Melco Resorts & Entertainment Limited, a prominent player in the integrated resort sector in Asia and Europe, is currently assessing various strategic alternatives for its Philippine venture, City of Dreams Manila. This review is part of a broader strategy to realign Melco’s asset portfolio in response to changing market dynamics and corporate objectives.

Exploring new opportunities:

As stated in the company’s press release, Melco has engaged the expertise of CBRE Capital Advisors, Inc. and Moelis & Company LLC to guide the exploration of potential avenues that could enhance the operational and financial trajectory of City of Dreams Manila. This exploration is driven by an understanding that no definitive course of action has been decided upon, and there is no certainty that this process will result in any substantial transaction. Melco has stated that it will not provide public updates or comments about the process until a decisive disclosure is deemed necessary or appropriate.

This strategic evaluation contains forward-looking statements within the framework of the U.S. Private Securities Litigation Reform Act of 1995. These include projections about future economic and market conditions in Macau, the Philippines, and Cyprus, among others. Such statements are inherently subject to risks and uncertainties, including but not limited to, economic fluctuations, changes in capital and credit market conditions, and regulatory changes in gaming laws, particularly the amended gaming law in Macau.

Analyst perspectives and market context:

The review of strategic alternatives for City of Dreams Manila comes shortly after industry analysts highlighted the challenging growth dynamics in Manila due to increasing competition and the underperformance of the Cyprus location, influenced by regional geopolitical tensions. Analysts suggest that reallocating resources from these markets could support Melco’s investments in more lucrative opportunities, such as the potential expansion into Thailand and the complete acquisition of Macau’s Studio City.

According to Inside Asian Gaming, Vitaly Umansky of Seaport Research Partners emphasized the strategic rationale behind potential divestments, stating, “Outside Macau, the Philippines (City of Dreams Manila) continues to generate cash but lacks real growth dynamics due to increasing Manila competition, while Cyprus has been a disappointment partly due [to the conflicts in] Russia and Israel.”

Lawrence Ho, Chairman and CEO of Melco Resorts, expressed his enthusiasm about the prospect of entering the Thai market, describing it as a “generational opportunity.” The Thai government’s recent move towards casino liberalization has intensified interest among global casino operators. Melco has already established a representative office in Bangkok and is actively studying the evolving regulatory landscape to strategize potential investments that align with its new asset-light business approach.

The strategic review and potential divestment from the Philippine and Cyprus markets are indicative of Melco’s shift towards capitalizing on more promising opportunities. This pivot is aimed at enhancing shareholder value through a strategic realignment of assets, emphasizing efficient capital deployment and strategic partnerships, especially in emerging markets like Thailand.