MGM China Holdings Ltd recently released its first quarter performance report which showed that the company had a twenty five percent drop in revenue. Although the drop in revenue is significant, it is nevertheless better than its first quarter results in 2015 when revenue dropped thirty one percent. The company has also reported that its MGM Cotai casino’s launch will most likely be delayed.

The slump in Macau’s casino industry for twenty three consecutive months has impacted all the six major casino operators but MGM China believes that its fortunes will turn around as it plans to open a $3 billion mega casino resort on the Cotai strip. The casino was expected to be opened during the first quarter of 2017 but a delay in construction will force MGM China to push back its launch date.

As of now the construction of the $3 billion casino is expected to be completed by the end of November and a launch will most likely take place during the second quarter of 2017. MGM China officials are also factoring the amount of time they would require to work out the final sign-off with Macau government officials and believe a first quarter opening will be cutting it very close.

Galaxy Entertainment and Melco Crown have already opened casinos on the Cotai strip and their strategy has been to focus on mass market gamblers and non-gaming facilities in order to boost their revenue. MGM China will look to follow a similar strategy with its new Cotai casino and expect revenues to increase even as the Macau casino market makes a slow recovery. Macau’s gross gaming revenue in April witnessed a 9.5 percent drop compared to a Bloomberg market analyst prediction of 13.5 percent.

In a statement, Tim Craighead, a Bloomberg Intelligence analyst said “MGM China is facing the same challenge that their Macau-peninsula based peers are: Cotai’s new resorts. Its VIP and mass businesses are both disadvantaged as Galaxy and Melco Crown ramp up. This pressure will build through the year for MGM and SJM as Wynn Macau and Sands China open their next resorts this summer.”

MGM China witnessed a 41 percent drop in its VIP table game revenue and an 8 percent drop in its main floor table games revenue. The company’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) fell by HK$995 million, which was a twenty three percent drop during the first quarter of this year.

The Cotai area will be home to a dozen casinos by early next year and MGM China’s new casino will face stiff competition from the Sands’ Parisian casino which features a half size replica of the Eiffel Tower and the $4.1 billion Wynn Palace casino which will offer air conditioned cable car rides.

 

2 Responses

  1. Jon

    The term “Cotai Strip” is trademarked by Las Vegas Sands Corporation. It only applies to Sands’ properties in Cotai.

    Reply
    • Lars Jones
      Lars Jones

      Interesting and valid point, we’ll take that under advisement. Although tempted to leave the colloquial “Cotai strip” in this instance, we do appreciate your comment and the article has been updated to reflect that. Thank you for reading World Casino News.

      Reply

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