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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Thank you for holding, and welcome to the Galaxy Entertainment Group's management update for the first quarter results of 2021. Joining us today are: Mr. Michael Mecca, GEG Board's Non-Executive Director; Mr. Robert Drake, Group CFO; Mr. Roland To, Senior Director of Strategic Planning; and Mr. Peter Caveny, Assistant Senior Vice President of Investor Relations. [Operator Instructions]
I would now like to pass the conference over to Mr. Drake for the presentation. Mr. Drake, please go ahead.
Thanks, operator, and greetings, everyone, and thank you for joining us for the update on GEG's Q1 2021 results. The GEG team joining me here on today's call include: Mike Mecca, a member of the GEG Board of Directors; Roland To, Senior Director of Strategic Planning; and Peter Caveny, Assistant Senior Vice President of Investor Relations. Copies of our media release, stock exchange announcement and PowerPoint presentation are available on our website, which also include our customary disclaimers.
On behalf of our Chairman, Dr. Lui, Francis Lui and the entire GEG family, we greatly appreciate everyone's contributions across the board during the pandemic as well as our heartfelt sympathies to everyone globally who have been impacted by this crisis. The sacrifices that everyone has made are paying off as Greater China continues to effectively contain the pandemic and life gradually returns more and more to normal. We are certainly encouraged by the fact that Macau's little sprouts that we mentioned back in February have grown into healthy green shoots as the market's gradual and managed recovery continues to build positive momentum, including, most recently, the improving performance over the May Golden Week holiday.
Here are some of our thoughts on why we continue to be optimistic about the recovery of Macau as well as its longer-term future. First and foremost, the Macau government continues to effectively handle the COVID-19 crisis, where they have simply done an outstanding job over the past 16 months. As we have said many times before, the Macau government has demonstrated proactive and decisive leadership while simultaneously generating critical community support, which is a huge accomplishment.
You may be interested in knowing that Macau has not experienced a new locally transmitted case for over 1 year since April 9, 2020, limited imported cases due to effective screening protocols and 0 fatalities. This is simply a remarkable achievement, especially when you consider that they gradually began to reopen the market in Q3 2020, experienced a healthy increase in visitation throughout the fourth quarter and proactively supported the well-signaled Chinese policy of limited travel during the critical winter period, including Chinese New Year, where Macau visitation growth abated in January and February of 2021.
Although visitation was down 7% sequentially in Q1 2021, as expected, we finished the quarter on a positive note in March with the best monthly visitation and revenue performance since the pandemic began in early 2020. The positive momentum has definitely carried into the second quarter with a very solid Golden Week holiday in early May, when we experienced some of our best visitation and revenue days since the pandemic.
We are also -- we also continue to be very encouraged by the improving Chinese economy and recent consumer trends over the May Golden Week holiday, which certainly indicated strong demand for leisure, retail, tourism and travel. Having said all of that, we are definitely not taking the recent trends for granted and remain as committed as ever to the health and safety of the community, our team members and guests as well as the economic and social stability of Macau, where the continued containment of the virus remains the highest priority.
Let's move on to our Q1 2021 performance, where our effective cost control efforts introduced throughout 2020 continued to yield results in a gradually improving revenue environment while at the same time, we continue to make progress with our enhancement projects at our existing properties as well as with our game-changing Phase 3 and Phase 4 development projects in Cotai. GEG's Q1 2021 EBITDA more than tripled year-on-year to $859 million but declined 15% sequentially.
There was a lot happening during the quarter worthy of note that impacted our results. Let's begin with our Construction Materials business, where EBITDA grew 31% year-on-year to $156 million but declined 52% quarter-on-quarter or $170 million due primarily to seasonality, which impacted the group's overall results. If you exclude Construction Materials, then EBITDA increased more than 4x year-on-year and grew 3% quarter-on-quarter to $703 million.
Let's move on to Macau. GEG's Q1 EBITDA also benefited by approximately $169 million of good luck. You may also recall that in Q4 2020, the group benefited from a $100 million COVID insurance claim, which was partially offset by playing unlucky, which reduced profitability by approximately $60 million. And for good order's sake, we experienced good luck in Q1 2020, which benefited EBITDA by approximately $84 million. If you adjust for the insurance claim, the luck factors and Construction Materials, GEG's EBITDA in Macau totaled $534 million, which was up significantly versus $80 million in Q1 2020 but down 17% quarter-on-quarter.
