GGRAsia – Studio City Phase 2 opening 2Q23, in stages: Lawrence Ho

Studio City Phase 2 opening 2T23, in stages: Lawrence Ho

Melco Resorts and Entertainment Ltd plans to launch the second phase of its majority-owned Studio City casino resort in Cotai only in the second quarter of 2023. The full opening of this phase is expected to take place in stages.

The information was provided by the company’s Chairman and CEO, Lawrence Ho Yau Lung (file photo), speaking during the group’s earnings call after its second quarter results released Thursday.

“Construction of Studio City Phase 2 is progressing well,” despite the challenges posed by restrictions related to the Covid-19 pandemic, Mr. Ho said. opening, and are currently planning a gradual opening, starting in the second quarter of 2023″.

The company had previously stated it planned to begin operating the second phase during this calendar year.

The Studio City extension is expected to have 900 rooms shared between two luxury hotel towers. The “W Macau – Studio City” is expected to have 557 rooms, including 127 suites.

During the conference call, Melco Resorts management indicated a probable expenditure of US$250 million for the completion of the second phase of Studio City: the majority would be spent this year.

According to a memo released by brokerage Sanford C. Bernstein Ltd after the conference call, the casino operator had previously said it planned to “use a large portion of existing staff” to run the second phase of Studio City. “But there will be further increases in personnel costs once Phase 2 is fully operational,” the analysts wrote analysts Vitaly Umansky, Louis Li and Shirley Yang.

All eyes on the Party Congress

Mr Ho admitted on the conference call that this year’s summer trading period had been “dreadful in Macau” given a recent community outbreak of Covid-19.

The outbreak, which began on June 18 and took authorities more than a month to bring under control, has seen a 12 day stoppage in July of the city’s casinos as a precaution, as well as tightened travel rules between Macau and neighboring Zhuhai in China’s Guangdong province.

“We’re coming out of it slowly and gradually,” Mr. Ho said. [period].” It was a reference to a festive season in mainland China encompassing the country’s National Day on October 1. In pre-pandemic times, the season was a peak time for Macau’s casino and tourism industries.

The boss of Melco Resorts pointed out that an important event to keep in mind is the upcoming National Congress of the Communist Party of China (CCP), scheduled for the second half of this year, probably in October. According to several analysts, it should pave the way for a third presidential term for Xi Jinping, an unprecedented event for the People’s Republic of China.

“Everyone is watching the Communist Party congress throughout October to see other catalysts and other signs,” Ho said.

Melco Resorts management stressed that a recovery in Macau’s gaming market would take time, likely becoming more visible in the last quarter of 2022. One issue mentioned was the need for accelerated outbound visa issuance for Mainland Chinese residents wishing to come to Macau. .

During the conference call, analysts also asked about a possible streamlining of the Melco Group’s corporate structure. Mr. Ho was also asked about any steps taken by management to address investment risks of Melco Resorts and related entity Studio City International Holdings Ltd on a provisional list – compiled by the US Securities and Exchange Commission (SEC) – of Chinese companies at risk of delisting from US stock exchanges.

Melco Resorts is listed on the Nasdaq and Studio City International Holdings on the New York Stock Exchange.

Mr Ho said the group was looking at potential solutions, including returning Melco Resorts to the Hong Kong Stock Exchange, where it was formerly listed. “We still have time if we needed to do anything else. So we’re pretty comfortable on that,” he said.

Mr. Ho added: “The main objective is to dig us and the other five operators out of the hole that Macau has been in for three years.”