Melco Crown deal could lead to expansion

TAGs: Cotai strip, Macau, melco crown

Melco Crown City of DreamsOne of Macau’s largest operators could be on the verge of developing a new resort on the world leading casino gambling enclave. James Packer’s Melco Crown Entertainment venture spent $360million to acquire a majority stake in Macau’s Cotai strip. Gabriel Chain, analyst at the Hong Jong branch of Credit Suisse, said, “This is meaningful. The significance is that, beforehand, a lot of analysts didn’t anticipate that Melco had something in the pipeline. So now it has changed the entire supply outlook.”

The deal itself saw the company take a 60% stake in Macau Studio City for $260m in addition to a further payment of $100m in cash to New Cotai over the next three years. New Cotai will remain as the 40% stakeholder in the venture. Chan added that the deal might mean that other operators hoping to open up on the Cotai strip will be delayed.

“I think they (Melco) will be able to start construction in the first or second half of next year, and open its doors in 2014. That means it will push the other potential new projects even further down the pipeline because of the labour shortage,” he said.

CEO of the company Laurence Ho added that the company now had a key competitive advantage thanks to the resort’s location. The news is only weeks after Melco announced a rise in revenues and we learnt that Macau’s growth is likely to be even faster than was earlier predicted. The bubble certainly doesn’t look anywhere near bursting yet and when the resort diversifies the sky won’t even be the limit.


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