OPINION – Expected losses

Macau casino revenue in 2020 suffered a terrible beating. Full-year figures indicate the total sector revenue dropped to just about 20 per cent of it was in 2019. Thankfully, the figures for January 2020 were still ‘normal.’ Had the pandemic control measures started just a few days earlier, the result would look even gloomier at the end of the year.

No aspect of the business was spared. The losses were seen across the board, touching all types of games. Of course, given its specific weight, Baccarat, especially its VIP segment, was the leading contributor to the losses. The two segments combined were responsible for more than 85 per cent of the total revenue loss. 

The full impact on the workforce and wages has yet to be fully grasped. Coping with the situation led to extraordinary measures in the human resources department. Other than contract terminations, we saw a wide gamut of measures: temporary layoffs, compulsory holidays, reduced work time, and pay. Return to previous levels of staff, and operational performance will take time. 

The number of tables and slot machines went down.  By the end of the year, there were ten per cent fewer tables and just over half of the slot machines in operation at the end of 2019.

Associated businesses such as hotels, restaurants, and retail shops were either closed or mostly desert. The path back to some normalcy resemblance may be slow, even if visitors’ numbers and bets pick up steadily in the coming months.

The coming month will bring a flurry of company reports. They will provide essential elements to understand the extent of the damage caused and the various businesses’ ability, especially the concessionaires, to adapt and fight back. Some figures have already been made available to the media.

Of course, no one would expect the year bottom lines to be anywhere else than the red despite all the loss limitation measures carried out. Yet, in purely financial terms, the first results known are not as bad as one might fear. 

Given the size of the sector and its revenue-generating potential, the losses announced so far do not seem catastrophic – and the previous years provided ample opportunities to build up reserves. But a fuller picture must wait for the publication of the financial reports from all the concessionaires. They will help us to better gauge the damages and the potential for recovery.