Seen on Hotel-Online.com, Oct 29, 2007
By Howard Stutz, Las Vegas Review-Journal
Nevada's top casino operators are busy spending billions of dollars
to transform this area of Southern China into Asia's version of Las
Vegas.
Meanwhile, a joint venture featuring Australia's richest
man and the son of Macau's controversial casino pioneer is seeking its
own piece of the action.
Melco PBL, a partnership between the
gaming of arm of James Packer's Publishing and Broadcasting Ltd. empire
and Lawrence Ho, son of Hong Kong billionaire Stanley Ho, opened its
first casino in May. The $500 million Crown Macau on Taipa Island has
216 hotel rooms. The public casino is boutique-sized and on five
levels. Crown operates several private luxury gaming salons on the
property's 37th floor, all with expansive views across the harbor of
the casino cluster on the Macau Peninsula.
The company, which became listed a year ago on the Nasdaq National Market, isn't stopping there.
Melco
PBL is spending $2.8 billion to build City of Dreams on Macau's Cotai
Strip, directly across the road from The Venetian Macau. Under
construction and expected to open in 2009, the project has reportedly
shunned the idea of an underwater casino but is still planning a
420,000 square-foot gaming space. Multiple hotel products totaling
1,700 rooms are under construction, including a 366-room Hard Rock and
a 1,005-room Grand Hyatt.
The company also controls a site on
the Macau Peninsula next to the Sands Macau and near the Ferry
Terminal. Recently, Melco PBL told investors it would build a project
called Trinity, which would have a casino with 215 gaming tables and
500 slot machines, residences and a boutique hotel. The project would
open in 2010.
Melco PBL also operates the Mocha Clubs, a chain
of Macau slot parlors, and has an agreement to operate the casino at
the Macau Studio City, which is being built on the opposite end of the
Cotai Strip from City of Dreams.
Clearly, Melco PBL is looking
to challenge Las Vegas-based Las Vegas Sands Corp., Wynn Resorts Ltd.
and MGM Mirage for Macau supremacy. At the Crown Macau, Melco PBL is
focusing on the high-end VIP market, which accounts for roughly 70
percent of Macau's overall gaming revenues.
Gaming consultant
Jonathan Galaviz of Las Vegas-based Globalysis said Melco PBL is able
to capitalize on its experience both in Australia and Asia.
"Obviously, they have a good understanding of the competitive dynamics in the market," Galaviz said.
In
2006, PBL purchased a gaming subconcession owned by Wynn Resorts for
$900 million. PBL, one of Australia's largest media and entertainment
groups, is traded on the Australian Stock Exchange and has a market
capitalization of $11 billion. PBL went into partnership with Lawrence
Ho to capitalize on different gaming opportunities in Macau.
PBL operates the Crown Melbourne, one of Australia's leading hotel-casinos.
Separate
from Melco, PBL paid $22.5 million in May to purchase a 37.5 percent
stake in a holding company that is planning a hotel-casino project on
the site of the now closed Wet 'n Wild theme park on the Strip between
the Sahara and the under-construction Fontainebleau. Crown would
operate the resort.
Crown Macau CEO Greg Hawkins said Packer,
the son of the Australian business magnate Kerry Packer, who died in
December 2005, wants to make Crown a global brand. Having Crown casinos
in Las Vegas, Macau and Australia would create a worldwide database.
"From
the PBL perspective, we see a natural evolution where that top-end
customer database grows and customers can move around to different
Crown resorts, be it here, Australia or Las Vegas," Hawkins said.
Deutsche
Bank gaming analyst Bill Lerner said Melco PBL is a company getting
into gaming in a big way, individually and together. The companies lost
out in the bidding process for one of two casino sites on the island
nation of Singapore.
"They might even look at Japan if something happens there," Lerner said.
Melco
PBL's initial effort in Macau caught some interest. Crown Macau was
introduced to Southern China television audiences through an
infomercial designed as a mini-movie, "Where Great Things Happen," that
starred Hong Kong actor Chow Yun-Fat, who became known to American
audiences through "Crouching Tiger, Hidden Dragon," and "Pirates of the
Caribbean: At World's End."
