Melco Resorts & Entertainment Q2 2025 Earnings Call Transcript

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Provided by Quartr
July 31, 2025

Key Takeaways

  • Positive Sentiment: Macau property adjusted EBITDA surged 35% year-over-year and 13% quarter-to-quarter, driven by record mass table games revenue at City of Dreams and Studio City alongside sustained market share.
  • Positive Sentiment: The relaunch of House of Dancing Water in May has averaged ~98% theater occupancy, boosting non-gaming revenue and helping City of Dreams visitation rise 31% year-over-year in Q2.
  • Positive Sentiment: Operational efficiencies reduced Macau property OpEx to ~$3 million per day (ex-shows), lifting the Q2 EBITDA margin to 29.2%, the second-highest on record.
  • Neutral Sentiment: In the Philippines, intensified competition pressured H1 performance, but cost optimization and marketing rationalization drove a July revenue recovery, with a strategic review of the asset ongoing.
  • Positive Sentiment: Melco opens City of Dreams Sri Lanka on August 1, the first integrated resort in South Asia targeting premium Indian customers, marking entry into a new geographic market.
AI Generated. May Contain Errors.
Earnings Conference Call
Melco Resorts & Entertainment Q2 2025
00:00 / 00:00

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Operator

Ladies and gentlemen, thank you for participating in the Second Quarter twenty twenty five Earnings Conference Call of Melco Resorts and Entertainment Limited. Today's conference is being recorded. I would now like to turn the call over to Ms. Jeannie Kim, Senior Vice President, Group Treasurer of Melco Resorts and Entertainment Limited.

Jeanny Kim
Jeanny Kim
SVP & Group Treasurer at Melco Resorts & Entertainment

Thank you, operator, and thank you, everyone, for joining us today for our second quarter twenty twenty five earnings call. On the call are Lawrence Ho, Jeff Davis, Evan Winkler and our Property Presidents in Macao, Manila and Cypress. Before we get started, please note that today's financial 19. Are be in We that company's company's results measures are pleased included in the earnings release. Finally, please note that our supplementary earnings slides are posted on our Investor Relations website.

Jeanny Kim
Jeanny Kim
SVP & Group Treasurer at Melco Resorts & Entertainment

With that, I'll now turn the call over to Mr. Lawrence Hau.

Lawrence Ho Yau Lung
Lawrence Ho Yau Lung
Chairman, Director and CEO at Melco Resorts & Entertainment

Thank you, Jeanie, and thank you all for joining us today. We achieved a strong set of results for the 2025 in Macau. Macau property EBITDA grew by 35% year over year and 13% quarter to quarter. Gaming volumes and revenues were up, with mass table games revenue at both City of Dreams and Studio City reaching all time highs. OpEx was further refined, leading to increased margins while sustaining our market share in a very competitive environment.

Lawrence Ho Yau Lung
Lawrence Ho Yau Lung
Chairman, Director and CEO at Melco Resorts & Entertainment

House of Dancing Water reopened in May with a refreshed storyline and an enhanced visuals incorporating a variety of new technologies. We've had great feedback with occupancy of the theater at an average of around 98% since the opening, contributing to growing non gaming revenue and visitation into Macau. Visitation to COD Macau increased 31% year on year over the second quarter. Average daily property visitation to our Macau properties has continued to grow, reaching record levels in July. We are continuing to work on a number of additional initiatives in Macau to drive traffic and revenue.

Lawrence Ho Yau Lung
Lawrence Ho Yau Lung
Chairman, Director and CEO at Melco Resorts & Entertainment

We have started the renovation of the main entrance to City Of Dreams, which will increase visibility and accessibility to the property. We are finalizing plans for the full renovation of the Countdown Hotel, which we currently plan to open in the second in the 2026. The hotel will be newly branded with approximately 150 high end luxury suites and an average room size in excess of 1,000 square feet. We believe the concept we have for this hotel will bring a one of a kind experience to Macau and add to the high end luxury hotel portfolio that we have at City of Dreams. Additionally, we continue to implement enhancements in our gaming areas across our Macau properties to broaden our service and product offerings and elevate the gaming experience for our premium mass customers.

