Melco Moves Forward with Plans to Offload City of Dreams Manila Interest
Melco Resorts & Entertainment has confirmed it is progressing with plans to divest its interest in the City of Dreams Manila integrated resort. The casino operator is currently in discussions with a number of prospective buyers who are reviewing information under non-disclosure agreements within a virtual data room. The company stated that this group of interested parties will be narrowed down over time as part of a structured bidding process.
LISTEN TO THIS ARTICLE:Geoff Davis, Melco's executive VP and CFO, explained that the company remains in active dialogue with its advisors throughout this process. He emphasized that updates would be provided once the company reaches a significant milestone in the sale proceedings. The remarks came during a conference call with investment analysts following the release of Melco's first-quarter financial results for 2025.
Related: Phase 1 of City of Dreams Sri Lanka Opened by Melco ResortsMelco first signaled its intent to explore strategic options for City of Dreams Manila in February 2025. The move aligns with the group's broader objective to transition toward an asset-light operational model. This strategy involves reducing ownership of physical assets while maintaining operational involvement, thereby improving financial flexibility and scalability.
During the earnings call, company chairman and CEO Lawrence Ho noted that increased competition in the Philippines has affected the performance of the City of Dreams Manila property. In the first quarter of 2025, the property recorded operating revenue of $101.6 million, a decrease from the $110.7 million reported in the same period of the previous year. Adjusted earnings before interest, taxation, depreciation, and amortisation (EBITDA) also declined, reaching $30.1 million compared to $37.8 million in the first quarter of 2024.
In response to the changing market environment, Melco is undertaking initiatives to optimize its operations in the Philippines. This includes adjustments to its cost structure and a reevaluation of marketing strategies aimed at enhancing EBITDA contributions from the property. These efforts reflect the company's focus on maintaining profitability amid evolving regional dynamics.
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City of Dreams Brand Still a Melco Hallmark
Beyond the Philippines, Melco operates casino properties in Macau and the Republic of Cyprus, with plans to soon launch a new venue in Sri Lanka. For the first quarter of 2025, the company reported a net income of $32.5 million, up from $15.2 million during the same period in 2024. The increase underscores improved performance, particularly in Macau, where mass-market gaming volumes continued to climb throughout the quarter.
Davis noted that the company succeeded in reducing its daily operating expenditure to $3.1 million during the first quarter of 2025, down from $3.2 million in the fourth quarter of 2024. This figure excludes expenses related to entertainment productions such as the House of Dancing Water and concert residencies at Studio City. He added that the target is to further reduce this daily expenditure to $3 million by the end of the second quarter.
The company relaunched its long-running show, The House of Dancing Water, at City of Dreams in Macau on May 7. This relaunch forms part of the broader strategy to enhance entertainment offerings and differentiate the brand in a competitive market.
Management expressed confidence that despite new competition in the area, including the full reopening of The Londoner Macao by rival operator Sands China, the company has maintained its market identity and performance levels. Ho stated that player reinvestment strategies in Macau are showing signs of becoming "more rational", contributing to the company's optimism about the sustainability of its growth in the region.
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