IAG NOVEMBER 2015 - page 8

The 1,600 room resort’sexterior is“GothamCitywithanasteroid
shot through it,” Mr Ho says, while the interior evokes Hollywood
of the 1920s and ’30s – staff urge customers, “Have a glamorous
day” – with shopping areas presented as periodmovie set versions
ofNewYork andBeverlyHills, plus steampunk elements taken from
the early industrial age. “We didn’t followwhat the competitors did.
We’re a young company,” the 38 year oldMrHo adds. “We’rewilling
to try new things.”
The most astonishing thing they’re trying, by Macau standards,
is Studio City’s absence of VIP gaming, relying solely on higher
margin but far lower volume mass market revenue. Constrained
by theMacau government’s gaming table cap, Studio City received
200 tables now and 50 more as of January 1. Mr Ho calls gaming
revenue“theeconomicengine” thatdrives resort revenueandmakes
it possible to invest in expensive attractions. But with only 250 of
the 400 tables originally envisioned andnoVIP tables, some believe
that enginemay be short of horsepower.MrHo counters thatMelco
Crown, which alsoownsCity ofDreams andAltira inMacau andCity
of DreamsManila in thePhilippines, currently derives less than 10%
of EBITDA from VIP players and is less reliant on that segment for
earnings than anyMacau casinooperator except SandsChina.
“We steered away fromVIP gaming tables a long time ago. Since
our IPO [on the US NASDAQ exchange in 2006] we believed mass
tables would be leading theMacaumarket,”Mr Ho explains. “At 250
tables, it was a no-brainer for us” to forgoVIP gaming. Nodoubt, the
41%decline inVIP revenue through thefirst threequartersof this year,
compared to the 29% drop in mass market revenue, helped guide
the choice. “If it was 400 tables, maybe we would have put in some
VIP,”MrHoadds.ThatnumberwouldalsosatisfyMelcoCrown’s loan
covenants calling for Studio City to have 400 tables by next October.
Melco Crown says it is in talks with lenders to satisfy their concerns.
The resort’s second level also reportedly has a VIP area ready to roll
out, whenand ifmanagement chooses togoafter higher rollers.
For now, gaming tables branch out from a central corridor
leading from the hotel’smain entrance onEstrada do Istmo, Cotai’s
central corridor. The roughly diamond shaped casino floor, with
red, orange and gold as the dominant colors, also has 1,233 gaming
machinesanda200 terminal livedealermultigamearena.Mainfloor
table minimums begin at HK$300 with HK$1,000 tables dominant
and all but 16 tables for baccarat. The premium mass Signature
Club has a branch off the main floor with about one-third of the
casino’s allotted tables and smoking prohibited outside smoking
lounges throughout. Lighting fixtures range from crystal chandeliers
to Chinese inspired cloth lanterns. The casino’s centerpiece is a
fountain of cascading teapots, surrounded by a tea bar. There’s no
livemusic or entertainment on the floor, but plenty outside.
Studio City, 60% owned by Melco Crown and 40% by two US
hedge funds, is banking on its location and future infrastructure
development to make it a hit. The 13.1 hectare (32.3 acre) site sits
at the foot of the Lotus Bridge border crossing fromHengqin Island
andwill eventually have aMacau light rail stop at its doorstep, both
expected to generate lots of traffic in coming years. Despite Melco
Crown securing its subconcession last among the six operators in
2006,MrPacker says, “Wehavebeenable toget the twobest sites in
Cotai,”withCityofDreamsat thenorthendof Cotai’smaindragand
StudioCity at the south end. “Business continues tomove toCotai.”
Dubbed “Asia’s Entertainment Capital,” Studio City aims to shift
Macau’s center of gaming and tourism gravity further toward Cotai
with its array of non-gaming attractions.Most immediately noticeable
is the celluloid inspiredGoldenReel running inafigureeight from the
23rdfloorbetween the resort’s twohotel towers, rising130meters (428
feet) aboveCotai. The 17 cabs, boardedas thewheel keeps rolling, can
eachaccommodateup to 10 riders. The 15minute rideprovidesbird’s-
eye viewsof Cotai,Macau International Airport andHengqin.
Batman Dark Flight begins with a tour of Wayne Industries
“Theresorthas investedhundredsof
millionsofdollars inentertainment
features, headlinedbyareportedUS$70
million forTheAudition, a shortfilm
DeNiro, LeonardoDiCaprio, director
MartinScorsese–all ofwhomattended
theresortopening for thefilm’sdebut–
Cover Story
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