James Packer has hit back at critics who claim City of Dreams (CoD)—a joint venture between his Australian casino company Crown Ltd and Hong Kong-listed Melco run by Lawrence Ho—has not so far found an effective niche in the Macau casino market. Mr Packer said time would be CoD’s “friend”.
CoD opened in June 2009 at a cost of US$2.1 billion with an initial focus on the mass market. The Macau mass segment offers much better margins than the VIP one, but it is a tough arena in which to gain traction. In 2010, 72% of Macau’s entire gaming revenues came from VIP baccarat. No operator and no property can afford to ignore entirely the VIP market, but CoD was arguably a little slower than some of its rivals to ramp up its high roller offer. That in part was because MPEL has a whole casino (Altira Macau) focused specifically on serving that upmarket segment.
In an interview with The Australian newspaper published yesterday, Mr Packer refuted some analysts’ assessments that CoD has not yet whole heartedly attacked either the mass market or the high roller segment.
He said he had been given some good advice by a fellow operator and rival to MPEL and Crown in the Macau and Las Vegas markets that he “respects enormously”.
“Steve Wynn, whom I know a little bit and respect enormously, gave me a piece of advice once,” Mr Packer told the newspaper.
“It was: ‘Just build things as good as you can and quality will beat out gimmicks over time.’ And that is not to say that The Venetian is not high quality or a gimmick-based hotel, but I am very proud of what we have got up there. Time will be its friend.
“I think that one of the things that people underestimate is how hard it is to be the sixth player in a market. We started three years after the first five [operators],” he added.
“Just build things as good as you can and quality will beat out gimmicks over time.”
CoD has has a 39,000 square meters casino with 400 gaming tables and 1,300 gaming machines, more than 20 restaurants and bars, a shopping mall and 1,400 rooms spread across three hotels.
Mr Packer said the start of the US$250 million House of Dancing Water show at CoD in September last year had lifted December quarter turnover and was drawing a new breed of clientele to the resort.
“It is terrific,” he said of the show. “Our last two quarters in Macau have been excellent.”
“People have no idea about Macau until they have been there. I think it is one of the most competitive markets in the world, with a standard of product that is — if not the world’s best already — on the way to being the world’s best,” he explained to The Australian.
“Macau is beginning to work out really well for us. Macau stands on its own two feet on a stand-alone basis, but it also helps us develop new contacts in the region, meet new people, meet new players,” Mr Packer said, adding that the MPEL joint venture helped to publicise the Crown brand with a new generation of Asian consumers and gamblers.
“[And] it is a great dissemination of our brand. What we are trying to do against some of the biggest and most successful companies in the world is produce a product that is world class,” he stated.
“Anyone who has been to the City of Dreams would recognise that that is an amazing facility.”
Mr Packer’s comments come only weeks before the opening of another major Macau gaming resort that will add to the competition on Cotai.
Galaxy Macau, developed by Hong Kong-listed Galaxy Entertainment Group, and next door to The Venetian Macao, is due to open on 15th May. It has a budget of HK$14.1billion (US$1.8 billion). The 550,000 square meters integrated resort project features 2,200 hotel rooms and will open with 400 gaming tables initially, with capacity for 600 tables.
Sands China, the Hong Kong-listed subsidiary of Las Vegas Sands, is also building a second—US$4.2 billion—gaming resort project next door to CoD on the Cotai Strip. The opening date for that scheme—known in the industry as ‘Cotai 5 and 6’ is not yet confirmed because of delays in getting enough imported labour on site.
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