Operator News

China – Macau takes huge bite out of Melco Resorts’ third quarter revenues

By Phil - 4 November 2022

Melco Resorts & Entertainment reported revenues for the third quarter of 2022 of US$241.8m, representing a decrease of approximately 46 per cent from US$446.4m for the comparable period in 2021.

The decrease in total operating revenues was primarily attributable to the government mandated temporary closure of our casinos in Macau in July and heightened travel restrictions in Macau and mainland China related to COVID-19 during the quarter which led to softer performance in the rolling chip and mass market table games segments.

Melco generated negative Adjusted Property EBITDA of US$34.9m in the third quarter of 2022, compared with Adjusted Property EBITDA of US$ 31.9m in the third quarter of 2021.

Operating loss for the third quarter of 2022 was US$198.5m, compared with operating loss of US$182.2m in the third quarter of 2021.

Lawrence Ho, our Chairman and Chief Executive Officer, said: “Our results for the third quarter of 2022 were impacted by the casino closures in July and the travel restrictions imposed across mainland China and Macau. In July, the Macau government implemented preventative measures against the pandemic and our casinos were closed for 12 days. Following the re-opening, the operating environment remained challenging given the continuing tight travel restrictions, but we are encouraged by the recent re-opening of Macau to international tourists from designated countries as well as the increase in visitation over the October Golden Week. We are also cautiously optimistic that the granting of e-visas and group visas, which commenced on November 1, 2022, will lead to a gradual increase in visitation.

“We submitted our proposal to the public tender for the award of new gaming concessions on September 14, 2022 and it has been a smooth and transparent process. We fully support the Macau government’s initiatives to further develop Macau as Asia’s premier destination for international tourism. Our integrated resorts offer a wide range of unique non-gaming amenities, and we plan to leverage our experience to provide additional tourist attractions in Macau. Our proposal reinforces our commitment to Macau, and we look forward to playing a leadership role in partnering with the Macau government to execute on its vision.

“In the Philippines, gaming volumes continue to track towards pre-pandemic levels. We expect to see further growth as travel restrictions around Asia continue to be lifted and travel returns to more normal levels. Gaming volumes in Cyprus exceeded pre-pandemic levels driven by further easing of COVID-19 related restrictions in the third quarter.

“In respect to our development projects, the construction of Studio City Phase 2 is progressing on schedule. We will monitor the market closely to determine the appropriate time to open and currently anticipate the opening to be conducted in stages beginning in the second quarter of 2023. In Cyprus, as we have previously announced, the City of Dreams Mediterranean project is expected to open in the second quarter of 2023, subject to regulatory approvals.

“I am pleased to report that we are making appreciable progress to reach our 2030 goals in environmental sustainability. The energy-efficiency measures that have been progressively adopted at our properties in Macau and Manila since 2018 have resulted in annualized savings of over 46.8 million kWh, equivalent to energy savings in over 4,000 homes. We continue to strive to reduce single-use plastic in our operations with the NORDAQ water filtration and bottling system which is now operational in all of our properties in Macau and Manila. In addition, we are undergoing an extensive plastic inventory exercise to report and continue to implement plans to reduce problematic plastic usage.”

For the quarter ended September 30, 2022, total operating revenues at City of Dreams were US$66.4m, compared to US$252m in the third quarter of 2021. Rolling chip volume was US$332.2m for the third quarter of 2022 versus US$2.79bn in the third quarter of 2021. The rolling chip win rate was 4.53 per cent in the third quarter of 2022 versus 3.46 per cent in the third quarter of 2021.

Mass market table games drop decreased to US$133.5m in the third quarter of 2022, compared with US$617.7m in the third quarter of 2021. The mass market table games hold percentage was 28.6 per cent in both the third quarters of 2022 and 2021.

Gaming machine handle for the third quarter of 2022 was US$137.4m, compared with US$376.9m in the third quarter of 2021. The gaming machine win rate was 4.3 per cent in the third quarter of 2022 versus 3.1 per cent in the third quarter of 2021.

Total non-gaming revenue at City of Dreams in the third quarter of 2022 was US$19.3m, compared with US$39.5m in the third quarter of 2021.

Revenues at Altira Macau were US$2.4m, compared to US$10.2m in the third quarter of 2021. In the mass market table games segment, drop was US$18.4m in the third quarter of 2022 versus US$28.7m in the third quarter of 2021. The mass market table games hold percentage was 4.8 per cent in the third quarter of 2022, compared with 25.8 per cent in the third quarter of 2021.

Gaming machine handle for the third quarter of 2022 was US$33.2m, compared with US$59.1m in the third quarter of 2021. The gaming machine win rate was 2.9% in the third quarter of 2022 versus 3.6 per cent in the third quarter of 2021.

Total operating revenues from Mocha and Other were US$18.8m in the third quarter of 2022, compared to US$22.2m in the third quarter of 2021.

Revenues at Studio City were US$25.6m, compared to US$81.8m in the third quarter of 2021. Studio City generated negative Adjusted EBITDA of US$31.5m in the third quarter of 2022, compared with negative Adjusted EBITDA of US$14m in the third quarter of 2021.

Revenues at City of Dreams Manila were US$102.6m, compared to US$52.5m in the third quarter of 2021.

The company is licensed to operate a temporary casino, the first casino in the Republic of Cyprus, and four satellite casinos. Upon the completion and opening of City of Dreams Mediterranean, the Company will continue to operate the satellite casinos while operation of the temporary casino will cease.

Total operating revenues at Cyprus Casinos for the quarter ended September 30, 2022 was US$24.8m, compared to US$20.2m in the third quarter of 2021. Cyprus Casinos generated Adjusted EBITDA of US$6.7m in the third quarter of 2022, compared with Adjusted EBITDA of US$3.6m in the third quarter of 2021.

Rolling chip volume was US$1.7m in the third quarter of 2022, compared with US$2.7m in the third quarter of 2021. The rolling chip win rate was 14.19 per cent in the third quarter of 2022, compared to 22.33 per cent in the third quarter of 2021. The expected rolling chip win rate range is 2.85 per cent to 3.15 per cent.

Mass market table games drop was US$39m in the third quarter of 2022, compared with US$31.3m in the third quarter of 2021. The mass market table games hold percentage was 19.8 per cent in the third quarter of 2022, compared to 17 per cent in the third quarter of 2021.

Gaming machine handle for the third quarter of 2022 was US$346.2m, compared with US$293.1m in the third quarter of 2021. The gaming machine win rate was 5.1 per cent in the third quarter of 2022 versus 5five per cent in the third quarter of 2021.