Altira Macau ceases its VIP business to focus on mass market
A popular Macau casino has ceased its VIP operations, deciding to instead become a premium mass property.
Inside Asian Gaming reports that Melco Resorts and Entertainment has revealed plans to transform Altira Macau following another quarter of subdued results.
The company detailed the move during a recent earnings call with analysts, in which it confirmed that both junket and VIP direct operations at Alitra have been shut down and moved to City of Dreams and Studio City.
Gaming areas not already serving the premium mass customer will be reallocated, as will non-gaming assets.
The move comes after Altira reported little movement in the second quarter, with revenue of US$18.3 million only slightly higher than the US$17 million generated a year earlier and the property recording an adjusted earnings before interest, tax, depreciation and amortisation of US$17.3 million.
Viability of VIP operations called into question
Melco’s chief operating officer of Macau Resorts David Sisk said it no longer made sense for Altira to remain VIP-focused, given prevailing market conditions.
“The idea is to take out a lot of the volatility given the kind of reduced womens that we’ve been seeing over the last 18 months in the VIP business that created a lot of fluctuations at Altira,” Sisk said.
“And unfortunately, we’ve been on the negative side of the whole equation, which has really exacerbated the losses over there. It’s just too much, we were essentially gambling in a way that didn’t make a lot of sense.
“So the idea is us going back in and kind of rethinking our business and really focusing on where our bread and better is and has always been.
“At Melco, we’ve always prided ourselves on developing great products and really focusing on our premium customers, particularly our premium mass customers and our mass customers, and that’s where our profitability is.
“We think given the product over there, the product mix and the opportunity to grow that local market as well as the market that we have over there in terms of international, is really compelling for us.”
Melco shifts VIP operations to existing casinos
Sisk said that creating a boutique experience for guests remains a priority.
“They’re looking for something a little bit different than maybe we have in Cotai, but it’s just a really unique opportunity for us to do that,” he said.
“We thought this was a good time for us to make this move and move forward with this new area of our business at Altira.”
Altira was opened in May 2007 as Crown Macau, before changing its name to Altira two years later following the opening of Crown Towers Macau as part of the City of Dreams development.
Crown Resorts and Melco have a decorated history
The partnership between Melco and Australia’s Crown Resorts ended in 2017 when Melco bought out all of Crown’s shares in the joint venture.
The two companies have remained linked for some time, with reports surfacing in 2020 that Melco was looking to take a slice of a large piece of Crown’s Australian operations.
However in April 2020, Melco sold its 9.99 per cent stake in the gaming operator to US-based asset management firm the Blackstone Group.
The sale was at a 37.3 per cent discount compared to the price Melco paid in May 2019.
In a filing to the Australian Securities Exchange, Crown Resorts said it had been informed that an entity linked to The Blackstone Group had acquired 67,675,000 Crown Resorts shares from Melco Resorts – representing its entire stake.
The shares were sold at a price of A$8.15 per share.
The sale amounted to more than half a billion dollars in aggregate.
In May 2019, Melco Resorts said it was paying A$13 per Crown share to CPH Crown Holdings.
The latter company, controlled by Australian businessman James Packer, was a major shareholder in Crown Resorts.
The acquisition price per share represented an aggregate investment of nearly A$879.8 million for the 9.99 per cent stake in Crown Resorts.