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MGM China and Melco are Recovering in Macau
It is no secret that Macau was struck hard by the 2020 pandemic. In the past couple of years, the gambling hub has suffered heavy financial losses, and has lost quite a few investors. Some believed that this would spell out the end for the world’s biggest gambling destination. However, it seems there was no cause for worry. As it happens, MGM China is playing a huge role in recovering the Macau gambling industry.
MGM China’s and Melco’s Recovery
In 2019, Macau was the undisputed king of international gambling. In 2019, the city produced six times the gambling revenue of Las Vegas. However, the 2020 lockdown struck a heavy blow against the city. In the past couple of years, casino operations have been losing revenue, and Sin City overtook Macau as the biggest gambling hub. However, the city recently lifted its COVID restrictions and is experiencing a rejuvenation, mainly helmed by two casino operators.
The Chinese branch of the gambling giant has endured through the COVID era, only to come out stronger on the other side. Not just them, but Melco Resorts, owned by Chinese businessman and casino mogul, Lawrence Ho has also had a fantastic recovery this year. Both businesses reported an incredible recovery, despite both of them having less-than-stellar earnings in 2022.
The performance of both companies is reflected in their successful shares. MGM China’s shares rose by 114%, whereas Melco Resorts increased by 144%. Not only that, but Melco Resorts’ parent company, Melco International, also saw a boost in shares by 81%.
Macau’s revitalization did not come as a surprise to many. A JPMorgan gaming sector analyst, DS Kim, predicted an overall gross gaming revenue increase by the year’s end. According to Kim, MGM China’s 16% gross revenue this January was “significantly ahead of the 9% to 10% levels back in 2019.” The JPMorgan analyst then went on to say that the demand for the market was significantly under-appreciated.
However, the pandemic still left its scars. In a recent interview, Lawrence Ho, the owner of Melco Resorts said “The number one objective of the company for the next two to three years is to really deliver and pay down debt.” Melco Resorts had accrued a total debt exceeding $8 billion by 2022’s end, almost doubling their 2019 debt of $4.4 billion.
It seems China’s gambling hub is finally recovering from the 2020 pandemic. MGM China and Melco Resorts are the two driving forces behind the city’s recovery. And while it certainly isn’t ideal, the city seems to be doing a great job of recapturing its former glory.