Inside Asian Gaming

DECEMBER 2017 INSIDE ASIAN GAMING 29 ASIAN GAMING POWER 50 2 0 1 7 Lawrence Ho CHAIRMAN AND CEO Melco Resorts and Entertainment CHAIRMAN AND CEO Melco International POWER 4,844 LAST 4 SCORE YEAR CLAIMS TO FAME Full authority over portfolio after breakup of Melco Crown partnership with James Packer Positioned in Macau, Philippines, Russia and Europe Oldest surviving son of Stanley Ho 3 For Lawrence Ho, turning 40 has meant taking control. Whether James Packer and Crown Resorts jumped or were pushed, they exited what Mr Ho called “the world’s most successful gaming partnership,” turning Melco Crown into Melco Resorts with Mr Ho’s Melco International the majority shareholder. Melco bought Hard Rock International out of their Cyprus IR and changed the nameplate on Hard Rock Hotel at City of Dreams to The Countdown. Melco Resorts’ reorganization, which saw Chief Operating Officer Ted Chan depart, left Mr Ho with no clear deputy. Yet there’s no sign of him letting up. He’s pledging “whatever it takes” for a Japan integrated resort. He’s considering expansion of Tigre de Cristal in Vladivostok and buying some of Philippine government operator Pagcor’s casinos to supplement City of Dreams Manila. At home, he’s vying to become the face of Macau’s casino industry, succeeding his legendary father, Dr Stanley Ho. With flagship City of Dreams in the shadows of Venetian Macao and Sands Cotai Central, it’s easy to underestimate Melco. With a projected US$1.35 billion in property EBITDA this year, Melco boasts the only non-Sands China IRs on Cotai’s main strip, with City of Dreams at the head and Studio City at the foot. Adjacent to the Lotus Bridge border gate, Studio City is expected to blossom as Hengqin island and its Macau rail connection ramp up. Even without Crown and Hard Rock, Melco has successful partnerships, holding 60% of Studio City and as CoD Manila’s operating partner with local licensee Belle Corp. In Japan, Morgan Stanley’s Praveen Choudhary suggests, “whatever it takes” may translate into accepting a minority partnership. Melco considers entertainment its calling card. It boasts Macau’s top show – the US$250 million House of Dancing Water – plus movie themed Studio City’s Batman ride, sky high figure-eight Ferris wheel and a 5,000 seat arena. For nightlife, CoD has homegrown Club Cubic, Studio City has Ibiza-born Pacha, while Manila has Michael Ault’s Pangaea and Chaos. As renowned architect Zaha Hadid’s Morpheus Tower readies to open next year, Melco plans to replace Crown Towers with a homegrown luxury hotel brand. Those plans highlight that Melco makes risky bets, some successful – though not necessarily delivering returns commensurate with their risks – starting with City of Dreams as the second IR in then-unproven Cotai. And some fizzle, such as Altira with Macau’s best views and uniquely comfortable hotel rooms, towering over Taipa’s forlorn gaming hub. Melco is also not afraid to fix what’s wrong. After opening Studio City two years ago at a cost of US$3.2 billion with mass gaming only, it added VIP rooms and shuttered the heavily promoted House of Magic show. In August, Studio City filed for a potential US IPO, perhaps a shortcut to finding its market value; Mr Ho says Melco and the US hedge funds that own 40% have been far apart on a potential buyout price. Mr Ho acknowledges observations in these pages that Melco properties too often don’t add up to the sum of their frequently stellar parts. That’s true for the company’s equity value as well. Having one vision, Lawrence Ho’s, at the top may help on both fronts.