Melco to end VIP operations at Studio City in 2020

Melco Resorts and Entertainment has announced that it will cease offering VIP gaming at its Studio City IR in Cotai in mid-January 2020.

“Studio City International Holdings Ltd today announced that Melco Resorts (Macau) Ltd has informed the company via its subsidiary, Studio City Entertainment Ltd, that the gaming operator will cease VIP rolling chip operations at the Studio City casino on January 15, 2020,” Melco Resorts said in a SEC filing.
Analysts posit that the property’s VIP tables will be relocated to the company’s Morpheus casino at its other Cotai IR, City of Dreams.
The decision comes just over two years after the introduction of VIP play at Studio City, which originally opened as a mass-only property in 2015.
“Studio City’s leased VIP tables generated only 10 per cent to 15 per cent of estimated property-level EBITDA (approximately$40min 2018). Melco Resorts believes the tables will generate greater volume if repositioned, probably at Morpheus where premium mass demand has been strong,” suggested Nomura analyst sHarry Curtis, Daniel Adam, and Brian Dobson. “Shifting 30 higher-margin tables to mass and 15 higher-volume tables to VIP,”could help increase Melco Resorts’ EBITDA “by $20mto $30m,” they added. “Further, Melco [Resorts] will retain 100 percent of the EBITDA on the 45 tables. Today it is obliged to allocate 46 percent of the profits to its minority partners” at Studio City.