Despite uncertainties over Macau’s future, the RM13.4b resort capitalises on the booming tourism demand during CNY
HONG KONG • MGM Resorts International’s debut of its US$3.4 billion (RM13.4 billion) property yesterday is the latest bet on the world’s biggest casino hub, as licensing bids and China’s proposal to allow gambling on a nearby island cast uncertainties over Macau’s future.
MGM is among the last of the operators to develop on the family-friendly Cotai Strip, following Wynn Resorts Ltd’s Wynn Palace and Las Vegas Sands Corp’s Parisian. The resort’s opening this week capitalises on the booming tourism demand during the Chinese New Year (CNY) holiday that’s seen rooms at major hotels fully booked with increased rates.
The splashy addition, which includes a 2,000-seat theatre, comes as Macau faces competition from new destinations
across Asia, including a plan by the Chinese government that paves the way for casino gambling on the island of Hainan. Sexual misconduct allegations against magnate Steve Wynn have also cast a shadow over the industry even as regulators are setting out licence bidding rules.
“It will be difficult for MGM to beat other competitors’ new resorts ramp-up,” said Margaret Huang, an analyst at Bloomberg Intelligence. “Macau will always face regulatory risk from any changes from China. Operators will also face greater pressure from more new resorts and additional Asian gambling destinations.”
MGM’s second property in Macau is part of the industry’s efforts to transform the stretch of reclaimed land into a familyfriendly zone. As the operators in Macau push to develop the Cotai Strip, other destinations from Australia to the Philippines are gearing up to vie for visitors from China’s mainland. Closer to home, China is proposing to allow gambling in Hainan, which
could open the door to physical casinos over the long term. Casino operators are also awaiting Macau regulators to outline the process for casino-licence bidding later this year, with permits starting to expire from 2020. For now, analysts are confident that Macau’s growth trend will continue, and additions to Cotai will help draw more crowds to the hub.
MGM Cotai’s 1,400 hotel rooms will help drive gambling revenue growth in the city, Praveen K Choudhary, an analyst at Morgan Stanley & Co, said in notes to clients. Macau’s hotel occupancy rate at its top hotels has topped 90% the past year as wealthy Chinese tourists and casual gamblers flock to Macau.
“It’s a perfect time to open right at the eve of the Year of the Dog,” MGM CEO James Murren said in an interview in Tokyo last week, referring to the Chinese zodiac animal that marks this year. “I believe we have created a resort that exactly targets the market that’s the fastest-growing today — the upper-end mass market.” — Bloomberg