Macau casino operator Melco Resorts & Entertainment says it is negotiating changes to its non-gaming investment in the city, but its overall capital commitment hasn’t changed.
The Chinese gaming hub made additional non-gaming attractions a requirement of the new 10-year gaming concessions that began on January 1. The government’s goal is to pivot away from gaming alone as the economic driver and turn the city into a multifaceted international destination.
In September, when Melco submitted its re-tender application, Chairman and CEO Lawrence Ho stated, “Our proposal reinforces our commitment to Macau and the further diversification of its economy. We look forward to playing a leadership role in partnering with the Macau government to execute on the government’s vision.”
In December, when the concession was granted, Melco released its plan to invest a total of MOP11.8 billion (US$1.5 billion) in both gaming and non-gaming projects at its City of Dreams and Studio City resorts, including “conventions and exhibitions, entertainment shows, sports events, art and culture, health and well-being, thematic entertainment, gastronomy, community and maritime tourism and others. Of the total investment … MOP10 billion (US$1.248 billion) will be applied to non gaming-related projects.”
According to Inside Asian Gaming, during Melco’s second-quarter earnings call, Ho told analysts that negotiations with the Macau government are ongoing. “What we’re seeing now is that there is a lot of reporting on the operators’ part—monthly reporting, quarterly reporting—[and therefore] a lot of negotiations and discussions around” investment plans. He said Melco will “stick to the number for the investment proposal that we put in when we got our license last December … We might make changes in terms of events or things we put in, but we will stick to that number.”
David Sisk, chief operating officer of Melco’s Macau Resorts unit, added, “Everything we promised the government, we have done and we are executing on.”
Meanwhile, Sisk said, Studio City is already seeing improvements in visitation and spending. “If you look at the number of covers we’ve done in our restaurants, the visitation numbers have gone up quite a bit, we’ve seen a lot of impact with our hotel rooms and the packages we’ve sold, and we’ve seen the spending patterns go up considerably with the customers that are coming in, so [the concerts] been a very nice lift for us,” said Sisk.
“I think the level of awareness [of Studio City as a destination] that’s been built now will continue to drive visitation forward as we go into the third and fourth quarters.”
On the gaming side, Melco has yet to post a profit since Macau reopened its borders in January, but the tide is turning. The company reported a net loss of US$23.4 million in the second quarter, down from a US$251.5 million loss in the same period last year and from a US$81.3 million loss in the first quarter.
“The increase in total operating revenues was primarily attributable to the improved performance in all gaming segments and non-gaming operations primarily due to the relaxation of Covid-19 related restrictions in Macau in January 2023, the openings of Studio City Phase 2’s Epic Tower and indoor waterpark in April 2023, as well as the launch of residency concerts at Studio City in the same month,” the company stated.
Macau Business reports that nine new hotels are currently under construction in the city, seven on the peninsula and two in Cotai. They could add more than 3,700 new hotel rooms over time. Another eight hotels are on the drawing board, according to the Macau Land and Urban Construction Bureau.
