Inside Asian Gaming

IAG JAPAN JUN 2020 78 How much discretionary spending will be possible as Asia emerges from the COVID-19 pandemic? アジアが新型コロナパンデミックから浮上する時にどれほどの裁量支出が可能だろうか？ COLUMNISTS Consumer sentiment: Will consumers be more cautious in their spending even if they have the means? This factor is more subjective, albeit quantifiable to a degree through consumer confidence measurements. Customer perception of safety: Will previous gamers continue to avoid public spaces like casino resorts, and for how long? Again, there is no modern precedent to COVID-19. But air passenger trends following 9/11 can inform to some extent. Additionally, there was a narrow window (late January and early February in Asia and first two weeks of March in the US) with weekly reporting statistics that provides insight into gaming behavior immediately preceding industry closure. SUPPLY CONSIDERATIONS Social distancing and seating capacity constraints: In advance of full containment of COVID-19, casinos are likely to institute social distancing and seating density measures that will limit the number of gaming positions available. This would result in capacity constraints, especially in high-volume casino markets. Thus, we believe spacing and density control on gaming floors will result in capacity constraints on top of the demand response. However, we note that the impact of new spacing policies is not ubiquitous. In a casino where historically only one out of every three slot machines was occupied at peak, there would be less sensitivity to an effective supply cap than a casino fully occupied during peak periods. New development and maintenance CapEx: We believe the potential impact of tight credit markets would constrain greenfield development or planned property expansions in Asian gaming markets.