Gaming revenues on the decline
China Star Entertainment Ltd. will reportedly sell its Hotel Lan Kwai Fong in Macau to Chan Meng Kam, Golden Dragon chief and former member of the Macau Legislative Assembly. According to Inside Asian Gaming, the sale will proceed in early 2018.
In a filing to the Hong Kong Stock Exchange, China Star cited the subpar performance of its gaming segment, which saw shared revenue drop 22 percent in 2016 and 8 percent in the first half of 2017. “There is no sign that the performance in such segment will have substantial improvement in the short term,” the filing stated.
The company conceded that the property is not well-positioned in the “new Macau,” with its emphasis on the mass market and more diverse offerings.
“Following new resort hotels being opened in Cotai in recent years, there is keen competition among hotels in Macau,” said China Star. “The Macau government wants to attract more families and mass market visitors interested in non-gaming entertainment as part of its program of economic diversification which favors those resort hotels in Cotai.
“Since Hotel Lan Kwai Fong Macau is a casino-oriented hotel and its hotel rooms are designed to serve and satisfy demands from casino patrons, the board believes that the performance in Hotel Lan Kwai Fong Macau will encounter uphill challenges in the near future.”
Under the conditional purchase and sale agreement, Chan would acquire all sale shares and shareholder loans of China Star subsidiaries Charming Era, Exceptional Gain and Most Famous, and take ownership of Hotel Lan Kwai Fong, Casino Lan Kwai Fong and 18 residential units in Macau.
Chan will also acquire a group of companies held by units of China Star including Charm Faith, Classic Management, Best Joyful, Noble Million and Merit Noble. Classic Management operates Casino Lan Kwai Fong through an agreement with casino concessionaire SJM Holdings Ltd.
China Star said it will terminate its hotel and gaming operations and focus on its film-related and property development businesses.
