Casino operator Melco Resorts & Entertainment (MRE) lost over $368m in the second quarter of 2020 as COVID-19 choked its casinos in Macau, Manila and Cyprus.
Figures released Thursday show MRE generated revenue of just under $178m in the three months ending June 30, a nearly 80% decline from Q2 2019. The company booked negative earnings of $156.3m versus last year’s $448m earnings gain and a net loss of $368.1m versus a $101.8m profit.
MRE’s performance was slightly worse than the $364m loss in Q1, during which the company was forced to shut its Macau casinos for 15 days due to COVID. All Macau casinos have since struggled mightily due to travel restrictions on the Chinese mainland, which still haven’t been completely lifted.
MRE’s Macau casinos suffered the same dramatic VIP turnover declines as the overall market, while the individual MRE casinos experienced wildly different luck in dealing with the few VIPs that did show up. City of Dreams and Altira Macau reported VIP win rates of 6.13% and 6.19%, respectively, around twice the upper end of the expected range. But Studio City’s win slumped to just 0.17%.
Mass market table games also reported drastic volume declines across the board, and while City of Dreams’ mass win rate was essentially flat, the other properties weren’t as fortunate. Altira’s mass win was cut in half to 11.3%, while Studio City fell seven points to 22.2%.
The net result was negative earnings of at City of Dreams (-$70.3m ), Altira (-$19.4m) and Studio City (-$42.3m). Only the slots-only Mocha Clubs segment was in the black, posting earnings of $4.4m, although this was down from $5.3m the previous year.
In the Philippines, City of Dreams Manila’s revenue slumped 96% to just $7.2m, resulting in negative earnings of $22.6m. Manila’s casinos were ordered closed in March and have yet to reopen, although signs are that their reopening may be imminent.
In Cyprus, MRE’s temporary and satellite casino revenue fell 84% to $3.5m and generated negative earnings of $6m. The properties generated no VIP revenue as turnover was a mere $200k and win rate was -23.1%, while mass table win was cut in half. Only a middling slots performance saved the Cyprus ops from an even worse showing.
MRE CEO Lawrence Ho has been busy shoring up the company’s finances, suspending the dividend program and raising cash to boost its balance sheet. Despite the setbacks, Ho said MRE was plowing ahead with expansion of Studio City and reaffirmed the company’s commitment to pursuing a Japanese integrated resort license.
Speaking on the analyst call, MRE execs said there were still days in which you could walk through a Macau casino and “find less than 20 people” on the gaming floor. And while Macau visitation is slowly rising, MRE is focused more on premium mass than ‘base’ mass, so it claims it doesn’t need the “big volumes” that some of MRE’s competitors need to recover from Macau’s long slump.
