Morgan Stanley Director Projects Bounceback for Macau

Macau skyline at night

Macau received promising remarks from a Morgan Stanley expert at G2E this week. [Image:]

Bouncing back

Despite fleeting business during the height and ensuing recovery stages of the pandemic, Macau is positioned to remain a “very profitable” market for operators.

expects Macau’s revenue to surpass its 2019 total and make a full recovery by 2024

Praveen Choudhary, director of Morgan Stanley Asia, said his company expects Macau’s revenue to surpass its 2019 total and make a full recovery by 2024. His remarks Wednesday capped off Morgan Stanley’s Financial Outlook of Asian Gaming Destinations presentation at G2E Asia.

Macau has been floundering for a couple of years, but the optimism will go a long way to ensuring an uptick in its business.

Struggles in Macau

G2E is an annual summit held to discuss the latest advancements in the gaming-entertainment industry. This week’s meeting took place in Singapore, one of the world’s wealthiest and most expensive countries.

During his presentation, Choudhary pointed to the pandemic as an obvious cause of Macau’s recent economic decline. He also pointed out many positive signs as to why the south Chinese region should rebound.

it could come in during the second half of 2023”

“The mass revenue and EBITDA will be bigger than in 2019, at least, that’s what we expect,” said Choudhary. “We’re pegging that in 2024, but it could come in during the second half of 2023.”

Macau was hit especially hard by the pandemic. As recently as mid-July, all of its 40+ casinos were forced to shut down after another wave of the virus swept the town.

Travel restrictions imposed by the Chinese government also limited the economic ceiling for the gambling destination. As a result, business was much slower to rebound than in other entertainment-focused cities.

Despite the harrowing situation, Macau’s market was described as “resilient” to the G2E crowd.

“This is why the market continues to remain excited about Macau. The demand is still there, it’s just a matter of bringing more [hotel] rooms, and of course, removing the travel restrictions,” Choudhary said. “At some point of time we also need [nearby] Hengqin island to bring more rooms to drive [an] even higher growth. That’s why we think Macau has just not peaked yet.”

Changing business

In addition to its decline in gaming revenue, Macau’s VIP travel has been slow to resume. However, Choudhary does not consider this an issue.

“Having a higher slot business and lower VIP business could be positive for Macau,” said Choudhary.

As it stands, Macau has a 35% claim of Asia’s VIP market, compared to the 72% it enjoyed pre-pandemic. Singapore has been the biggest benefactor from the falloff, moving to 24% market control from just 9% in 2019.

The VIP market is still not what it was before the worldwide shutdown—instead, the once-$20bn industry is now worth just $4bn. Choudhary forecasts a greater portion of that returning to Macau.

Macau’s situation is rather unique, especially when compared to its competition. Las Vegas, another premier landing spot for traveling gamblers, has managed to come out of the pandemic even stronger than it went in, with Nevada reporting a record year for gaming win. Local Harry Reid International Airport also has its busiest month ever in June.

In an effort to catch up to its transcontinental competition, the Macau government created a ten-year plan for gaming in the city as the old concessions were set to expire. Bidders have until September to apply for up to six licenses but must first provide plans as to how they intend to acquire overseas customers.

Investors can expect a lower return in the future, although Choudhary assured that “It’s still going to be an extremely profitable business for the next 10 years as and when we’re out of Covid.”

Through seven months of 2022, Macau claimed 3.33bn of revenue, down 53.6% year-to-year and making up just 15.3% of its pre-Covid standard.


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