Our Q1 '21 results were also impacted by year-on-year and quarter-on-quarter shifts in revenue mix. We also continue to work hard at leveraging our cost structure as business gradually improves. To that end, our Macau OpEx burn rate has declined by over 30% from approximately USD 3.4 billion per day under normal operating conditions and essentially remained in USD 2.3 million range for the third quarter in a row in Q1 2021. Even as business ramped up in Q4 2020 and Q1 of 2021, we were able to virtually maintain the same OpEx burn rate as Q3 and Q4 2020, which indicates that we are well on the road to delivering operating leverage.
We'd like to pause here like we have previously and make a very important point on fiscal management, especially during these challenging times. We certainly acknowledge that OpEx burn rate is an important part of the expense equation, but there's certainly more to the overall cost picture than that. Daily cash burn is more indicative of the cost structure as it includes interest expense. We are very fortunate that we are the only concessionaire in Macau that generates net interest income, not interest expense.
In fact, our net interest income also remained unchanged in Q1 '21 at approximately USD 300,000 per day. If you deduct the $300,000 per day of interest income from the $2.3 million per day in OpEx burn, we get approximately $2 million per day in cash burn, excluding CapEx. It's a powerful example of how conservative balance sheet management really pays in challenging periods in general and, in our case, significantly differentiates us from the competition.
We would like to thank everyone on the GEG team as well as our valued suppliers who continue to support the company in these difficult times by contributing to our cost management programs. We are proud to report that virtually all team members made voluntary contributions during this challenging period, including the Board of Directors, which waived their directors' fees; management who participated in our nonpaid leave program; and the many team members who joined our Flexi Family Care Program. It's truly been inspiring. We've also contributed millions of dollars to the COVID-19 relief efforts to support the community as we previously reported.
Let's move on to our development update, where we continue to make progress with our initiatives, particularly in our home base of Macau. In fact, on March 1, 2021, we announced that our Cotai Phase 3A tower will be named Raffles at Galaxy Macau. We look forward to welcoming Accor's legendary Raffles brand in an exclusive state-of-the-art 450 all-suite tower to Macau in late '21 or early '22. We continue to move forward with the GICC, our convention center and arena, as well as our Cotai Phase 4, which will be Macau's only next-generation integrated resort. We continue -- we will continue to provide updates on our target timelines for all of our projects as we move forward.
We are also using this period as an opportunity to perform additional maintenance and enhancements to our existing properties. Our Cotai development activities, along with our property -- existing property initiatives, also demonstrate our support of Macau during the pandemic by continuing to invest billions of dollars into the economy providing jobs and supporting local SMEs as well as our long-term commitment to help Macau achieve its vision of becoming a world center of tourism and leisure.
In addition, we note that the Central Government is currently reviewing the strategic master plan of Hengqin, which were revised by the Zhuhai and Macau governments. We're also expanding our focus to potentially include opportunities within a rapidly expanding Greater Bay Area. And finally, in Japan, where we continue to pursue opportunities with our partner, SBM of Monaco. We are also monitoring the impact of the pandemic in Japan, which has also caused highly publicized delays to their IR process. And we'll continue to update you as the situation moves forward.
Next up is an update on our balance sheet, which continues to remain strong, liquid and virtually unlevered. Cash and liquid investments decreased from $46 billion at the end of December 2020 to $42.4 billion in March 31, 2021. Our net cash position declined from $36.8 billion to $33.6 billion as operations contributed to cash flow while we continued to invest in our development projects, including Cotai Phases 3 and 4, and experienced some working capital adjustments.
Total debt decreased from $9.2 billion to $8.8 billion, which primarily reflects $8.3 billion of borrowings associated with our treasury yield enhancement initiative. Our core non-treasury yield enhancement borrowings remained virtually unchanged at $500 million, which includes 0 debt associated with our Macau operations.
Moving on to our outlook, where we continue to remain very optimistic that Macau's gradual, sustainable and managed recovery will continue. As we noted earlier, Q1 finished with a strong March, which was the best month of the pandemic. This is followed by a solid April, which reported the highest GGR since January 2020, and an encouraging Golden Week holiday in early May. If we continue to remain diligent in effectively containing the COVID outbreaks and execute vaccination programs, we are confident that our green shoots will continue to strengthen as the summer high season approaches throughout the balance of '21 and beyond.
