Lawrence Ho downplays money exchange crackdown on soft revenues

Melco Resorts Chairman and CEO Lawrence Ho has attributed the recent softness in Macau’s gaming market to factors like the Euro 24 football championships and the delayed start of the Chinese school holidays, rather than the impact of a crackdown on illegal money exchange activities.

In an earnings call with analysts, Ho said some growth in July had been noted notwithstanding softness in June, and observed that August was off to a very good start.

He believed June’s results are likely related to the Euro cup, which lasted from mid-June to mid-July.

These comments come amid concerns that the crackdown on underground money changers, who facilitate the flow of funds from mainland China to Macau’s casinos, could negatively impact Macau’s gaming revenue.

Regarding the money changers, Ho said, “We have seen this in Macau over the years. I think this has been a story 10 years in the making.”

The executive expressed optimism about Macau’s gaming prospects, stating the market has shown a more typical summer performance so far in August. He expects continued growth, buoyed by the completion of upgrade works at Melco’s City of Dreams Macau and Studio City properties.

“If anything, we are very positive and optimistic about the future,” Ho said. “I believe that we will continue to see growth heading into the second half of the year.”

In the earnings call with analysts, Ho noted gaming volumes have steadily improved since mid-July, and he expects the impending completion of upgrade works at both City of Dreams Macau and Studio City to further support growth for the remainder of 2024.

Ho maintained a positive outlook, suggesting the industry’s resilience and the appeal of Macau’s integrated resort offerings would help offset any short-term disruptions.

“Post Covid, we have seen that there was work needed from a maintenance standpoint, and to concurrently reestablish our former premium mass leadership position. That is why we are reinvesting into the gaming floor,” said Ho.

Subject to approvals and the applicable regulations, Melco hopes that by Golden Week, the gaming operator would have “the nicest VIP slot area to open at that time.”

Weak retail sales

At City of Dreams, where the high-end and luxury retailers are located, sales have also been soft in line with the rest of China and Hong Kong.

Ho hopes the Chinese economy will recover, because ultimately the long-term success of any businesses in the Greater China area depends on the health of the Chinese economy.

“Fortunately for Macau, Macau has its unique advantages compared to Hong Kong or, say, Hainan Island. So again, everybody is hoping for the Chinese economy to recover quickly,” he said.

White Gallery Exhibition

City of Dreams is set to have a new exhibition in the fourth quarter, president and managing director Evan Winkler announced in the call.

The exhibition will be held in the White Gallery, which is the part of retail precinct by Nua. The gaming operator expects this to be an incremental driver of traffic.

“If you’ve been there on the weekend, you’ve already seen that we’ve got sports cars in the lobby and that we’ve got concerts on the weekend that have attracted some pretty good crowds,” said Winkler.

Melco’s revenues up 22% y-o-y

Melco’s second quarter total operating revenues were USD1.16 billion, representing an increase of approximately 22% from USD947.9 million for the comparable period in 2023.

The increase in total operating revenues was primarily attributable to the improved performance in the mass market segment and non-gaming operations, led by the continued recovery in inbound tourism during the second quarter of the year.

Melco generated Adjusted Property EBITDA of USD302.8 million in the second quarter of 2024, compared with Adjusted Property EBITDA of USD267.3 million in the second quarter of 2023.

Lawrence Ho, chairman and CEO, commented, “Our strategic initiatives to expand revenue and profitability, and drive growth continued to evolve in the second quarter of 2024. We’ve seen growth in GGR quarter-to-quarter and year-over-year, and our teams are focused on driving the continued expansion of our market position.”