Declining VIP patronage has caused Melco Resorts & Entertainment to reposition Altira Macau resort to serve premium mass customers.
During a second-quarter earnings call with analysts, Melco COO David Sisk said market upheaval and the fallout from Covid-19 are behind the shift. “The idea is to take out a lot of the volatility given the kind of reduced volumes that we’ve been seeing over the last 18 months in the VIP business that created a lot of fluctuations” at Altira, Sisk said.
“And unfortunately we’ve been on the negative side of the whole equation, which has really exacerbated the losses over there. It’s just too much, we were essentially gambling in a way that didn’t make a lot of sense.”
He said the change will create “a boutique experience for our guests there. They’re looking for something a little bit different than maybe we have in Cotai …. We thought this was a good time for us to make this move and move forward with this new area for our business at Altira.”
On the same call, Melco Chairman and CEO Lawrence Ho said the change will begin in the third quarter and take about a year to complete. “We’ve embarked upon a strategic shift that aligns Melco’s first integrated resort with the company’s broader focus on the high-margin premium mass segment,” Ho said. “We will refocus some of the existing VIP gaming space to cater to the premium mass segment and reallocate non-gaming assets to support the premium mass initiative. We do not believe it will be necessary to incur material capital expenditures to implement this strategic shift.”
Altira opened in May 2007 as Crown Macau. The name changed two years later, but the property has always served VIP patrons. Melco confirmed that both junket and VIP direct operations at Altira have already been shut down and moved to its City of Dreams and Studio City properties.
In related news, according to GGRAsia, Ho said Melco Resorts plans to complete Phase 2 of Studio City on Cotai “no later than December 2022.” The expansion will increase hotel inventory by around 60 percent, with two new luxury hotel towers offering 900 rooms and suites. There will be additional gaming space and non-gaming facilities, including a Cineplex, fine dining restaurants, space for conventions and meetings and an indoor-outdoor water park.
At City of Dreams, also in Cotai, an overhaul of the Countdown hotel, which closed in March, is underway. The property will reopen as a luxury hotel in 2023.
Ho also commented on the upcoming concession retender in Macau, and said he expects the local government to extend the process beyond 2022, when all the concessions will officially expire.
“The government has been, for the last 18 months, like the rest of the world is, singularly focused on fighting Covid-19. … I wouldn’t be surprised if the licenses get extended for a year or even two years.”
Macau’s six casino concessions were set to expire in June 2022, but the government has the power to extend the terms up to five years.
“All the concessionaires will be working closely with the government and I do not expect any surprises,” Ho said, and added, “It’s a big industry and it’s critically important to Macau,” kicking in up to 80 percent of revenues.
