The recently announced City of Dreams Sri Lanka project could achieve Gross Gaming Revenue (GGR) ranging between $200 million to $250 million on a run-rate basis, the group’s management revealed.
During the group’s conference call after the announcement, Melco’s EVP and CFO, Geoff Davis, also stated that with the recently announced Sri Lanka project, the group’s total CAPEX for 2024 is estimated to be approximately $415 million, $50 million of which would be for the Sri Lanka endeavor.
For Davis, this forecast aligns with the initial phase of casino development, which corresponds to an estimated capital expenditure of $125 million for casino fit-out. However, while the property should open in the third quarter of this year, the casino itself should only debut in mid-2025.
“I think India is definitely the most interesting feeder market and I think there’s very significant potential there. Of course, there is some level of domestic spending as well. But of course, our goal will be to address those feeder markets in India and more broadly in the region. But we think the market potential there significantly exceeds where we are today with the existing operators in the market,” Davis pointed out.
“So a combination of local and domestic but very heavily skewed towards international when we think about where the growth can come going forward. So in our view, the international market could probably be something like two-thirds to one-third in that ballpark of international to domestic.”
Melco Resorts recently announced a joint venture with John Keells Holdings PLC, the largest conglomerate listed on the Colombo Stock Exchange, to include a casino in a $1 billion-plus integrated resort project located in central Colombo – Sri Lanka’s capital.
During the group’s first quarter results conference call, Melco executives expressed confidence in the $125 million investment, considering it a “small wager” with the prospect of substantial returns.
Melco CEO Lawrence Ho emphasized Sri Lanka’s proximity to India and its burgeoning economy as key factors driving this strategic move, with Melco seeing Sri Lanka as the most viable gaming jurisdiction in the region to tap into the rising wealth creation in India.
“I think we’ve been looking at that region, not so much the country for over a decade. And my view is that Sri Lanka can be to India, what Macau is to China,” Ho pointed out.
While comprehensive data on the size of Sri Lanka’s gaming market remains scarce, Melco indicated that have has conducted extensive research, noting the presence of two operators with four local casinos, but admitting these establishments lack the integrated resort model and are not associated with hotels.
Formerly known as the “Cinnamon Life Integrated Resort,” the project will now be rebranded as City of Dreams Sri Lanka, offering 800 hotel rooms, plus retail outlets, food and beverage establishments, and MICE (Meetings, Incentives, Conferences, and Exhibitions) facilities.
Under the partnership agreement, a Melco subsidiary has secured a 20-year casino license from the Sri Lankan government, with the group to spearhead the fit-out and operation of the gaming area within City of Dreams Sri Lanka.
“This is a landmark development in Sri Lanka and we’re thrilled to participate in this opportunity. This is a capital light investment with an attractive return profile, allowing us to expand the City of Dreams brand and broaden our customer reach,” Ho pointed out.
