Operator News

China – Macau weighs heavy on Melco but Manila and Cyprus see growth

By Phil - 2 March 2023

Melco Resorts & Entertainment generated revenues for the fourth quarter of 2022 of US$337.1m, representing a decrease of approximately 30 per cent from US$480.6m for the comparable period in 2021.

The 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 which led to softer performance in the rolling chip and mass market table games segments.

Operating loss for the fourth quarter of 2022 was US$199.5m, compared with operating loss of US$104.4m in the fourth quarter of 2021.

Melco generated negative Adjusted Property EBITDA of US$6.8m in the fourth quarter of 2022, compared with Adjusted Property EBITDA of US$94m in the fourth quarter of 2021.

Net loss attributable to Melco Resorts & Entertainment Limited for the fourth quarter of 2022 was US$251.9m, compared with US$159.9m, in the fourth quarter of 2021. The net loss attributable to noncontrolling interests was US$42.1m and US$30m during the fourth quarters of 2022 and 2021, respectively, all of which were related to Studio City, City of Dreams Manila, and the Cyprus Operations.

Lawrence Ho, our Chairman and Chief Executive Officer, commented: “Our results for the fourth quarter of 2022 continued to be impacted by the travel restrictions imposed across mainland China and Macau. However, we are encouraged by the increased visitation and volume that we have seen since the travel restrictions between mainland China and Macau were relaxed on January 8, 2023. Our recent performance reinforces our belief in the return of pent-up demand and our view that Macau will continue to develop as a leading international destination for entertainment and leisure.

“We are honored to have been awarded a gaming concession to continue to operate in Macau for the next 10 years. We greatly appreciate the consideration given to our proposal and our investment propositions that we believe will continue to build on our existing strengths in entertainment and non-gaming attractions. We pledge our full support to the sustainable and diversified development of the tourism and leisure industry in Macau, and will continue to work with the Macau government, the community, and stakeholders to contribute to the city’s development as a leading global tourism destination.

“Gaming volumes in the Philippines have reached close to pre-pandemic levels, and volumes in Cyprus have exceeded those we had seen pre-pandemic. We are optimistic about continued growth in the Philippines and Cyprus as international travel normalizes.

“In respect to our development projects, we expect Studio City Phase 2 to open in the second quarter of 2023. 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. The second phase of opening is expected to be in the third quarter. In Cyprus, 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 license to June 30, 2023 and we continue to work with our contractors with a target to open within that timeframe.

“We remain steadfast on reaching our 2030 goals in environmental sustainability. We are monitoring food waste through the Winnow AI technology installed in the employee kitchens and dining areas and continuously adjust menus accordingly. Food waste has reduced by 50% at our employee dining room at City of Dreams Manila due to continued efforts in internal engagement initiatives. Food waste composted on site in both Macau and Manila increased by 30% overall compared to 2021 and usage of the compost for our properties green areas has continued to improve as a result of ongoing adjustments with our landscaping teams. We are also working towards achieving BREEAM certification for the completed construction of Studio City Phase 2 and City of Dreams Mediterranean, following the ‘Excellent’ ratings that we obtained for the design stage of both properties.”

For the quarter ended December 31, 2022, total operating revenues at City of Dreams were US$139.2m, compared with US$244.8m in the fourth quarter of 2021. City of Dreams generated negative Adjusted EBITDA of US$7.8m in the fourth quarter of 2022, compared with Adjusted EBITDA of US$49.7m in the fourth quarter of 2021. The year-over-year decline in Adjusted EBITDA was primarily a result of softer performance in the mass market table games segments, as well as non-gaming operations.

Rolling chip volume was US$850.4m for the fourth quarter of 2022 versus US$3.12bn in the fourth quarter of 2021. The rolling chip win rate was 4.47 per cent in the fourth quarter of 2022 versus 1.68 pe cent in the fourth quarter of 2021.

Mass market table games drop decreased to US$292.2m in the fourth quarter of 2022, compared with US$690.9m in the fourth quarter of 2021. The mass market table games hold percentage was 29.2 per cent in the fourth quarter of 2022, compared with 29.7 per cent in the fourth quarter of 2021.

Gaming machine handle for the fourth quarter of 2022 was US$194.7m, compared with US$421.6m in the fourth quarter of 2021. The gaming machine win rate was 4.5 per cent in the fourth quarter of 2022 versus 3.6 per cent in the fourth quarter of 2021.

Total non-gaming revenue at City of Dreams in the fourth quarter of 2022 was US$30.5m, compared with US$41.6m in the fourth quarter of 2021.

For the quarter ended December 31, 2022, total operating revenues at Altira Macau were US$9m, compared with US$13.3m in the fourth quarter of 2021. Altira Macau generated negative Adjusted EBITDA of US$9.5m in the fourth quarter of 2022, compared with negative Adjusted EBITDA of US$0.1m in the fourth quarter of 2021.

In the mass market table games segment, drop was US$31.9m in the fourth quarter of 2022 versus US$35.4m in the fourth quarter of 2021. The mass market table games hold percentage was 20.6 per cent in the fourth quarter of 2022, compared with 28.1 per cent in the fourth quarter of 2021.

Gaming machine handle for the fourth quarter of 2022 was US$40.8m, compared with US$65.8m in the fourth quarter of 2021. The gaming machine win rate was three per cent in the fourth quarter of 2022 versus 3.6 per cent in the fourth quarter of 2021.

Total non-gaming revenue at Altira Macau in the fourth quarter of 2022 was US$2.1m, compared with US$2.3m in the fourth quarter of 2021.

For the quarter ended December 31, 2022, total operating revenues at Studio City were US$43.4m, compared with US$88.2m in the fourth quarter of 2021. Studio City generated negative Adjusted EBITDA of US$25.3m in the fourth quarter of 2022, compared with negative Adjusted EBITDA of US$0.1m in the fourth quarter of 2021. The year-over-year decline in Adjusted EBITDA was primarily a result of softer performance across all gaming segments and non-gaming operations.

For the quarter ended December 31, 2022, total operating revenues at City of Dreams Manila were US$95.2m, compared with US$83.9m in the fourth quarter of 2021. City of Dreams Manila generated Adjusted EBITDA of US$23.6m in the fourth quarter of 2022, compared with Adjusted EBITDA of US$34.6m in the comparable period of 2021.

The company is licensed to operate a temporary casino, which is 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 December 31, 2022 was US$28.7m, compared with US$22.4m in the fourth quarter of 2021. Cyprus Casinos generated Adjusted EBITDA of US$10.5m in the fourth quarter of 2022, compared with Adjusted EBITDA of US$5.2m in the fourth quarter of 2021.