Entertainment <\/p>\n
Last month, Melco Resorts & Entertainment announced it was \u201cevaluating potential strategic alternatives\u201d for City of Dreams Manila, which could mean selling the Philippines resort. Is the billion-dollar price tag too high?<\/strong><\/p>\n Melco wants to free up capital for entry into Thailand, which is expected to pass casino legislation this year.<\/p>\n In a\u00a0fourth-quarter earnings call<\/a>, Melco chairman and CEO Lawrence Ho described an \u201casset-light\u201d strategy that will \u201creallocate our resources\u2026 and support our long-term growth initiatives\u201d.<\/p>\n That clearly refers to Thailand, the next holy grail in gaming.<\/p>\n Some analysts predict a Thai gaming industry could supplant Singapore as the world\u2019s third-largest gaming market after Macau and Vegas.<\/p>\n In 2024, Singapore reaped $4.5 billion (\u00a33.7 billion\/\u20ac4.04 billion) in gross gaming revenue with just two integrated resorts (IRs), Marina Bay Sands and Resorts World Sentosa. Thailand plans five IRs or \u201centertainment complexes\u201d in the first phase of development. Officials have already chosen four locations: Chiang Mai, Phuket, Chonburi and Bangkok. The latter may host two resort complexes.<\/p>\n To bid on a resort licence, would-be investors must demonstrate a minimum of $288 million in registered capital and commit at least $3 billion to development.<\/p>\n For Melco, which operates IRs in Macau and Cyprus as well as the Philippines and is currently developing a resort in Sri Lanka, Manila<\/a> is the most dispensable asset.<\/p>\n \u201cIf you look at the Melco portfolio, there are very few options to open up liquidity for Thailand,\u201d says Ben Lee, managing partner with Macau gaming consultancy IGamiX<\/a>.<\/p>\n Sri Lanka will not open until the third quarter of 2025. And Cyprus \u201cstill has not hit its stride for a lot of reasons\u201d, says Lee. (City of Dreams Mediterranean opened in 2023, shortly after Russia attacked Ukraine and amid the global pandemic recovery. The Gaza conflict also hindered tourism to Cyprus.)<\/p>\n But a sale of Manila could be complicated. Belle Corp<\/a>, the leisure and gaming arm of SM Investments, \u201cowns the land, the buildings and the licence\u201d, Lee points out. \u201cSo all Melco can really sell is the management rights [and] maybe the assets within the casino. And even then, the sale would be subject to approval and acceptance by both [Philippine regulators] and Belle.\u201d<\/p>\n \u201cOutside Macau, the Philippines continues to generate cash [for Melco] but lacks real growth dynamics\u00a0due to increasing Manila competition,\u201d said Vitaly Umansky of Seaport Research<\/a> in comments in January. Meanwhile, \u201cCyprus has been a disappointment.\u201d \u00a0<\/p>\n Belle Corp is the logical buyer for Melco\u2019s Manila stake.\u00a0But so far, it has taken a pass<\/a>.<\/p>\n In a 3 March filing to the Philippine Stock Exchange,\u00a0Belle said it was \u201cnot in a position to confirm the accuracy of the statements about a possible exit of Melco from the Philippines\u201d. It added coyly, \u201cany buyout of Melco\u2019s interests in COD Manila is not part of Belle\u2019s plans for the immediate future\u201d.<\/p>\n That seems to leave the door open for a deal, if the price is right.<\/p>\n A teaser released last month by Melco\u2019s financial advisors, CBRE and Moelis Company, included no sale price. But a source told Bilyonaryo Business News<\/a> that Ho\u2019s Nasdaq-listed firm wants $1 billion for its share of the complex. The IR, which opened in 2014 in the Entertainment City casino district, cost that much to build.<\/p>\n The price may be too rich even for the Sy family, which owns SM Investments and Belle Corp. In 2024, the sibling dynasty had a collective net worth of $13 billion.<\/p>\n The City of Dreams Manila teaser touted its \u201cstrong position in an attractive high growth Philippine gaming market, with significant growth potential and upside opportunities\u201d.<\/p>\n The resort enjoyed a strong fourth quarter<\/a> due to better performance in the rolling-chip and mass table segments. Total GGR was up 14% year-on-year to $149 million thanks to a 109% increase in VIP gaming revenues. Total non-gaming revenue came to $29.9 million, compared with $30.3 million in fourth-quarter 2023.<\/p>\n City of Dreams Manila offers three luxury hotel brands, including a plush Nobu Hotel, as well as \u201cexquisite gastronomic experiences\u201d in 20 restaurants \u201cand a \u201cspacious retail boulevard\u201d. The resort includes the world\u2019s first DreamWorks-inspired family entertainment centre, DreamPlay, 18,000 square metres of gaming floor and 2,300 square metres of MICE space.<\/p>\n But emerging Asian markets \u2013 including Thailand, Japan and the United Arab Emirates \u2013 could be a threat to the local gaming industry.<\/p>\n \u201cIn 2024, about 35.5 million tourists entered Thailand, while in the Philippines we have about six million. That\u2019s a big threat,\u201d Alejandro Tengco, head of the Philippine Amusement and Gaming Corp, recently told the Manila Standard<\/a>. \u201cWhy would I go to the Philippines to gamble when I\u2019m already in Thailand?\u201d<\/p>\n Other global gaming operators have also set their caps for Thailand. Is it all it\u2019s cracked up to be?<\/p>\n \u201cI\u2019m still in a wait-and-see on Thailand,\u201d says gaming analyst Brendan Bussmann<\/a>, managing partner at B2 Global. \u201cIt has fabulous potential to be one of Asia\u2019s leading markets, one that could compete with Singapore, Manila and the UAE.<\/p>\n \u201cBut it\u2019s going to come down to one thing \u2013 the regulatory market. Until that\u2019s determined and finalised, you won\u2019t fully know where the market potential can be.\u201d<\/p>\n Melco may have the right stuff for the jurisdiction when entertainment complexes are approved. According to The Thaiger<\/a>, last year Melco\u2019s global resorts saw 21 million footfalls. And Ho contends that Melco guests stay 30% longer and spend three to four times more money than guests at rival resorts.<\/p>\n \u201cTheir far-ranging global footprint denotes their ambition and appetite for new markets,\u201d says Lee. \u201cMelco has been the most aggressive\u00a0and successful in developing entertainment that works for the Asian market.\u201d<\/p>\n<\/p><\/div>\nMelco first on the ground in Thailand <\/h2>\n
City of Dreams Manila not an easy sell<\/h2>\n
Belle won\u2019t dance \u2013 yet<\/h2>\n
The \u201cupside\u201d of City of Dreams<\/strong><\/h2>\n
Thailand: Land of \u201cfabulous potential\u201d<\/h2>\n