Melco Resorts Announces Two Japan Non-Gaming Hotels, But Remains Committed to Casino IR
Posted on: October 30, 2019, 03:08h.
Last updated on: October 30, 2019, 03:46h.
Melco Resorts says it will invest JPY 27 billion ($250 million) to build two non-gaming properties in Japan – a hot spring resort in Hakone, near Tokyo, and a ski resort in Nagano.
Melco is one of the frontrunners to win one of the three forthcoming integrated resort (IR) licenses in Japan. The three casino concessions have the attention of the world’s largest casino operators, including Melco, Las Vegas Sands, MGM Resorts, Wynn Resorts, Hard Rock, Galaxy Entertainment, and Genting Malaysia.
The casino giants are trying to woo Japanese lawmakers, and that begins with showing a commitment to the Asian nation. Melco announcing investments in non-gaming hospitality should help the Hong Kong-based group improve its standing in the casino bidding war.
Melco’s billionaire founder and CEO Lawrence Ho announced the projects this week in Tokyo.
Melco Resorts is one of the six licensed casino operators in Macau, the world’s richest gaming hub. It additionally operates an IR in Manila, and has another under construction in Cyprus.
Melco Resorts’ two non-gaming projects are minuscule compared to what the company plans for its Japan casino should it win a license.
Ho announced in September that Melco would be focusing all of its energy on Yokohama, the gaming tycoon saying the city is ideal for such a large-scale development.
Yokohama is our priority,” Ho explained. “The benefit of Yokohama is its proximity to Tokyo, but it’s very much a day-trip market. We are looking to build the world’s biggest IR to make Yokohama a primary city for people to go and stay for two or three days.”
The total investment could be as high as $10 billion. Ho countered critics this week who opined IRs are simply covers for casinos, “The casino portion is only three percent in terms of scale.”
Ho believes his company is ahead of the curve because of its facial recognition technology. “Unlike our competitors, we’ve already developed that system, and we’ll share source code with the Japanese government if we get the license,” he stated.
Melco released its quarterly earnings on Wednesday, and missed the Zacks Consensus Estimate of $0.27 per share by three cents. However, the company surpassed revenue expectations at $1.44 billion – 6.19 percent above analyst forecasts.
The Q3 performance pushed Melco shares down. The stock lost 44 cents on Wednesday, or nearly two percent, to close at $21.96. Ho said he was nonetheless pleased with the three-month performance, and cited all-time high volumes on mass table games and slot machines in his optimism moving forward.
Ho added that he believes the VIP sector in Macau is stabilizing.
“I think, broadly, the VIP market has started to stabilize,” Ho opined. “The gaming market … in Macau is very much driven by the Chinese economy and Chinese policies, and I think the sooner that the trade war has some sort of resolution and the renminbi is more stabilized and stops devaluing, will have positive impacts to Macau.”