Bosses want to double Macau share after new casino opening
Posted by Gavin Smith on 03 Jun 2009 at 09:06
A casino operator has opened a $2.1 billion new venue in Macau and has declared an intention to double the firm's market share within 12 months.
Reuters reports executives at Melco Crown Entertainment Ltd are optimistic the gambling hub will see steadier times and even growth by the end of 2009 following a period of upheaval.
The company has just opened its huge City of Dreams resort on the Cotai Strip, in Macau, which is often compared to the bright strip of its US cousin Las Vegas.
According to Reuters, the firm already had about a 14 per cent market share before it opened the new casino.
Quoted by the agency, Lawrence Ho, chief executive of Melco Crown, said: "The darkest days for Macau are probably over, before the end of the year, we'll see flat or tiny growth."
"If we don't double what we have with Altira [the firm's existing resort], we'll be disappointed,"
The Melco Crown expansion move arrives as other companies including Las Vegas Sands have put a hold on new projects in Macau due to a regional slowdown.
Revenues in the former Portuguese colony have been slipping since the fourth quarter of 2008 after tighter restrictions were introduced for Chinese visitors looking to get visas to visit the island, while others have also said the world economic slowdown has had an effect.
Mr Ho, who is the son of legendary casino businessman Stanley Ho, also said the company currently did not expect to further expand elsewhere in the near future, and ruled out a move in America.
Mr Ho juniour holds about 35 per cent of Melco Crown, with Reuters adding the businessman formed the firm with Australian James Packer.
Both were reportedly at a glitzy opening of the new City of Dreams project.
Shares in Melco Crown have been performing well so far this year and have almost doubled in value so far in 2009.
Shares in other Macau gaming firms have also been doing well amid talk of a recovery in the region.
The City of Dreams has competition in the form of the Venetian Macau, run by US firm Las Vegas Sands, and boasting 3,000 rooms.
The new resort is part of a range of venues which could attract more visitors intent in staying for a longer period in the area. It is also hoped more international travellers could be attracted by the ongoing expansion.
Quoted by Reuters, analyst Aaron Fischer said the City of Dreams could be a "tipping point" for Cotai, adding: "It will start attracting more visits and that means more revenue being shared among the operators. We think it's going to be net positive for the Venetian."
Figures are impressive at the opening stage of the new casino - there are 520 gaming tables and two hotels with around 600 rooms combined. A third, set to be finished in October, will add a further 800 rooms.
Reuters added Mr Ho hopes the City of Dreams will increase the mass market segment for Melco Crown, leading to higher margins as the firm would not have to pay commissions to middle-man operators that bring in high-roller players.
