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China – Melco hopeful of signs of recovery by mid-March

By - 26 February 2021

Melco Resorts is expecting to see signs of recovery by mid-March, according to Lawrence Ho, Chairman and CEO, who believes border with mainland China could be back to normal within two to three months.

Mr. Ho said: “We remain optimistic on the recovery in Macau and continue to expect increased visitation in the near-term. Hopefully sometime in Q2, maybe the end of Q2, we’ll see some normalisation.”

Total operating revenues for the fourth quarter of 2020 were US$0.53 billion, representing a decrease of approximately 64% from US$1.45 billion for the comparable period in 2019. The decrease in total operating revenues was primarily attributable to softer performance in all gaming segments and non-gaming operations as a result of the COVID-19 pandemic, which resulted in a significant decline in inbound tourism throughout 2020 which continued through the fourth quarter.

Operating loss for the fourth quarter of 2020 was US$144.8 million, compared with operating income of US$173.4m in the fourth quarter of 2019.

Melco generated Adjusted Property EBITDA(1) of US$53.4 million in the fourth quarter of 2020, compared with Adjusted Property EBITDA of US$409.8 million in the fourth quarter of 2019.

Net loss attributable to Melco Resorts & Entertainment Limited for the fourth quarter of 2020 was US$199.7m, or US$0.42 per ADS, compared with net income attributable to Melco Resorts & Entertainment Limited of US$68.1m, or US$0.14 per ADS, in the fourth quarter of 2019. The net loss attributable to noncontrolling interests during the fourth quarter of 2020 was US$35.1m and the net income attributable to noncontrolling interests during the fourth quarter of 2019 was US$12.7m, all of which was related to Studio City, City of Dreams Manila, and the Cyprus Operations.

Lawrence Ho, Chairman and Chief Executive Officer, said: “COVID-19 and the subsequent travel restrictions continue to have a significant negative impact on our operating and financial performance. Despite these challenges, our integrated resorts experienced a moderate recovery in business levels during the fourth quarter.

“Despite the nationwide resumption of issuance of Individual Visit Scheme visas by China in September 2020, our operations continue to be impacted by significant travel bans, restrictions, and quarantine requirements imposed by the governments in Macau, Hong Kong, and certain provinces in China on visitors traveling to and from Macau, and such bans, restrictions and requirements have been, and may continue to be, modified by the relevant authorities from time to time as COVID-19 developments unfold. Additionally, health-related precautionary measures remain in place at our properties in Macau, which could continue to impact visitation and customer spending.

“Our Philippines casino gaming operations were closed due to the enhanced community quarantine for the entire island of Luzon, including Metro Manila, which began on March 16, 2020 and was extended to November 30, 2020. However, as permitted by PAGCOR, since June 19, 2020, City of Dreams Manila has conducted a dry run/trial run of its gaming and hospitality operations with a limited number of participants strictly adhering to the new guidelines on social distancing and hygiene and sanitation procedures imposed by the government of the Philippines. The PAGCOR-sanctioned dry run/trial run, which aims to address all potential operational concerns to achieve a seamless re-opening for City of Dreams Manila, is expected to continue until such time that PAGCOR provides a formal notice that City of Dreams Manila can resume operations again on a regular basis in the future.”

The COVID-19 outbreak has also impacted the construction of the Studio City Phase 2 project and the progress of construction work on the City of Dreams Mediterranean project.

Mr. Ho said: “We currently expect additional time will be needed to complete the construction of these projects. Previously, under the gaming license granted by the government of Cyprus to our subsidiary Integrated Casino Resorts Cyprus Limited, we were required to open the City of Dreams Mediterranean project by December 31, 2021. In February 2021, the government of Cyprus extended the opening date requirement to September 30, 2022.”

“While impacted by COVID-19, Melco remains committed to its global development program. In Macau, construction on the expansion of Studio City is progressing. Upon completion, Studio City will offer approximately 900 additional luxury hotel rooms and suites, one of the world’s largest indoor/outdoor water parks, a Cineplex, fine-dining restaurants, and state-of-the-art MICE space. Also in Macau, our facility upgrade works at City of Dreams are ongoing, with the fully renovated Nϋwa nearing completion. In Europe, we are developing City of Dreams Mediterranean which, upon completion, will be Europe’s largest integrated resort with more than 500 luxury hotel rooms, approximately 10,000 square meters of MICE space, an outdoor amphitheater, a family adventure park, and a variety of fine-dining outlets and luxury retail.

“Turning to Japan, I want to highlight our continued commitment to bring to the country a world-leading IR. We believe our focus on the Asian premium segment, a portfolio of high-quality assets, devotion to craftsmanship, dedication to world-class entertainment offerings, market-leading social safeguard systems, established track record of successful partnerships, culture of exceptional guest service, and a continuing commitment to employee development puts Melco in a strong position to help Japan realize the vision of developing an exceptional IR with a uniquely Japanese touch. Due to COVID, the process in Japan has been delayed and remains complex but has renewed momentum as jurisdictions are again initiating RFP processes. We will continue to be patient as we evaluate the landscape to ensure that Melco pursues the right opportunity that takes advantage of Melco’s core strengths to drive strong value creation.”

Caption: Lawrence Ho

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