Melco Resorts & Entertainment Ltd is to create an integrated resort (IR) with casino in the centre of Colombo, the Sri Lankan capital, the firm said in a Tuesday announcement coinciding with its first-quarter earnings statement.
City of Dreams Sri Lanka (pictured in an artist’s rendering) will be a US$1-billion scheme in partnership with John Keells Holdings Plc, described in the statement as the largest listed conglomerate on the Colombo Stock Exchange.
The initial investment in the casino portion of the project is expected to be approximately US$125 million.
Lawrence Ho Yau Lung, chairman and chief executive of Melco Resorts, said of the Sri Lanka venture when speaking on the group’s first-quarter call: “For us, US$125 million is a small bet, for a potentially huge opportunity.”
Geoff Davis, chief financial officer of Melco Resorts, said on the call: “Sri Lanka from a GGR [gross gaming revenue] perspective, can be comfortably in the US$200-million to US$250-million [range annually] on a run rate basis with phase one of our casino development there.”
The complex will have an 800-room hotel as well as casino, and facilities for meetings, incentives, conferences and exhibitions (MICE).
A wholly-owned local subsidiary of the Melco group has been awarded a 20-year casino licence by the Sri Lankan government, according to Tuesday’s press release.
The statement said Melco would “fit out and operate the gaming area at City of Dreams Sri Lanka, and Melco will manage the top five floors of the hotel under its Nuwa brand of ultra high-end luxury rooms, which represents 113 of the 800 total hotel rooms at City of Dreams Sri Lanka”.
“Melco and John Keells have agreed all key commercial arrangements and expect fit out of the casino area to begin shortly,” said the announcement.
Mr Ho was quoted as saying: “We are thrilled to be part of this landmark development in Sri Lanka and to be in partnership with John Keells.
“We believe Sri Lanka has immense potential and this opportunity complements our existing portfolio of properties.”
The chairman noted on the first-quarter earnings call that the Sri Lanka opportunity was “a capital-light investment with an attractive return profile, allowing us to expand the City of Dreams brand and broaden our customer reach”.
According to the earlier announcement, the non-gaming facilities of the complex, including the 687 rooms of the Cinnamon Life hotel to be managed by John Keells, are “in the final stages of completion and [it] is expected to commence operations in the third quarter of 2024,” while the casino operations are expected to “commence in mid-2025”.
“There is potential for further expansion of the gaming facilities, subject to performance and market conditions,” added the release.
“Sri Lanka can be to India, what Macau is to China,” in terms of catering for gaming customers, suggested Mr Ho during the casino group’s first-quarter earnings call.
“We’re very excited about the market.” It had so far been “untapped essentially,” with only “a few local establishments”
Mr Ho added: “We are, along with John Keels, raising the bar significantly to the world-class standard with the integrated resort, [and] with the casino that we’re fitting out.”
Though the Melco Resorts boss said it was “a little too early” to provide information on “specific returns” from the project.’
(Updated 11.30pm, April 30)
