Melco Resorts CEO Lawrence Ho is untroubled by softer gaming revenues in Macau. On a Q2 earnings call on Tuesday, he expressed optimism about August and the full-year. He also downplayed concerns about the city’s clampdown on illegal money exchanges.
Melco Resorts & Entertainment boss Lawrence Ho isn’t worried about slower gaming revenue in Macau this summer. The city’s casino industry saw upticks in both June and July, but fell short of analysts’ projections.
In a 13 August second-quarter earnings call, Ho attributed the results to vagaries in the calendar.
“This year, the Chinese school holiday started two weeks later,” he said. So… parents want to stay home and make sure that the kids are done with final exams before they travel.
“So, if anything, we’re very positive and optimistic about the future. I think what we’ve seen so far in August is a more typical summer,” Ho told analysts.
Ho also said the city’s new war on illicit money exchanges, which stepped up in June, was expected. “It’s been talked about for over a year now,” Ho said. He acknowledged that the clampdown will have “a bit of an impact in terms of liquidity to players”.
To combat capital flight and money laundering, Macau officials have proposed legislation that would criminalise unauthorised currency exchanges in casinos. Under the plan, the offence would be punishable by up to five years in prison. It may also include a ban from city casinos of two to 10 years.
Melco revenue picture
Melco operates casinos in Macau, the Philippines and the Mediterranean island of Cyprus. The Hong Kong-listed firm posted a 22% hike in Q2 sales to £902.3bn (€1.051bn/$1.159bn), just shy of the £903bn expectations. The increase was pegged to stronger mass-market performance and non-gaming spend and the ongoing return of tourism to Macau.
Operating income for the second quarter was £96.3m, versus £50m during the second quarter of 2023.
“Our strategic initiatives to expand revenue and profitability and drive growth continued to evolve in the second quarter,” Ho said. “We’re investing in people and incorporating enhancements to our properties to provide the best premium experience available in Macau.
“We’ve seen growth in GGR quarter-to-quarter and year-over-year. Our teams are focused on driving continued expansion of our market position. And so, we’re happy heading into the second half of the year. And I believe that we will continue to see growth.”
Will Melco roll the dice in Thailand?
During the call, Ho fielded a question about Melco’s interest in Thailand, where lawmakers are considering a legal casino industry.
“Thailand is a generational opportunity based on our experience with Japan and some of the other jurisdictions,” he said. He added that the ball will likely not starting rolling in Thailand for “a year or so”.
“Anybody will be interested in such an amazing opportunity and we are looking at it. But I don’t think there’s going to be any meaningful amount of money spent on that in the foreseeable future.”
Executive VP and CFO Geoff Davis spoke about headwinds in the Philippines, where Melco operates City of Dreams Manila. He said “increased supply in the market” has caused “a small diversion of some of the trips from guests”.
But “overall” he said, “I still remain very optimistic about Manila…. Strong mass business, increased international capacity and commitment to tourism from the government will benefit us well into the future.”
