The chairman and CEO of Melco Resorts and Entertainment said that the acquisition of a 20% stake in Australia’s Crown Resorts is a leap in the global expansion plans of the Macau-based casino operator with Japan in mind.
In a media briefing held yesterday at hotel Morpheus, Lawrence Ho explained the enormous potential of the upcoming Japanese gaming market.
“They have now 35 million visitors per year” and forecasts indicate that visitors to Japan will increase to 80 million in the mid- to long- term. “And many of these visitors will come from Europe and the U.S.”
In that sense, Ho views the Australian play via “the most prestigious gaming and hotels group in the country” in a highly regulated market as a “great step” to compete for a license to operate in Japan, which is the ultimate goal of Melco’s expansion, following projects in the Philippines and Cyprus.
“With this transaction we’ve gone suddenly from three countries to five, because it includes three properties in different Australian cities and also London. So I think from that perspective it really ticks all our boxes.”
Last week, Melco announced that it had purchased a 19.99% stake in Australian gaming operator Crown Resorts for AUD1.75 billion (USD1.2 billion).
Acquiring a share higher than 19.99% would have “required a prolonged approval process with longer regulatory probity reviews,” Ho said yesterday at the press meeting.
Ho noted the group welcomes such “extensive regulatory work,” with him having already been subject to several probity reviews during the Melco Crown partnership with Australian tycoon James Packer, between 2004 and 2017.
Crown Resorts wholly owns and operates integrated resorts in Melbourne and Perth, plus the Crown London Aspinalls. The group is also developing a AUD2.2 billion Barangaroo project in Sydney Harbour with an estimated completion in 2021.
“Because there’s three jurisdictions within Australia and in addition to London, we expect the approval process to take approximately 12 months. After we intend to continue to accrete up our shareholding in the company. It’s a great company and we would love to be bigger shareholders,” Ho said.
Ho thanked his friend James Packer for the opportunity to acquire this share in the group. Asked what role the Australian businessman, who still holds 26% in the company, would have in this new partnership, Ho said without hesitation, “it is really up to him.”
Ho also said that he has known the executive chairman of Crown, John Alexander, and his senior management team since 2004, and was always “very comfortable” dealing with them.
Ho considered that Melco would be able to attract premium or VIP business from China and Asia to the Australian Crown properties, which have focused mainly on local players over the last two to three years, following the crackdown on Crown marketing efforts in China.
Notwithstanding their expansion drive, Lawrence Ho acknowledged that Macau continues to be Melco’s “biggest market.”
Big money comes at a cost.
“The good thing about Macau is that luckily we have the gaming facilities [revenue] which subsidizes non-gaming activities and helps diversify the industry. […] It would be an insult to the government and to Macau not doing it,” he said.
“Even though non-gaming ventures don’t make money, we have to keep doing it. I think of ourselves as an entertainment company as much as a gaming company.”