MACAU (Reuters) - MGM Mirage, the world's No.2 casino operator, opens a 600-room, Las Vegas-style resort in Macau on Tuesday, raising the stakes in a Chinese gambling haven increasingly crowded by global players.
By John Ruwitch
MACAU (Reuters) - MGM Mirage, the world's No.2 casino operator, opens a 600-room, Las Vegas-style resort in Macau on Tuesday, raising the stakes in a Chinese gambling haven increasingly crowded by global players.
The $1.25 billion MGM Grand Macau, a joint venture between MGM and Pansy Ho, daughter of Macau gambling mogul and one-time monopoly holder Stanley Ho, is a relative latecomer to the once sleepy former Portuguese enclave, following Las Vegas Sands Corp and Wynn Resorts Ltd
MGM was in talks with Dubai World, holder of close to a 5 percent stake in the company, to extend their relationship in Macau and into China, though nothing had been finalized, said Gordon Absher, vice president of public affairs.
!ADVERTISEMENT!"The stage that we're at in the development of gaming resorts in Macau is very close to going back 40, 50 years, to when Bugsy Siegel opened the Flamingo in Las Vegas," said Gabe Hunterton, vice president for casino operations.
Siegel was the legendary mobster credited with having a hand in Vegas' initial development.
Now, MGM Mirage and MGM Grand Paradise -- the joint venture with Pansy Ho -- are pondering ways, and holding talks, to expand in the region, Absher said.
"In Macau, the MGM Grand Paradise partnership is in the process of negotiating with the government on a second site in Cotai. Separately, DW (Dubai World) owns land in Macau..., which may present a location of a third development site," he said.
He also said that MGM Mirage was considering projects in China not related to gambling together with the Diaoyutai State Guesthouse in Beijing, and that Dubai World may join some or all of those projects.
Foreign casino operators jumped at the opportunity when Stanley Ho's gaming monopoly expired in 2002, setting up giant Vegas-like facilities, replete with shopping arcades, entertainment complexes and vast casino floors.
BIG QUESTION MARK
Macau's economy has jumped, too, and annual visitor numbers have doubled since 2003 when the Chinese government began to loosen restrictions on individual travel for its population, with its legendary appetite for gambling.
Some 22 million people visited Macau last year, pumping its gambling revenues past those of the world-famous Las Vegas Strip.
The new resort targets high-margin high rollers -- the revenue dynamo of the gambling industry in the only place casinos are legal in China.
But questions hang over Macau's casino boom.
For one, the tiny territory, with a population of around 500,000, will have to import huge numbers of workers.
Also, visitor numbers may be rising, but much of the new casino construction is betting guests will stay longer than the current average and do more than just gamble. That may be a long bet, given that most of the gamblers are from China and have tended to spend the majority of their time at the tables.
"For many, many years they didn't really have another option. If you throw someone out of a boat, they'll swim whether they enjoy swimming or not," Hunterton said. "As customers here start to enjoy the amenities, as they become more comfortable with the amenities, I think they are going to definitely take advantage of it."
Industry wide, VIP margins are declining as commissions rise with the competition, while on the mass-market side the average revenue per table is declining.
Still, MGM Grand Macau plans to expand, possibly in the next "12, 18, 19 months," said Hunterton. "We have another 120,000 square feet of gaming area for expansion and approximately 80,000 of non-gaming."
MGM Mirage operates nearly 20 casinos, and in addition to the Macau offering it is developing a number of others, including the giant CityCenter project in Las Vegas and a $5 billion casino in Atlantic City.
(Editing by Jan Dahinten)
