Cyprus – City of Dreams Mediterranean generating revenue as Macau drains profits for MelcoBy Lewis - 24 August 2022
Set to open in the summer of 2023, City of Dreams Mediterranean was a bright note in the overall gloom of Melco Resorts and Entertainment’s Second Quarter Earnings Call. Total operating revenues at Cyprus Casinos for the quarter ended June 30, 2022 were US$21.7m, compared to US$10.0m in the second quarter of 2021. Cyprus Casinos generated Adjusted EBITDA of US$5.6m in the second quarter of 2022, compared with negative Adjusted EBITDA of US$0.8m in the second quarter of 2021.
The year-over-year increase in Adjusted EBITDA was primarily a result of the relaxation in COVID-19 related restrictions in Cyprus while casinos were temporarily closed for 1.5 months during the second quarter of 2021 due to government mandated restrictions.
The picture is very different in Melco’s stronghold market of Macau in which Covid-19 restricted imposed across mainland China and Macau have inflicted heavy losses on the international casino operator.
Total operating revenues for the second quarter of 2022 were US$296.1m, representing a decrease of approximately 48 per cent from US$566.4m for the comparable period in 2021. The decrease in total operating revenues was primarily attributable to heightened border restrictions in Macau and mainland China related to COVID-19, which led to softer performance in the rolling chip and mass market table games segments.
City of Dreams Manila also bucked Melco’s overall downward trend, posting revenues of US$111.7m, compared to US$52.7 million in the second quarter of 2021. City of Dreams Manila generated Adjusted EBITDA of US$49m in the second quarter of 2022, compared with Adjusted EBITDA of US$13.3m in the comparable period of 2021.
However, it’s the fledgling City of Dreams Mediterranean that’s seeking to establish a player base ahead of the launch of the Integrated Resort mid-summer next year that’s drawing the interest of European casino operators. What impact will such a resort have upon the mass and VIP market that has traditionally headed west from the Middle East for its entertainment?
Rolling chip volume was US$0.1m in the second quarter of 2022, compared with US$1.5 million in the second quarter of 2021. The rolling chip win rate was negative 6.12 per cent in the second quarter of 2022, compared to negative 4.40 per cent in the second quarter of 2021. The expected rolling chip win rate range is 2.85 – 3.15 per cent. Mass market table games drop was US$31.4m in the second quarter of 2022, compared with US$14.4m in the second quarter of 2021. The mass market table games hold percentage was 19.5 per cent in the second quarter of 2022, compared to 15.6 per cent in the second quarter of 2021.
Gaming machine handle for the second quarter of 2022 was US$315.9m, compared with US$161.0m in the second quarter of 2021. The gaming machine win rate was 5.0 per cent in the second quarter of 2022 versus 4.9 per cent in the second quarter of 2021.
Melco 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, Melco will continue to operate the satellite casinos while operation of the temporary casino will cease.