Asian gaming operator Melco Resorts has highlighted the green shoots in Macau as losses have increased 28.7% in the past year to $743.1m (PS623,0m/EUR701.7m).
Macau’s recovery – historically the biggest source of revenue for the company – will be an enormous boost to its business. It has had a difficult few years following the Covid-19 Pandemic of 2020.
The company stated in its full-year financial report that testing had been suspended for all visitors to Macau who were coming from Hong Kong, mainland China and Taiwan. The gaming revenue in Macau increased by 233% from MOP3.5bn to MOP11.6bn this January.
Pent up demand
Lawrence Ho, Melco CEO, described Melco’s performance so far in 2023 as “highly promising”.
Ho stated that the gross gaming revenue reached 6 million pesos per day during peak Chinese New Year days, from 22 January through 5 February.
The business is doing well post-New Year. In February, the average daily volume was in line with that of the preceding month.
Ho said, “This performance confirms our belief that Macau is a destination of choice for leisure and entertainment in Asia.”
Melco officially started its new 10-year license on 1 January 2023 after being awarded the new licence back in November. Ho stated that the company was “honored” by this new development.
We are grateful for the attention given to our proposals and investment ideas that, we feel will help us to continue building on our strengths in non-gaming and entertainment attractions.
In the period from January to December of last year, the business generated US$337.1m. This is a drop of 30% compared with $480.6m.
Operating costs and expenses of the company also decreased, falling by 8% from $585m in 2011 to $537m.
The casino cost reductions of 20.1% from $286m down to $227m were a major factor. The cost of the sub-concession for amortisation gambling also decreased, falling from $14m down to $2m. Food and beverages costs dropped from $22.7m down to $20.9m, and room costs fell from $12.6m up to $11.1m.
Operating losses rose 91.1% in Q4 from $104.4m up to $199.5m. Net loss increased from $159.9m down to $251.9m.
Results for the full year
The revenue for the entire year fell by 32.8%, from $2.01bn down to $1.35bn in the 12 months ending on 31 December. Casino revenue was the largest contributor to this year’s revenues, falling from $1.68bn in the prior period to just $1.08bn.
Melco’s total revenue was dominated by food and beverage revenue, but room revenue also contributed a small amount. Over the same period, food and beverage revenues dropped from $97m (in revenue) to $85m. Rooms revenue also fell over this time from $157m ($116m), to $116m ($115m).
It equates to an operating deficit of $743.11m and a loss net of $930m.
The Covid-19 Pandemic has caused restrictions to continue to affect revenue, including lockdowns on a large scale during the summer.
Melco reported that the decrease was due to increased travel restrictions in Macau, mainland China and Hong Kong during the third quarter.