New emphasis on nongaming
It may take a superhero to reverse the downward slide in Macau. Melco Crown Entertainment is calling on Batman, Superman, Wonder Woman and the Flash, among others, to help bring more families to the Chinese gaming hub, and to its new Studio City casino on the Cotai Strip.
According to Bloomberg Businessweek, the company, in partnership with Time Warner, is developing a 30,000-square-foot (2,787-square-meter) Warner Bros. Family Entertainment Center at its new Studio City. Among the attractions: a virtual reality ride called “Batman Dark Flight”: and a 426-foot (130-meter) Ferris wheel called the Golden Eye, the tallest such attraction in Asia. The wheel was “inspired by two asteroids shooting through a Gotham City building,” according to the company.
At a recent press conference in Macau, Lawrence Ho, CEO and co-chairman of the company with James Packer, said the $3.2 billion Hollywood-themed resort is scheduled to open in the third quarter of 2015. It will have two Art Deco-style hotels with a total of 1,600 rooms. The Celebrity Tower will target mass-market visitors, and the Star Tower will focus on premium guests. The retail area will include a 300,000-square-foot mall named Boulevard at Studio City to be managed by Taubman Asia, reported the Daily.
The casino will have at least 400 table games; Ho says the resort was built “with a capacity for 500 gaming tables, but I have no idea how many we tables are going to get.”
He also acknowledged that the Batman attraction is a direct response to Chinese President Xi Jinping’s call for more nongaming tourist draws.
“If you look at China, how many more billionaires are going to drop out of trees in the next 10 years?” Ho said. “It is going to be the rise of the middle income earnings demographics. These are the younger people who want to travel, experience the world.”
“In this non-gaming era,” according to the Macau Business Daily, “entertainment for families is the new winning card.”
The resort will also include Studio City Entertainment, a 5,000-seat multi-purpose arena to be managed by Global Spectrum; the House of Magic with illusionist Franz Harary; a Pacha Nightclub; and 30 food and beverage outlets including the Cosmos Food Court, “where customers can dine while watching holographic projections of space scenes,” according to the Business Daily.
Ho has predicted that the casino industry in Macau will recover in the second half of the year and end 2015 with growth in the “low- to mid-single digits,” boosted by Studio City and other openings. Almost 2 million mainland tourists visited the former Portuguese colony in November, an increase of 28 percent and 70 percent of the total, according to government figures.
In the past six months, the once indomitable gaming destination has seen a startling decline in revenues as the Chinese government cracks down on money laundering and corruption. During a visit in December, the president warned Macau Chief Executive Fernando Chui to diversify an economy that has relied on the casino industry for more than 80 percent of total government revenue. The former Portuguese colony recorded its first-ever annual decline in 2014 as Xi’s anti-corruption drive scared away high rollers.
Deutsche Bank analyst Karen Tang and Credit Suisse Group analyst Kenneth Fong estimated Macau casino revenue in 2015 would fall 8 percent and 6 percent respectively. CLSA Ltd. analyst Aaron Fischer and Bank of America Merrill Lynch analyst Billy Ng have predicted a 9 percent and 10 percent decline.
Melco Crown announced January 2 that it would delist from the Hong Kong stock exchange but keep its Nasdaq listing.
“We have 99 percent of our trading volume in the United States. From the very beginning our primary listing has been on Nasdaq. And so the board of the company decided to focus on Nasdaq,” Ho said. “The delisting has nothing to do with the anti-corruption campaign in China and it is not connected at all to the slump in Macau gaming revenue.”