We're also encouraged by the rebounding Chinese economy and are quite confident that the leisure and tourism sectors will continue to recover on the back of the overall economy. In the interim, we remain well capitalized to invest in our development initiatives, including our game-changing Cotai Phases 3 and 4 as the fundamentals of Macau and our operating businesses continue to improve and generate cash. We also remain upbeat and very positive about the long-term prospects for Macau and the Greater Bay Area, where the underlying fundamentals continue to remain incredibly compelling.
We would also like to extend our sincere appreciation to the Macau government for their outstanding performance as well as the community, which has rallied under their leadership during the pandemic. We'd also like to thank all the GEG team members again, who have been extraordinarily supportive of the community and the company during this challenging period. And finally, you may also be interested in knowing that Galaxy Macau will be celebrating its 10th anniversary of its Phase 1 opening on this coming Saturday. Happy birthday, Galaxy Macau. The best is yet to come.
Operator, that concludes our opening remarks, and we're happy to field any questions.
[Operator Instructions] We will now take our first question from Billy Ng from Bank of America.
So I guess I have a couple of questions. The first question, I want to direct to Mike, and just want to get an update about Japan, given that we understand COVID probably has slowed things down there. But can you give us an update what's the latest timeline and also what's the latest development in Japan right now?
You bet. Thank you for your question, Billy. Japan, like all countries, have experienced an impact on both business and personal life as a result of the pandemic. Japan has accordingly adjusted their programs and timelines. The national government has announced an extension of the submission lodgement dates for the prefectures and their casino consortium partners from October of 2021 to April 2022.
Given that submissions to the national government have been extended until 2022, there is still a period of time before any announcement from the national government could be expected. GEG, with SBM of Monaco and our local partners, remain interested in bringing our brand of IR to Japan, and we continue to explore all options. And we will keep you posted as the process progresses. Again, thanks for the question, Billy.
And back to Macau. Bob, would you mind to share a bit more color about April and Golden Week? We heard from your peers, when they had the conference call, kind of suggesting that like some of them are achieving almost 80% recovery in terms of their March revenue during Golden Week. But on the other hand, junket VIP remain quite slow, is about 20%, 30% recovery. Do you see a similar trend? And I guess, more importantly, have you seen a dramatic slowdown after the Golden Week or number is still kind of better than April run rate at the current level?
Great question, Billy. As far as like as I just mentioned as far as the end of the quarter is concerned, March finished very strongly, was our best revenue and visitation month since the pandemic. We haven't seen the April visitation yet, but it's the -- it was also our strongest GGR month. And as we transition there, we had the Qingming holiday, which was -- is traditionally not a strong holiday for Macau but certainly rebounded after that to go into Golden Week, where we had very encouraging results.
I think everyone has seen the visitation numbers. But as far as our actual performance is concerned, we did probably about 50% of the GGR that we did in 2019. It was really driven by our premium mass business and where we did probably 60% to 70% what we did in 2019. The encouraging thing about our mass business is that our rate of play was very high. It was upwards of 70% of what we did in 2019.
Hotel occupancy was in the mid- to high 80s. What was more encouraging about that is the type of occupancy and the type of customers that we're attracting. Now it was a very high casino mix, very high. And as far as the IP is concerned, it continues to be challenged. And the numbers that you quoted are directionally accurate as far as we're concerned. They were doing about 20% to 30% of volume of what they used to, but that's where we're really not surprised by that. One of the things that I think has been understated is the performance of our retail business.
If you look at our tenant sales over Golden Week or even in the first quarter -- well, let's talk about the first quarter. We did upwards just a little north of 90% of what we did in Q4 '19 in terms of tenant sales and EBITDA contribution. Fast forward to Golden Week, and we did approximately 80% more than we did in 2019. And we did it with 15% less tenants so -- as we continue to reconfigure our mall. And it's the type of customers, it's all premium retail, they're just doing extraordinarily well.
You may know that we had our AGM this afternoon. And in between meetings, I just -- end the call, I just walked around the property a little bit. And 4 or 5 of our major outlets have lines to get in, and it's a Thursday afternoon. So that really bodes well for the recovery and the gradual recoveries we've been seeing. And it is definitely managed. So the prognosis moving forward, post Golden Week, we expect a little post-holiday roll and we've seen that. And we expect that the summer should be pretty strong. As you look at the overall economy in China, it continues to do well. And we're well positioned for that. And I think -- and of course, the primary focus is always public health and safety. And if we could remain vigilant, there's no reason to think that the recovery will continue. It's just going to be a gradual recovery, and we've been very consistent in our views of the market over the last 6 to 9 months. So overall, I think we had an encouraging Golden Week. It's certainly encouraging going into the high summer season. And we look forward to reporting on our progress as we move forward.
