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Melco Crown Earnings Up

Posted on May 22nd, 2011

Despite the arrival of a new rival down the neighborhood, Macau casino gambling company Melco Crown Entertainment Ltd. got a taste of increased earnings last Thursday. The company which is partly owned by Hong Kong-listed Melco International Development Ltd. and has Lawrence Ho – son of famous Macau gambling mogul Stanley Ho—as co chief executive officer alongside Australian billionaire James Packer, has amassed $7.2 million in total revenue in the first four months of the year’s operations a huge leap forward from last year’s loss amounting to $12.5 million.

Ho’s company had an increase in net revenue of 42%, banking in a total of $806.6 million in the year’s first quarter. The overall gambling revenue of Macau has also had an enormous growth of 43% in the same timeframe and with the continuing trend of increasing casino gambling returns, the percentage is expected to reach five times as high as that of Las Vegas’ expected revenues by the end of the year.
Melco Crown’s early success is credited to the vast improvements on both gambling and non-gambling related services. With the addition of entertainment attractions like “The House of Dancing Water” production and Cubic nightclub, the casino company is expected to receive a considerable increase of visitors on its prized property – the City of Dreams – and further strengthen their claim to be labeled as Macau’s premiere entertainment establishment.

On the other hand, Ho downplayed the negative effects that the opening of rival Galaxy Entertainment Group Ltd.’s $2 billion hotel and casino could bring to Melco’s City of Dreams casino resort. In fact, he even thought of it as a development that would benefit their cause. “We believe that the Galaxy opening is great for Macau and it’s even better for Cotai,” Ho said. Melco’s Cotai strip neighbor Sands China Ltd. shares the same vantage point as Ho. The company believes that the launch of Galaxy would help divert people from the central Macau peninsula to the Cotai region. The majority of the casinos in the China’s territorial land are located within the central peninsula. Ho said that the flow of visitors to the City of Dreams has been consistently steady and at some times, even increases in the aftermath of the Galaxy’s launching of its new casino establishment.

Ho sees the Galaxy rival as a casino property which attends to types of customers that are different from his company’s targets. “When you look at City of Dreams it’s much more contemporary and probably more on the sophisticated side,” he said. “The Galaxy property looks great but it certainly looks like a property that was built to compete with the Grand Lisboa.” The Grand Lisboa is the torch-carrying property of Ho’s father’s SJM Holdings Ltd., which banks on more heavily on the Chinese mass market. Galaxy’s newest property boasts of a huge wave pool which generates 1.5 meters of waves and an astonishing artificial beach which took 350 tons of sand to build. Ho said that his company is still hoping to finalize an arrangement with stakeholders to resume the $2.4 billion Macao Studio City project, a property which Melco Crown owns a privilege to operate based on revenue sharing. The said project was supposed to start its operations last 2009, but disputes between the business members that were even brought to the Hong Kong court pulled down its progress. After the company’s bond issuance of $350 million recently, many business experts believed that Melco Crown was trying to spend the funds to a potential inclination on Macao Studio City.

Meanwhile, Ho said Melco is still trying to figure out on how to utilize the excess 1.5 million square feet of land extending the City of Dreams. However, Ho hinted that building an apartment-hotel wouldn’t be one of the few options. “It’s probably unlikely that the government will approve apartment hotels … they’ve been looking at it the past five years,” he said. The Four Seasons apartment hotel of Sands China has been attempted to be sold a lot of times for a value worth $1.4 billion according to Chairman Sheldon Adelson. But until now, the Macau government doesn’t allow land owned by casino operators to be utilized for residential purposes.