Why MGM is delaying new Macau casino launch

Why MGM is delaying new Macau casino launch

Wednesday, February 24, 2016 Totally Gaming
The company already operates the MGM Grand Macau

MGM Resorts International has postponed the opening of its new $3bn (€2.73bn) casino in Macau because of the city’s continuing decline.

The MGM Cotai was due to be unveiled in the final quarter of 2016, but the casino operator said that the opening would now be rescheduled to the end of Q1 2017.

The decision, which follows Wynn’s announcement late last year that it had postponed the opening of its new property, comes after 20 straight months of year-on-year casino win decline in Macau.

MGM’s China subsidiary reported a 33-per-cent year-on-year decline in net revenue during 2015, with a 31-per-cent decrease during Q4.

A company statement read: “The company has made the strategic decision to move the opening of its MGM Cotai development from the fourth quarter of 2016 to the end of the first quarter of 2017 based on current market conditions and the timing of other resort openings in the area.

“There is no change to the current budget of $3bn, which excludes development fees, capitalised interest and land related costs.”

Wynn said in November 2015 that its new $4.1bn casino would open in July of this year, rather than in March, but cited construction issues for the delay. Despite the resort’s problems, two new casinos opened in Macau last year – one from Melco Crown Entertainment and one from Galaxy Entertainment Group.

Meanwhile, MGM said that overall consolidated net revenue for 2015 was $9.2bn, a nine-per-cent decrease compared to 2014, while adjusted earnings increased by two per cent to $2.5 billion. The company said that net revenue from wholly-owned US resorts was $6.5bn, a two-per-cent increase compared to the prior year.

“Our strong fourth-quarter domestic results culminated a very successful 2015,” said Jim Murren, chairman and chief executive of MGM.

“MGM Resorts continues to excel both in Las Vegas and at our market-leading regional resorts, with our wholly-owned domestic adjusted property earnings up 15 per cent in the quarter and 11 per cent in the year.

“We remain focused on driving profitability throughout our existing portfolio. We are ahead of pace with our profit growth plan and are well on our way to reaching our 30-per-cent margin target by 2017.”

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