That's very clear. I'm sorry. Just one quick follow-up. Because like you mentioned about summer, we had a strong Golden Week. I think like one of your peers talked about like they are also optimistic about May and June. Do you share that optimism? Or do you think we will still see the normal slowdown, seasonality slowdown between -- especially in June and the second half of May?
We're cautiously optimistic that this is -- usually after the holiday, you get the post-holiday roll. The question is, is the demand during a recovery strong enough to offset the traditional roll? And we'll watch that very closely. And hotel occupancy has dropped off as expected. It hasn't dropped off as much as we thought it would, but -- so we're reasonably encouraged by that, but we just need more time.
And we're not managing this week-to-week or month-to-month. We're -- we've been very focused on working with the government and really timing our -- the introduction of new products with the recovery of the overall market. And as fast as we all want it to happen, we've been very disciplined in our approach to running the business in this recovery. And again, we're definitely focused on public health and safety.
We will now take our next question from D. S. Kim from JPMorgan.
Happy birthday to Galaxy Macau. Firstly, can I ask you about a new project? I read from the press release that Raffles is now scheduled to open in late '21 or early '22. So it seems like kind of slightly delayed. Can I check what's causing this modest delay? And how about GICC? Is it going to open before or after Raffles?
Thanks for the question, D. S. As you rightly picked up in our press release and in our opening remarks that we continue to make progress on all our projects, including Cotai Phases 3 and 4. Literally, the day after our Board meeting -- or after our Board meeting in February, we announced the collaboration with Accor, a very exciting project, where we're going to introduce their legendary Raffles brand in Macau and calling it Raffles at Galaxy Macau. The 450-suite exclusive all-suite tower is really going to redefine hospitality here in Macau, we believe, and attract the type of customer that we think will continue to call on Macau for visitation. Now as far as the opening is concerned, we just want to hedge our bets here a little bit to see how the market ultimately recovers and really try to align with the market recovery. So whether it's the latter part of this year or early part of next year, we just want to align as much as we can with the market recovery. And a month or 2 either way isn't going to make that much difference. As far as the GICC is concerned, we're looking at and studying the recovery of the MICE business. And we expect to open that around the same time as well, if not, maybe a little later than that. But again, we want to see recovery in the MICE business. And we're -- from a cost structure standpoint, that's a very -- it will have a minimal impact on the overhead going forward.
And of course, we're very happy about opening the Andaz and welcoming Andaz to Macau as well and their 700 brands. So it's -- we're -- again, we want the recovery to ramp up as fast as can. But we want -- again, we're focused on public health and safety. This is definitely a marathon, not a sprint. And we have a longer-term view of the world.
That's really helpful. May I follow up on that? Like when you say we want to watch the market recovery, do you have any like benchmark in terms of, I don't know, like occupants of the Galaxy Macau existing property, do you want it to go to 70%, 80%? Or is it more about the opening -- further reopening of the borders and the visas that come with that? Or is it just about like GGR pace? Any threshold level that you keep in mind? And I have one final follow-up.
Well, it's been an interesting trend as far as visitation is concerned. In the first quarter, our visitation was down, but revenue was up. So it's the -- and then we've had a couple -- you can see that with January and February, where growth really abated after a very strong December only to recover in March. And it's really driven by policy. And of course, the policy is designed to protect the public.
And we're -- again, we're -- we are all in this together with the government. And we just want to make sure we're doing things the right way and a sustainable way. But we've been consistent all along that we believe it will be a gradual managed recovery. And if we continue to -- on our current trajectory that the fourth quarter should be pretty solid.
And this is slightly a related question. But we heard that DICJ government has been asking operators to expand the definition of gaming area from previously just the gaming floor to now gaming floor plus support area plus some common areas and whatnot. Is that true? And if so, does it cause any design change or plan for Phase 3 and 4? And -- yes, please.
Sure. We get lots of requests and we work closely with the regulators. We just want to make sure that we're all cooperating, and we are, on these things. So there's a whole list of things that we talk to the regulators virtually on a daily basis. But it's all in the spirit of moving the industry forward. And we're certainly very supportive of what they want to do.
