MGM Outpacing Mass Market in Macau ASIA & OCEANIA
MGM China reported a revenue increase of 11 per cent for the second quarter, taking revenue to HK$3.9bn, and with mass gaming accounting for nearly 80 per cent of the group’s profit
Mass market spike helps MGM China to report 11 per cent second quarter revenue increase to HK$3.9bn
CHINA CASINO OPERATIONS
JAPAN – With the stalled casino process now seemingly back on track in Japan, MGM Resorts has said it would be willing to invest US$10bn on a large-scale casino resort in Japan if gambling is legalised. A parliamentary committee meeting held in Tokyo last month has helped propel the optimism that legislation could be in place by the end of the year. At a meeting in November, MGM CEO James Murren highlighted Tokyo, Yokohama or Osaka as potential sites for casino development.
“We think there would be a tremendous amount of demand, and ultimately a public listing of these types of Japanese resorts would be very appealing,” Mr. Murren said in an interview with Reuters. He added that a REIT could be the best way forward with an MGM-controlled operating company responsible for expenses and investment paying rent to a property company owned by private investors and domestic and foreign companies.
“That could be an interesting way to expand the level of involvement, as there are many investors who are risk averse and looking for yield and others who are more risk tolerant,” Mr Murren said. He believed that a resort in Tokyo, Osaka or Yokohama could be built by 2022 to 23.
The renewed optimism has been sparked by Japan’s Prime Minister Shinzo Abe move to appoint three officials who are proponents of the casino bill to top level positions within the ruling Liberal Democratic Party. Toshino Nikai, secretary-general; Hiroyuki Hosoda, General Council chairman; and Toshimitsu Motegi, policy chief, have now confirmed their intention to try and pass the bill during this current parliamentary session, which ends on November 30. With the LDP now claiming an overall majority in upper and lower houses of parliament, there is growing optimism that the bill could be passed if it comes to a vote.
Over 20 localities in Japan showed interest in hosting casino resorts, which would also include hotels, convention facilities, retail, theme parks and entertainment facilities with support particularly strong in Osaka and Yokohama. With time running out for casinos to be put in place in time for the 2020 Olympic Games, and despite predictions they could generate $40bn a year, they could now be sidestepped altogether. MGM Resorts rival operators Las Vegas Sands Corp, Wynn Resorts and Caesars Entertainment had all been optimistic that the Prime Minister Abe would be able to pave the way to integrated resorts in 2014 and 2015 but discussions failed to make the parliamentary sessions. Kotaro Tamura, a Milken Institute fellow, went as far as to say: “This time, it’s 100 per cent happening.”
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MGM China reported a revenue increase of 11 per cent for the second quarter, taking revenue to HK$3.9bn, and with mass gaming accounting for nearly 80 per cent of the group’s profit. Te Group’s EBITDA margin grew to 33 per cent for the Period as a result of business mix and cost management, a 350bps improvement from in the second quarter.
For the period, main floor table games win increased by 13 per cent sequentially, compared to Macau mass market growth of approximately eight per cent. Hotel rooms at MGM Macau achieved an occupancy rate of 95.7 per cent during the period.
VIP table games win increased by three per cent sequentially. VIP table games turnover was increased by five per cent in line of the market. VIP table games win percentage was three per cent compared to 3.1 per cent in the second quarter.
Grant Bowie, Chief Executive Officer and Executive Director of MGM China said: “Operating efficiency is a core strategy as we
Rail system construction knocks Wynn off track
Macau
Wynn Resorts owner Steve Wynn has blamed a lack of high rollers at its new Wynn Palace Resort in Macau along with ongoing city infrastructure projects for the company posting a net loss of $17.4m in the third quarter.
Wynn Palace will be the first stop on a new citywide light rail transportation system from Macau International Airport. But as construction continues on the train line, Wynn says his venue is paying a price.
“I didn’t realise how critical the blockade was until I tried to cross the street,” Mr. Wynn said. “You take your life into your own hands when you try to cross the street with all the traffic.”
continue to demonstrate over the years. We focus on customer acquisition both on mass gaming and non-gaming leisure business, continue to drive operational excellence and to develop our shared capabilities. Te Group continues to see stability in the main-floor business. We are undergoing a remodelling of main floor at MGM Macauto pursue diversification including creating additional retail space and upgrading our food and beverage experiences.”
“We continue to move full steam ahead with the construction of MGM Cotai,” he added. “Te MGM brand resonates with visitors worldwide, and we are highly focused on growing our customer database and infrastructure to ensure success when we open our second resort in this dynamic marketplace in the second quarter of 2017. Te budget remains approximately HK$24bn. MGM Cotai is a first of its kind integrated resort with technology and entertainment offerings. We believe it will be well received by the market and we are confident to capture the growth opportunities of Macau.”
Wynn Palace generated $146.7m in revenue during the 40 days it was open in the third quarter. Referring to a lack of high rollers at the new venue, Mr Wynn said: “Eagles don’t flock, you got to catch them one at a time.”
Wynn Macau was also down though reporting net revenue of $518.1m, an 11.5 percent decrease from the third quarter in 2015. Overall for the company, net revenues were $1.11bn for the third quarter of 2016, an increase of 11.4 per cent, or $113.5m.
Te increase was the result of $164.6m from Wynn Palace and an increase of $15.9m from Wynn’s Las Vegas Operations, partially offset by a decrease of $67m from Wynn Macau.
Net revenues from Wynn’s Las Vegas Operations were $427.1m for the third quarter of 2016, a 3.9 per cent increase from $411.2m for the same period of 2015.
Taiwan
BetConstruct has now opened its new office in Taichung, Taiwan, bringing it closer to its existing and future partners in Asia. Te company has been working in the region for a few years and it has been BetConstruct’s intention to expand its local presence for some time and the new office in Taiwan have presented the ideal opportunity.
Lichun Hsiao, Head of the BC regional office in Asia, said: “We have comprehensive gaming products and services, 24/7 technical support and all- embracing marketing tools, which means our partners in the region will have all the necessary tools and assistance.”
“Our Asian office is dedicated to offering intuitive and localised service for partners in Asia. Such approach will eliminate the language barrier and, most importantly, lead to fast and responsive support,” he added.
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