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Despite Delayed Relaunch, Macau Leads Worldwide Gaming

April 28, 2023 Macau Industry Updates

According to a note released on Wednesday by Moody’s Investors Service Inc., the gaming sector in Asia Pacific will benefit in the coming months as consumers “continue to selectively splash out on entertainment” following extended Covid-related limitations. The revival of Macau “will fuel growth in the gaming industry,” it was noted.

However, the institution predicted that growth in the US gaming business “will moderate, given record gaming revenue in 2021 and 2022.” “China has been a drag on the gaming recovery, but will now help the broader hospitality recovery stick for longer,” it was stated.

The ratings agency adds that despite Macau’s relatively slow start on the road to demand recovery—which it links to the Covid-19 protocols that were largely lifted for mainland China, Macau, and Hong Kong in early January—it will still contribute to the growth of the global gaming industry’s earnings before interest, taxation, depreciation, and amortization (EBITDA).

According to Moody’s, the gaming industry’s EBITDA will increase from 17 percent in 2022 to 20 to 25 percent during the following 12 to 18 months.

Given the low levels experienced since 2020, the ratings agency predicted that Macau’s planned rebound and Singapore’s ongoing recovery will both exhibit outsized growth.

In contrast, it continued, it is anticipated that U.S. gaming, accommodation, and restaurants will “grow at a more moderate pace in coming months”.

However, Moody’s adds a warning that “the recovery tide is ebbing” for general consumer spending on leisure activities including cruises, hotels, restaurants, and casinos.

Globally, there were “increasingly challenging economic conditions characterized by high inflation and rising interest rates.”

Currently, consumers are still spending lavishly on leisure, according to Moody’s.

The institution observes that following prolonged Covid-related limitations, the cruise industry and Asia gaming have experienced delayed recoveries.

“These two categories are primarily responsible for our hospitality prediction of still strong EBITDA growth of 16 to 20 percent over the next 12 to 18 months. The U.S. casino, motel, and restaurant industries have already experienced the most of their recoveries, so this is a lower revision from our previous prediction of 20 to 25 percent for 2023, according to Moody’s.

Risks, according to the report, were “accelerating in the face of a slowing global economy and an increasingly ambiguous outlook.”

The performance of the global gaming industry is predicted by Moody’s to surpass pre-pandemic levels in 2024 for the first time since the health crisis started in early 2020.

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