Lawrence Ho Yau Lung
Lawrence Ho Yau Lung
Chairman, Director and CEO at Melco Resorts & Entertainment

In The Philippines, the heightened competitive environment continue to impact performance in the 2025. In response, we have implemented various cost reduction initiatives, including rationalization of our patron reinvestment and marketing expenses. We are already seeing the results of these initiatives with higher profitability along with a recovery in gaming revenue in July. The strategic review that we have had previously announced is continuing, and we will provide updates when we are able to do so. In Cyprus, City of Dreams Mediterranean and the satellite casinos were impacted by the Iran Israel war in June.

Lawrence Ho Yau Lung
Lawrence Ho Yau Lung
Chairman, Director and CEO at Melco Resorts & Entertainment

However, recovery has been faster than expected and GGR has now surpassed pre wall levels. Based on our forward bookings for the remainder of the summer, we're cautiously optimistic that the property can deliver strong results over the remainder of the peak season. And finally, we're very excited to open City of Dreams Sri Lanka tomorrow, August 1. City of Dreams Sri Lanka is the first integrated resort in Sri Lanka and in South Asia catering to the premium segment of the Indian customer base. We look forward to the new new opportunities that this brings. With that, I'll turn the call over to Jeff.

Geoffrey Stuart Davis
Geoffrey Stuart Davis
EVP & CFO at Melco Resorts & Entertainment

Thanks, Laurence. Our group wide adjusted property EBITDA for the 2025 grew 25 year over year to approximately $378,000,000 Adjusted for VIP hold, our property EBITDA was approximately $354,000,000 Favorable win rates at COD Macau had a positive impact on our property EBITDA by approximately 31,000,000 while an unfavorable win rate at COD Manila had a negative impact of approximately $7,000,000 In the prior quarter, we had guided that our OpEx target for Macao was to exit the second quarter at $3,000,000 per day, excluding House of Dancing Water and the residency concerts. We were able to outperform our earlier expectations and reduced OpEx down to approximately $3,000,000 per day for the entirety of the second quarter. OpEx for House of Dancing Water was approximately $100,000 per day as previously mentioned. We saw solid flow through in the quarter with an increase in revenue and a reduction in costs.

Geoffrey Stuart Davis
Geoffrey Stuart Davis
EVP & CFO at Melco Resorts & Entertainment

Our Macau property EBITDA margin reached 29.2% in the 2025, the second highest on record. We are focused on remaining disciplined on cost as our business continues to grow. Turning to our balance sheet, our liquidity position remains robust. We had available liquidity of $2,300,000,000 with consolidated cash on hand of approximately $1,200,000,000 as of the end of the 2025. Melco, excluding its operations at Studio City, The Philippines and Cyprus, accounted for approximately $644,000,000 of the consolidated cash on hand.

Geoffrey Stuart Davis
Geoffrey Stuart Davis
EVP & CFO at Melco Resorts & Entertainment

We had two bond maturities over the last couple of months, dollars 1,000,000,000 in June at Melco and $222,000,000 in July at Studio City. Melco's bonds were refinanced with a drawdown from its RCF, while Studio City's bonds were refinanced with a combination of a drawdown from its RCF and approximately $50,000,000 of in available cash. The RCFs were drawn in Hong Kong dollars given today's low high bar rates. We locked in these rates with interest rate swaps allowing us to refinance at lower interest rates than the bonds that matured. We expect to pay down more debt over the 2025 with free cash flow from operations.

Geoffrey Stuart Davis
Geoffrey Stuart Davis
EVP & CFO at Melco Resorts & Entertainment

Over April and May, we repurchased approximately $120,000,000 of Melco shares taking advantage of the unique opportunity that the dislocation in the equity markets provided at the time. The average price of the repurchased shares in the second quarter was approximately $5 per ADS. We have always placed priority on increasing shareholder value. And although our primary objective remains debt reduction, we will continue to monitor market conditions as we balance our capital allocation objectives. And a final note on our balance sheet for reference, as announced in June 2025, we will close Grand Dragon Casino and three Mocha Clubs over the second half of this year.