Final question. We couldn't help but notice that you mentioned e-renminbi in the earnings release. And I'm just wondering, I think it's too early to say anything, but if you have any color, could you share your thoughts on potential impact on our business? I guess, VIPs will definitely be negative. But how about premium mass and grind mass and the visitation, any long-term pictures that you envision with e-renminbi? And that's all I have.
Well, it's been highly publicized in Mainland China that they've been trialing the e-RMB. And the Macau government has come out and said that they're very supportive of that. And of course, we are, too. So we're very encouraged to learn more as the Macau government learns more and supportive of all these initiatives. And we're all about the long-term sustainability of Macau. And whatever it takes to do that, we're going to be very supportive of.
We will now take our next question from Angus Chan from UBS.
Can I ask a question about OpEx? You managed to keep it flattish for the quarter. I'm wondering if at what level do you need to start increasing OpEx? Obviously, Q2 is tracking better than Q1 in terms of the visitors or GGR. What kind of OpEx should we -- or OpEx increase should we be expecting? Secondly, on Raffles, how should we think about the incremental OpEx you need? And then lastly, we read that this -- with the voluntary exit program that you're implementing, I guess, what kind of permanent cost savings do you envisage, let's say, versus 2019 as a result of the program?
As far as OpEx is concerned, as you know, with our -- supportive of the Macau government and supporting local that we have a ways to go until we hit the constraint, where we have to add a lot more incremental labor. So I would expect that our OpEx rates for the next quarter or so remain pretty stable. And of course, our big challenge is converting temporary savings to permanent. And then at some point, once the GGR hits a certain point, then you'll see a tremendous amount of flow-through because the -- just because we won't be adding a lot of labor and the flow-through will be very strong.
So it's the -- said another way, we have kind of a high fixed cost base and -- but having said that, one of the areas that we've been pretty successful in our cost containment programs is reducing our labor cost, where it's upwards of 15% to 20% year-on-year. So it's -- the challenge there is really using this as an opportunity to improve your productivity, do more with less. I think Francis, our Vice Chairman, who has been championing that, along with our operations team, to really try and really increase productivity. And I think we're being able to see that and by maintaining a very stable OpEx on a gross basis. But what you don't see underneath there is certainly a change in the mix.
So even on the controllable expenses like utilities that we expect that could increase as, a, it's seasonality and it's business increase. So with our OpEx, at some point, it will increase. But hopefully, it will be very -- I think that again maybe you're focusing on the cost, but we're return-driven, that the flow-through that we get on that will be incrementally higher. And when we -- and we're quite confident that we are currently generating a lot of operating leverage through our cost structure. So you can see that with our revenue mix shifting and bringing up some of our personnel cost to market. So the real challenge there is to really try to convert as much temporary savings to permanent. As far as Raffles is concerned, and again we're very excited about that, it is a new tower to Galaxy Macau. It's not a separate integrated resort. So we won't be adding a lot more folks to the team to support that, given that we have an existing labor pool that we'll transfer some of our existing labor to support that, if you will. So the incremental OpEx on that isn't going to be as much as people think. So what we think that will do is generate a very profitable incremental revenue to the bottom line.
So on the back of that, as far as our lifestyle change programs, as you mentioned there, but again, these programs are 100% voluntary. What we are -- remember, our primary stakeholders, the Macau government, again is to promote economic development in general and including through the locals. And what we're trying to do is provide not only these "new lifestyle packages", but opportunities to shift into career opportunities in non-gaming or wherever they want to do.
And that's really what we're here to do is really to promote economic development across the board, including local and providing new career development opportunities. And as the business changes, we're trying to again optimize our labor and cost structure to the trend in the business such that we're all delivering shareholder value here. So some of that's permanent. But at the end of the day, we're more focused on really just satisfying what we're really here for, is to help Macau achieve its objective of being a world center of tourism and leisure and to promote local economic development, including through locals.
Hopefully, the Hong Kong border opens up in time for us see the Raffles.
I would welcome the opportunity to show you around.
As there are no further questions at this time, I would like to turn the call back to your speakers for any additional or closing remarks.
Well, thank you, everyone, for joining us for our Q1 results update call. We look forward to updating you on our Q2 results sometime in the month of August. Until then, stay safe and healthy, and we'll talk to you then. Thank you very much.
Thank you. This is the end of the GEG's conference call. Thank you for joining us today. You may now disconnect.