MGM’s Global Brand Value Will Help Macau Operations Attract Foreigners

Summary

• MGM China will submit its bid for Macau’s new gaming tender
• The company’s strengths in foreign markets and non-gaming should help it obtain a new Macau gaming license
• MGM China suffered heavy losses during Q2 this year due to COVID-19 restrictions

MGM Resorts International is confident it will get the approval of the Macau government in the ongoing gaming tender process. The company, which operates gaming resorts in the city through its subsidiary MGM China Holdings Ltd, is due to submit its proposal for the fresh tender, with the deadline for submissions set on September 14.

Macau authorities will take into account several factors during the evaluation of the bids. Among the aspects that the government will look into is the bidder’s capability to bring in more foreign customers to the region. Macau will also assess the company’s gaming and non-gaming investments and how the city can benefit from them.

MGM China Holdings Ltd, President and COO Hubert Wang said the MGM brand has a lot of strengths in those two areas and this will benefit MGM Macau and MGM Cotai.

The Macau concession tender process was discussed during MGM Resorts International’s second-quarter earnings call where Mr. Wang said MGM’s global distribution network should help it drive more overseas customers in Macau, which is among the main priorities of the government. Additionally, the company’s traditional strengths in arts and culture will also satisfy the non-gaming diversification requirement, he said.

More Challenging Times Ahead for Macau Casinos

Macau dealt with a fresh surge of COVID-19 cases from June to July this year which forced non-essential businesses, such as casinos, to close for nearly two weeks, with travel restrictions also put in place. Gaming venues have since reopened but they’re reporting record-low revenues as a direct effect of the pandemic-related measures.

MGM China suffered losses of HKD382.4 million (US$48.7 million) on earnings before interest, taxation, depreciation, and amortization (EBITDA) during the second quarter. That compares to gains of almost HKD116.0 million in the same period last year.

MGM Resorts CEO Bill Hornbuckle admitted during the call that operating and bidding in Macau remains a challenge for casino operators given the restrictions brought about by COVID-19. He said the company will continue to examine how it can fulfill the multiple requirements set out by the government, especially in terms of employment, job opportunities, and social programming.

Under Macau’s fresh public tender process, casino licenses can have a maximum validity of 10 years, but Hornbuckle stated that the 10-year window still entails a lot of challenges with COVID-19 not going away anytime soon.