Macau money to fund U.S. investments
MGM Macau plans a major upgrade to freshen the property and bring in more mass-market players, according to CEO Grant Bowie.
“To remain competitive, we plan to invest approximately US $100 million… in capital this coming year,” Bowie said in a fourth-quarter conference call on February 16.
“Our future capital projects for MGM Macau include a redesigned main floor layout to improve traffic flow and operating efficiencies,” said Bowie on the call. He said the resort will also be introducing “a range of nongaming products in the form of over 15 new retail outlets and re-conceptualized food and beverage offerings to add capacity and diversity.”
That approach is in keeping with Chinese President Xi Jinping’s call for a more vibrant, multifaceted economy based on attractions beyond gaming. Macau’s 35 casinos draw some 30 million visitors each year and have generated as much as $34 billion per year in revenue.
Macau is still the world’s leading gaming destination by far. But Xi’s recent war on money laundering and graft has caused high rollers to flee the city for other markets, including Manila, Singapore and Vietnam. And that’s got casino operators looking to the mass market for solutions.
“Since the People’s Republic launched its anti-corruption campaign, the casinos have been facing big problems,” sociologist Larry So of the Macau Polytechnic Institute told MSN.com. “Business is declining because high-ranking officials and the rich do not dare come here to play.”
According to GGRAsia, mass-market players contributed to approximately 75 percent of MGM China’s earnings before interest, taxation, depreciation and amortization in the fourth quarter. That’s an increase of 60 percent from the previous year.
In Union Gaming’s report on the fourth quarter outcome, the research firm said it was “encouraged by MGM’s performance in the market.”
“Margin performance was solid for MGM in 4Q14 despite concerns of margin degradation in the market. Also, MGM’s Cotai development remains on track for a 2H16 opening. This is important, as the opening remains a cornerstone of MGM’s longer term story.”
However, parent company MGM Resorts reported a net loss of $342.3 million compared to a loss of $56.8 million in the same quarter in 2013, reported the Las Vegas Review-Journal. That’s a loss per share of 70 cents compared to 12 cents per share in the previous year.
But MGM is putting its revenues from Macau to good use in the United States, funding reinvestments in Las Vegas, Maryland and Massachusetts, Union Gaming reported.
