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​Job losses likely to hit MBS eventually, say analysts

Published on: 17-Jul-2020

It is likely a matter of time before Marina Bay Sands (MBS) will have to let go of some of its staff due to the fallout from the Covid-19 pandemic, said analysts, following a retrenchment exercise by fellow integrated resort operator Resorts World Sentosa (RWS).

This is because the domestic market alone is unsustainable, and there is no clear timeline as to when tourism can restart.

MBS' $4.5 billion expansion project could also be delayed or scaled down, the analysts told The Straits Times.

RWS had on Wednesday announced the retrenchment of its staff, although it declined to disclose the number of workers affected. ST understands that about 2,000 employees were laid off.

RWS had more than 7,000 employees as at the end of last year. MBS has more than 10,000 employees. It declined to respond to questions on its manpower plans, and said there was no update to its expansion plan.

Nanyang Business School adjunct associate professor Zafar Momin said RWS and MBS were facing the same issues, such as reduced demand from visitors due to fear of virus exposure and international travel restrictions.

Prof Zafar said: "Depending on its financial capacity and risk appetite for managing the financial impact of the pandemic, MBS is likely to carry out similar measures to a higher or lower degree of severity."

He said the retrenchment of staff indicates that companies do not expect future demand to meet previous levels for some time.

Maybank Kim Eng analyst Yin Shao Yang noted that RWS owner Genting Singapore has net cash on its balance sheet. In contrast, MBS has a net debt of US$2.4 billion ($3.34 billion) as at March 31.

"MBS (and RWS) are subject to a small local gamblers market and reliant on international gamblers, but borders are closed," he said.

CIMB Private Banking economist Song Seng Wun noted that the Jobs Support Scheme, which covers up to 75 per cent of wages for local workers, will help them retain staff, but there is still an issue of an oversupply of labour.

"The only question is whether the management at the MBS side is more optimistic about borders being reopened than RWS," he said.

When asked about the possible impact of Covid-19 on MBS' expansion plan, Mr Song said it could lead to delays by a couple of years, depending on factors such as when a vaccine is found.

Las Vegas Sands, owner of MBS, announced in April last year its expansion plan, which included a luxury hotel tower and a 15,000-seat entertainment arena.

Lawyer Yap Wai Ming, who sits on the editorial board of the Gaming Law Review And Economics journal, suggested the plan could be downsized, given that long-term consumer behaviour would likely be affected by Covid-19. 

He also noted that Las Vegas Sands is now showing a much more conservative stance, as reflected in its decision in May to pull out of the race to run an integrated resort in Japan.

"I think the world is pressing a reset button on everything in 2020. The one that will be affected will be mass events, where you have a lot of people gathering," he said.

"In Macau, so many casinos had closed for several months. But even as they start to open now, it's not as if people are going there in droves."

Both he and Prof Zafar also noted that a shift towards online gambling could affect the businesses of RWS and MBS in the long term.

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