Macau concessionaire Melco Resorts & Entertainment confirmed Tuesday that it is involved in ongoing discussions with the Macau government over proposed adjustments to its non-gaming investment plans but said the company’s overall capital commitment will not change.
Speaking with analysts during Melco’s 2Q23 earnings call, Chairman and CEO Lawrence Ho revealed there were “a lot of negotiations” continuing with the Macau government in the wake of last year’s re-tendering process, which saw all six concessionaires submit detailed investment proposals in winning new 10-year gaming concessions.
Ho had been asked if there was any truth to reports the government was not satisfied with the more comprehensive investment plans concessionaires had since submitted earlier this year – part of their commitment to spend a combined MOP$108.8 billion (US$13.5 billion) on non-gaming attractions and facilities over the next decade.
“What we’re seeing now is that there is a lot of reporting on the operators’ part – monthly reporting, quarterly reporting – [and therefore] a lot of negotiations and discussions around [what we are planning to do],” Ho replied.
David Sisk, Melco’s Chief Operating Officer, Macau Resorts, added, “There are two types of things we are doing related to the tender that was approved for our initial plan. There are certain capital costs that were done for the casino that we are obviously executing on in terms of upgrading the casino or replacing certain items. The other is a collection of non-gaming things which can be in terms of capital or in terms of events, concerts, sporting events – things we are sponsoring.
“Everything we promised the government, we have done and we are executing on. As Lawrence said there is a very significant measurement that goes on, be it a quarterly measurement with the DICJ or MGTO or IPIM, or something we do on a monthly basis. They are monitoring it quite closely, trying to make sure everyone is doing what they are saying, but additionally as we go along there are some things that may not make sense that we said we were going to do back in 2022. [In those instances] we work with the government to go back and make adjustments and slide other things into programs that help us support what the government is trying to do in improving international visitation or the MICE business in Macau.”
Despite these adjustments, Ho said Melco would “stick to the number for the investment proposal that we put in when we got our license last December … we might make changes in terms of events or things we put in, but we will stick to that number.”
Separately, Melco praised the response to its recent residency concert series at Macau integrated resort Studio City. Part of the company’s diversification efforts, Studio City has hosted a total of 34 shows since April featuring Joey Yung, Leon Lai and most recently Aaron Kwok, with analysts citing Macau’s rejuvenated concert scene for helping kickstart a broader recovery.
“If you look at the number of covers we’ve done in our restaurants, the visitation numbers have gone up quite a bit, we’ve seen a lot of impact with our hotel rooms and the packages we’ve sold, and we’ve seen the spending patterns go up considerably with the customers that are coming in, so [the concerts] been a very nice lift for us,” said Sisk.
“I think the level of awareness [of Studio City as a destination] that’s been built now will continue to drive visitation forward as we go into the third and fourth quarters.”
