As of right now, almost half the Chinese provinces have (Covid) cases, and that has affected travel,” Ho noted. “As a company we are prepared for the worst, as part of our budgeting.”
Ho also said that Macau’s VIP gaming business is “structurally impaired” and the future is in the mass market. “Mass is going to need more amenities and more nongaming attractions,” Ho said.
Meanwhile, the reopening of borders could boost Macau’s No. 1 industry, according to Inside Asian Gaming. The territory is considering a trial starting next month that would allow Hong Kong travelers to enter the mainland without having to quarantine. The trial would be limited to Guangdong Province initially, with Shenzhen as the sole entry point. A daily visitor quota would be put in place and travelers would be subject to a health code system.
“Travelers from Hong Kong could go to other cities in Guangdong province after arriving in Shenzhen, if they have valid health codes and meet other requirements, which are being finalized,” the South China Morning Post quoted one source as saying.
Media reports indicate Beijing could entertain a broader reopening with Hong Kong by February and a full reopening by no later than June 2022.
“A potential HK-China reopening would allow Macau to drop its quarantine requirements for Hong Kong residents, which historically comprised ~15 percent-plus of Macau’s gaming business,” said analysts from brokerage Bernstein.
“A reopening with Hong Kong would be a positive impact on Macau and successful reopening for HK/China travel could lead to continued easing of travel restrictions between China and Macau.”
JP Morgan added, “In our view, travel easing between Hong Kong and the Mainland is likely to be applicable to Macau (which is already connected to the Mainland without quarantine) and, hence, is incrementally positive to Macau’s demand.”
