Inside Asian Gaming

INSIDE ASIAN GAMING | January 2009 Caesars Palace Delays Tower Opening Joining a string of other companies delaying or cancelling building projects amid the floundering economy, Harrah’s Entertainment is delaying the opening of its Octavius Tower expansion at Caesars Palace until demand for hotel rooms improves, reports the Las Vegas Sun. The company had planned to open the 660-room tower, part of a US$1 billion hotel expansion, this summer. Some 110,000 sq. ft of convention space, three 10,000 sq. ft villas and an expanded Garden of the Gods pool and garden area will open by mid-summer, as planned. While demand for the convention space remains high in spite of the downturn, hotel demand has suffered in this economy, Harrah’s spokesman Gary Thompson said. With additional hotel rooms opening in the next few months “it was not prudent to bring this to market,” Thompson said. “We have not had the advance bookings we anticipated for those rooms.” Harrah’s has a tight balance sheet because it was taken private last year with billions of dollars in debt. The company, like many others, has been cutting costs and shaving staff. Still, financing for the US$1 billion expansion was in place before the credit markets collapsed. The company said it doesn’t expect any staff reductions related to the hotel tower delay and anticipates being able to bring the rooms online within a few months once demand picks up. The Las Vegas Sun also reported that winnings at Strip casinos dropped to a five-year low in November as the resorts recorded their second straight month of double-digit declines. The gross win at the 41 Strip casinos was US$437.6 million, off 16.2% from a year ago. MGM Mirage Scales Back Bloomberg reported that MGM Mirage will write down the value of Mandalay Resort Group by US$1.2 billion because cash flows at the casino company acquired in 2005 have weakened and buyers are paying less for gaming assets. The goodwill and trademark expense will be taken in the fourth quarter, MGM said in a regulatory filing. The Las Vegas-based 46 Briefs International Briefs company, controlled by billionaire Kirk Kerkorian and the Strip’s largest casino operator, paid US$7.67 billion for Mandalay. Casino values have been hurt by 11 straight declines in Las Vegas gambling revenue during the US recession. Gaming companies, which had been expanding, have reversed course and are now scaling back. Chief Executive Officer James Murren agreed last month to sell MGM’s Treasure Island Hotel & Casino to real-estate investor Phil Ruffin for US$775 million. Fourth-quarter results will be a “kitchen sink for a lot of the companies,”Deutsche Bank AG casino analyst Bill Lerner said today on a conference call. “We should be expecting any impairment or any other charge that was going to happen.” Murren,whowaspromoted to CEO after Terry Lanni quit, inherited an indebted company still expanding in the face of a recession and declining revenue in Las Vegas and Macau. The company will “dramatically” reduce debt and will consider further casino sales to strengthen the balance sheet, Murren said in a January 7 interview. Top Tier In an apparent effort to boost its standing in the analyst community, Nasdaq-listed Melco Crown Entertainment has been accepted as a member of Nasdaq’s Global Select Market. The tier within the Nasdaq index was created in July 2006 and has higher standards in terms of company finance and liquidity than for the main bourse. The company will maintain its existing MPEL ticker. Melco Crown’s City of Dreams integrated casino resort on Cotai, Macau, is due to open in the first half of 2009. A Cool Head Jamie Odell, the recently appointed chief executive of Aristocrat, Caesars Palace Octavius Tower Mandalay Bay Treasure Island