A little more than a week ago, we reported on the fact that Macau is seeing a casino resurgence that few expected, and even fewer expected would be so robust. Though there are numerous factors in play contributing to Macau’s recent successes, one of the biggest factors is that the Chinese government has stopped readily meddling in what happens in the special administrative region.
Now being seen as a freer, liberal environment, many of the high-rollers that had been staying away from the South China resort city are flocking back. This time, it was China-based Melco Resorts & Entertainment reporting much better than expected earnings through the first 3 months of the year.
If you are not familiar with the Melco Resorts & Entertainment, that is probably because you are more familiar with the company’s old name, Melco Crown Entertainment. The company recently changed its names, and along with that name change came a change of fortunes, so to speak. The two Melco casinos located in Macau are known as City of Dreams and Altira Macau.
Since the end of February, both sites have been consistently reporting higher than expected revenues. The revenues are being brought in from much more than the casino floor alone, too. Melco reported strong performances from the casino, food services, and various other amenities. With all of this being said, there was mention made of the VIP aspect of Melco’s offering, which is not performing as strongly as anticipated.
What today’s earnings report does is complement perfectly the Q1 earnings reports from other entities, like Las Vegas Sands Corp. and MGM Resorts Ltd. Both of the aforementioned companies reported their earnings last week, and both of those reports were far better than anticipated.
Perhaps an even bigger takeaway from the last few week’s worth of financial reporting is the fact that the Asian market, generally speaking, seems to be catching fire. Though Macau has existed as a gambling destination for some time now, we are hearing more and more about gambling destinations popping up elsewhere across Asia.
Earlier this year, Japan announced that they are in the process of building the legal framework within which the nation’s first casino resort might operate. The Philippines have also laid out plans to positons some large-scale resorts in towns and cities where tourism is huge. All things considered, it seems as though Asia is really beginning to see just how lucrative casinos can be. Gambling has long been seen as a social ill in many Asian societies, however that seems to be changing at an increasing rate. As the year carries on, we will continue to closely watch the financial performance of Macau casinos in order to see if this is just a fluke, or if it is the beginning of a larger trend of upbeat performance. Melco had performed particularly well in March, but it seems as though a trend is forming because April’s earnings were nothing to scoff at either.