The Crown Macau is tucked into a
small land parcel on Taipa, surrounded by high-rise residential
apartments, separated from the casinos on the Peninsula and the
developing Cotai Strip. The 38-story building has just 216 hotel rooms,
all with view of the Macau Peninsula. The hotel lobby is on the 38th
floor.
"I think the physical location where we are, nestled
between the hub of activity on the Macau Peninsula and the Cotai Strip,
is not a negative in our view," Hawkins said. "Everything we are trying
to do is to capture a niche market, which is VIP gaming and the top of
the mass market. That's the space we want to exist. We don't want to be
everything to everybody. We want to capture a space in this property
that appeals to that particular market."
Crown Macau's
five-level casino has 220 table games and 500 slot machines, but the
real action is on the 37th floor, where several luxury gambling salons
are available to high-end customers willing to put up at least $30
million Hong Kong (roughly $3.9 million American) in the casino cage
for gambling.
The spacious hotel rooms have three price levels;
$569 for a deluxe room, $1,554 for a deluxe suite and $1,664 for a
premier suite (all in American dollars). Crown Macau also has upscale
Japanese, Chinese and French restaurants. The French restaurant offers
an outdoor patio and lounge area with views of the Peninsula.
"Ninety-five
percent of the story is premium play and VIP customers," Lerner said.
"They may have gotten off to a slow start, but it seems to be ramping
up rather quickly."
Lawrence Ho, CEO and co-chairman of Melco
PBL, said in August during the company's second-quarter earnings
release that going after a high-end customer was the correct move.
"Our
decision to position Crown Macau as an up-market VIP property is
proving to be a sound one," Ho said in a statement. "Based on the
initial operating results at Crown Macau, which has been characterized
by increasingly strong VIP play, we have determined to seek
opportunities to further enhance our VIP capacity at the property,
combined with a commensurate consolidation of our mass market
capacity."
Hawkins said the Crown Macau location on Taipa does
not lend itself to the mass-market, walk-in customer base experienced
at the casinos operated by Stanley Ho along the Peninsula. But that
isn't the market Crown is targeting.
However, as the company's
City of Dreams project moves forward on the Cotai Strip while the
Peninsula development takes shape, Melco PBL will be in position to
capture all segments of the Macau market, setting the company aside
from the American casino operators.
"As a casino destination,
Macau has historically been fundamentally different than what you would
experience in other parts of the world," Hawkins said. "It's an
incredibly competitive environment, and from that perspective, we have
to make sure we fully understand the strategic directions taken. All
the concession holders, including the Americans, have to understand the
framework and the fabric of what makes Macau tick."
THE SERIES
--
Sunday: Macau is in the cross hairs of a multibillion-dollar building
boom largely fueled by Nevada's major gaming companies, which are
exporting Las Vegas-style casinos into a market starving for action.
--
Monday: Thanks to the growing casino industry, unemployment is just 3
percent in Macau. But where will all the workers come from to staff the
new casinos now under construction?
-- Tuesday: More than 80
percent of the table games in Macau are dedicated to the game of choice
for Asian gamblers: baccarat. But the use of slot machines is growing,
and Nevada's slot makers are trying to capitalize on the market.
--
Wednesday: Macau's Cotai Strip has more than 20,000 hotel rooms in
various stages of construction. By 2010, the Cotai Strip will resemble
the heart of the Strip in Las Vegas.
-- Today: American gaming
giants Las Vegas Sands Corp., Wynn Resorts Ltd. and MGM Mirage are
establishing footholds in Macau. But an Australian company, in
partnership with the son of Macau's casino pioneer, is ready to
challenge the experienced casino operators.
ON THE WEB
For a photo slide show and video of Macau from Review-Journal reporter Howard Stutz and director of photography Jeff Scheid:
- -http://www.reviewjournal.com/webextras/macau