Geoffrey Stuart Davis
Geoffrey Stuart Davis
EVP & CFO at Melco Resorts & Entertainment

As a result, we recognized an impairment in goodwill of approximately $56,000,000 in the second quarter. We expect to continue operations of the three remaining MoCA clubs subject to the legal and regulatory requirements in Macau. As we normally do, we'll give you some guidance on non operating line items for the upcoming 2025. Total depreciation and amortization expense is expected to be approximately 135,000,000 to $140,000,000 Corporate expense is expected to come in at approximately 25,000,000 to $30,000,000 and consolidated net interest expense is expected to be approximately 115,000,000 to $120,000,000 This includes finance liability interest of around $6,000,000 relating to fees payable in relation to the Macau gaming concession and the Cypress gaming license and finance lease interest of approximately $5,000,000 relating to City of Dreams Manila. That concludes our prepared remarks. Operator, over to you for the Q and A.

Operator

Thank you. Your first question comes from George Choi from Citi. Congratulations

George Choi
George Choi
Research Analyst at Citigroup

on this very solid set of results. I have a couple of questions, if I may. Firstly, in your prepared remarks, you said you're going to remodel the Camden Hotel. I'm wondering if you guys are doing anything to your gaming floors at either COD or Studio City in the near term in light of new new supplies by your competitors?

Lawrence Ho Yau Lung
Lawrence Ho Yau Lung
Chairman, Director and CEO at Melco Resorts & Entertainment

Hey, George. It's Lawrence. Maybe I'll I'll start off and, you know, I, you know, I hand it off to Evan and then also perhaps Tim to talk about TLD. But over the last eighteen months, we've been improving our product and reinvesting in the customer experience. So that has been very yeah.

Lawrence Ho Yau Lung
Lawrence Ho Yau Lung
Chairman, Director and CEO at Melco Resorts & Entertainment

I think it's, you know, that shows in our results. So, you know, I think all of their hard work that we put in in terms of improving that. So, you know, as part of the the countdown, you know, what used to be a 330 room hotel, we're really taking it down to a 150 luxury suites, and I think it's gonna be a super unique product. Doesn't exist anywhere in the world. So we're very excited about that, but I think maybe I'll hand off to you know, there's a lot of work being done on the casino floor for us constantly.

Lawrence Ho Yau Lung
Lawrence Ho Yau Lung
Chairman, Director and CEO at Melco Resorts & Entertainment

So I think maybe I'll hand it off to Evan or Tim to to elaborate. Sure. I can Lawrence, this

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

is Evan. I'll start, and and Tim can obviously join in. There's been a huge amount of work that's already been done this year and a number of projects that are gonna be completed here in this quarter and then throughout the end of the year. You'll probably recall, we completed our new high limit slot space. We took our old high limit slots area, and we've now converted that over to mass gaming.

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

Over the last weekend, we took the last remaining section of that high limit slots gaming, and we created a unique clubhouse experience for our premium players that has three private salons in there, but it also has a golf simulator, a race simulator, ping pong, pool, darts, pinball, jukebox, some unique food and beverage offerings, and really a clubhouse environment for our players to enjoy as part of that premium gamer experience. In the months ahead, we've got on the main gaming floor a new redemption lounge opening. We have a new F and B counter that's gonna be opening before Golden Week. We have carpet being replaced throughout COD. We have new column treatments going throughout COD.

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

If you've been by our property, you've seen that we've taken down the fountain and stairs on the south entrance. That's now gonna be a new entry experience that's gonna allow much easier access into the property and much greater visibility into the property. And so I I we also have a number of new f and b concepts that we're gonna be adding throughout the mall. So that's just on COD. At Studio City, we recently opened a new f and b offering for our Star Tower Gala to give customers a place not just for breakfast, but to have an all day dining experience.

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

It's been well received. You probably saw prior to that that we had re lobby remodeled both lobby spaces, so now the star and celebrity lobbies have both been remodeled. We opened up a new food and beverage offering that's adjacent to our premium gaming space in the Epic Tower. And we're, in the next few months, gonna get approval to sort of consolidate all that into a gaming space. So we're gonna create more tables in a real premium customer environment in that unique casino experience that's just really geared at Epic and towards that premium mass.

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

We've got a number of new F and B concepts, bacha copies coming in at the front of Studio City. We opened up Nickelodeon Play Space. We've got a unique concept on health where IRAD will be opening, which has a full hospital license. It's gonna be doing imaging and medical procedures, which have been requested by a number of our customers. So it's gonna be something very unique within Macao.

