The pre-opening phase of Colombo’s City of Dreams casino complex has seen substantial investment, with John Keells Holdings (JKH) reporting that costs have now reached Rs 1.95 billion. This integrated resort, designed to elevate Colombo’s standing as a regional luxury destination, includes the Cinnamon Life Hotel, branded residences, high-end shopping venues, and world-class entertainment facilities. The primary attraction, however, is the casino operated by Melco Resorts & Entertainment, a gaming powerhouse headquartered in Macau and led by Lawrence Ho, a significant figure in the global casino industry.
Investment Breakdown and Financing Structure
To meet the funding requirements for City of Dreams and other related developments, JKH raised Rs 24.02 billion through a rights issue in July 2024. This financing was vital given the project’s escalating costs and the need for robust capital amid rising interest rates. The funding structure is a combination of revenue from sales of hotel rooms, residential apartments, and commercial spaces within Cinnamon Life, coupled with a detailed loan scheme to support ongoing construction and expansion.
Melco Resorts’ Involvement and Casino Licensing
Melco Resorts, which invested $125 million in the Sri Lankan City of Dreams project, is renowned for luxury gaming resorts, notably in Macau, which is a leading global gambling hub. The casino license granted to Melco comes with a 20-year duration, secured by the previous administration, indicating strong regulatory support for the resort’s long-term viability in Sri Lanka’s tourism sector. Lawrence Ho’s involvement in the project brings expertise and international appeal, given his background and successful casino ventures across Asia.
Impact on John Keells Holdings’ Financials
The interim report by JKH shows that while the project has increased group revenues by 20% to Rs 76.96 billion for the recent quarter, operating profits dipped 4% to Rs 8.42 billion due to rising pre-opening expenses. The six-month earnings report reveals a 5% decrease in total earnings to Rs 556.09 million, illustrating the substantial financial impact of the project on the group’s short-term profitability.
Construction Milestones and Future Outlook
In mid-October, JKH celebrated the opening of key sections of the Cinnamon Life complex, including the luxury hotel, various dining facilities, and the mall, marking significant milestones in the broader City of Dreams project. While the casino is slated for a mid-2025 launch, this phased opening strategy enables incremental revenue generation and enhances Colombo’s appeal for upscale tourism.
Potential Boost for Colombo’s Economy
City of Dreams is positioned to have a considerable economic impact on Colombo by attracting high-net-worth tourists and bolstering the local hospitality industry. The project promises not only job creation in hospitality, entertainment, and retail sectors but also increased tax revenues from gaming and luxury tourism. If successful, the complex could catalyze further development in Colombo’s waterfront area, potentially elevating the city to a key entertainment destination in Asia.
In summary, City of Dreams represents a high-stakes investment in Sri Lanka’s tourism future. With Lawrence Ho’s expertise, JKH’s substantial financial commitment, and the support of government licensing, the project is anticipated to bring transformative growth to Colombo’s tourism and luxury sectors. However, given the high pre-opening costs and fluctuating financial returns, its success will depend on sustained visitor demand and a stable regulatory environment for luxury and gaming industries.
