Melco Crown to open Cotai resort in October
James Packer has resigned his post as chairman of Crown Resorts in the wake of a 41 percent fall in fiscal-year net profits, to $385 million. The company has been hard-hit by the historic decline in Macau’s once-invincible gaming industry, along with a big write-down in the value of its overseas investments, according to ABC Online.
Packer is Crown’s majority shareholder. He will stay on as a member of the board and senior executive director. He says he is as committed as ever to the company’s success, and called it his “No. 1 business priority and passion.”
“I will continue to drive key projects, including our joint business in Asia and our planned resort in Las Vegas,” he said in a statement. “I will also be working to improve Crown’s online strategies, an area where I believe we could be doing better and a platform which will provide great potential for global growth in the future.”
Packer will retain his role as co-chairman of the company’s subsidiaries Melco Crown Entertainment in Asia and Alon Resort in Las Vegas. His successor in the chairman role at Crown Resorts will be Robert Rankin.
Crown enjoyed growth in Australia, with earnings up 4 percent to $947 million and revenues up 14 percent to $3.2 billion, reported ABC. In a research note, Deutsche Bank said “Crown Melbourne is benefiting from strengthening domestic gaming revenue and increasing Chinese visitation, while Crown Perth is benefiting from lower operating costs.”
But the firm’s overseas investments lost much of their value; Crown’s profits in Macau plunged 58 percent to $122 million, and the company took a $61 million impairment charge on the value of its investments in Las Vegas as well as a planned Sri Lankan project, which has been tabled.
In fairer economic times, Packer’s joint venture with Lawrence Ho planned the lavish $3.2 billion Studio City resort on Macau’s Cotai Strip. Unfortunately for the partners, the Hollywood-themed destination will debut in the midst of the jurisdiction’s steep decline. The grand opening is set for October 27.
Ho, Packer’s partner in Melco Crown Entertainment Ltd., called the slump “a transitional phase from a very VIP gaming-centric market to more mass-focused. It’s probably going to be a rough second half. Hopefully with Studio City opening, it would be a new catalyst for the market.”
Even Melco’s competitors apparently wish the new resort well and hope it will stimulate the marketplace. Ambrose So Shu Fai, CEO of SJM Holdings Ltd., told the Chinese-language newspaper Jornal Do Cidadão he hopes the October opening will draw new tourists to the region.
But Studio City could be hobbled by insufficient gaming tables. According to Bloomberg News, Melco is “actively” talking with the Macau government in hopes of getting 400 gaming tables for the property.
“We hope the government will reward us more for the hard work we have put in over the last 10 years,” Ho said at a press conference. But Galaxy Entertainment Group got just 150 gaming tables for its Phase II projects, which opened in May. Ho said he is “extremely concerned” about Galaxy’s allotment and what it could portend for Studio City.
In the Philippines, meanwhile, City of Dreams Manila—a joint venture launched by a unit of Melco Crown—has laid off 100 staffers, or about 2 percent of the workforce, just six months after it officially opened February 2. Charisse Chuidian, vice president for public relations at the property, said “employment of the affected employees will resume when business improves.”
According to Reuters, the property’s stock “is the worst performing amongst its peers, having fallen 44 percent so far this year.” The news outlet blamed a lack of Chinese high rollers, who were expected to patronize the casino in Manila’s Entertainment City.
