MGM China Holdings, the Hong Kong-listed owner and operator of MGM Macau, held an official groundbreaking ceremony for its Cotai project on 27th February.
Earlier in the month, the company had reported strong Q4 earnings at MGM Macau, noting main floor business at the property now accounts for 60% of EBITDA [earnings before interest, taxes, depreciation and amortization]. Thus, it seems only appropriate for the VIP-focused operator to finally join the mass-market centered Cotai party.
Speaking at the ceremony, MGM China Chairperson and Executive Director Pansy Ho said: “We are grateful to the Macau government for giving us the opportunity to develop our Cotai project. I would also like to thank our shareholders for the confidence they have in us, and the support from our banks. We are committed to bringing a new level of excitement, sophistication and entertainment to Macau. We believe the city will consolidate its status as one of the world’s leading tourism, leisure and entertainment hubs.”
MGM Resorts International Chairman and CEO Jim Murren echoed the sentiment, stressing that MGM Cotai represents yet another significant breakthrough for MGM. “I would like to give my heartfelt thanks to the MGM China team for laying such a solid foundation for the growth of the company. This second property in Macau will be our most stunning resort and casino yet.”
MGM’s Cotai project will have 1,600 hotel rooms, 2,500 slots and up to 500 gaming tables. The construction budget is approximately HK$20 billion, net of land cost and capitalized interest. Over 85% gross floor area is dedicated to non-gaming, including restaurants, retail and entertainment, and the property is scheduled to open in early to mid-2016.
Solid Footing
MGM China Holdings appears to have bright prospects in both its mass and high end businesses. According to a research note from Union Gaming Macau: “Management noted that 4Q 2012 represented a high water mark for direct VIP business at MGM Macau. We continue to believe that MGM Resorts International’s relationship with China’s Diaoyutai State Guesthouse and the resulting JV’s development projects throughout mainland China are an underappreciated driver of VIP business to MGM Macau. The company, unlike most of its Macau peers, has a unique opportunity to promote its global brands, including MGM Macau, to a growing number of high-networth individuals.
“For example, the MGM brands via Diaoyutai MGM Hospitality were a primary focus at a recent kick-off event in Sanya for the JV’s new Serenity Coast luxury residential project. This event was attended by a large number of extremely high-net-worth individuals, many of whom are already well known to MGM Macau and MGM Resorts International’s global resorts. This, along with general confidence in MGM Macau’s management team, gives us comfort on the company’s ability to maintain/grow its VIP market share in 2013 and beyond.”
From left to right—Bill Hornbuckle, Executive Director of MGM China Holdings; Pansy Ho, Chairperson and Executive Director of MGM China Holdings; Francis Tam, Secretary for Economy and Finance of Macau; ChenXiang, Deputy Director-General of Economic Affairs Department of the Liaison Office of the Central People’sGovernment in Macau; and Grant R. Bowie, CEO and Executive Director of MGM China Holdings, at thegroundbreaking ceremony to mark the commencement of construction on MGM Cotai.
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