New casino in Macau sparks renewed optimism
Posted by Gavin Smith on 11 Jun 2009 at 13:06
The gaming market in one of the world's most up-and-coming international gambling destinations looks ready for a new period of optimism, according to reports.
The Chinese territory of Macau has had a tough time of it over the last 12 months, with some of its biggest casino companies experiencing financial difficulties and even putting a hold on new construction projects.
It has rapidly developed a reputation as a major rival to the likes of Las Vegas, and is now no longer just attracting local visitors but international gamers and high-rollers.
Flashy casinos run by both traditional local firms and the likes of the big American gaming conglomerates have sprung up along an alternative to the Las Vegas strip.
But a combination of factors saw a slump in the region's sector last year, which posed the question as to how many operators and casinos in Macau would emerge unscathed from the world financial crisis.
But according to Bloomberg, the recent opening of City of Dreams, the latest in a number of new developments, has been well received and attracted large numbers.
Created by James Packer and Lawrence Ho, the facility has been five years in the making and its opening earlier this month was a kind of rallying call for an industry which looked in serious difficulty until recently.
A huge hotel and casino along with other venues, the project was opened by the two entrepreneurs to a battery of camera flashes in front of crowds of eager gamers.
Mr Ho's father, Stanley, held a gambling monopoly in Macau for years until the arrival of the Las Vegas Sands corporation in 2004. More casinos backed by American names followed, and the destination quickly became a world gambling hub.
But the arrival of the world financial slowdown last year appeared to spoil the party, as did China's decision to restrict visa requirements for citizens who wanted to visit.
The result was a hit on the stock market for many companies which own casinos in the area, with values downgraded. As a result tools were downed on some projects, including some being built close to the City of Dreams by Las Vegas sands.
This also put a question mark over the City of Dreams, with Bloomberg saying the gambling licence for the scheme came in at $900 million, or 40 per cent of the $2.1 billion cost of the project as a whole.
But the doors opened on June 1 with a fanfare, and gamers and guests were reportedly not in short supply.
March this year saw the first chinks of light as cash started to come back to the sector. As a result shares in some companies rose again, including in Las Vegas Sands and others.
Furthermore, some people are confident that the Chinese visa restrictions can be got around, perhaps through second passports for rich gamers, and through package holiday firms for other visitors.
According to Bloomberg, not only the City of Dreams was busy on its opening day. There were also reportedly plenty of people at the Venetian close by and at the grand Lisboa, which is run by the older Mr Ho. MGM Mirage, part-owned by Stanley Ho's daughter, Pansy, was also said to be busy.
Of course, no one can say with much certainty how far the recovery will go and just how much progress Macau can make in a short space of time. But many believe that Macau can come back bigger and better than before.
However, Bloomberg also reported not all new casinos and venues in Macau have been an overall runaway success. Bloomberg also pointed out that Gabriel Chan, an analyst at Credit Suisse, said only just over a quarter of revenues in Las Vegas come from gambling, whereas everything else comes from the likes of shows, eating and drinking and shopping.
Just how gambling-reliant Macau gets on in future could be anyone's guess.
