Casino operator Melco Resorts & Entertainment experienced a decline in market share in Macau in 2023, which was a contributing factor in the decision to change management, according to chairman and CEO Lawrence Ho.
Ho told investors last week that the casino company “cut too deep” regarding operational overhead amid its emergence from the Covid-19 pandemic in Macau.
“Clearly we lost share in 2023,” Ho said. “I guess we continued to cut too deep to the bone in terms of our operating expenditures and how we conducted our business.”
In an earnings call, the executive said Melco’s Macau properties carried trimmed workforces into the post-pandemic environment, noting reduced resort services hampered the company’s product and prompted some visitors to take their business elsewhere – which included coveted VIPs and premium mass gamblers.
The loss was “part of the reason” for its management change.
Speaking on the departure of former chief operating officer David Sisk, Ho said Sisk “did a great job for us during Covid in terms of trying to survive.”
Meanwhile, the current goal for the gaming operator “is to really reclaim the crown in the premium mass sector.”
Last week, Melco announced the shake up of its leadership with new appointments including Alidad Tash, executive vice president of analytics and gaming operations for Macau, Stefan Bollhalder as vice president of hotels and food and beverage for City of Dreams, Macau, and Linda Switzer as vice president of retail.
Melco shares on the Nasdaq are down nearly 49% over the past year from USD13.87 to close at USD7.12 Friday.
2023 revenues
The group reported total operating revenues of USD3.78 billion versus USD1.35 billion in the prior year. The increase in total operating revenues was primarily attributable to the improved performance in all gaming segments and non-gaming operations following the relaxation of Covid-19 related restrictions in Macau in January 2023 and the opening of Studio City Phase 2.
However, Melco still reported a net loss of USD277.5 million for the year.
No immediate plans for expansion
Ho also said there are currently no immediate plans for expansion into new markets like the United Arab Emirates, as the company is still recovering from the impact of the pandemic.
Instead, Melco is exploring smaller potential projects, yet also considering larger projects like those in the UAE and Thailand in the longer term.
The CEO said exploring new markets is a lengthy process, as evidenced by their experience in pursuing a potential project in Yokohama, Japan. Staff Reporter
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