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

We've got a new concept coming in on the Level 2 gourmet walk at Studio City. And then if you've been on the Studio City Floor, think you've also seen that we've really popped up the lighting almost everywhere along with new layouts. We've consolidated the LTG Gaming space, improved the flows and improved the lighting throughout. And then as was alluded to in the prepared remarks, we've got new electronic product and tables that are gonna filter through the system here by year end. So you're gonna see more product at the different IRs.

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

So I think I probably gave the laundry list. I don't know if Kevin or Tim will start giving me the thumbs up. But I think the short answer is we are very focused on making sure we continue to offer a premium experience to our customers.

George Choi
George Choi
Research Analyst at Citigroup

Thank you very much. That's that's a very long list. I'm sure I'll have to spend a lot more a longer time the next time I visited Business COD and State of City. My my second question, if if I can, given the July momentum and whatever visibility that you might have in August, do you expect your whole normalized EBITDA to improve sequentially?

Lawrence Ho Yau Lung
Lawrence Ho Yau Lung
Chairman, Director and CEO at Melco Resorts & Entertainment

Well, you know, I think the market is is doing very well. And, you know, I think the strength that we saw in really in the first half, you know, this we've had an excellent first half. So q one, q two is is, you know, is is we see it in q three as well in that momentum. And I think at the end of the day, is the Chinese economy stabilizing and, you know, people consuming more again. And, so I I, you know, I think it sets us up for a great March. I don't know if Jeff or Evan wanna elaborate.

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

No. Look. I I think we feel very good. I think we've carried the momentum that we saw in June into July. I think the market feels good right now. You've obviously seen some comments from some of our competitors that, you know, some people are are modulating reinvestment. Right now, I think based on where we are with our product and service, we feel very good about where we are and very good on expense discipline. So if we sort of continue in the way that we feel that we can, I think we feel very, very good about q three?

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

Obviously, don't have a crystal ball, but sitting here today, I I think we all feel good about where we are.

George Choi
George Choi
Research Analyst at Citigroup

Thank you very much for the color. I'll jump back to the queue.

Operator

Thank you. Your next question comes from Riccardo Cinchilla from Deutsche Bank. Please go ahead.

Luis Ricardo Chinchilla
Luis Ricardo Chinchilla
Director at Deutsche Bank

Hey, guys. Thank you so much for taking the questions, and congrats on the strong set of results. One of your competitors was mentioning that mid quarter, they, you know, significantly increased reinvestment and, you know, that they will continue to monitor the market given that they experienced some market share declines. Have you guys seen seen anything meaningfully in terms of, you know, the competitive nature of the market, or is it just business as usual?

Lawrence Ho Yau Lung
Lawrence Ho Yau Lung
Chairman, Director and CEO at Melco Resorts & Entertainment

Hey, Ricardo. It's Lawrence. I'll maybe I'll just, you know, answer and then hand it off to Evan. You know, Macau is you know, it's always gonna be competitive. And and, you know, we see competitors trying to grab share here and there.

Lawrence Ho Yau Lung
Lawrence Ho Yau Lung
Chairman, Director and CEO at Melco Resorts & Entertainment

But I think the most important thing, I think the competitor you're referring to, you know, has really been you know, have under, you know, reinvested in the market previously and it's now doing it. But at the same time, we you know, at Melco, we wanna compete on product and services. So, you know, I think the what we have done at City of Dreams in terms of the luxury experience with the hotels and now has a dancing water and the food and beverage, that stands on its own. So, you know, we don't necessarily need to match or compete on on who has the best deal out there. And equally at Studio City, you know, in terms of the family attractions and other fun attractions, again, it's a differentiated product.

Lawrence Ho Yau Lung
Lawrence Ho Yau Lung
Chairman, Director and CEO at Melco Resorts & Entertainment

So, again, we don't have to be the most aggressive or give the best deal in the market. So I think that is an area we'll continue to lean in on. I don't know

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

if No. I think Lawrence said it well. Obviously, we hear the same statements you're hearing. When one of the large operators makes a statement like that, you you wanna make sure you're monitoring what's going on. I think where we're sitting here today and what we've been doing over the the last month is not any different than what we were doing through q two.

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

We continue to titrate our programs. We continue to look at it every week, but we've pretty much been business as usual. We're gonna continue to look at it. If a bunch of other people followed suit, if something dramatically changed in the market, I think we would adjust. But based on what we're seeing right now, I think we're continuing with our our current strategy.

