Construction of Melco Resorts and Entertainment Ltd’s flagship casino resort on the Mediterranean island of Cyprus, is facing delays, says group chairman and chief executive Lawrence Ho Yau Lung (pictured in a file photo). The global gaming operator still expects to open the City of Dreams Mediterranean complex by the end of this year, he added.
“Construction of City of Dreams Mediterranean continues with a target to open by year-end,” said Mr Ho, speaking on the group’s earnings call following its first-quarter results issued on Thursday.
“However, we are encountering difficulties with our contractor who has struggled with meeting its labour resourcing plans and maintaining progress, which has led to delays,” noted the CEO. “We are actively dealing with these difficulties as we remain fully committed towards delivering Europe’s first integrated resort in Cyprus.”
Melco Resorts – which has its core operations in Macau, and also runs a gaming resort in Manila, the Philippine capital – is building City of Dreams Mediterranean at Limassol, in Cyprus.
Melco Cyprus, a venture between Melco Resorts and Cyprus-based conglomerate Cyprus Phassouri (Zakaki) Ltd, has a 30-year exclusive licence for the jurisdiction. The venture is already running a temporary casino in Limassol under the branding “C2”. Under the terms of its licence, it is also running satellite casinos in Nicosia, Ayia Napa and Paphos.
Mr Ho said the group remained “committed” to its development plans in Macau and Cyprus. “Construction of Studio City Phase 2 is progressing, and we continue our efforts to complete construction by the deadline set in the land concession of December 27, 2022,” he stated, referring to a Cotai resort in Macau, majority-owned by Melco Resorts.
The Studio City extension is due to have 900 rooms shared between two luxury hotel towers. The “W Macau – Studio City” is due to have 557 guest rooms, including 127 suites. The budget for Studio City Phase 2 has been narrowed to US$1.2 billion.
Opening date uncertain
Mr Ho said on the conference call that the group was confident of completing construction of Studio City Phase 2 by December this year. “Construction is on schedule; we are very confident that we are going to meet the timeline, in terms of getting the necessary occupational permit, and for the various government departments to do the inspections and give us the relevant licences,” he stated.
The opening of the property however might take place at a later stage, revealed the executive. “In terms of the actual opening, that is up to us. Our goal right now is to finish up the construction, get the proper licences, and monitor the market to determine the best time to open the property,” said Mr Ho.
Geoff Davis, chief financial officer for the group, noted on the conference call that Melco Resorts’ capital expenditure for 2022 would be “about US$750 million,” with “about US$650 million of that” related to combined project spending on construction of City of Dreams Mediterranean, and on Studio City Phase 2. “That does anticipate an opening of City of Dreams Mediterranean by year end,” he added.
Melco Resorts’ total debt increased by US$1.3 billion year-on-year as of the end of March, as the group said it “increased available liquidity” to support its “operations and ongoing development projects.” Total debt, net of unamortised deferred financing costs and original issue premiums, was US$6.56 billion at the end of the fourth quarter last year.
On the call, the group’s management also addressed the risk of Melco Resorts’ American depositary shares being delisted from the U.S. bourse.
“We have been monitoring that for the last couple of years. We know that between countries, the U.S. and China, they are potentially working on a solution,” said Mr Ho. “But if that doesn’t come true, the delisting doesn’t happen until 2024. There are a few options that we can resort to,” he added.
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