Murren: A “leap of faith” before concession renewals
On Las Vegas-based MGM Resorts International has finally opened its $3.4 billion resort, MGM Cotai, in the Cotai district of Macau.
According to MGM CEO James Murren, the development constitutes a “leap of faith” by the U.S. based company, which has no guarantee the local government will extend its gaming concession after it expires in 2020.
“I have no answers but I have a lot of trust” that lawmakers will see fit to renew MGM’s license, Murren said. “We feel we’re the kind of company that the government would like to see here.”
The new property’s distinctive silhouette is an eye-catcher, resembling stacked, gilded jewel boxes. In keeping with the government’s mandate to diversify beyond gaming, the resort includes a $13 million art collection including more than two dozen Qing Dynasty carpets; luxury retail stores; celebrity chef restaurants; and plenty of entertainment. Among the attractions is an atrium covered in LED screens, described by MGM as a “mind-bending and harmonious technological symphony.”
But gaming won’t exactly take a back seat. MGM Cotai debuted with almost 1,000 slot machines 100 gaming tables, including 77 transferred from the company’s peninsula resort. Another 25 tables will be available next January. As yet there is no VIP room, but Murren said he expects to bring in up to five junket operators by summer.
A spokesman said, “At this stage, we are focusing on the mass market first. So, we have mass market gaming area and also a premium area. But the VIP clubs will come at a later stage.”
Right now, about 500 of a total 1,390 hotel rooms are open, and MGM said they’re at full occupancy through the end of the month. The resort will also include bi-level “sky lofts” and mansion villas.
MGM China CEO and Executive Director Grant Bowie said the new resort will be “vital in terms of the process of concession renewal.”
“The concession renewal will not be determined by how successful we are at running casinos, it’s how successful we are at diversifying and allowing Macau to become more than just a gaming town,” he said at the opening.
“Everything we’ve tried to do is to create multiple uses for every space, multiple opportunities to create more visitation to Macau” and boost Macau’s profile as “a non-gaming destination.”
The property opened almost exactly five years after the February 2013 groundbreaking, noted the South China Morning Post. It was beset by delays, including damage from Typhoon Hato in August 2017, and additional delays in the government approval process. Now that it’s open, said Bowie, “Our expectation is that we will meet our shareholders’ expectations in terms of our return on that investment.”
With MGM Cotai, he said, “We‘ve created a niche for ourselves at the upper end of the market. We believe there’s greater potential for sustainability and core customers in terms of driving incremental revenue and supporting the significant investment we’ve made.”
Asked about the long-term impact of the delays, Bowie said, “We’ve always wanted to open when the property is ready because of the challenges we’ve endured. The biggest challenge for us was August when we had the largest typhoon come through here. It was a fairly sensitive time for us because we did sustain quite a bit of damage.
“The delay was not significant to us though because we’re here for the long term and that’s what I think is important. In terms of ramp-up, the one observation I would make is that clearly every time a new property opens, you would hope it creates an inflection in visitation but the reality we’ve also seen is that each property takes a little bit longer to ramp-up than he previous.”
He added, “We’ve put in place many, many strategies which we believe will allow us to get up to our optimal performance as quickly as we can and the single most important facet in that will be the strength of the market. What we will be doing is everything we can to respond to those opportunities and maximize the return for us and our shareholders.”
The 2018 Chinese New Year, celebrating the Year of the Dog, lasts through February 21.
