Casino closures in Macao due to the spread of coronavirus has affected many Las Vegas-based casinos, yet the Las Vegas Sands seems to be resistant to short term effects.
Since the beginning of the Chinese New Year on January 25, the Las Vegas Sands stock saw a fall but have been rising steadily ever since. This means that many investors appear to be trading up the Las Vegas-based casino company.
It is worth mentioning that the Las Vegas Sands investments in Macao are an important pillar in the company’s operations. The casino relies greatly on Macao in terms of revenue growth.
It was very unexpected that the Las Vegas Sands’ stocks see an increase in the past period. Many experts were even raising concerns about the financial effects of the virus on many Las Vegas casinos with ties to Macao.
The company’s current performance in the stock market leads experts to now believe that the Las Vegas Sands is handling this crisis and it that showing whey they are in a strong position to continue delivering investor returns.
Las Vegas Sands Relies on China for growth
Currently, Macao is considered the gambling capital of the world. In terms of revenue, Macao casinos earned $24.04 billion in gross gaming revenue, while Las Vegas earned only $6.5 billion.
The Las Vegas Sands current expansion plans are predicted to be less dependent on China over the long term. For instance now with Japan opening up gambling, many tourists will be going there as well.
Moreover, as East Asia becomes wealthier and develops a larger
interest in gambling, Las Vegas Sands will help investors benefit from Asia’s
Measure by the Chinese government to help the gambling industry
Given the importance of gambling and Macao to the economy, the Chinese government will be considering incentives in the days to come to promote bookings. This will probably happen once the virus’s outbreak fades out.
China also imposed travel restrictions on its citizens. Furthermore, Chinese-controlled Macao had asked casinos in late January to close for two weeks as a response to the coronavirus outbreak.
Officials ordered casinos to close beginning Feb. 5 and stay shut for 15 days. It might be that this period gets prolonged further but up till now, there has not been any word of that happening.
This is the second time the industry closes in Macao. The last time this happened was back in 2018 during a 33 hours Typhoon.
Sanford C. Bernstein analysts forecast that “the two-week closure will cut first-quarter revenue in half, and if the casinos need to be shut for the entire quarter, full-year revenue will plunge by as much as 70%.”
It is noteworthy to mention that the number of travellers to Macau decreased by almost 80% at a time where China celebrates its Lunar New Year holiday. This time of the year usually sees increased traffic to Macau but this year is not looking too great.