Luis Ricardo Chinchilla
Luis Ricardo Chinchilla
Director at Deutsche Bank

Got it. That's great color. As my follow-up, I know that you guys have done a fantastic job with regards to, you know, managing expenses, particularly in Macau. So I was curious if you guys see an opportunity for further, you know, optimization of the expense base or if you guys, you know, given that you're making some change food traffic, are, you know, feeling comfortable with, you know, increasing perhaps in the short term a little bit of of dollars just to provide, you know, additional services to the consumer and then, you know, bring it close to that, you know, 3,000,000 per day that you guys referenced before?

Geoffrey Stuart Davis
Geoffrey Stuart Davis
EVP & CFO at Melco Resorts & Entertainment

This is Jeff. So I think, you know, simply put the the 3,000,000 per day of OpEx, I think that is a good number going into the third quarter. But maybe Evan has some additional color on that.

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

I think we feel good about where the expense base is. That's not to say that we don't Tim and Kevin are looking to me because, obviously, we spend all day every day looking for ways that we can optimize and improve. But I think, generally speaking, we've done a lot of that work and feel pretty good about where we are. In terms of would we increase it going forward, I I think we'd have to feel like we found an opportunity that we could really move market share and generate EBITDA. So I don't have some plan right now where we would increase the expense load going forward.

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

I think three is a good number. But, again, we're always watching the market. If we think there was something that we could do opportunistically, I think we'd go to Lawrence. We wouldn't be afraid to spend money in order to make money, but I think we feel pretty good about where we are right now.

Luis Ricardo Chinchilla
Luis Ricardo Chinchilla
Director at Deutsche Bank

Thank you so much for all the color.

Operator

Thank you. Your next question comes from Joe Stauff from Susquehanna. Please go ahead.

Joseph Stauff
Senior Equity Research Analyst at Susquehanna International Group

Thank you very much. Maybe just to build on that question about your Macao daily OpEx per day. I hear you on core, you did better in the quarter in terms of the all in number, including House of Dancing Water and residencies. Is there any expectation maybe in the third quarter to bend or to reduce the two other components, whether it be House of Dancing Water or residencies within, say, the all in number above and beyond core? And then the second question on that is, you gave a very long list of all the new projects that you're working on.

Joseph Stauff
Senior Equity Research Analyst at Susquehanna International Group

Certainly makes sense in terms of your defense of on product. But wondering if that's gonna create any construction disruption over the second half of the year.

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

Sure. Let me I guess on the first one, in terms of the overall expense number, and I'm assuming you're pointing towards residencies of House of Dancing Water. In terms of the residency program, that that's trailed off. So Aaron had his last show on Monday. So for that component going forward, we do expect a reduction as that program has run off.

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

We obviously will continue to have entertainment and concerts next year, but at a reduced level to what we've seen. In terms of House of Dancing Water, that number is probably about the right run rate. So we're starting to get things stabilized. We have very good take up at occupancy. So, again, it should be an EBITDA contributor.

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

But in terms of its portion in the expense base, that's probably not a bad number going forward. In terms of all of the projects that we're we're doing on each of the properties, I probably gave you a list of ones that have already happened this year and ones that are gonna be happening. Studio City, I would say, we're essentially behind all of that. In terms of COD, we've actually been pretty successful, I think, if you go to the property on being able to hoard zone by zone to minimize any customer disruption. Even the front entrance, it's sort of its own separate zone.

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

It's not within the casino property. So I do think we're able to do it with fairly limited impact in terms of a customer experience as we're getting all these things done. The team spent a lot of time looking at the phase in these projects. And so, again, I I'm not concerned about any disruption that would come from construction over the next three to six months.

Joseph Stauff
Senior Equity Research Analyst at Susquehanna International Group

Appreciate that. And is there anything you can share with us maybe at this point, you know, on on the the advanced look of of sort of August activity in Macau?

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

I mean, I I it's probably a little early to tell. Again, we're we're that starts tomorrow. So I think we're hoping that we're gonna continue the momentum through, but a little bit early for for us to be making a call on that.

Operator

Your next question comes from John DeCree from CBRE Capital Advisors. Maybe

John Decree
John Decree
Director - Equity Research at CBRE Group

ask one question on Sri Lanka, which is opening tomorrow. Congratulations on that. Maybe, Laurence, can you maybe give us a little bit of how you're thinking about performance there, the ramp, the time to ramp, expected returns? Obviously, it's a very new product in a new market. Know, a little bit little bit tougher to hone in on.

