MGM China Reports Delay In Cotai Resort Launch
MGM China Holdings Ltd has announced its first quarter results for the year, reporting a revenue drop of 25 percent year-on- year.
It has additionally announced that the opening of its new Cotai gaming complex is likely to be pushed to the first quarter of 2017. The Cotai casino was expected to open by the end of this year but a delay in construction and the state of the Macau casino industry has forced MGM China to delay its launch.
MGM China Chief Executive Officer Grant Bowie said that the casino resort in Cotai would be finished mostly by October or November this year but the opening depends on the signoff between the company and the Macau government, which could take some time as both parties work through any differences which might arise in the process. To be safe, MGM China has announced a delay in the Cotai casino opening.
The company has posted revenue of HK$3.6 billion ($464 million) in the first quarter of 2016, a decline of 25 percent over last year, which however is an improvement over its previous quarter when it dropped by 31 percent year-on- year.
The adjusted earnings before interest, taxes, depreciation and amortization for the period was HK$995 million,a decline of 23 percent for the same period in 2015. MGM China’s VIP revenue fell by 41 percent while main floor table games went down by 8 percent.
The downturn in Macau’s casino industry which started in 2014 has continued as gaming revenue declined in April for the 23rd straight month. Casino operators have moved away from the VIP segment given the reduced inflow of high rollers as a result of the Chinese anti- graft campaign and are now focusing on mass market gamblers and family tourist segments. MGM is the last among the operators to finish construction of its casino resort on the Cotai strip. Galaxy Entertainment already has two casinos operating in Cotai and Melco Crown opened its Hollywood-themed Studio City towards the end of last year. The Cotai strip has currently over a dozen casino resorts and a few more including the Sands Parisian and Wynn Palace are scheduled to commence operations before the end of this year.
In a statement, Tim Craighead Bloomberg analyst said
MGM China is facing the same challenge that their Macau-peninsula based peers are: Cotai’s new resorts. Its VIP and mass businesses are both disadvantaged as Galaxy and Melco Crown ramp up. This pressure will build through the year for MGM and SJM as Wynn Macau and Sands China open their next resorts this summer.
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