Melco Resorts & Entertainment Ltd., one of Macau’s biggest casino resort operators, is already sold out for the upcoming lunar new year holidays, as its top executive downplayed concerns on the outlook in the world’s largest gaming hub.

Analysts are “overreacting” in forecasting that gaming revenue will decline in the former Portuguese colony, Melco Chief Executive Officer Lawrence Ho, said in an interview Wednesday in Macau. He said he expects gaming revenue in the hub to grow to mid- to high- single digit this year. That’s in contrast to a 1 percent growth decline for 2019 forecasted by analysts in a Bloomberg survey.

“The global economy has started to weaken but at the same time, China mainland where we depend on heavily, has been aggressively loosening policies, asking banks to facilitate more liquidity to small and median businesses,” Ho said. “The overall consumer sentiment is still okay.”

Melco expects business to be booming during the lunar new year holiday next month, when Chinese are expected to travel and spend during their week off. Melco’s hotel rooms at its three properties are all sold out — at higher rates than last year, Ho said.

Macau Uncertainties

Ho’s optimism contrasts with industry analysts, who expect this year’s gaming receipt growth to decline as China’s economy counters a slowdown and uncertainties over the renewals of casino licenses in Macau creates an overhang. A likely dip in casino receipts this month may end the hub’s streak of 29 straight months of revenue growth.

The concerns in Macau reflect the overall anxiety about the impact of China’s slowing economy and consumer sentiment. Investors of global luxury brands from Prada SpA to LVMH Moet Hennessy Louis Vuitton are jittery after Apple Inc. shocked the market with a profit warning and said Chinese consumers are cutting back on iPhones.

Earlier this month, Morgan Stanley forecast gaming revenue growth to drop as much as 2 percent and lowered its price targets for most of Macau’s six listed casino operators. Morgan Stanley and other analysts raise concerns the high-roller business may be volatile, with many of those premium clients in the property and manufacturing sectors that’s affected by China’s slowdown.

Melco is shifting its business to attract the so-called mass market of tourists, casual gamblers and families to its properties that feature roller coasters and live shows. The company announced this month that its Studio City resort will not host tables or elite gaming rooms for high stakes players come the next lunar new year in 2020.

Strategic Project

Adding to its mass appeal, Melco is awaiting government approval to begin the $1.4 billion construction of phase two of its Studio City project, Ho said. That project will be gaming-free and boast one of the world’s biggest indoor water parks with a Hollywood theme, he said. The project will also include two, five-star hotels with 1,000 rooms.

The new project is also strategic. Macau operators including Melco, have increasingly invested in non-gaming facilities to meet the requirements of Beijing and Macau authorities who want to see more revenue diversification in the former Portuguese colony. The operators have met the non-gaming revenue contribution target of 9 percent, the city’s gaming regulator said in November.

Melco will have competition in its shift. MGM Resorts International debuted a $3.4 billion Cotai property last year, while Las Vegas Sands Corp. is remodeling its Cotai Central property with a London theme, adding replicas of the Big Ben, Parliament and Tower Bridge.

For now, Ho said he has reason to be optimistic. “This Chinese New Year we will definitely see business growth,” he said. “Overall, it’s better than last year for us.”

©2019 Bloomberg L.P.

This article was written by Daniela Wei from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

Photo Credit: Melco Chief Executive Officer Lawrence Ho thinks gaming revenue will be solid in Macau in 2019. Bloomberg