Rising hotel room capacity, growing demand and reduced costs will see Property EBITDA of Macau’s gaming operators increase 15% over 2019 levels in 2022, according to investment bank Morgan Stanley.
In a research note issued Thursday, analysts Praveen Choudhary, Gareth Leung and Thomas Allen note that multiple circumstances will work in the favor of operators next year, with the number of hotel rooms in Macau’s gaming center of Cotai due to rise 13% thanks to openings at SJM’s Grand Lisboa Palace and Galaxy Entertainment Group’s Galaxy Macau Phase 3.
Notably, with Sands China’s The Londoner Macao focusing on quality over quantity, ultra-high-end hotel rooms will be up 59%, “delivering higher premium mass revenue,” Morgan Stanley said.
Rising revenues, driven by a 22% increase in China nominal GDP, will also be complemented by lower operating costs, estimated to remain 4% lower in 2022 than they were three years earlier. As a result, Morgan Stanley estimates Macau-wide Property EBITDA of US$11 billion in 2022 – 11% higher than market consensus and 15% higher than 2019.
“Macau will look and feel different in 2022 when compared to the pre-COVID world,” the analysts state.
Noting that Macau stocks are up 16% year to date, they add, “Investors are asking us ‘what is priced in’ and about the ‘shape of recovery.’ We recommend to focus beyond these to 2022, and how Macau looks so much different from the pre-COVID world.”