John Decree
John Decree
Director - Equity Research at CBRE Group

But any kind of initial thoughts on kind of what you're hoping or expecting would be helpful.

Lawrence Ho Yau Lung
Lawrence Ho Yau Lung
Chairman, Director and CEO at Melco Resorts & Entertainment

Hey, John. We're very excited about Sri Lanka. We have looked at it for a number of years, and it is you know, it's it's the first integrated resort in South Asia and also in Sri Lanka. You know, I think there is gonna be definitely a key thing period because the it's we're effectively creating a whole new industry. You know, I think our the current players there are, you know, really, you know, third world type operators.

Lawrence Ho Yau Lung
Lawrence Ho Yau Lung
Chairman, Director and CEO at Melco Resorts & Entertainment

So, you know, I think it's it's it's a whole new paradigm shift. So we're very excited about that. For us, it's really opening a, you know, a new market in India as well. And so, you know, I think we're, you know, similar to what we did with Cypress where, you know, it's grown into a very nice market in itself. It will take a little bit of time, but, you know, I think we're we're very excited about it.

Lawrence Ho Yau Lung
Lawrence Ho Yau Lung
Chairman, Director and CEO at Melco Resorts & Entertainment

I don't know if, you know, Evan has any more color additional color

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

Sure. I I look. I I think in this market, you know, part of what attracted, you know, Lawrence to the market was the ability to bring really the IR model into a market where if you go there and look at what's there, it's not just sort of stand alone casino product, but it's a pretty antiquated stand alone casino product with very limited offerings. And so what we've been able to create there, drafting off this amazing property that was built by our partner, John Keels, is really a true IR experience. And I think we believe over the, you know, medium term to to long term, it's gonna attract an entirely customer base to come and experience that market.

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

We've got a big jump. We're looking at a good opening for this weekend. But in terms of the ramp going up, there is gonna be an education process into that consumer base for them to understand the quality of what's there and why they wanna make that trip. So I do think it's gonna be a ramp period before we really see the full potential.

John Decree
John Decree
Director - Equity Research at CBRE Group

Got it. That's Thanks, Lawrence and Evan. Maybe if I can ask one, I know there hasn't been too much discussion on this, I appreciate satellite casino is a relatively small piece of the overall business in Macau. With closures, the ones you've announced and some others, how do you kind of think about the market evolving? Do those kind of customers find a new home?

John Decree
John Decree
Director - Equity Research at CBRE Group

Any thoughts that you have on that change that's coming this year?

Lawrence Ho Yau Lung
Lawrence Ho Yau Lung
Chairman, Director and CEO at Melco Resorts & Entertainment

Hey, Joe, I think on for for us in Macau, we're quite excited about the some of the satellite closures because I think it gives it's an opportunity for LPRAP because other than the Cotai mega integrated resorts and some of the casinos on Macau Peninsula, Altera will be effectively the only game in Taipa. And, you know, we're closing three MoCA units as well, and so we're equally enthusiastic about what we can do to optimize our gaming unit by moving some of those gaming machines to City Of Dreams and and Studio City. So I think all in all, it will consolidate the business at the, you know, remaining casinos and and integrated resorts. I think some of the satellites on the Peninsula Side, you know, we'll we'll see if we could try to draw some of them over to Taipa and LTIR.

John Decree
John Decree
Director - Equity Research at CBRE Group

Great. Thanks, Laurence. I really appreciate the color, guys.

Operator

Your next question comes from Vitaly Umansky from Seaport Research Partners.

Vitaly Umansky
Senior Analyst - Global Gaming at Seaport Research Partners

I wanted to follow-up on the player reinvestment discussion that we had a bit earlier. Just looking at the numbers, it seems like Studio City player reinvestment was relatively flat if you kind of factor in volume changes, etcetera. But COD, the numbers actually improved. They came down. I think the expectation would be that at the high end is driving the growth in q two and now in q three, that that player reinvestment as a percentage of masks will go up.

