Spread the love

Post Views: 12

Melco Resorts & Entertainment emerged from a testing second quarter with lower revenue and property earnings, but modest improvement in operating income, stronger net profit, and a sizeable new luxury hotel waiting in the wings.

The Nasdaq-listed integrated resort operator reported total operating revenue of US$1.25 billion for the three months to 30 June 2026, down approximately 6 per cent from US$1.33 billion a year earlier.

The decline was driven mainly by softer rolling-chip and mass-market table gaming, along with weaker non-gaming operations. In casino parlance, luck may be a lady, but during the quarter she appeared to have left the building without settling her minibar account.

Adjusted Property EBITDA fell 19.6 per cent, from US$377.7 million to US$303.8 million. However, operating income edged higher to US$127.8 million, compared with US$124.7 million in the corresponding quarter of 2025.

Net income attributable to Melco Resorts rose to US$22.7 million, or US$0.06 per American depositary share, from US$17.2 million, or US$0.04 per ADS, a year earlier.

That combination paints a more nuanced picture than the headline revenue decline might suggest. Melco faced considerable pressure across its flagship Macau properties, yet retained profitability, improved operating income and continued investing in products designed to attract higher-quality visitation.

According to Melco chairman and chief executive Lawrence Ho, the company remains focused firmly on the longer game.

“We are confident in the long-term strength of our businesses and our outlook for Macau,” Ho said.

His confidence rests partly on REM, Melco’s new luxury hotel at City of Dreams Macau, which is scheduled to begin a phased opening during the third quarter of 2026.

The hotel is expected to refresh the resort’s premium offering as Macau’s integrated resorts compete for travellers seeking more than tables and terminals. Today’s profitable resort visitor may arrive for entertainment, restaurants, retail, wellness and designer accommodation with the casino merely another stop between dinner and a very expensive handbag.

Melco said REM, combined with tighter operating efficiencies and continued property investment, would position the company to capture strengthening demand in Macau.

City of Dreams feels the quarterly chill

City of Dreams Macau accounted for roughly half of Melco’s group revenue, but its second-quarter performance bore much of the pressure.

Operating revenue fell 11 per cent to US$632.2 million from US$710.5 million, while Adjusted EBITDA declined 34.5 per cent to US$147.8 million.

Rolling-chip volume slipped from US$5.49 billion to US$5.16 billion. More significantly, the rolling-chip win rate fell to 2.71 per cent from 3.93 per cent, sitting below Melco’s expected range of 2.85 to 3.15 per cent.

Mass-market table-game drop remained steady at US$1.75 billion, although the hold percentage eased from 30.5 per cent to 29.8 per cent.

Gaming-machine activity provided a brighter note. Handle increased 26.3 per cent to US$1.20 billion, while the win rate improved from 3 per cent to 3.6 per cent.

Non-gaming revenue also crept higher, reaching US$89.5 million against US$88.1 million a year earlier. The increase was modest, but important: it reinforces the continuing role of accommodation, dining, retail and entertainment in Macau’s broader tourism economy.

Studio City delivers a mixed hand

Studio City recorded second-quarter operating revenue of US$371.5 million, down 4.3 per cent from US$388.2 million. Adjusted EBITDA declined 9.2 per cent to US$95.5 million.

Mass-market table-game drop fell from US$958.2 million to US$884.1 million. Nevertheless, the property’s hold percentage improved to 36.3 per cent from 34 per cent.

Gaming-machine handle rose 13 per cent to US$1.04 billion, but non-gaming revenue dropped 17.4 per cent to US$69.2 million.

The figures underline the balancing act facing large integrated resorts. Gaming can produce the fireworks, but hotel rooms, restaurants, shows, shops and attractions help keep the lights glowing after the tables cool.

Studio City’s performance was hardly a disaster, though it lacked the sort of theatrical flourish one might expect from a resort whose very name promises show business.

Altira Macau punches above its weight

Altira Macau was among the quarter’s stronger performers. Operating revenue increased nearly 20 per cent to US$33.9 million, while Adjusted EBITDA rose from US$800,000 to US$2.2 million.

Mass-market table-game drop grew 12.6 per cent to US$134 million. Gaming-machine handle surged more than 81 per cent to US$208.4 million, accompanied by a higher win rate of 3.4 per cent.

Non-gaming revenue also improved, rising from US$4.8 million to US$5.3 million.

Altira remains a relatively small contributor to the group, but its improvement shows that sound mass-market execution can still move the needle—even when the needle is surrounded by several billion dollars’ worth of larger resorts.

