Melco Resorts & Entertainment (NASDAQ:MLCO) reported group-wide adjusted property EBITDA of approximately $304 million for the second quarter of 2026, as lower-than-expected visitation and an unfavorable VIP win rate weighed on margins in Macau.
Chairman and Chief Executive Officer Lawrence Ho said the company remains confident in its long-term outlook in Macau despite near-term headwinds. Melco is focused on deepening customer engagement, attracting high-quality visitation and investing in its properties while maintaining discipline over costs.
Macau results and City of Dreams investments
Chief Financial Officer Geoff Davis said adjusted property EBITDA would have been approximately $312 million when adjusted for VIP hold. An unfavorable win rate at City of Dreams Macau reduced property EBITDA by roughly $9 million. The property’s VIP win rate declined to 2.7% in the second quarter from 3.9% a year earlier.
Total daily operating expenses in Macau remained steady at about $3.4 million per day during the quarter, including the House of Dancing Water attraction, Davis said. The company is evaluating ways to add flexibility to its operating model in response to changing demand and business volumes.
Melco has soft-opened its new REM hotel offering at City of Dreams, with a grand opening planned after Golden Week in October. Ho described REM as a differentiated luxury product that complements the company’s existing five-star hotel inventory.
“It’s a very unique product. It’s a lot of fun,” Ho said, adding that the offering is differentiated from other hotels in Macau and elsewhere in Asia.
The company also opened an 18-table gaming area near City of Dreams’ southwest entrance at the end of July. Management said the location along the Cotai Strip is expected to attract incremental walk-in visitation. Melco cited the success of a 15-table gaming area near the Grand Hyatt entrance that opened in October 2025.
Meanwhile, Melco has begun a revamp of retail areas at City of Dreams that is intended to create a continuous loop across the property and introduce a more curated luxury retail mix. Evan Winkler, President and Director, said the construction will create disruption through approximately the middle of 2027, although management expects the completed project to improve the property’s retail experience.
Melco expects Macau daily operating expenses, including REM and House of Dancing Water, to be in a range of about $3.3 million to $3.4 million. Winkler said the company is reviewing spending across guest services, room amenities and gaming-floor offerings to identify areas where costs can be reduced without affecting the guest experience, particularly for premium customers.
World Cup effect and demand trends
Management said the World Cup had a greater-than-expected effect on gaming activity during June and July. Winkler said customers appeared to direct some gaming spending toward sports betting, reducing play levels compared with historical activity.
However, he said activity returned to more normal levels in late July and early August, with customers returning and playing volumes recovering. Melco also said it has seen favorable results from selected entertainment events, though Ho noted that the Macau concert calendar has become more rational than in the prior year as operators assess event profitability.
On the premium direct VIP roll and chip business, Winkler said Melco remains strong and expects to receive its “fair share or more” of the market. He said management felt positive about rolling volume in August and its VIP outlook for the second half of 2026.
International operations show growth
Outside Macau, Melco’s other markets posted growth. City of Dreams Manila generated property EBITDA of $31 million in the second quarter, up 9% from a year earlier. Ho said the Philippines operation serves a large domestic market as well as a significant Korean customer base, and that Chinese visitation has shown some improvement in 2026 following visa-related developments.
In Cyprus, property EBITDA at City of Dreams Mediterranean and the company’s satellite casinos increased 60% year over year despite disruption associated with Middle East conflicts. In Sri Lanka, Melco’s casino operations recorded positive EBITDA of $3.5 million as the business continued to ramp up.
Liquidity, capital allocation and dividends
Melco ended the second quarter with approximately $2.8 billion of available liquidity and about $1 billion of consolidated cash on hand. The company announced in June that it extended the maturity of its revolving credit facility from April 2027 to June 2031 and increased the facility by about $821 million to $2.8 billion.
Studio City issued $300 million in senior secured bonds in May and used the proceeds, along with cash and a revolver drawdown, to redeem notes due in 2027. In July, Studio City redeemed $165 million of its 6.5% senior notes due 2028, leaving $335 million outstanding after the cancellation of redeemed notes.
From April 1 through Aug. 12, Melco repurchased about 22.4 million American depositary shares for approximately $121 million. Total 2026 repurchases reached about 25 million ADSs for $134 million.
The company now expects to resume dividends in 2027 rather than toward the end of 2026. Davis said Melco intends for any resumed dividend to be “substantive and meaningful,” rather than nominal.
For the third quarter, Melco expects depreciation and amortization expense of $140 million to $145 million, corporate expense of $20 million to $25 million, and consolidated net interest expense of $115 million to $120 million. Management said remaining 2026 capital expenditures are expected to total about $225 million across the group, while next year’s capital expenditures are expected to be about $275 million to $300 million.
About Melco Resorts & Entertainment (NASDAQ:MLCO)
Melco Resorts & Entertainment Limited (NASDAQ: MLCO) is a developer, owner and operator of integrated resort destinations in Asia and Europe. The company’s portfolio spans casino gaming, hotel accommodations, retail, dining and entertainment facilities. Melco’s properties feature a mix of luxury hotels, award-winning restaurants, high-limit gaming salons and entertainment venues, catering to a broad range of leisure and business travelers.
In Macau, Melco owns and operates flagship properties including City of Dreams Macau, Altira Macau and Studio City.
