Melco Resorts is looking towards recovery in the Macau market, which has historically been a major source of revenue for the company. The sector has faced challenges since the Covid-19 pandemic began in 2020.
In its full-year financial report, Melco noted the suspension of testing for travelers from mainland China, Hong Kong, and Taiwan. This change contributed to a remarkable 233% increase in gaming revenue in Macau, with figures soaring from MOP3.5 billion in December 2022 to MOP11.6 billion in January 2023.
Melco's CEO, Lawrence Ho, described the company’s early 2023 performance as “highly encouraging.” He highlighted promising early data from the Chinese New Year holiday period, which lasted from January 22 to February 5. During the peak days of this celebration, the company averaged MOP6 million in gross gambling revenue per day.
Following the New Year, Melco's performance remained stable, with February’s daily averages aligning closely with those of January. Ho expressed optimism, stating, “This recent performance supports our continued 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.”
On January 1, 2023, Melco formally began a new 10-year concession, having been awarded the license in November. Ho remarked on the honor this development brought to the company, appreciating the trust placed in their proposals and investment strategies to enhance existing entertainment and non-gaming attractions.
In the fourth quarter of 2022, Melco reported revenues of $337.1 million, a 30% decrease from $480.6 million in the same quarter of the prior year. Operating costs also saw a decline, decreasing by 8% from $585 million to $537 million. This decline was partially due to a 20.1% drop in casino costs, which fell from $286 million to $227 million. Costs associated with gaming sub-concessions decreased significantly from $14 million to $2 million, while food and beverage costs fell slightly from $22.7 million to $20.9 million, and room costs were reduced from $12.6 million to $11.1 million.
The impact of Covid-19 restrictions on the Macau market was evident; operating losses in Q4 climbed 91.1% from $104.4 million to $199.5 million, with net losses increasing from $159.9 million to $251.9 million.
For the full fiscal year ending December 31, Melco experienced a 32.8% decline in revenue, dropping from $2.01 billion to $1.35 billion. Casino revenue made up most of this total, falling from $1.68 billion to $1.08 billion.
Revenue from food and beverage and room rentals represented a smaller ratio of Melco's overall earnings, with food revenue decreasing from $97 million to $85 million, and room revenue dropping from $157 million to $116 million. Overall, the company recorded an operating loss of $743.1 million and a net loss of $930 million for 2022. Revenue was continuously influenced by pandemic-related restrictions, including significant lockdowns over the summer.
Melco reported that the major decline in operating revenues was largely due to increased travel restrictions enacted in Macau and mainland China during the quarter.
