Melco Resorts Eyes Global Expansion with Asset-Light Strategy

Melco Resorts & Entertainment plans to expand its casino brand globally through an asset-light strategy, partnering with local operators to co-run multi-billion-dollar projects. This approach aims to reduce debt and capitalize on growth opportunities in emerging markets. Melco is exploring new markets, with potential details to be revealed within 12-18 months. The company has over $7 billion in debt, acquired after Covid curbs in China disrupted its global expansion.

Melco Resorts & Entertainment Limited (MLCO) is set to expand its casino brand globally through an asset-light strategy, aiming to reduce debt and capitalize on growth opportunities in emerging markets. This approach involves partnering with local operators to co-run multi-billion-dollar projects, a strategy that has shown promise in recent earnings calls. The company's focus on cost management and strategic reinvestment has driven its financial performance, as seen in its Macau operations.

In the second quarter of 2025, Melco's Macau property EBITDA grew by 35% year-over-year and 13% quarter-over-quarter [1]. This growth was driven by increased gaming volumes, particularly in mass table games, cost optimization, and strong non-gaming revenue contributions from attractions like the House of Dancing Water. The company's disciplined cost management, reducing OpEx to approximately $3 million per day, led to a Macau property EBITDA margin reaching 29.2%, the second highest on record [1].

The House of Dancing Water, which reopened in May, has been a positive EBITDA contributor, attracting 40,000 property visitors daily and contributing to increased non-gaming revenue [1]. Its alignment with City of Dreams has enhanced visitation and visibility, supporting the overall property's success.

In the Philippines, Melco implemented cost reduction initiatives, rationalizing patron reinvestment and marketing expenses, which led to improved profitability and July gaming revenue recovery [1]. The improvement is attributed to market stabilization, transition in VIP business with new junkets, and optimizations in operating expenses.

Melco's CEO, Lawrence Ho, expressed optimism about the market's performance and the company's ability to compete through product and services rather than aggressive deals. He also acknowledged the competitive nature of the market but highlighted Melco's focus on differentiation through luxury experiences and family attractions [2].

Looking ahead, Melco is exploring new markets, with potential details to be revealed within 12-18 months. The company has over $7 billion in debt, acquired after Covid-19 curbs in China disrupted its global expansion [3]. By adopting an asset-light strategy, Melco aims to reduce this debt and capitalize on growth opportunities in emerging markets.

References:

[1] https://www.ainvest.com/news/melco-resorts-2025-q2-earnings-call-unpacking-key-contradictions-strategy-performance-2508/
[2] https://finance.yahoo.com/news/melco-resorts-entertainment-ltd-mlco-170312067.html
[3] https://www.morningstar.com/company-reports/1318398-melco-resorts-earnings-solid-macao-operations-new-project-initiatives-to-enhance-competitiveness?listing=0P00007KNM