Macau’s industry-wide EBITDA is expected to return to pre-COVID-19 levels in 2023, with mass market GGR comfortably exceeding 2019 and partially offsetting long-term VIP weakness, according to Bernstein analysts.
In a Thursday note on the outlook for Macau gaming over the next two years, Bernstein analyst Vitaly Umansky predicts strong upside in the months and years ahead, with 2023 seeing GGR reach 81% of 2019 including mass revenue 15% higher than pre-COVID on a shift away from VIP, strong rebound in visitation and spend supported by capacity increases. VIP is expected to remain weak at just 28% of 2019 levels.
The mass-led recovery will also see Macau-wide EBITDA show higher growth thanks to a better mix and ongoing cost reductions. Bernstein estimates 2022 EBITDA to reach 37% of 2019 levels – representing a 270% improvement over 2021 – before returning to pre-COVID levels in 2023.
This means a “more normalized 2023” for Macau, which Umansky expects to deliver “GGR above pre-pandemic levels in Mass … while VIP will remain a fraction, largely on Direct VIP, with likely some junket agent business as well, but we assume no junket run room operations returning.”
The short-term forecast is for Macau GGR to rise 47% year-on-year in 2022, although this would still leave GGR at only 44% of 2019 levels. Mass is tipped to reach 66% of 2019 but VIP only 9%.
“While Macau will continue to experience soft revenues during the first half of the year, we expect travel resumption from Hong Kong to begin by end of Q1/early Q2 and improved travel from China in the summer leading to improving GGR through the course of 2022,” Umansky said.