Macau casino giant Melco Crown is looking abroad at potential projects in the wake of China’s continuing gambling crackdown.
Melco’s billionaire chairman, Lawrence Ho, said this week that “Japan or other parts of Asia” could be earmarked to target “the most sophisticated international travellers.” Cyprus and Russia are also being earmarked for big casino projects.
“It’s a global footprint that we are developing,” said Mr. Ho.
“We have done well in Macau and we want to see how we can do even better internationally.”
Melco Hit By Crown Resorts And Clampdowns
Ho’s company has suffered as much as anyone in Macau’s two year-long revenue slump, and only now are the firm’s fortunes beginning to level out. Melco opened Studio City to huge fanfare at the back end of last year, with Mr. Ho proudly lining up against the boss of majority shareholder Crown Resorts, James Packer.
Studio City cost billions to build but marked a move into a more family-oriented area. The resort comes with a 5-star hotel, giant ferris wheel, and Batman-themed attractions.
Since then, however, James Packer has stepped back from his Crown duties, and Crown has sold much of its stake in Melco back to Lawrence Ho. Crown Resorts retains a 27-percent stake in the Macau gaming firm.
Ho has assumed more control of his Macau operations after Studio City disappointed on takings after it opened. “There’s more potential for Studio City to grow,” Ho said in his interview, and Melco’s profits have jumped.
Bu Melco is still recovering from a crackdown on VIP movement from China by the Beijing government. The increasingly-authoritarian rule of president Xi Jinping is a worry for casino bosses in Macau who are being forced to diversify.
And attracting Chinese gamblers overseas has also proved dangerous. Last month, Melco’s shareholder Crown Resorts had 18 of its employees detained on “gambling charges” in Shanghai. Although the authorities have been cagey about the reasons behind the arrests, it is believed Crown employees were trying to promote Crown junkets and packages to Chinese nationals.
That’s a huge no-no where Chinese law is concerned, and three of those arrested have now been formally charged.
Where Next For Melco?
Following in Studio City’s footsteps for Melco will be a high-rise hotel on the Cotai Strip. The Morpheus Hotel will be opened in 2018, Mr. Ho hopes, and will form the fifth tower of Melco’s City of Dreams resort. The tower will feature 780 rooms and restaurants, and cater mainly for high-end gamblers and travellers.
City of Dreams has been outperforming the newer Studio City, mainly due to its larger number of gaming tables and machines.
But further hotels could be launched as Macau forms the base of a global empire for Melco Crown. Available prime land in Macau is on the decline, and nearby locations like Vietnam (which has recently opened up to gambling operators) could be key to Melco Crown’s fortunes.
Certainly, if China continues its aggressive attitude towards casinos in the former Portuguese colony, other operators will be looking overseas to boost their businesses.