Inside Asian Gaming

40 INSIDE ASIAN GAMING | March 2013 REGIONAL BRIEFS MGM Resorts Bails on Ho Tram MGM Resorts International has pulled out of an agreement to manage Vietnam’s first resort-scale casino. Asian Coast Development (Canada), the company behind the resort at Ho Tram, located on the South China Sea coast about two hours from Ho Chi Minh City, made the announcement. ACDL gave no reason for MGM’s move, but US-based casino operator Pinnacle Entertainment, MGM’s management partner in Ho Tram, said it was a result of the project failing to meet pre-opening hurdles by 1st March. Pinnacle has already stated it could lose its investment of more than US$100 million in the project as a result of problems with gaming licenses and funding by local banks. “From an MGM perspective, we think the announcement is a modest positive,”wrote investment analysts Union Gaming Research Macau. “The project has had a number of issues from the start, and we don’t believe current forecasts nor valuation contemplated this exposure for MGM.” It is still not known when the resort will open, probably not before April, although ACDL said that Pinnacle and its other principal shareholder, US-based Harbinger Capital Partners, both have reaffirmed their commitment to the project. MGM was not itself a capital investor. “We thank MGM for its assistance in the hiring and training of our 2,000-strong team of Vietnamese hospitality professionals,”Chief Executive Lloyd Nathan said in a statement. “We are delighted that we have completed the construction of the first phase of our first resort.” The development features 541 rooms and suites, nine restaurants, a casino and luxury retail. A second hotel tower is under construction, which will add 559 rooms. An 18-hole golf course also is planned. Macau Officials Say Visa Limits Not the Answer Macau officials say they will not consider restricting travel from mainland China as some are suggesting. In the face of mounting complaints about overcrowded border crossings and overburdened infrastructure, the territory’s new deputies to the Chinese People’s Political Consultative Conference warned against what they called drastic steps. They recommend instead that a solution be sought in new boundary crossings and more efficient immigration processes. “Because the contribution of tourists from the mainland is huge and [visa restriction] will be misinterpreted by compatriots in China as radical,” explained Macau legislator and Executive Council member Leonel Alves in an interview with Portuguese-language broadcaster TDM . “China has been supporting Macau’s and Hong Kong’s economy,” he added. “Without this support, the two regions would paralyze instantly.” Lawrence Ho, co-chairman of casino operator Melco Crown Entertainment and a first-time deputy on the CPPCC, also opposes visa restrictions. “It seems to me that opening the border 24 hours would be much more effective,”he said.“In addition, the Lotus Bridge is largely unexplored and it’s viable if more tourists are redirected there.” Ng Siu Lai, president of the influential General Union for Neighborhood Associations, Kai Fong, as it’s known, agrees that a new crossing point is needed between Macau and the neighboring mainland city of Zhuhai and urged the central government to begin planning soon as possible. She also recommended a more effective immigration clearing system at the city’s borders. Strong 2012 for SJM Holdings Macau casino giant SJM Holdings reported a 27% increase in full- year profit to HK$6.75 billion (US$870 million) on HK$78.9 billion in gaming revenue (US$10.1 billion), a 4.5% increase over 2011. VIP revenue rose to HK$53.3 billion from $52.8 billion a year ago, a 9.5% increase. Mass-market was up 13% to $24 billion. Machine gaming revenue, also up, hit $1.5 billion. Hong Kong-listed SJM, Macau’s largest operator, with 20 of the market’s 35 casinos, posted adjusted EBITDA of HK$7.6 billion, a 10% increase year on year. “SJM’s market share remained steady and was gradually improving,” in the fourth quarter, wrote Kenneth Fong, a Hong Kong- based analyst at JPMorgan Chase & Co. The company has proposed a special dividend of HK$0.30 a share on top of a final dividend of $0.50 a share. Looking ahead, the company says it expects gaming revenue growth market-wide in the “low teens” in 2013. “We have a bigger base, so low teens is still very good,” said Chief Executive Ambrose So. Revenue growth market-wide slowed to 14% last year from 42% in 2011 as growth declined in the lucrative VIP sector, which accounts for two-thirds of the take. High rollers from the mainland curbed their spending in 2012 in response to softer growth in the Chinese economy, which appears to be weighing on this year as well. “Overall, the economy is not improving and we don’t see demand on the VIP side recovering from last year,” said Jefferies Hong Kong The Ho Tram integrated resort project Leonel Alves