Nomura analysts anticipate a substantial rise in Chinese tourists visiting Singapore, driven by positive regional travel indicators and an imminent visa exemption agreement between Singapore and China. Against the backdrop of Marina Bay Sands’ record-breaking quarterly performance, this report delves into the factors influencing the surge in Chinese travel, the potential impact on integrated resort operators, and the overall outlook for the tourism industry in Singapore.
Regional Travel Indicators and Chinese Tourism Trends:
Nomura’s Tushar Mohata and Alpa Aggarwal point to regional travel indicators, suggesting that Chinese travel began rebounding in December following a brief slowdown in November. Drawing parallels with Thailand, where Chinese tourist arrivals surged by 37% month-on-month in December, the analysts project a similar trend for Singapore. The impending mutual visa exemption between Singapore and China, slated for 2024, is expected to further catalyze this surge.
Marina Bay Sands’ Performance and Market Analysis:
On the same day that Marina Bay Sands reported an unprecedented quarterly Adjusted EBITDA of US$544 million, Nomura analysts scrutinized the specifics of the performance. Despite the overall success, it was noted that VIP volume experienced an 11% decline, and mass volume saw a 3% quarter-on-quarter dip. This decline is attributed to fluctuations in Greater China tourists and Singaporeans traveling abroad for holidays.
Resilient Trends for Genting and Resorts World Sentosa (RWS):
Despite the fluctuations in volume at Marina Bay Sands, Nomura analysts expect resilient trends for Genting, the operator of Resorts World Sentosa, in 4Q23. Factors such as faster mass recovery, higher premium traveler spending, and increased Average Daily Rates (ADRs) contribute to this positive outlook. The report emphasizes the recovery in Gross Gaming Revenue (GGR), which had already reached 123% of its pre-COVID run-rate in Q3.
Investment Perspective and Recommendations:
Nomura maintains a “Buy” rating on Genting Singapore stocks, forecasting robust year-on-year growth in key metrics for FY23. The projections include a 51% increase in rolling chip volume, a 30% rise in mass table drop, and a 21% surge in slot handle. The analysts cite these figures as indicative of Genting’s resilience and potential for sustained growth in the competitive integrated resort landscape.
Nomura’s analysis sheds light on the evolving landscape of Singapore’s tourism industry, with a specific focus on the surge in Chinese tourists. The interplay of regional travel indicators, the performance of Marina Bay Sands, and the resilient trends observed at Resorts World Sentosa provide a comprehensive understanding of the market dynamics. As Singapore positions itself for increased Chinese tourism, integrated resort operators like Genting are poised to capitalize on these trends, offering investors a compelling opportunity in the recovering tourism sector.