Mocha, meanwhile, reported operating revenue of US$15.1 million and Adjusted EBITDA of US$4 million. Comparisons were affected by government-mandated closures during 2025 and the removal of Grand Dragon Casino from the segment.

Manila holds firm despite lower volumes

City of Dreams Manila produced a resilient EBITDA result despite broadly softer activity.

Revenue eased from US$98.5 million to US$97.3 million, but Adjusted EBITDA increased 8.8 per cent to US$30.9 million.

Rolling-chip volume nearly halved to US$342.6 million, although the win rate improved sharply to 3.67 per cent from 2.05 per cent. Mass-market table-game drop declined to US$131.9 million, while gaming-machine handle softened to US$950 million.

Non-gaming revenue fell 13.7 per cent to US$23.3 million.

For travel-industry observers, the Manila result reminds them that headline gaming volumes do not always tell the entire story. The property produced higher EBITDA on slightly lower revenue, suggesting improved operating discipline and a more favourable business mix.

Cyprus rebounds as travel disruption eases

Melco’s most eye-catching regional improvement came from City of Dreams Mediterranean and its three Cyprus satellite casinos.

Operating revenue increased 13.4 per cent to US$82 million. Adjusted EBITDA leapt 60.5 per cent, from US$12.4 million to US$19.9 million, driven principally by stronger mass-market performance and easing regional travel disruption.

Mass-market table-game drop rose 8.6 per cent to US$175.7 million, while gaming-machine handle increased 8.9 per cent to US$727.7 million.

The rolling-chip win rate was negative 29.66 per cent, but the extraordinarily low volume of just US$100,000 rendered that figure statistically dramatic rather than commercially decisive. Sometimes a percentage arrives wearing a cape when it barely warranted a cardigan.

Cyprus is strategically important because it adds geographical diversity beyond Macau and Manila. Its improved result also shows the value of destination-based integrated resorts as international air access and traveller confidence begin to recover.

Other Operations, including the casino at City of Dreams Sri Lanka and management services for the resort’s Nüwa hotel, contributed US$16.9 million in revenue and US$3.5 million in Adjusted EBITDA.

The Sri Lankan casino opened on 1 August 2025, while Nüwa welcomed its first guests on 15 July 2025, leaving no directly comparable contribution for the prior-year quarter.

Investment continues despite a substantial debt load

Melco ended June with US$1.04 billion in cash and bank balances, including US$124.3 million in restricted cash. Available liquidity, incorporating undrawn revolving facilities, stood at approximately US$2.80 billion.

Total debt was US$7.05 billion, excluding the effect of unamortised deferred financing costs and original-issue premiums.

The group spent US$123.9 million on capital projects during the quarter, chiefly on enhancements at City of Dreams Macau and City of Dreams Mediterranean.

Melco also extended the maturity of key revolving facilities to June 2031 and increased total commitments to the equivalent of US$2.76 billion. Studio City completed a US$300 million secured-note issue, using the proceeds as part of refinancing arrangements for debt due in 2027.

Between 1 April and 12 August, the company repurchased approximately 22.4 million ADSs for US$120.6 million. It retained authority to buy back another US$589.6 million of equity.

Repurchases signal management’s confidence in the company’s value, although investors will continue watching the balance between shareholder returns, property investment and debt management.

The quarter’s real wager is on experience

Melco’s second-quarter scorecard is neither a jackpot nor a bust. Revenue and Adjusted Property EBITDA declined, particularly at City of Dreams Macau, but operating income and attributable net profit improved. Altira, Manila and Cyprus supplied valuable counterweights.

The coming quarters will therefore hinge on execution. REM must sharpen City of Dreams’ luxury credentials, attract premium travellers and support spending across rooms, restaurants, retail and entertainment—not simply redistribute demand already inside the resort.

Macau remains Melco’s principal engine, but Manila, Cyprus and Sri Lanka increasingly add cylinders to the portfolio. That diversity matters when aviation access, economic confidence and gaming luck can each change faster than a croupier’s hands.

For Melco, the second quarter may be remembered less for its softer tables than for the groundwork laid around them. The chips were down in places, certainly, but the company is still investing, refinancing and preparing its next room key.

And in the modern integrated-resort business, that key may prove every bit as valuable as the cards.

Financial figures are unaudited and reported in US dollars unless otherwise stated. Adjusted EBITDA is a non-GAAP measure and should be considered alongside, rather than as a substitute for, statutory financial results. Read the official Melco Resorts Q2 2026 earnings release and visit Melco Resorts Investor Relations for filings and supporting materials.