Vitaly Umansky
Senior Analyst - Global Gaming at Seaport Research Partners

That seems to have been the case for most of the Cotai properties at Sands and for MGM Cotai. You guys are an outlier, and I'm assuming once we see the other results, they'll be outliers as well. I know, Evan, you talked a little bit about kinda what you guys are doing and how you're trying to differentiate, but it seems like a very divergent trend that you're seeing at COD. Can you maybe elaborate as to what you're doing on player reinvestment that may be different? Is there a different methodology you're incorporating?

Vitaly Umansky
Senior Analyst - Global Gaming at Seaport Research Partners

Is it a different set of player reinvestment initiatives that you have that's leading to this? Because that's a big part of the benefit that you've seen this quarter.

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

Well, again, it's a little hard for us to comment on on how we're doing it relative to others because, obviously, I'm I'm not sitting with their teams. What I would say is we're trying to utilize our sort of as we're getting better and better data out of Walker and better and better insight into the player, We're trying to be more strategic in terms of where we're putting those dollars to get the best bang for our buck, and so we're trying to to titrate it more carefully. I think, again, we were able to bring it down pretty successfully. The market's dynamic. We're constantly titrating it.

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

So, again, it'll bump up and down a little bit from where it is. But I think, again, we're we're trying to make sure we're rewarding the right folks who we think are really bringing in the contribution. And it's it's hard for me to comment on what we're doing different than the others because I just I I don't know exactly how they're apportioning their spend.

Vitaly Umansky
Senior Analyst - Global Gaming at Seaport Research Partners

Yeah. That's that's fair. And maybe just second question. Just broadly speaking, and I know we touched a little bit on this, but broadly speaking, the strength that we're seeing in June and July, it's it's it's largely been coming from a higher end customer base. What what do you think has changed in in that player behavior?

Vitaly Umansky
Senior Analyst - Global Gaming at Seaport Research Partners

And correct me if I'm wrong on that. Maybe maybe you're seeing something different.

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

Again, I I I don't know if it depends on where you're cutting to the high end, but we are seeing but, again, certainly at that middle but affluent tier, good volumes. I I think what Lawrence said probably is a big part of the answer, which is a lot of the overhang and concern in China around global economy seems to have dissipated. And so people who potentially were worrying about their own business or worrying about the global economic environment are both feeling a little more confident and a little more excited about traveling and spending again, and we're seeing the benefit of that.

Vitaly Umansky
Senior Analyst - Global Gaming at Seaport Research Partners

Okay. Great. Thanks.

Operator

Thank you. Your next question comes from Praveen Chaudhry from Morgan Stanley. Please go ahead.

Praveen Choudhary
Praveen Choudhary
MD - Head of Asian Gaming/ HK & India Property/ Conglomerates Research at Morgan Stanley

Thank you. Congratulations for a very good set of results. A couple of questions from me. Of course, the focus is on OpEx and competitive dynamics where you've already answered all the questions. I have two questions, one on Philippines and another on House of Dancing Water.

Praveen Choudhary
Praveen Choudhary
MD - Head of Asian Gaming/ HK & India Property/ Conglomerates Research at Morgan Stanley

Both are, for me, catalysts to take it to the next level from your stock price perspective and profitability. So would you be able to quantify or at least subjectively explain if House of Dungeon Water is actually contributing positively to gaming business? I understand you mentioned that it might be EBITDA neutral on a nongaming side. And is that helping or helped Q2 number in City of Dreams? That's the first question.

Praveen Choudhary
Praveen Choudhary
MD - Head of Asian Gaming/ HK & India Property/ Conglomerates Research at Morgan Stanley

The second question on Philippines, the weakness is all across Philippines. It's not just yours. So just wanna understand when does it stop getting worse? And then related to that was a transaction that you were working on. Any update if you can give us, that'll be awesome. Thank you so much.

Lawrence Ho Yau Lung
Lawrence Ho Yau Lung
Chairman, Director and CEO at Melco Resorts & Entertainment

Praveen, maybe I'll answer the first one on House Dancing Water, and then I'll hand it off to Jeff Andres on Philippines, and Jeff Davis can talk about the transaction. So, you know, I think House of Dancing Water, and and maybe, you know, Evan and Tim can can add. It's done wonders for us ever since the opening in May 7 because, you know, the House of Dancing Water IP is so closely aligned with City of Dreams. So if anything, the grand relaunch of House of Dancing Water was really relaunching City of Dreams as well. And I think since then, we have seen record visitation across the board.

