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END OF PACKER’S SRI LANKA PLAN?
The Sri Lanka presidential election could spell the end for Crown’s attempts to develop a $US400m Colombo resort Sri Lanka - Casino Operations
The election of a new president in Sri Lanka could spell the end for Australian operator Crown’s attempts to develop a $US400m casino resort in the capital of Colombo.
CHINA – RECORD MONTHLY DROP ACROSS MACAU Macau’s casinos recorded their worst year in 2014 with rev- enues falling 2.6 per cent to 351.5bn patacas ($44bn) for the year bringing a decade of explosive growth to an end.
Analysts’ worst fears were compounded in December with a record 30.4 per cent monthly drop in Gross gaming Revenues for the month, year-on-year, forcing the annual figure below analysts expectations. Chinese President Xi Jinping’s much publicised efforts to catch ‘tigers and flies’ with his anti-corruption drive has put off VIP play. Analysts don’t expect to see much improvement in Macau’s growth until mid-2015, when new resorts open.
Standard Chartered’s Philip Tulk said: “The VIP heyday is over. The anti-corruption crackdown doesn’t look to be a short-term phenomenon. Unless the top end recovers, the new capacity isn’t going to drive gross gaming revenue sig- nificantly positively.”
There are currently seven new casino resort properties being built in Cotai, all of which are scheduled to open between 2015 and 2017.
Galaxy Entertainment will double the footprint of its Galaxy Macau resort by mid-2015 and will be Macau’s next major completed project. Melco Crown Entertainment has said the opening of its Studio City project is also on course for mid- 2015. Las Vegas Sands will open its US$2.7bn Parisian casi- no resort, including a scaled version of the Eiffel Tower, in November 2015 with 3,000 hotel rooms. It has requested 450 gaming tables from the government. MGM Resorts plans to double its standing in Macau with the mid-2016 opening of its MGM Cotai project in 2016 with 1,600 hotel rooms, 2,500 slots, and up to 500 gaming tables. Wynn Resorts meanwhile says it will open the $4bn Wynn Palace on Cotai by Chinese New year 2016 with hopes of 500 tables and a 15,000-seat entertainment venue called Wynn Diamond Coliseum. SJM is building on Cotai for the first time with its Lisboa Palace opening in 2017 with 700 gaming tables and 1,000 slot machines as well as approximately 2,000 hotel rooms.
Falling revenues wiped away $91.6bn from the market value of Macau’s six casino stocks in 2014. Sands China dropped by $HK208bn or 40 per cent of its value over the year, marking the biggest drop by any of the Macau casino stocks.
Melco Crown, who confirmed it would be delisting from the Hong Kong stock exchange, saw its share price fall 35 per cent or $HK61bn.
SJM Holdings experienced a 52 per cent loss in value repre- senting a drop of $HK73bn. For some analysts, the success of Macau’s casinos in recent years has emphasised the downward trend in 2014.
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Newly elected Maithripala Sirisena has promised to ‘disallow’ licences for casinos put forward by James Packer’s Crown Resorts and local developer John Keells Holdings.
Mr. Sirisena switched from the ruling party in November having previously worked under for- mer president Mahinda Rajapaksa as health min- ister. The previous government had wanted to double the foreign tourist count to 2.5m by 2016. It had wanted to revamp an entire street along Lake Beira for new casinos, creating Sri Lanka’s own mini Vegas Strip. The plan was to offer 10-year tax breaks on income generated from visitors.
Crown has planned to build Crown Sri Lanka, dubbed a must-see landmark resort located on Beira Lake in the Colombo resort district. The 5- star facility would have offer approximately 450 rooms and suites, signature dining experiences and entertainment offerings, conferencing and event spaces, gaming areas, retail outlets and a specially designed water feature attraction.
John Keells Holdings, Sri Lanka’s largest listed conglomerate, was planning to invest $650m into another resort, marking the largest investment by
a domestic company in Sri Lanka. The resort, which was due to open in 2018, would have included a 900-room luxury hotel, conference venues, a shopping mall, residential apartments, an office complex and a casino.
Whilst progress had been brisk throughout 2013, the plans stalled following opposition from Buddhist leaders amid concern over the proposed tax breaks for the project.
One analyst said even before the election of the new government: “I don’t think investors thought, and certainly Crown wasn’t selling the idea that this was going to go ahead.”
SJM linked to management of Paradise City in South Korea
SOUTH KOREA Reports out of Seoul are stating that Macau-based SJM Holdings has been offered the chance to jointly manage the future casino at Incheon International Airport by its owners and developers; Paradise and Sammy Holdings.
None of the parties involved have so far commented on the link. If it were to materialise it would mark SJM’s first move into South Korea and would give Paradise and Sammy access to SJM’s play- er database for what will be a foreigner-only operation. To be called Paradise City, it will open in the first half of 2017 at the air- port’s International Business Center on Yeongjongdo Island at a cost of $1.2bn.
Construction work began on the resort in November. It will house
160 gaming tables and 350 slots alongside two hotels, a shopping mall and exhibition space.
Hajime Satomi, Chairman of the Board and Chief Executive Officer for Sega Sammy, said: “We’re con- vinced that Paradise City will achieve great development and become a driver of South Korea’s tourism industry as a major pres- ence in the northeast Asian region along with Incheon International Airport, which is growing in stature as an Asian hub airport. In 2017, we promise to open Paradise City as a world-class site that will excite and amaze everyone.”
Phil-Lip Chun, Chairman of Paradise, added: “We will build a true integrated resort that meets today’s needs while giving sincere consideration to culture, arts and people’s daily lives.”
Philippines Mid-December Melco Crown Entertainment confirmed the soft opening of City of Dreams Manila. Opening at a cost of US$1.3bn, the casino has 365 gaming tables, 1,680 slots, 1,680 electronic table games and around 946 hotel rooms in three hotels. But the gaming floor will only constitute a part of the resort. The operator has teamed up with The Ault Group, the nightclub consulting firm, bringing the world-renowned nightclub brands; Pangaea and Chaos, into the fast- growing Philippine market. Renowned for pioneering the “Ultra-Lounge” concept in the 90’s, Pangaea has become a staple for those familiar with its intimate and sophisticated club set.
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