Melco’s Macau integrated resorts fully booked for Lunar New Year; CEO downplays gaming revenue dip projections
Melco Resorts & Entertainment’s Macau properties are sold out for the upcoming Lunar New Year holidays, CEO Lawrence Ho said earlier today in an interview with Bloomberg.
The executive also downplayed analysts’ warnings that Macau will record a drop in casino revenue this year on the back of China’s slowing economy.
Melco operates the City of Dreams and Studio City integrated resorts on Macau’s Cotai Strip, known to be the Asian equivalent of the legendary Las Vegas Strip, and Altira Macau in Taipa. Mr. Ho told Bloomberg that his properties are gearing up preparations for the upcoming Lunar New Year holidays and that they are already sold out.
This year’s Lunar New Year celebrations will take place from February 5 through February 19. Over the course of festivities, Chinese will have a week off. The Lunar New Year traditionally is the busiest time of the year for Macau as visitors from Mainland China flock to the tiny enclave to celebrate.
Melco’s all three properties are sold out at higher rates than last year, Mr. Ho revealed today. Over the past few years, the company has been working hard to shift its focus from VIP casino players to the so-called mass market of visitors who come to Macau as tourists and casual gamblers. Melco’s three properties around the Chinese special administrative region have introduced multiple attractions and activities aimed to appeal to that particular customer group.
The casino and hospitality giant announced earlier this month that it would cease VIP rolling chip operations at its Studio City casino from January 15, 2020 to further focus its business on mass market entertainment.
The company also awaits approval from the government of Macau to commence construction work on phase two of Studio City. The planned $1.4-billion expansion of the existing property will include more non-gaming attractions, including a massive indoor Hollywood-themed water park. The second phase of the Studio City project will also involve the development of two five-star hotels with 1,000 rooms and suites.
Gaming Revenue Growth
Contrary to many analysts’ projections, Mr. Ho said he believes casino revenue in the popular gambling hub will grow by mid- to high-single digit in 2019. According to a recent Bloomberg survey, the city will record a revenue decline of around 1% this year due to weakening Chinese economy and uncertainties over how and when casino licenses will be renewed in Macau.
Morgan Stanley analysts forecast a 2% drop in gaming revenue. They also believe that the VIP gambling business is volatile as many Chinese high rollers are in the property and manufacturing industries and those are heavily impacted by China’s economic slowdown.
Mr. Ho said today that while “the global economy has started to weaken”, Mainland China “has been aggressively loosening policies, asking banks to facilitate more liquidity to small and median businesses.” The casino executive further elaborated that the overall consumer sentiment “is still okay.”
Macau is expected to see a slight decline in its January gaming revenue, which would end its streak of 29 consecutive months of revenue growth.
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