New development: Bollywood actor Hrithik Roshan (centre) receives a present from chairman of John Keells Holdings Krishan Balendra (right) and Ho (left) during the opening ceremony of ‘City of Dreams’ in Colombo. The project is a US$1.2bil joint venture. — AFP
HONG KONG: Melco Resorts & Entertainment Ltd is in talks to expand its brand beyond Macau, with plans to ramp up an asset-light strategy by teaming up with local partners to co-run multi-billion-dollar casino projects, chief executive officer Lawrence Ho says.
The approach would help the group reduce debt and capture growth opportunities in emerging markets, Ho, who is also Melco’s founder, said in a video interview with Bloomberg News from Colombo.
He is in the Sri Lankan capital to open a casino resort – its first project under the new strategy.
“Having these new opportunities come up, our asset-light strategy allows us to do those and also have management fees and earnings before interest, taxes, depreciation and amortisation (Ebitda) associated with it, without committing serious capital,” Ho said.
He didn’t name the new markets the company is exploring, but said the group may reveal more details about its efforts within the next 12 to 18 months.
Melco has racked up more than US$7bil of debt, the highest among Macau’s six casino operators, after its global expansion was disrupted by three years of Covid curbs in China that limited tourism.
The group is now focusing on reducing its borrowings as Macau’s growth potential has been constrained by Beijing’s crackdown on high rollers and tighter regulations.
Melco is pursuing its asset-light strategy expansion as countries from the United Arab Emirates to Japan and Thailand look to boost tourism by legalising casinos.
The group in February announced plans to explore a sale of its Manila resort to help cut debt and free up capital.
Ho had previously described Thailand’s casino legalisation efforts “a generational opportunity”.
However, Thailand’s plan has stalled after the government withdrew the bill last month amid public opposition and political turmoil. The delay could benefit the group, Ho said, giving the company more time to cut debt and increase capital.
City of Dreams Sri Lanka is a US$1.2bil joint development between Melco and the country’s major conglomerate John Keells Holdings Plc.
Melco has invested about US$125mil and will operate the gaming floors and some accommodations. The project includes 800 luxury hotel rooms and suites, convention facilities and premium retail spaces.
The group also operates a casino resort in Cyprus and is exploring ways to recoup part of its investment, Ho said. Options include replacing some of the initial shareholders’ loans with bank loans or bringing in strategic investors, he added.
Melco posted US$378mil in adjusted property Ebitda for the three months ended June, up 25% year-on-year, and beating analysts’ expectations.
The performance follows a boom in Macau’s non-gaming activities, including concerts and entertainment shows, as well as a bullish stock market in Hong Kong and mainland China.
The company has stepped up its non-gaming offerings in Macau, including the May relaunch of the long-running show, The House of Dancing Water.
The show, which takes place in a 2,000-seat theater, has helped boost footfall by about a third, Ho said, creating opportunities for the group to attract more visitors to its gaming floors.
“The House of Dancing Water has helped a lot on the non-gaming, including packages with hotels and restaurants,” said Ho. — Bloomberg
