Galaxy Entertainment Group Reports Massive Second Quarter Losses

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Galaxy Entertainment Group recently reported that it had suffered massive losses for the second quarter of this year. According to the report the casino operated sustained a negative $176.8 million adjusted earnings before interest, taxation, depreciation, and amortization (EBITDA).

In contrast, during the same period last year, the casino operator posted a positive $563 million EBITDA. This is a massive loss for the operator which points at the coronavirus lockdown as the major reason. The company said that travel restrictions because of the coronavirus pandemic have totally obliterated its revenue during the second quarter of the year.

A challenging year for the industry

For the first quarter of the year, Galaxy Entertainment reported a positive $36 million EBITDA. However, it all came crashing down after Macau, and several other neighboring countries, implemented strict lockdown protocols to contain the spread of the coronavirus.

Galaxy Entertainment operates in Macau, the mecca of gambling and entertainment in the region. It is important to note that majority of tourists from Macau are coming from China, which is where the virus originated.

In order to contain the spread of the virus, China imposed restrictions for both incoming and outgoing travelers. The restriction caused Macau’s tourist numbers to tumble down to almost zero overnight. With no economic activities, and all non-essential establishments forced to close, casinos in the region suffered the brunt of the pandemic.

Based on the recent report, Galaxy Entertainment’s net revenue for the second quarter of the year dropped by as much as 91% compared to the same quarter the year before.

The company’s aggregate gross gaming revenue (GGR) also dropped by as much as 97% compared to last year’s figure. This represents loss of about $62.5 million. With regards to the company’s VIP GGR, it also dropped by 98% and its electronic segment fell by as much as 95%.

Galaxy Entertainment chairman and founder Lui Che Woo said:

“Covid-19 had an adverse impact on our financial results in the second quarter and the first half of 2020, as mainland China, Hong Kong and Macau faced travel restrictions and social distancing.”

Signs of economic reopening

As China continues to maintain the spread of the virus, the country has started to lift travel restrictions. However, the country is still implementing strict physical distancing protocols in order to avoid spreading the virus.

With the reopening of its borders, Macau is experiencing some semblance of economic reopening. While tourist traffic is still far from normal, casino operators in the region are positive that they should be able to weather the storm in the long run.

As for Galaxy Entertainment, the casino operator is still optimistic about the future. The company said that it is targeting to launch a portion of Phase 3 of its flagship Galaxy Macau resort. This expansion will add 1,500 more hotel rooms, additional casino space, a large arena with a 16,000-sitting capacity, and 400,000 square feet of MICE space.

The coronavirus pandemic is still surging, but with proper implementation of health protocols some regions are beginning to experience some semblance of normalcy.

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