Macau GGR to exceed $22 billion by 2027, post-pandemic recovery process to be slow: Morgan Stanley

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Macau casino Gross Gaming Revenue (GGR) is estimated to cross $22 billion by 2027, according to analysts at investment management and financial services company Morgan Stanley. Although this figure is still less than the pre-pandemic levels, it will serve as a marker for the region’s recovery and eventually change the terms of the concession as per the firm.

GGR in Macau has decreased significantly. The special administrative region’s tourism industry has been ravaged by the COVID-19 pandemic and the virus’ constant return ever since has been having a significant negative influence on the casinos till now.

Despite the loosening of restrictions associated with the pandemic, analysts were fairly optimistic about the industry’s rebound in the second half of 2022. However, the performance has not been good enough.

The six concessionaires in Macau have been granted their licenses recently, which give them permission to run casinos for the next 10 years. Once Macau GGR hits the predetermined level, the operators will be required to increase their non-gaming spending in accordance with the provisions of the recently granted concessions.

According to Gambling News, several of the largest operators, including MGM China and SJM Resorts, will be under a lot of pressure if this occurs. Since the contributions from the concessionaires are not equal, the FCFE and EBITDA issues will probably be more severe for these two businesses.

The non-gaming investments are also consistent with Macau’s strategy, which views the concessionaires as businesses that should promote tourism. All concessionaires must thus make investments outside the casino industry and inform the administration of their yearly objectives.

Non-gaming investment plans have been submitted by the concessionaires for the next few years with Wynn Macau spending on a theme park, art gallery and brand-new theater. The plan put forth by Sands China includes a new garden and dining facilities and MGM China will launch an entertainment and arts-focused area.

A sizeable 61,000 square meter high-tech amusement park and a sizeable museum will be the primary goals of Galaxy Entertainment. Additionally, the concessionaire wants to inaugurate the 16,000-seat Galaxy Arena. SJM will be investing in three museums for now and Melco in a new cinema and a water park.

According to reports, 2023 will also be considered as a recovery year with operators trying to catch up with all the losses incurred during the pandemic.