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China – Mixed response to MGM Cotai’s eventual opening

By - 20 February 2018

Following months of delays, MGM Cotai, the 1,390-room hotel casino has opened its doors in time for Lunar New Year.
MGM Resorts has more than tripled its number of hotel rooms in Macau as well increasing MGM’s overall gaming table count in the hub by 29 per cent to 552.

James Murren, Chairman & Chief Executive Officer of MGM Resorts International and Chairperson & Executive Director of MGM China Holdings Limited, said: “We set out with a vision to develop an integrated resort that brings first of its kind experiences to Macau and beyond. I am incredibly proud of the talented global team of MGM professionals for bringing this vision to life with the opening of MGM Cotai.”

Pansy Ho, Co-Chairperson and Executive Director of MGM China Holdings Limited, commented: “Macau SAR is stepping into its 20 years and has made remarkable achievements. The city has now become a distinguished ‘Global Brand’, allowing us to showcase our ambition and determination by developing an architectural ‘Jewelry box’ for the city.

“Serving Macau has always been MGM’s mission. With the vision of ‘To inherit the past, to explore the future’, we leveraged innovation and artistry to tell the story of Macau and create extraordinary moments for the people of Macau as well as guests from around the world.”

Grant Bowie, Chief Executive of MGM China, said: “Every time a new property opens, you hope it creates an upward inflection in the visitation. But the reality we’ve also seen is that these properties took a little bit longer to ramp up than the previous.”

Mr. Murren, added: “MGM is committed to supporting the development of Macau as a global tourism destination and I am grateful to the Macau government for allowing us the opportunity to invest and develop a second property here.”

The gaming floor has opened with 177 table games, dominated by baccarat, with 100 new-to-market gaming tables and 982 slot machines. MGM China moved 77 tables across from the peninsula. MGM Cotai is guarded by a 38-ton MGM Golden Lion 33 feet tall and made from 32,000 sheets of 24-karat gold foil. The $12.7m art collection within the property features more than 300 contemporary Asian paintings and sculptures, as well as 28 Chinese imperial carpets dating from the Qing Dynasty that once adorned the Forbidden City in Beijing.

Some analysts were underwhelmed though.

Sanford Bernstein’s Vitaly Umansky, said the opening night, was ‘not a whimper, not a bang but a long ramp up.’

“It felt more muted than prior openings on Cotai,” he said. “While the property brings some new elements to Macau (digital theatre, grand atrium with digital art) and MGM’s food and beverage offering has greatly improved, the casino layout, in our view, is not ideal and suffers from the property’s long, narrow footprint.”

“The building was opened to the public at 7:30pm, but visitors into the property were slow to arrive and we did not witness large crowds. While the casino was somewhat full later in the evening, the numbers of people appeared significantly lower than seen during the Parisian and Wynn Palace openings.”

Morgan Stanley analyst Praveen Choudhary added: “It is important to note that early impressions of the casinos have not been accurate in predicting the eventual success of a casino, but even so, many investors found this resort underwhelming.”

JPMorgan analysts DS Kim and Sean Zhuang added: “We couldn’t find anything thesis changing.”

Chelsey Tam an Analyst with Morningstar said it had been a ‘successful’ opening. “Given the recovery of the gaming market and the decent accessibility, we expect to see faster ramp up compared with the initial launch of Wynn Palace. Foot traffic in the retail area and the base mass gaming section of MGM Cotai was very strong on the night, though the foot traffic tapered off closer to the high-end side of the property. The opening is just in time to capture the seasonally strong Chinese Lunar New Year holiday.”

The opening was followed by MGM China’s full year results which saw revenue increase by three per cent to HK$15.4bn, driven by a strong fourth quarter results where revenue was up ten per cent.

Full year results saw main gaming floor revenue at MGM Macau increase by 5.9 per cent to HK$8.1bn with slot machine revenue up 11.9 per cent to HK$1.4bn.

Mr. Bowie added: “What we recognize globally is the transformation of people’s life to the digital platform. At MGM Cotai we are creating a space that our guests can actively participate and experience the content we offer. We believe MGM Cotai will drive greater product diversification and bring more advanced and innovative forms of entertainment to Macau as it grows as a global tourism destination.”

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