Inside Asian Gaming

March 2012 | INSIDE ASIAN GAMING 33 of spa and wellness facilities centered on a natural hot springs. An MGM Grand with a Skylofts component is under construction and slated to open in 2014 in Chengdu, the capital of Sichuan Province. The city of 7 million, the commercial and manufacturing hub of the southwest, has drawn over the last decade an enormous amount of multinational investment. The last hotel in the joint venture’s current pipeline is MGM Grand Tianjin and Skylofts at MGM Grand Tianjin. These are located within the new Sinosteel International Plaza, a centerpiece of redevelopment efforts in the northern port city of 10 million and typical of the kind of large-scale projects combining commercial and residential elements that in China tend to enjoy favour with local governments and land lessees and developers. Experts like hospitality consultants Horwath HTL say developers for the most part are more than prepared to risk weak returns on the commercial component for the large profits to be made on residential sales. The hotel piece generally is perceived as crucial to the branding of the overall project, providing valuable name recognition that more than offsets the likelihood of lower returns in markets, and there are several, where average daily room rates are softening as a result of overbuilding. The cachet of a five-star resort is especially prized, which plays to the advantage of Diaoyutai MGM Hospitality, among others. The portion of the Sinosteel complex the joint venture will operate is located in the 88-floor main tower and includes several hundred guest rooms, penthouse-size suites, luxury condominiums and an assortment of dining and leisure attractions. “The portion of the Sinosteel complex the [Diaoyutai MGM Hospitality] joint venture will operate is located in the 88-floor main tower and includes several hundred guest rooms, penthouse-size suites, luxury condominiums and an assortment of dining and leisure attractions.” As far as MGM Resorts is concerned, the benefits of a presence in Shanghai have less to do with ADRs and RevPAR than with the sizable opportunities it affords for cross- marketing the casino at MGM Macau—and those of its properties on the Las Vegas Strip, where baccarat play, most of it Chinese, now generates the lion’s share of table game revenues. MGM China Holdings is the only single-property operator in Macau and the property with the fewest tables, so it’s had to be somewhat creative, maneuvering around the junket networks in some instances to market directly to VIPs and introducing a lounge targeting its more lucrative main floor customers. Since MGM Resorts took over majority control last summer the property performance has steadily improved relative to its modest size. Adjusted property EBITDA was up 23% to US$174 million in the fourth quarter on a 26% increase in net revenue to $719 million, driven by increases across-the-board in VIP and mass-market table play and slots of 29%, 13% and 35%, respectively. For the year, VIP revenue increased almost 80%, mass-market table revenue 32% and slots 60.7%. EBITDA soared 74.3% year-on- year on a 64.7% jump in gaming revenue. An Asia rollout of the parent company’s M Life loyalty rewards is no doubt on the way, and its integration will dovetail nicely with these efforts. Importantly, it will tie them more closely with the luxury hotel expansion on the mainland. It’s estimated that half of China’s 1.3 billion people will undertake holiday travel in 2012, 90% of them within the country. Pursuing more of them by moving beyond Macau’s dependence on the southeast of the country makes sense. Shanghai, which has emerged as a destination of choice for them, is as good a place as any to start. For years, the city lagged Hong Kong and Beijing in popularity. But that changed in 2010 when it hosted the World Expo. Tourism revenue jumped 30% that year to 305.5 billion renminbi (US$46.4 billion). Knowing lightning in a bottle when they see it, the municipal government has identified tourism as a priority and has earmarked more than US$6 billion to enhance the city’s appeal. A Disney resort is coming in 2014. More than 14,000 new hotel rooms are in the pipeline. By the time the Suning Bellagio Shanghai opens in 2015, tourism receipts are expected to hit 520 billion renminbi. Rendering of the Diaoyutai Hotel Beijing, Lama Temple Butterfly sculpture featured in the MGM Grand Sanya lobby Feature Sinosteel International Plaza