Bringing up the rear: SJM’s Lisboa Palace
MGM China Ltd. is getting ready to unveil its long-awaited MGM Cotai, the next-to-last integrated resort planned for Macau’s Cotai Strip. But it won’t be this month.
MGM Cotai was scheduled to open for business on January 29. In a press release last week, the company pushed that back into the “month of February.” The company had previously said the official grand opening would be held on February 13, but didn’t comment on whether that was still a target date. The company also did not cite a reason for the delay, saying only that it was “still undergoing government approval process.”
Nonetheless, details of the project have been leaking out.
A central part of the guest experience will be an attraction known as Spectacle. According to Inside Asian Gaming, it covers a space as long as a football field and has been described as “an innovative, multi-dimensional sensory experience.”
“Everyone wants to know what is Spectacle,” said MGM China CEO and Executive Director Grant Bowie. “It’s a digital canvas, a reflective space. It’s mesmerizing, whimsical and entertaining. You really have to see with your own eyes to understand it.”
Bowie called MGM Cotai “a property of discovery. We are not only building a luxury integrated resort, but creating an experience that continues to surprise and captivate our guests. With Spectacle, we provide an interactive and ever-changing experience to our guests to create great memories at MGM Cotai.”
Spectacle was created in partnership with some of the industry’s best architectural experts, including Rockwell Group, which created the overall design concept. The LED walls and their contents are a collaboration with digital, visual and audio experts including Obscura Digital, Smart Monkeys Inc., Electrosonic Inc., VER and LAB at Rockwell Group. It is programmed with ultra-high definition LED displays including more than 700 LED lights combined with more than 130 speakers in a single atrium space.
Macau Business speculates that MGM took almost five years to build the smallest of Cotai’s IRs because of a shifting market. The resort was originally slated to open in early 2016, but at that time, the city was in recession due to a crackdown on corruption by Beijing. China’s action sent high rollers heading for the hills and caused a massive drop in revenues in the gaming sector.
“The delay gives MGM a better perspective on what’s working at rival venues, and despite it increasing the total costs of the project, adding about $100 million more to the tab it could see the casino operator ultimately holding the winning hand,” said Motley Fool analyst Rich Duprey.
Telsey Group analyst David Katz said the delay in opening was “likely a strategic positive in that a later opening should meet a stronger market and more competitive landscape.”
Bowie has gone back and forth about the property’s primary player focus. In 2016, as the recession started to ease after two years, he said, “In Cotai, we’ve already made the decision that we’re envisaging opening only with mass tables. That’s obviously the basis of where we see the future of Macau and that’s the decision we have taken at this time. We are going to walk forward as a mass-only property.”
But last October, in light of a resurgence in VIP play, Bowie announced, “We will certainly be opening with only mass tables but as we build up the property, we would expect that in time we will have junket operators.”
In November, he said the operator plans to increase the number of VIP tables at MGM Macau on the peninsula and open a new high-roller room there. Speaking of Cotai, he added, “As we indicated earlier, in the first phase we will not have any gambling promoters, but we have a definite plan to integrate these types of resources as soon as possible.”
The government has authorized a total of 100 new-to-market live dealer tables at the HK$27 billion (US$3.46-billion) Cotai property, with an additional 25 new-to-market tables incoming on January 1, 2019. MGM China says the Cotai property has capacity for up to 500 gaming tables, but the government’s cap on tables is limited to 3 percent per year through 2022. MGM also may install more than 900 new slot machines on its casino floor at Cotai.
Meanwhile, SJM’s Grand Lisboa Palace, now under construction and schedule to debut in late 2018, may not actually open until the first quarter of 2019. As late as late August, a note from brokerage Sanford C. Bernstein said, “While the company is still sticking to its second-half 2018 opening, we view this as very unlikely. Based on our research, we estimate that the property will not open until early 2019 and adjust our model to reflect this view.”
And Grant Govertsen of Union Gaming wrote in a note, “We had previously baked into our model a 4Q18 opening for Lisboa Palace and are now shifting that to 1Q19” after delays caused by Typhoon Hato in August and a fire on the construction site in September.
Ben Lee, Macau-based gaming expert and managing partner of IGamiX, told Macau Business that the latecomers have cause for concern due to the delays. “The fact that their concessions are the earliest of the six to expire raises some concerns among investors that the technical period for potential recovery of their capital investment is extremely short, and would in any other commercial environment be unfeasible.”
But SJM CEO Ambrose So says Lisboa Palace will be the “most exquisite of Macau’s resorts,” with room for 700 gaming tables and 1,200 slot machines.
