China – MGM to delay Cotai opening as revenues slide by a thirdBy Phil - 22 February 2016
MGM Resorts has confirmed it is delaying the opening of its casino on Macau’s Cotai strip until 2017 with the hope that market conditions will have improved by then.
The US$2.6bn MGM Cotai project has already seen its opening delayed from early 2016 until the autumn of 2016.
MGM stated: “The company has made the strategic decision to move the opening of its MGM COTAI development towards the end of the first quarter of 2017 based on current market conditions and the timing of other resort openings in the area. We believe the extra time will allow us to further fine-tune our offerings in an evolving marketplace, ensure that we are being as efficient as possible, and ultimately come out with a spectacular end-product offering unique MGM experiences to the market. We believe this is the right decision for a healthy launch and long term success of MGM Coati. The construction budget remains at HK$24bn.
It added: “As a Macau-based business, MGM believes our long term success depends on our commitment to the whole community. Approximately 80 per cent of our team members are local and we have focused training and development programs for our local team members. Meanwhile our volunteer team gave over 5,800 hours of community service in 2015, a record for our company.”
The Cotai Project will have 1,600 hotel rooms, 2,500 slot machines, and up to 500 gaming tables with a budget of approximately HK$20bn, excluding land cost and capitalised interest. Over 85 per cent gross floor area will be given over to non-gaming offerings, including restaurant, retail and entertainment attractions. Macau has suffered 20 consecutive months of year-over-year decline.
During the last year, MGM China recorded total revenue of HK$17.2bn, a decrease of 33 per cent from a year ago, compared with 34 per cent decline in the broader Macau market and 38 per cent decline for Peninsula market. MGM’s market share remained stable despite opening of new properties in Macau.
Main floor gaming accounted for 81 per cent of profit in the fourth quarter. The group continues to see stabilisation in the mass market. Mass gross gaming revenue in Macau has been showing improvement for two consecutive quarters. For the Group, main floor table games win in the fourth quarter was up 12 per cent sequentially, while VIP table games win was down 22 per cent.
Grant Bowie, Chief Executive Officer and Executive Director of MGM China said: “MGM is committed to grow our presence in Macauand share these opportunities with our community. With MGM COTAI opening in 2017, we will bring added and new MGM experiences to the market, helping to develop Macau as a world tourism destination.”
MGM’s first casino in Macau opened in 2007 at a cost of $1.25bn. The decision to delay opening follows a similar move from Wynn Resorts, who has delayed the opening of Wynn Palace until July of this year.