Lawrence Ho Yau Lung
Lawrence Ho Yau Lung
Chairman, Director and CEO at Melco Resorts & Entertainment

You know, I think now consistently, we're getting over 40,000 property visitation in City of Dreams. So it certainly has contributed to the success that we saw in q two and part of that momentum into q three. I don't know if you wanna elaborate.

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

Sure.

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

I I look. It on the days that it's running, it it brings in, you know, 1,900 people twice. So it's 3,800 people come in to the property. It helps a lot on F and B covers. It helps a lot on the retail environment.

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

It helps in the overall environment. It provides a halo to the property. It was a positive EBITDA contributor in q two. I would say that I think that there is still an opportunity for us to do an improved job on converting those customers into gaming customers. So we get a lot of mass tourists in general.

Evan Winkler
Evan Winkler
President & Director at Melco Resorts & Entertainment

We also know because we have the the data that we are getting people who are coming from other properties who are likely to be gamers. I'm not as happy with our conversion rate. I think we have opportunities. So I don't think it necessarily did a huge amount of gaming revenue in Q2. And I think that's something that we're looking to try and optimize here in the quarters ahead.

Geoffrey Stuart Davis
Geoffrey Stuart Davis
EVP & CFO at Melco Resorts & Entertainment

So on the strategic review, as we said in the prepared remarks, we are still continuing to work through the process with our advisers on a short list of potential buyers. Nothing to announce at the moment. But when there is, we'll make the appropriate disclosures and remain cautiously optimistic on this opportunistic exploration that there'll be something to do in Manila.

Praveen Choudhary
Praveen Choudhary
MD - Head of Asian Gaming/ HK & India Property/ Conglomerates Research at Morgan Stanley

Thanks, Jeff. There is also another question on Philippines business. Yeah. Thank you.

Geoffry Philip Andres
Geoffry Philip Andres
Property President at Melco Resorts & Entertainment

Yeah. This is this is Jeff Andres, Praveen. Hey, on the Manila market, you're right. There was some softness that we all experienced in the first half of the year. As a result of that, we've really been taking thoughtful and measured expense initiatives over the last five months that we're starting to see some of that bear fruit in July.

Geoffry Philip Andres
Geoffry Philip Andres
Property President at Melco Resorts & Entertainment

And we've also seen stabilization in the market in July. And as well, there's been a transition, I think, second in quarter going into the third quarter on the VIP part of the business, some junkets transitioning out of the market. And we've had signing up some new junkets that we think will be performing at a higher level. And so we're feeling better going into the second half of the year.

Praveen Choudhary
Praveen Choudhary
MD - Head of Asian Gaming/ HK & India Property/ Conglomerates Research at Morgan Stanley

Lovely. Thank you so much. And again, hopefully, this uptick continues. And once again, congratulations.

Geoffrey Stuart Davis
Geoffrey Stuart Davis
EVP & CFO at Melco Resorts & Entertainment

Thanks, Praveen.

Operator

Thank you. There are no further questions at this time. I'll now hand back to Jeannie for closing remarks.

Jeanny Kim
Jeanny Kim
SVP & Group Treasurer at Melco Resorts & Entertainment

Thank you for participating in our call today. We look forward to speaking with you again next quarter. Thank you.

Operator

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.

Executives
    • Jeanny Kim
      Jeanny Kim
      SVP & Group Treasurer
    • Lawrence Ho Yau Lung
      Lawrence Ho Yau Lung
      Chairman, Director and CEO
    • Geoffrey Stuart Davis
      Geoffrey Stuart Davis
      EVP & CFO
    • Evan Winkler
      Evan Winkler
      President & Director
    • Geoffry Philip Andres
      Geoffry Philip Andres
      Property President
Analysts
    • George Choi
      Research Analyst at Citigroup
    • Luis Ricardo Chinchilla
      Director at Deutsche Bank
    • Joseph Stauff
      Senior Equity Research Analyst at Susquehanna International Group
    • John Decree
      Director - Equity Research at CBRE Group
    • Vitaly Umansky
      Senior Analyst - Global Gaming at Seaport Research Partners
    • Praveen Choudhary
      MD - Head of Asian Gaming/ HK & India Property/ Conglomerates Research at Morgan Stanley
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