MGM opens $4.5-billion resort in Macau

The MGM Cotai casino resort in Macau opened on Tuesday.
The MGM Cotai casino resort in Macau opened on Tuesday.PHOTO: BLOOMBERG

MACAU • MGM Resorts International hopes to "bark" louder in Macau with the debut of its US$3.4-billion (S$4.5-billion) property on Tuesday, just in time for tomorrow's Chinese Year of the Dog.

MGM is among the last of the operators to develop on the family-friendly Cotai strip, following Wynn Resorts' Wynn Palace and Las Vegas Sands' Parisian.

The resort's opening this week capitalises on the booming tourism demand during the Chinese New Year holiday that has seen rooms at major hotels fully booked.

The splashy addition, which includes a 2,000-seat theatre, comes as Macau faces new challenges.

MGM's second property in Macau is part of the industry's efforts to transform the stretch of reclaimed land into a family-friendly zone and strengthen the odds for continual prosperity.

As the operators in Macau push to develop the Cotai Strip, other destinations from Australia to the Philippines are also betting on new projects to hit the mainland Chinese visitorship jackpot.

Closer to home, China is proposing to allow gambling in Hainan, which could open the door to physical casinos over the long term.

Still, Mr Grant Bowie, chief executive of MGM China Holdings, said: "We live in a world with many business distractions. Any business needs to have the resilience and capacity." The Macau market can "overcome any of these challenges that present themselves".

Casino operators are also awaiting Macau regulators to outline the process for casino-licence bidding later this year, with permits starting to expire from 2020.

For now, analysts are confident that Macau's growth trend will continue and additions to Cotai will help draw more crowds to the hub.

MGM Cotai's 1,400 hotel rooms will help drive gambling revenue growth in the city, Mr Praveen K. Choudhary, an analyst at Morgan Stanley, said in notes to clients.

Macau's hotel occupancy rate at its top hotels has topped 90 per cent in the past year as wealthy Chinese tourists and casual gamblers flock to Macau.

"It's a perfect time to open right at the eve of the Year of the Dog," MGM chief executive James Murren said last week, referring to the Chinese zodiac animal that marks this year.

"I believe we have created a resort that exactly targets the market that's the fastest growing today - the upper-end mass market."

Most high-end hotels, including the Wynn properties, MGM Macau and those operated by Galaxy Entertainment Group, are fully booked during the 11-day holiday period that begins today.

Room rates have also jumped significantly, with average rates at Las Vegas Sands' Four Seasons Hotel doubling to US$670 compared with last year, according to Morgan Stanley surveys.

The city's largest junket operator Suncity Group, which provides credit to its big gamblers, also expects betting volume to rise 20 per cent in the first quarter from last year, boosted by the New Year, said Mr Andrew Lo, executive director of the group's listed vehicle, Suncity Group Holdings.

Mr Grant Govertsen, an analyst with Macau-based Union Gaming Securities Asia, said: "I'm not hearing anything to suggest that Chinese New Year will be anything but strong."

Analysts will be watching to see if Macau fares better this holiday than the Golden Week one in October, when the enclave reported disappointing visitor number and weaker-than-expected gaming revenue. For now, operators are optimistic that Lady Luck will cast her favours this time round.

"We are more than full," Mr Allan Zeman, chairman of Wynn Macau, said. "I wish we had another hotel right now."

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on February 15, 2018, with the headline 'MGM opens $4.5-billion resort in Macau'. Print Edition | Subscribe