Melco announces strategy shift; Macau stays key to recovery
Melco Resorts & Entertainment is shifting its strategy.
Key points:
– Melco to focus on managing gaming operations rather than building new resorts
– Shares have fallen 20.6% amid fallout from junket restrictions
– Capital spending for 2025 set at $415m, with Macau remaining a priority
Melco Resorts & Entertainment has announced a shift in strategy as it seeks to grow its footprint in Macau while limiting capital exposure. The company will prioritise operating casino floors inside integrated resorts, rather than constructing large-scale properties of its own.
This change in direction comes after a year marked by uncertainty in the sector. A clampdown on junket operators by Chinese authorities has led to a notable fall in VIP spending, with Melco’s share price falling by more than 20% over the past twelve months. Even so, Melco appears confident that ongoing investments and a more flexible structure can help to turn the tide in 2025.
Macau remains central to Melco’s business model, with properties such as City of Dreams and Studio City continuing to drive revenue. Both venues have undergone renovation efforts in recent months, aimed at attracting a broader base of high-value players directly, rather than relying on external promoters.
The company has earmarked $415m in capital expenditure for the year ahead. Of this, around $290m will be directed towards enhancing its operations in Macau, including the upgrading of Studio City’s facilities. A further portion will support development activity in Sri Lanka, where Melco is involved in a joint project to furnish a gaming floor and luxury hotel.
Alongside these upgrades, Melco has stated its intention to reduce debt levels and maintain a healthy cash position. With a cash balance of over $1bn at the end of 2024, it remains one of the better-capitalised players in the region.
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