VIP gambling rooms at Studio City could open for the first time this month – nearly a year after the property launched on Cotai in Macau.
Works to set up the high roller facilities at the casino resort – a venue that opened on October 27 last year – were nearly finished, but property operator Melco Crown Entertainment Ltd still had to decide which part of the business would supply the VIP tables. So said chief operating officer Ted Chan Ying Tat (pictured), in comments to the Macau media on the sidelines of a company event on Tuesday.
“The VIP play facilities will be opened all at the same time,” said Mr Chan.
“We have one to two [junket operator] partners, plus our own in-house VIP play. Hopefully the VIP facilities will be opened this month,” he added.
The executive was asked whether the 30 VIP tables planned for Studio City – that the firm had mentioned during its second-quarter earnings call on August 4 – would come about by asking the local casino regulator to redesignate some of the mass-market tables at its current Studio City operations as VIP tables; or by moving existing VIP tables from some other part of Melco Crown’s Macau operation.
“That we have not decided internally,” said Mr Chan, referring to from where the VIP tables would come.
“We’ve confirmed [operations] with the [junket] partners, but we still have to discuss [the allocation of] tables. The renovation has been pretty much finished. We are ready any time, in the sense that after all this [discussion] settles, the government will have no problem in approving [the VIP tables],” he added.
Melco Crown has a 60-percent equity interest in Studio City, and must share the economic value of its tables at the property with its 40-percent partner, New Cotai LLC, an entity controlled by United States-based investment firms Silver Point Capital LP and Oaktree Capital Management LP. Melco Crown has a 100-percent equity interest in its other Macau resorts: City of Dreams Macau and Altira Macau.
At the time of Studio City’s opening, Melco Crown’s chief executive, Lawrence Ho Yau Lung, had said not having VIP gaming there was a “business decision”, driven mainly by the size of the gaming property’s new-to-market allocation of 250 tables from the Macau government.
But in the months following the launch of Studio City, a number of investment analysts had noted that the property was underperforming the bulk of its large-resort competitors – when judged in revenue terms relative to its market share of gaming tables.
“Consistent with our approach of maximising profitability through yield management, we are in the process of setting up rolling chip operations at Studio City, including both junket and premium direct VIP offerings,” said Mr Ho on August 4.
In July, junket operator Suncity Group confirmed to GGRAsia that the firm was in the process of establishing VIP facilities at Studio City.
In other comments on Tuesday, Mr Chan said Melco Crown welcomed the launch of the neighbouring Parisian Macao. The US$2.7-billion casino resort, promoted by Sands China Ltd, is due to open on September 13.
“I’m happy to see that the Parisian Macao will be finally opened. Because as you know, the biggest problem that Studio City used to have, location-wise, was it was like being on an isolated island, making it hard to walk to,” stated Mr Chan. “Now, we have a new neighbour and that will create a synergy effect”.
The casino executive added that Macau’s casino gross gaming revenue had recently “stabilised”, but noted that despite August’s 1.1 percent year-on-year GGR growth – the first such positive performance in 27 months – a wait-and-see approach was needed.
“September is traditionally a low month. I think we need to observe one month or two before concluding [a trend],” he said.
“For the gross gaming revenue in the upcoming fourth quarter, because it will be compared against a lower base last year, there is a chance that we will see a positive note,” stated the Melco Crown executive.
“And here [Cotai] we have new resorts that opened – Wynn Palace and, next week, Parisian Macao: we hope that we’ll see a positive note in the fourth quarter.”
Mr Chan was speaking on the sidelines of a company press conference at Studio City on Tuesday, where it was announced that Melco Crown would be the “official title partner” in Hong Kong and Macau for a series of dining events organised by the Michelin Group and Robert Parker Wine Advocate. Melco Crown’s City of Dreams Macau property has three restaurants rated with Michelin stars.
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"VIP growth [in Macau] is roaring back on the heels of last year’s economic stimulus – but we think this could stall once the effect of the stimulus and the Chinese housing bubble wears off – as it did in 2013-14"
Cameron McKnight and Robert Shore
Analysts at Wells Fargo Securities