Lawrence Ho’s Melco Resorts Opens Cyprus Resort
Author:
Scott Lawson
The venture is the very first project in Europe for the Asian casino conglomerate, a firm that has usually focused on Macao, Hong Kong, and Singapore in the past. The €600 million project which opened its doors for the first time this week, involved the construction of a fully equipped luxury integrated resort on the island. Complete with hotels, casino floors, restaurants, and all the amenities that gamblers love to indulge when playing at the world’s most prestigious locations.
The city of Limassol has long been a tourist hotspot in Cyprus, and now features an entirely new attraction courtesy of Melco Resorts. Welcome, the City of Dreams integrated resort and casino.
?dimitrisvetsikas1969/Pixabay
The ambitious project has captured the hearts of European, and indeed global players. The so-called City of Dreams is the largest casino complex of its kind in Europe, and gives the island of Cyprus a completely new story to tell as a tourist attraction. Aiming to take notes of local culture, hospitality and art into the design of the buildings, the City of Dreams promises to mesmerize guests in an effort to assert itself as the main casino in Europe.
Situated in the Southern coastal city of Limassol, the City of Dreams resort will become a tourist hotspot. The current forecasts suggest that the hub will provide an extra 300,000 tourists annually to the island, generating upwards of 700 million euros for the Cyprus treasury each year.
The Melco business, which is publicly traded on the NASDAQ, already has a substantial level of value in its portfolio. With locations in Macau and Manila, the company has been seeking expansion opportunities for some while. The company had previously attempted to establish itself as an integrated resort partner in Japan, but the project was killed by the Japanese government in late 2021. Despite this setback, Melco Resorts have been recovering well in the post pandemic reality, and in the first quarter of 2023 saw its revenues rise to $716 million, a 51% rise from the same time last year.
The Mass Market Affect Driving Macau’s Casino Boom
The halt in casino activities due to the pandemic restrictions led to a mounting pent-up demand within the mass-market segment of Macau’s casino sector. This demand, coupled with eased travel restrictions, created a virtual tidal wave of enthusiastic patrons, not just the affluent VIPs, but also the average players who enjoy the thrill of the gaming tables. This sudden influx of mass market gamers in Macau helped the city regain its status as the gambling hub of Asia and set the stage for an accelerated recovery for its constituent casinos.
Further aiding this recovery was the Macau government’s slew of incentives to attract mainland Chinese tourists back to the island. These tourists form the majority of Macau’s mass-market clientele, and their return was instrumental in breathing new life into Macau’s casinos. The revenues of Macau’s casinos bounced back significantly faster than anticipated with the mass-market segment – traditionally a high-margin business – acting as the catalyst.
The casinos’ strategy to diversify their offerings whilst investing in entertainment, dining, and shopping, helped them attract a wider demographic. The pent-up demand from the mass-market segment not only facilitated a quicker recovery but also ensured a more robust revival of Macau’s casino sector. This has painted a promising picture of resilience and resurgence for the industry.
High Potential for Melco in the 2nd Half of 2023
Turning our attention to Melco Resorts’ stock, the company’s recent ventures into Europe with the City of Dreams in Cyprus suggest a promising future. Given the stock’s solid performance after Q1 2023 and the company’s ambitious growth plans, there’s reason for optimism.
Assuming a modest growth rate of 7% year-on-year, Melco could potentially see its annual revenue climb to $1.5 billion by Q4. This projected growth could substantially enhance the company’s bottom line and improve the stock’s performance. With the anticipated success of the City of Dreams in Cyprus, Melco’s EPS could reach an estimated $0.75 by the end of the fiscal year, implying significant growth and an increased return for investors.
Beyond these near-term prospects the company’s strategy of diversifying its resort offerings holds long-term potential. The integration of non-gaming activities within its resorts could provide a steady stream of revenue even amidst potential regulatory changes in the gambling sector. Melco Resorts’ stock presents a considerable upside for investors, and the mix of consistent growth and a history of resilience makes this company a strong bet for success in the future.
