Analyst: Impact on casinos by Hurricane Sandy may take time to understand
It may take some awhile before investors understand the impact of Hurricane Sandy on the Northeast casinos, one analyst said Tuesday.
KDP Investment Advisors gaming analyst Barbara Cappaert told investors the aftermath of Hurricane Katrina on the Gulf Coast casinos in Mississippi and Louisiana offers one guide.
“First, from what we have heard, and of the jurisdictions we follow, Atlantic City was most impacted with damage and flooding” Cappaert said. “We have yet to hear specifics from most of the casinos, save Caesars, which will reopen its facilities by Thursday.”
Connecticut casinos will probably be closed the same amount of time as Atlantic City while Pennsylvania casinos will experience less disruption.
Given the closures began on Sunday and will likely last through the week, analysts will need to calculate what a week of lost business will mean for estimates.
Any business disruption insurance proceeds won’t be seen for at least two quarters. If there is a surge of clean up and rebuilding, that might result in a big pick up in business.
“Boomtown New Orleans saw double digit increases in demand for a quarter after Katrina and saw margins expand beyond 50 percent,” Cappaert said. “Biloxi casinos that survived saw similar demand for both hotel rooms and for gaming, as workers used their free time to hang out at the casinos. It is possible we could see an uptick in demand for roughly a quarter as the clean-up is underway.”
Residents, as they look to rebuild and repair, may have to use disposable income on the clean-up.
“In some cases, like Katrina, flood damage may not be covered, further squeezing consumers’ wallets,” Cappaert said. “This should all result in much slower demand from the local feeder base for at least the next year.”
