Casinos in Manila are empty but owners aren’t idle

By Ethan Anderson Updated
Hong Kong Corp terminates agreement with Philippines casino

For the last two months, Manila’s Entertainment City – where Las Vegas’ glamour meets the Philippines has been a ghost town.

Nikkei Asia Review reports that since March, Manila’s four integrated casino resorts have been empty.

Steel barricades have replaced the inviting smiles of the greeters.

Even the bomb-sniffer dogs appear lethargic and forlorn.

“As everybody else, they are losing money,” gaming industry champion Andrea Domingo, who heads the Philipine Amusement and Gaming Corp said.

The virus, which has hit tourism across the region hard, has hammered the gambling industry from Manila to Macau, with cashflows running dry as casinos have been forced to shut.

Even in Macau, where the pause lasted just 15 days, and now in South Korea, Vietnam and New Zealand, where some casinos have started to reopen, traffic is likely to remain subdued as gamblers remain hesitant about mingling in crowds and governments maintain strict border controls and quarantine measures.

“Although we expect recovery in 2021, we think it is likely to remain lower than in 2019 as we anticipate the economic implication from the pandemic may drag on,” Fitch analyst Erlin Salim said.

Australia-listed Silver Heritage Group, which entered voluntary administration after it was forced to close its casinos in Nepal due to the pandemic, could be the first of many to struggle to survive.

Hong-Kong listed Imperial Pacific International last week similarly warned its sole casino, on the Pacific island of Saipan, would have to go out of business too, according to local media, if the company is forced to pay a $5.6 million court judgment to a disgruntled contractor.

For the first 24 days of May, Macau’s daily casino revenue came in at 96 per cent below last year’s levels, according to analysts at Bernstein Research, who currently project a full-year decline of 44 per cent.

Most Macau operators have cut or suspended dividend payments to shareholders and the majority of those reporting net results for the first quarter fell into the red.

“For us, when you break it down short-term, midterm and long-term, I would say short-term continues to be Armageddon, midterm is grim and long=term is great, but it really depends on when the borders start opening up,” Lawrence Ho, chairman and chief executive of Melco Resorts and Entertainment told analysts on an earnings call for the company, which operates casinos in Macau, Manila and Cyprus.

Suspended dividends and profits tumble

Most Macau operators have cut or suspended dividend payments to shareholders and the majority of those reporting net results for the first quarter fell into the red.

SJM Holdings reported a net loss of US$52.7 million for the first quarter, reversing its near $110 million profit a year earlier.

Wynn Macau reported a loss of $154.2 million, down from a profit of $190.6 million.

Even as taking dry up, Macau’s casinos have continued to service their payroll commitments and are sticking with planned construction projects on the basis that they have enough cash to tide them over for more than a year.

The Las Vegas Sands, which is controlled by US billionaire Sheldon Adelson and owns Singapore’s Manila Bay Sands, plans to proceed with the June opening of its Grand Suites Tower at the Macau Four Seasons.

Hong Kong-based Melco Resorts is also aiming to finish renovations and reopen the showcase Nuwa hotel at its City of Dreams resort in Macau in September.

“Now is not the time to pause or slow down investment in Macau,” Aldeson said.

“We see the opportunity and possess both the financial strength and strategic commitment to make additional investments.”

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