Melco Mulling Alternatives for Manila Casino Hotel

Posted on: February 27, 2025, 04:49h. 

Last updated on: February 27, 2025, 04:49h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.
  • Melco hired investment banks to examine alternatives for City of Dreams Manila
  • Operator did not say a sale of the casino resort is in the cards

Melco Resorts & Entertainment (NASDAQ: MLCO) announced today that it hired a pair of investment banks to explore strategic alternatives for its City of Dreams Manila casino hotel.

Philippine casinos gaming revenue pandemic
Melco Resorts City of Dreams in Manila. Operator Melco Resorts is considering alternatives for the property. (Image: Melco Resorts)

Lawrence Ho’s gaming company said it retained CBRE Capital Advisors, Inc. and Moelis & Company LLC as financial advisors “to assist in the process of exploring potential strategic alternatives for City of Dreams Manila.” The operator did not mention if a sale of the integrated resort is possible.

No decision has been made regarding any strategic alternative and there can be no assurance that the exploration of potential strategic alternatives will result in any transaction,” said the gaming company in a press release. “Melco does not intend to comment on or provide updates in relation to this process unless and until it determines that further disclosure is appropriate or required.”

Melco Resorts Leisure (PHP) operates City of Dreams Manila.

Analyst Encouraged Melco to Divest Manila Casino

Melco’s announcement that it’s examining potential moves for City of Dreams Manila arrived about a month after a sell-side analyst encouraged the operator to divest its Cyprus and Philippines operations.

In a January note to clients, Vitaly Umansky of Seaport Research Partners said that while City of Dreams Manila generates cash flow for the parent company, it’s not a compelling long-term asset for Melco to retain because it lacks growth drivers and competition in that market is rapidly increasing. He added that City of Dreams Mediterranean — the operator’s casino hotel in Cyprus — has not delivered desired results for Melco.

The statement released today by Melco did not mention the Cyprus integrated resort so it appears for now that the operator’s focus is on doing something with the Manila gaming venue. The Cyprus property has been hindered by the Russia-Ukraine war, indicating it could be difficult to unload that asset prior to the conflict ending.

Melco’s core assets are in Macau where it’s one of six concessionaires. It’s also in the process of building a new casino resort in Sri Lanka.

Why Melco Could Move on From Manila Casino

While Melco hasn’t confirmed it’s actively shopping City of Dreams Manila, the operator could have good reasons to divest that property. Those include generating cash to make a run at a Thailand casino permit.

The gaming company recently declared an intent to bid on a gaming license in that country when politicians formally approve casino gaming, which is widely expected to happen. Analysts believe that should Thailand approve traditional casino hotels, the country will become a top-five gaming market in the world, easily outpacing the Philippines.

Additionally, Melco could use capital generated from a potential sale of the Manila property to bolster its Macau venues, which could be smart because rivals there are sinking significant sums of cash into their integrated resorts.