Melco Resorts cuts costs amid REM launch, LVS spend focused on Macau market share gains: Seaport

Casino operator Melco Resorts & Entertainment Ltd is “is removing costs across the portfolio” of its properties, “to limit operating expense growth and offset” costs including ones linked to the launch of the newly-refurbished and rebranded hotel tower now known as REM, at City of Dreams in Macau. That is according to Vitaly Umansky, senior analyst at Seaport Research Partners, citing management commentary from the 2026 Seaport Annual Summer Conference this week. Melco Resorts’ Macau market rival Sands China Ltd – per its parent Las Vegas Sands Corp (LVS) – “does not plan to let up on spend in order to drive share gains and EBITDA growth – near term sacrifice for long term positioning,” added Mr Umansky. He was mentioning further discussions from the conference, and referring to earnings before interest, taxation, depreciation and amortisation (EBITDA). Sands China saw its second-quarter profit halve, as VIP hold weighed on is results. Its quarterly EBITDA went down 24.0 percent year-on-year. Mr Umansky clarified that the context of the discussion with Melco Resorts and Las Vegas Sands was the evolution of consumer demand and market competition in the remainder of the third quarter and beyond, in the markets where the two firms operate. Las Vegas Sands runs casino resorts in Macau and one – Marina Bay Sands – as part of Singapore’s casino duopoly. Melco Resorts operates casino business in the Philippines, the Republic of Cyprus, and Sri Lanka, as well as in Macau. Mr Umansky noted in the memo about the Seaport conference, referring to Melco Resorts: “Management is removing costs across the portfolio to limit opex growth and offset REM costs.” The 149-room REM had a soft launch within the current quarter, and is due to have a ‘grand opening’ in the autumn. The firm said in a Monday press release that the first guests at REM are invitation-only clients. Daily opex, World Cup Geoff Davis, Melco Resorts’ chief financial officer (CFO), had said on the firm’s August 13 call to discuss the second-quarter earnings, the group had been “disciplined in… cost management, with total daily opex in Macau for the second quarter of 2026 remaining steady at approximately US$3.4 million per day, inclusive of House of Dancing Water and in line with our prior guidance”. The latter was a reference to large-scale resident show at City of Dreams in Macau. Mr Davis had nonetheless conceded on the quarterly call that in Macau “lower than expected visitation and lower hold relative to prior quarters placed pressure on margins in the second quarter of 2026.” The group had revealed in its results for the three months to June 30 that operating revenues had fallen 5.7 percent, to US$1.25 billion. Evan Winkler, group president, had stated during the call on those earnings: “Throughout the back half of 2026, we’re going through an exercise… looking back at the last couple of years of data, and seeing areas where we can strategically trim back without really negatively impacting guest experience.” Seaport’s Mr Umansky noted in the memo about the Seaport conference that – notwithstanding analyst commentary of general Macau recovery in gambling demand following the FIFA World Cup 2026, which ran from June 11 to July 19 – Melco Resorts’ management “does not believe there is an element of pent-up demand from customers who skipped Macau during the World Cup”. The Seaport analyst said, citing Las Vegas Sands’ management: “Both Macau and Singapore markets remain relatively healthy and have seen a rebound post the World Cup.” But Mr Umansky also cited management as noting: “There does seem to be some softness in the ultra-high end in both markets.” He added: “It is too early to say if this is long trend or something temporary. The high-end customer in Macau may rotate among several properties and this could cause some shifts in market share.” Seaport stated of Las Vegas Sands’ position on Macau: “At a later date, reinvestment may be trimmed but not in the foreseeable future as competition for premium customers remains intense.” Singapore “remains more high-end driven than Macau, which leads to quarterly volume volatility,” added Mr Umansky, citing Las Vegas Sands. “Normal quarterly EBITDA is in the US$700-million to US$750-million range, but could swing materially in any given quarter.” Mr Umansky added, further referencing Las Vegas Sands’ management: “Similar to Macau, big opex increases are in the rearview [mirror], with more modest inflationary type opex growth expected.”