Melco expects REM, property upgrades to support growth in second half

Melco Resorts & Entertainment expects its soft-opened REM hotel and a series of property enhancements to support growth in the second half of 2026, as the operator seeks to capture changing tourism demand and strengthen its integrated resort offerings.

Speaking during the company’s earnings call, CEO Lawrence Ho said REM has already begun a soft opening, with its grand opening scheduled for after China’s Golden Week in October. He described the property as a highly differentiated addition to City of Dreams Macau.

REM is set to transform the former 330-room Countdown Hotel, shuttered for renovation since 2021, into about 150 high-end luxury suites. Each suite will exceed 90 square meters, or more than 1,000 square feet, reducing the room count by more than 55% to emphasize space and exclusivity.

“Macau has some of the nicest hotels in the world. So there’s already an oversaturation in the luxury market,” Ho said. “It’s actually more like – it’s unlike anything in Asia, probably in the world. So it’s a very unique product.”

Ho said REM is intended to complement City of Dreams’ existing five-star hotel offerings rather than compete directly with them.

“So I think that complements our 5-star hotel offering very well,” he said. “And so we’re quite excited about REM and also about the rest of the City of Dreams Macau retail revamp.”

The company is also revamping the retail areas at City of Dreams, with management expecting the redesigned space to create a more integrated experience across the property. The project will introduce a curated mix of luxury brands and differentiated offerings, with the company saying the completed revamp will help deliver a full integrated resort experience.

Meanwhile, the gaming operator also opened an 18-table gaming area near the Southwest entrance of City of Dreams at the end of July. Management expects its location along the main Cotai Strip to attract additional visitation, particularly from walk-in customers.

The opening follows the company’s launch of a 15-table gaming area near the Grand Hyatt entrance in October 2025, which it described as a successful example of convenient access to gaming.

The latest expansion comes as the tourism market continues to normalize following softer activity in June and July.

On the impact of the 2026 World Cup on customer activity, President Evan Winkler said the company had been surprised by the extent of the impact, with some gaming customers diverting their time to the sporting event.

“Coming out of that period, as we get into the late July, early August period, I think we’ve seen a reversion to our normality,” Winkler said. “So we’re seeing our customers come back. We’re seeing normal plane volumes.”

Winkler said the company expects operating expenses of about USD3.3 million to $3.4 million when including REM and other activities, with House of Dancing Water now included in the company’s guidance.

Increasing Southeast Asian and Korean visitors

The firm noted that while Macau continues to rely predominantly on the mainland Chinese market, the city is seeing increasing numbers of Southeast Asian and Korean visitors.

“We are seeing more and more Southeast Asian tourists and more Korean showing up in Macau nowadays,” Ho said. “But still, that’s a small portion of it.”

He contrasted Macau’s tourism base with that of Manila, which he said has a large domestic market and a significant Korean visitor segment. Ho also attributed a temporary decline in Chinese visitors to the geopolitical tensions between the Philippines and China, but said arrivals have shown some improvement in 2026 as visa arrangements have eased.

“So I think so far in 2026, we’ve seen a little bit of uptick on that,” he said. “So I think that each market serves its own kind of catchment of areas.”

Ho expects activity to return to normal levels during the second half of the year after what he described as a temporary dip.

Dividend resumption pushed to 2027

The company deferred the resumption of dividends to 2027, opting to utilize cash for opportunistic share repurchases during the first half of 2026.

Chief financial officer Geoffrey Davis announced during the call that the company has pushed back its dividend plans, while prioritizing capital allocation and share repurchases when management considers the company’s shares significantly undervalued.

“We think in 2027, we will be in a position to recommence the dividend without providing any specific target on that,” Davis said. “The intention is to commence the dividend when it can be substantive and meaningful. We’re not interested in a nominal dividend.”

The company said it remains focused on improving efficiency while protecting the guest experience.

Melco reports lower revenue, EBITDA in Q2

Melco Resorts & Entertainment reported USD1.25 billion in operating revenue for the second quarter of 2026, down about 6% from $1.33 billion a year earlier, mainly due to weaker rolling-chip and mass-market table game performance and softer non-gaming operations.

According to its earnings report, Adjusted Property EBITDA fell to $303.8 million, from $377.7 million in the second quarter of 2025. Despite the lower revenue and EBITDA, operating income rose to $127.8 million from $124.7 million, while net income attributable to Melco increased to $22.7 million, or $0.06 per American depositary share, from $17.2 million a year earlier.

Chairman and CEO Lawrence Ho said the company remains confident in Macau’s long-term prospects despite near-term challenges, stressing continued investment in its properties, including the phased opening of REM in the third quarter, which he said would position Melco to capture growing demand.