By: Staff Writer
July 31, Colombo (LNW): Melco Resorts & Entertainment’s new City of Dreams project in Colombo, Sri Lanka, is poised to capitalize on the growing wealth and outbound tourism from India. According to Morgan Stanley, the casino at this integrated resort could generate around 50% of the property’s EBITDA.
Melco announced a joint venture with John Keells Holdings PLC, Sri Lanka’s largest conglomerate, to include a casino in the $1 billion-plus project. During a conference call, Melco executives expressed confidence in their $125 million investment, viewing it as a strategic move with substantial returns.
Melco Resorts & Entertainment’s casino project in Sri Lanka will predominantly target the Indian market, with estimated annual gaming revenues of up to US$250 million per year, the company stated on Tuesday.
Melco will fit-out and operate the casino and some hotel rooms at Sri Lanka’s US$1 billion Cinnamon Life Integrated Resort after being awarded a 20-year casino license by the Government of Sri Lanka. The casino is expected to open in mid-2025.
Providing some further insight into the deal during the company’s 1Q24 earnings call, Melco Chairman and CEO Lawrence Ho said he saw Sri Lanka becoming to India what Macau is to China by tapping into its enormous population base and growing economy.
Tourism in Sri Lanka has experienced disruptions due to a terror attack in 2019 and the COVID-19 pandemic. However, the market is rebounding, with tourist visits peaking at 2.3 million in 2018, of which 18% were Indian nationals. As of May 2024, tourism levels have recovered to 88% of the 2018 peak.
Melco’s City of Dreams aims to leverage the increasing interest and financial capability of Indian tourists. Although Indian tourists traditionally spend less on casinos than their Chinese counterparts, the partnership with John Keells is expected to bolster the project’s success.
John Keells, a veteran in the leisure and hospitality industry, operates around 2,500 rooms across Sri Lanka and the Maldives under the Cinnamon brand.
The City of Dreams development will feature a casino and 113 ultra high-end hotel rooms. Melco will operate the casino, which is expected to begin operations by mid-2025.
Financial arrangements dictate that Melco will receive EBITDA from gaming operations after remitting a portion to John Keells and paying income tax on the remainder. Additionally, Melco will earn management fees for the hotel operations.
With a significant investment and strategic partnership, the Melco project aims to capture the rapidly growing wealth in India, potentially generating substantial returns and contributing to the growth of Sri Lanka’s tourism sector.
