HR, Melco also part ways on Spain bid
Before the ink was dry on a contract to build Europe’s largest casino resort, U.S.-based operator Hard Rock International pulled out of the plan, according to stock market filings.
On June 26, Hard Rock, its former partner Melco International Development and local firm Cyprus Phasouri (Zakaki) Ltd. signed a deal to build the integrated resort project in the Limassol region. In 2016 the consortium won the sole Cyprus casino license, which came with a 30-year term and a monopoly in the market for the first 15 years.
At the last minute Melco filed papers with the Hong Kong Stock Exchange saying it had reached an agreement to buy Hard Rock’s stake in the deal. According to the documents, Melco and Hard Rock each held a 35.37 percent stake in the joint venture; Melco now will control 70.74 percent. No price was disclosed in the transaction, and the change must be approved by the government.
Hard Rock’s exit took place just days after it severed a similar agreement to work with Melco on a proposed integrated resort project in Spain’s Catalan region. Speculation is that the company, owned by Florida’s Seminole Indians, may be redirecting its focus to its North American operations, specifically its acquisition of Atlantic City’s Trump Taj Mahal casino from former owner Carl Icahn and the rebranding of the Rideau Carleton Raceway in Ontario. Hard Rock has promised to invest $500 million in the aging Boardwalk property, once the centerpiece of Donald Trump’s Atlantic City gaming empire, and will invest millions in the Ontario racino, as well.
Though the players have changed, the game remains the same. Cyprus Commerce Minister Yiorgos Lakkotrypis says the government wants to see operations begin “as fast as possible,” and added that the 15-year period of exclusivity “started ticking as of yesterday.”
The Associated Press reports that the casino will include 136 gambling tables and 1,200 gambling machines. An adjoining luxury hotel will have 500 rooms, a health spa and 1,500-seat concert hall. Lakkotrypis says the resort will represent an investment of more than €500 million (US$558 million) and will create around 4,000 new jobs during construction, with another 4,000 jobs to be created once the resort is open. Lakkotrypis says the project should attract 300,000 additional tourists to the Greek-controlled island nation each year. Tourism currently contributes more than 20 percent of Cyprus’ economy.
“The project as has been proposed foresees the creation of Europe’s only integrated casino resort,” Lakkotrypis said. “The casino resort will, among other things, include Europe’s largest casino.” Finance Minister Harris Georgiades has said the casinos would bring in €100 million (US$114 million) a year in taxes.
Andy Choy, president of Melco’s Resorts and Entertainment division, told the AP the resort should be built by the first half of 2020. Meanwhile, the partners have permission to open an interim casino in Limassol and four smaller casinos in other cities in Cyprus. Those will start operating early next year, said Choy.
In a story about the development, Cyprus Property News reported that the previous government under Demetris Christofias “vowed to never allow a casino for social reasons.” But the 2013 financial crisis spurred the current government to embrace the plan.
“Our goal is the improvement of incoming tourism, increasing arrivals, and average spending per capita, and also to see this contribute to the ongoing efforts to address the problem of seasonality in the Cypriot tourism industry,” said Lakkotrypis. “Our other strategic objective was the creation of new jobs and additional tax revenue, supporting sectors that will be associated with the casino, and attracting further foreign investment.”
