Where do we go from here?

In the process of canceling its 2020 earnings guidance, Marriott International gave some oblique insight into how the casino industry is likely to cope with the Coronavirus quarantine. Occupancy, it said, had fallen to 25%, compared to 70% last year. In addition to suspending share repurchases (good) and cutting dividends, the company is taking a scythe to $140 million in costs. Brand standards have been put on hold, as hotel floors are closed, restaurants and bars are shuttered, staff is cut (heavily) and even entire hotels are going dark. Executive salaries are on the chopping block for “significant cuts,” temporary leaves and shorter work weeks may be required, and non-essential travel and spending are kaput. Even so, the pain from an idled travel sector is going to be deep, with as many as 4.6 million people unemployed, per the U.S. Travel Association. On a Las Vegas note, the Sahara (not a Marriott property) was one of the very last resorts to close, a deplorable reluctance that probably wouldn’t have been resolved without Gov. Steve Sisolak‘s emergency order.

Revenue per available hotel room in the U.S. was down 32.5% last week and obviously is primed to fall much farther this week. “Analyst Patrick Scholes at SunTrust Robinson Humphrey opined on Wednesday that it is possible that RevPAR may be down over 50%, with some hotels running occupancy in the single digits to teens, versus a long-range average pre-virus of 66%,” reported HotelsMag.com. In the meantime, MGM Resorts International and Caesars Entertainment gave some indication of how they intended to stay afloat in the near term, namely by tapping their credit lines. “We believe the company has ample liquidity to weather the current uncertainties in the marketplace,” said MGM CEO Jim Murren. That would include $2.4 billion in cash and $1.5 billion in backup loans (making one wonder why a federal bailout is so urgent). Caesars, for its part, can draw on almost $1.2 billion in revolving credit. Dare we suggest that this might not be the best time for Eldorado Resorts to proceed with its $17.5 billion LBO of the Roman Empire? Carl Icahn wants his payday, we know, but hasn’t Uncle Carl done enough damage already?

Elsewhere in the industry, the bill for REITmania is coming due and fixed costs like rent spell trouble for casinos. Nomura Instinet analyst Harry Curtis likes Las Vegas Sands‘, Wynn Resorts‘ and Melco Resorts & Entertainment‘s survival chances, in part due to their cash positions and partly due to their presence in Macao, one of the few revenue streams left at this point. “It is no revelation that Macau is the most likely casino market to rebound in the near term, possibly putting the stocks in the best position to recover earliest,” wrote Curtis. If you wonder why Sheldon Adelson can be so “george” with his employees, Sands has $4.25 billion in cash, meaning he can hang tough for two years. Wynn and Melco can survive almost as long—560 days—thanks to their cash reserves.

MGM Resorts stock has fallen 78% this year, even though the operator has cash on hand to remain a going concern for 476 days. Eldorado and Boyd Gaming are in serious trouble, says Curtis, and Caesars won’t last the year without a giant cash infusion. (The Motley Fool has a chart showing just how much trouble Caesars is in.) Penn National Gaming has five months. Since Penn, Caesars and MGM all have close ties to their REITs, they can appeal to a sympathetic ear for rent forbearances or reductions but that’s a huge, fixed cost that other companies aren’t going to have to reckon with. What will be a really tough sell will be getting shareholders to go without dividends, something that has been aggressively paid out lately, even when it might be thought incautious. There’s definitely enough agitation to go around. Meanwhile, the current American Gaming Association spin is that a federal bailout would go to pay the ground troops. We’ll be watching the components of any aid package closely.

* Illinois regulators are compounding a two-week shutdown of the state’s casinos with a lockdown of slot routes. That’s 35,484 machines generating $42 million a month in revenue. Poof! “The public health of patrons, video gaming industry employees, Gaming Board staff, and all others is of paramount importance,” said the Illinois Gaming Board, idling all slot routes until March 30. Going even farther, Iowa Gov. Kim Reynolds (R) closed all casinos through April 16, although a few voluntarily beat him to the punch. (Entertainment venues and fitness centers are also shuttered.) In Oregon, tribal Mill Casino is defying the odds and remaining open. It is taking some preventive measures, such as unplugging every other slot machine and closing the buffet.

Added casino spokesman Ray Doering, “We had a March Madness we thought that would be a fun couple weeks here and obviously with no basketball games that makes sports gambling impossible.” In Alabama, the Wind Creek chain belatedly closed through March 30. Overseas, Melco has capped attendance at its four small Cyprus casinos at 75 patrons apiece and closed table games at two.

* No casinos? This is your big chance to try online gambling, as we covered Monday. If you’re feeling trepidation, here’s a how-to primer. Heck, there’s even virtual sports betting available. And, if you’re feeling optimistic, Major League Baseball could be back anywhere from mid-April to early June. If you’ve already bet on division or World Series winners, your money’s stuck, but the delay in play could put your favorite team on the mend. As for the NBA and NHL, here’s the status of your futures bets.

* What do you do if you’re a mega-casino and have tons of perishable food on hand? If you’re Horseshoe Hammond, you donate 30,000 pounds of free food to local charities. Meals on Wheels and Campagna Academy were the two nonprofits who benefited equally. Thanks to Horseshoe for its largesse to those in need.

* Both South Korea and the U.S. reported their first Covid-19 case on Jan. 20 (yes, two months ago). As of Tuesday, South Korea had tested 274,000 citizens. The U.S. … not so much. We’ve got to do better.

* Just when you thought the Cats saga couldn’t get any weirder …