- Fitch says casino markets that depend on local visitation will recover faster from the ongoing pandemic than Las Vegas, Singapore, and other tourism-dependent regions.
- Fitch’s gaming analyst says the possible re-implementation of COVID-19 restrictions continue to pose risks for regional casino operators.
- Las Vegas and Singapore have seen visitor volume drop dramatically this year.
- The pandemic has also waned the hopes of the once-promising market in Japan.
Fitch Ratings predicts that casino markets that depend on local visitation will recover quicker from the ongoing pandemic than tourism-dependent regions such as Las Vegas and Singapore.
The company’s gaming analyst Alex Bumazhny believes destination markets will lag behind regional gaming in recovery from COVID-19.
“Gaming markets globally that are more reliant on local visitation will continue to recover faster relative to destination markets,” Bumazhny said in a note this week.
Regional gaming markets mainly depend on gamblers located within driving distance. Penn National Gaming, Boyd Gaming, and newly formed Caesars Entertainment (which enlarged its portfolio through its merger with Eldorado Resorts) are some of the US gaming operators specializing in regional jurisdictions.
While MGM Resorts has a heavy focus on Las Vegas and Macau, the company has properties in Michigan, Atlantic City, Maryland, Massachusetts, Ohio, and New York.
Bumazhny says regional casino operators are still under threat because of the possible re-implementation of coronavirus restrictions as cases surge across the country. “Targeted measures, such as temporary closures and heightened operating restrictions, are possible amid higher levels of reported COVID-19 cases,” he explained.
Without domestic and international travel, Las Vegas isn’t Las Vegas. Over 42.1 million people visited the city in 2019. At the end of 2020, the number will be much smaller. Usually, approximately 20% of all visitors to Las Vegas are foreigners in a non-pandemic year.
Visitor volume year-to-date has dropped 54.2%, or 19.2 million guests fewer traveling to the city from January through October. Gross Gaming Revenue in Las Vegas plummeted 38% through October.
Similarly, Singapore, where two integrated resort casinos Resorts World Sentosa and Marina Bay Sands call home, has seen a drop in visitor volume. The city-state reports that international visitor arrivals are down more than 43% this year in a place where the IRs depend heavily on foreign visitors.
“The potential vaccine availability will allow destination markets like Singapore and Las Vegas to begin recovering more in earnest in the second half of 2021,” said Bumazhny. Singapore’s GGR for 2021 at its two casinos will reach “only 45%” of its 2019 levels.
This week, Robert Redfield, director at Centers for Disease Control and Prevention, said a vaccine will be available in the country in the coming weeks. However, it won’t be until March for the general public to have it widely available.
The once-promising global gaming industry marketing opportunity in Japan is wrapped up in uncertainty “as the pandemic exacerbates existing challenges, such as a high gaming tax rate, bureaucratic and regulatory hurdles, and a bribery scandal,” said Bumazhny.
MGM Resorts recently announced that it would reduce its investments there. Also, Wynn Resorts closed its Yokohama office earlier in 2020.