Inside Asian Gaming

inside asian gaming September 2015 12 Lawrence Ho Co-Chairman and CEO Melco Crown Entertainment Hopes for a revival of Macau’s beleaguered gaming market rest squarely on Melco Crown Entertainment’s $2.3 billion Studio City, scheduled to open on 27th October. China’s rapidly evolving middle class is hungry for new, world- class tourism experiences, and the Macau offering of the past decade is apparently no longer cutting it. The question is, will Studio City really prove transformative enough to regain the validity of the supply-creates-demand thesis vis-à-vis Macau? For most of Macau’s post-monopoly casino years, supply did unequivocally create demand with pronounced spikes in citywide gaming revenue registered around new property openings. In the early, supply-constrained days, it didn’t even take transformative product to do the trick. Even newly opened casinos within hastily converted office buildings managed to pack in players three deep around their baccarat tables. Times have clearly changed. The 27th May opening of Galaxy Macau Phase 2 failed to lift the market out of its ongoing downward spiral, but that could be because it was seen more as an extension of an existing property than an all-new, must-see attraction, as Studio City is emphatically positioning itself. As such, Melco Crown Entertainment Co-Chairman Lawrence Ho believes Studio City will be up to the task of kick-starting the market. “Macau is going through a transitional phase from a very VIP gaming centric market to more mass-focused,” he stated. “This latest large-scale integrated resort is designed to introduce to Macau a more diversified mix of entertainment than ever before and set to become a catalyst to the market, and substantially enhance Macau’s appeal to an increasingly sophisticated Asian consumer who is continually seeking world- class, multi-faceted tourism experiences.” The Hollywood-themed resort will boast Asia’s highest Ferris wheel and family entertainment developed with Time Warner Inc. It will have a flight simulation ride with Batman flying through Gotham City and a 40,000-square-foot (3,700 square meters) indoor play center with rides and other interactive facilities featuring DC Comics characters such as Daffy Duck and Bugs Bunny. It will also have a theater for magic shows, a 5,000-seat entertainment center and a TV production studio. And to promote the property, Melco Crown splashed out $70 million on a teaser film directed by Martin Scorsese and starring Robert De Niro, Brad Pitt and Leonardo DiCaprio. A less frequently mentioned feature of Studio City will be the Pacha Macau nightclub, the city’s first truly Las Vegas-style and-scale super club, and it’s worth mentioning insofar as it highlights the difference in mindset between the 39-year-old Lawrence Ho and the octogenarian head of Macau’s current mass-market leader, Sheldon Adelson. Sands China’s neighboring The Venetian Macao resort doesn’t have a full- scale nightclub at all, and there are no plans for one at its upcoming Parisian Macao. It’s the kind of difference that could prove increasingly $421 million during the depths of Florida’s real estate crash. The site includes the former Miami Herald newspaper’s headquarters— demolished last year—an office complex and a four-star hotel. Efforts to win state approval for gaming have been foiled so far by a broad phalanx of opponents including Disney, tribal casino operators and, lately, Miami politicians. “We remain steadfast on our vision to realize the development of Resorts World Miami as a destination resort and will continue to engage with all relevant stakeholders,” Mr Lim says. In New York, Mr Limwon one of two bids for a license after Genting and Kien Huat spent an estimated $6 million combined on behalf of their separate proposals. Genting’s $2.5 billion Sterling Forest Resort project, located 35 minutes from New York City by its calculations, was rejected, along with all other bids in Orange County, home to some of the choicest suburbs in the state, not exactly an economically depressed area that needs new casino development to prosper. Instead, state officials awarded a license to Empire Resorts, 62% owned by Kien Huat, located about an hour further north in Sullivan County’s Catskill Mountains, a shriveling tourist area that’s clamored for gaming as nearly all 500 hotels from its 1940s to 1960s Borscht Belt heyday closed. Adjacent to the site of the Concord Hotel, once the gold buckle of the Borscht Belt, Empire’s $630 million Montreign will include a 391-room hotel and golf course as part of a $1 billion joint venture resort. With RW New York City, Mr Lim, through separate entities, controls the two gaming venues closest to the Big Apple. That might not make him tops in Asian gaming, but it certainly makes him the top Asian in US gaming.