Malaysia and Singapore are discussing a travel bubble. Assuming it comes to fruition, that could be integral in the rebound hopes of the city-state’s two integrated resorts, Marina Bay Sands (MBS) and Resorts World Sentosa.
After being closed for more than three months, the two gaming venues reopened on July 1. But they did so to a slew of restrictions, including limiting entries to guests that are annual levy holders. Additionally, gamblers looking to enter Marina Bay Sands must be “gold” or higher in the Sands Rewards Club. Those looking to go into Resorts World must be members of that hotel’s loyalty program.
The opening of Singapore for Malaysian visitors is an important catalyst for Las Vegas Sands and Genting Singapore,” said Bernstein analysts.
After city-state locals, Malaysia is the next-largest feeder market for MBS and Resorts World. Officials from the two regions are in discussions with hopes of unveiling a travel bubble plan that would smooth visits starting Aug. 17. That effort will include mandatory coronavirus testing.
Betting on Bubbles
Malaysia and Singapore already came to terms on implementing Reciprocal Green Lane (RGL) and Periodic Commuting Arrangement (PCA) travel plans. RGL applies to essential business travelers and those moving between the two regions on official government business. The PCA scheme permits workers with long-term immigration passes to move between the two countries.
Singapore is also working on “fast lane” agreements with six Chinese cities. The city-state’s efforts to rejuvenate tourism are vital in bolstering an economy ailing at the hands of the COVID-19 pandemic. To that end, Singapore is pushing ahead with a $32.5 million initiative to spur domestic travel.
Still, more gamblers in casinos are needed. In a normal operating environment, MBS is one of the most profitable gaming venues in the world, serving as a cash cow of Sands. But when the operator reported second-quarter results earlier this month, it said the Singapore integrated resort generated a paltry $23 million in revenue, down from $688 million a year earlier.
Bernstein noted that before news of the Malaysia bubble gained momentum, MBS was turning earnings before interest, taxes, depreciation and amortization (EBITDA) positive for July due to robust local demand.
“The recent opening of hotels will help with higher-end play and Malaysian business once the border opens,” said the research firm.
No Guarantees
Talks on travel bubbles are one thing. Bringing the plans to life are another. For example, Hong Kong, Guangdong province and Macau recently held bubble talks, but the discussions collapsed amid a second wave of coronavirus cases in Hong Kong.
Guangdong eventually relaxed quarantine protocols with Macau. But Hong Kong is a critical feeder market to the world’s largest gaming hub.
Analysts believe some countries in the region, including Malaysia, Singapore, Thailand, and Vietnam, are better positioned to execute bubbles because COVID-19 curves in those nations are flattening.
“These countries appear to have flattened the curve when it comes to new infections, even after loosening some of their lockdown restrictions. Singapore and China, for instance, already plan to begin ‘jetting’ essential passengers back and forth,” according to HSBC Global Research.
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