Melco Resorts & Entertainment Chairman and CEO Lawrence Ho says he does not expect any further opening up of the borders between Macau and mainland China while Hong Kong continues to experience a major COVID-19 outbreak – suggesting prolonged pain for Macau’s gaming and tourism operators.
Ho’s comments during the company’s 4Q21 earnings call with analysts overnight were in response to a question about the Hong Kong outbreak and whether China could fully open up to Macau before it does the same with Hong Kong. With Hong Kong reporting 32,500 new cases on Tuesday and China maintaining its strict COVID-zero policy, Ho said he expects the situation will negatively impact Macau’s own recovery trajectory in the months ahead.
“It’s a very unique year in China, a very important year,” said Ho, pointing to a series of significant events following the recent Winter Olympics in Beijing. These include this week’s “two sessions” meetings, the Hong Kong Chief Executive election, the 25th anniversary of Hong Kong’s handover and the Communist Party National Congress.
“I think the Chinese policy is going to be very conservative this year with regards to opening up its borders. Even recently we’ve seen how certain provinces view Macau as being close to Hong Kong and therefore the COVID outbreak in Hong Kong would somehow affect Macau, so honestly I don’t have a lot of hope that group tours or eVisas are going to be normalized before the Hong Kong-China corridor [opens].”
Explaining how that will impact Melco’s financial results, Ho described the situation as a “range down” environment where periods of improvement are consistently followed by COVID-related setbacks.
“As long as the zero COVID policy is in place and visitation into Macau is limited, I think this is what we’re going to see,” said Ho, pointing to strong results for Melco during Chinese New Year. “After a good Chinese New Year period, the visitation naturally decreased.”
Melco’s Chief Operating Officer Macau Resorts, David Sisk, added, “There’s always a kind of malaise that happens after Chinese New Year, where things slow down. I think you’ve kind of seen that as you look at statistics from the government coming out over the last couple weeks.
“Additionally, we’ve kind of seen some flare-ups now coming through not only Hong Kong as omicron has kind of taken hold over there, but we’ve had some flare-ups across the border as well into Zhuhai and around certain other areas there, so things have slowed down a little bit.
“So I think it’s going to continue to go up and down and maintain that range bound thing a little bit, and unfortunately I think we’re going to still see some flare-ups now coming back from COVID that will see some start and stop type of activities take place.”
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