What is termed the first stage of the second phase of the Studio City casino resort, in Macau’s Cotai district, is to open in the second quarter this year. The confirmation was given on Wednesday by Lawrence Ho Yau Lung, chairman and chief executive of casino operator Melco Resorts and Entertainment Ltd, in prepared remarks accompanying the firm’s fourth-quarter results.
“The first stage of opening is expected to include one of our hotel towers and the indoor water park, which is expected to be the largest of its kind in Asia,” he said. The second stage of opening is scheduled for the third quarter, and will include a second hotel tower.
Melco Resorts is this year still to invest between US$75 million and US$80 million on completion of the second phase of Studio City (pictured in an artist’s rendering), management said. Mr Ho already had flagged last year a timetable for its opening.
According to Melco Resorts’ chief operating officer, David Sisk, the firm will increase its workforce by around 1,000, in order to staff the second phase of Studio City.
Mr Sisk said in a conference call with investment analysts after the fourth-quarter results that – in terms of its staffing levels – Melco Resorts expected still to “have approximately 10 percent less FTEs [full-time equivalents] at the end of 2023” in its Macau operations, compared to the final quarter of 2019, prior to the Covid-19 pandemic. That was despite the opening of the second phase of Studio City.
“We have really done a good job of rethinking how we operate our business and we are much more efficient with the things we are doing now”, he added.
In Macau, Melco Resorts operates the fully-owned City of Dreams casino resort and the Altira Macau casino hotel. It is the majority owner of Studio City. The firm also operates a chain of slot-machine parlours under the brand Mocha Clubs.
Mr Ho referred in his prepared remarks in the results to the group’s under-construction City of Dreams Mediterranean, the flagship property for its Republic of Cyprus monopoly licence. “We have been informed that the Council of Ministers has approved an extension of the deadline to open City of Dreams Mediterranean, under the terms of our gaming licence, to June 30,” he said. “We continue to work with our contractors with a target to open within that time frame.”
Melco Resorts expects capital spending of between US$60 million and US$65 million this year for its Cyprus operations.
In the conference call with investment analysts, Mr Ho said the firm’s Macau performance in the first two months of 2023 had been “highly encouraging”.
“During the peak days of Chinese New Year this year, we saw EBITDA [earnings before interest, taxation, depreciation and amortisation] reach US$6 million a day,” Mr Ho noted. “Volume post-Chinese New Year is holding up well and our daily average mass volume in February has been in line with January.”
The executive noted that in Melco Resorts’ City of Dreams Manila casino complex, which it manages in the Philippine capital, gaming volumes were “very close to pre-pandemic levels.” Mr Ho added: “We expect continued growth, with more international travel into the Philippines, and increased junket activity.”
4Q results in the red
Melco Resorts saw its net loss widen to US$251.9 million in the fourth quarter of 2022, compared with a net loss of US$159.9 million a year earlier. The net loss increased by 3.3 percent from the third quarter of 2022, according to the firm’s results filed in the United States on Wednesday.
Total operating revenues for the fourth quarter were US$337.1 million, down 29.9 percent from the prior-year period. The firm had posted total operating revenue of US$241.8 million in the three months period ended September 30, 2022.
The year-on-year decrease in total operating revenues was “primarily attributable to the heightened travel restrictions in Macau and mainland China related to Covid-19 during the quarter,” said the company. Those constraints “led to softer performance in the rolling chip and mass market table games segments,” it added.
Melco Resorts generated negative adjusted property EBITDA of US$6.8 million in the final quarter of last year, compared with a positive figure of US$94.0 million in the fourth quarter of 2021.
The company had reported negative adjusted property EBITDA of US$34.9 million for the third quarter last year.
At the group’s Macau flagship, City of Dreams, on Cotai, total operating revenues in the fourth quarter this year were US$139.2 million, down 43.1 percent in year-on-year terms. The property generated negative adjusted EBITDA of US$7.8 million, compared with positive adjusted EBITDA of US$49.7 million in the fourth quarter of 2021.
At City of Dreams Manila, total operating revenues were up by 13.5 percent in year-on-year terms, to US$95.2 million. The complex generated adjusted EBITDA of US$23.6 million in the fourth quarter of 2022, a decline of 31.8 percent in year-on-year terms.
Melco Resorts reported total operating revenue of US$1.35 billion for full-year 2022 versus US$2.01 billion in the prior year. The firm generated adjusted property EBITDA of US$569,000 for the 12 months ended December 31, 2022, compared with adjusted property EBITDA of US$235.1 million in 2021.
Net loss attributable to Melco Resorts for 2022 was US$930.5 million, worse than the net loss of US$811.8 million recorded in the prior-year period.
