Inside Asian Gaming

DECEMBER 2018 INSIDE ASIAN GAMING 29 Mark 2018 as a year of revision and consolidation for Lawrence Ho, his first full year running Melco Resorts solo without any remnant of the old Crown Resorts partnership and his second year taking a direct role in day-to-day operations. The choppy ride is emblematic of Melco – Nasdaq listed and controlled by Ho via Hong Kong listed Melco International – complicated but forward thinking, with a penchant for innovation and experimentation, and, if it doesn’t work, a willingness to rip it up and start again. When the Macau government offered Cotai land to operators not named Adelson, Ho was reportedly the only one who said yes. Melco got the City of Dreams site at the head of Cotai’s main north-south spine. It took control of Studio City, envisioned as a TV production center before gaming liberalization, at the foot of Cotai in 2011 and opened the IR in 2015. Each has a Macau light rail station on its doorstep but Melco’s strategy for these assets is, like the mass transit project, a work in progress with an uncertain completion date. The June debut of Morpheus Tower headlines Melco’s 2018. The US$1.1 billion addition to City of Dreams, designed by the late Dame Zaha Hadid, aspires to become Macau’s modern architectural landmark, in the mold of Singapore’s Marina Bay Sands. Morpheus’ eye-catching exoskeleton design with a hole in the middle indisputably breaks new ground for Macau. But its equally fresh hip luxury position may prove a niche in search of a market. Morpheus debuted in the context of an overhaul of Melco’s Lawrence Ho CHAIRMAN AND CEO Melco Resorts and Entertainment CHAIRMAN AND CEO Melco International Development POWER SCORE: 4,825 POSITION LAST YEAR: 3 CLAIMS TO FAME Melco’s City of Dreams and Studio City are the only properties directly on the Cotai Strip not owned by Sands China Opened landmark US$1.1 billion Morpheus Tower, designed by the late Dame Zaha Hadid, underscoring Melco’s premium focus Philippine presence with City of Dreams Manila partnership 3 flagship IR. It’s one of three new hotel brands as Melco converts Crown Towers to Nüwa and Hard Rock to Countdown, en route to Libertine. Both properties are due for major renovations. These changes portend disruptions and negative impacts on City of Dreams results. Studio City is also undergoing wholesale changes. In share markets, an October Wall Street IPO raised US$345 million in fresh capital. The offering valued the property at US$3.2 billion, its factory sticker price, and shares rose 43% in their first week of trading. But the share sale doesn’t clear a path for Melco buying out its now 36% hedge fund partner or for proceeding with the property’s second phase. Greater clarity on Studio City’s first phase could help, too. In recent months, Studio City opened a new eSports stadium, announced a limited-run vehicle stunt show to replace short-lived House of Magic and closed nightclub Pacha. The CoDManila joint venture with the Philippines’ richest family’s investment vehicle has proven a great addition to the portfolio (Cyprus, where Melco and a local partner are opening temporary casinos while building Europe’s biggest IR, may become a similar gem or, like Ho’s former stake in far eastern Russia’s Tigre de Cristal, a temporary distraction). Melco Resorts Philippines’ ham-fisted attempt to go private has it offering to buy out shareholders but staying listed. Successful partnerships may bode well for Melco’s Japan ambitions, but persistent complexity keeps its undervalued. ASIAN GAMING POWER 50 2 0 1 8