Diversification with Macau characteristics

The Wynn Resorts quarterly earnings announcement released this week underlines a key difference between Las Vegas and Macau. It’s a difference that Macau casinos need to address, particularly because Beijing says so.

Net revenue for Wynn’s Las Vegas operations in the second quarter totaled $390.8 million. Casino net revenues were $158.3 million, meaning non-casino revenues – from rooms, food and beverage, retail and entertainment – represented $232.5 million, or 59 percent of total revenues.

(During the earnings conference call, Wynn Resorts founder Steve Wynn trashed President Obama. Wynn’s personal attack extended an emerging tradition for the billionaire mogul.)

In Macau, Wynn registered net revenue of $976.5 million. Gross non-gaming revenue totaled $94.6 million, or less than 10 percent of the total. That figure must rise, Chinese central government officials urge, and Macau’s government has made diversification a priority.

Don’t expect Macau to mimic the Las Vegas patterns for non-gaming revenue. Instead, look for diversification with Macau characteristics. What works in Vegas overwhelmingly hasn’t worked in Macau and may never succeed. My Asia Times article examines reasons behind those differences. Beijing will need patience to see significant changes in Macau’s non-gaming revenue percentage.

Totally globalized native New Yorker and former broadcast news producer Muhammad Cohen is author of Hong Kong On Air, a novel set in his adopted hometown during the 1997 handover about television news, love, betrayal, financial crisis, and cheap lingerie. See his biography, online archive and more at www.muhammadcohen.com.

Macau Studio City puts Lawrence Ho center stage

Bulletin: My interview on Macau’s TDM Talk Show will be televised on its Portuguese channel on Saturday, July 2 at 8pm (Macau/Hong Kong/China time; Saturday 8am US Eastern time) and be repeated Sunday night/Monday morning at 12.30 am. After the initial airing, you can watch it on the TDM website TDM Talk Show link. Hope you’ll tune in for my talk (in English) with Natalya Molok about Macau gaming, Hong Kong On Air, and Writing Camp.

Taking control of the long idle Macau Studio City project has turned heads Lawrence Ho’s way. Ho’s Melco Crown has long been viewed as a logical party to buy out one of the project’s feuding partners since it agreed to operate the Studio City casino back in 2007. But the timing of the US$360 million deal surprised gaming industry observers far and wide.

As I wrote in Asia Times, the acquisition has won a lot of respect for Ho. Getting Macau Studio City out of Hong Kong’s courts and back into construction is sure to please the Macau government. The key challenge for Stanley Ho’s highest profile son in the casino business is to build a winning property that could make him as big a player as anyone in Macau. Ho’s Altira and City of Dreams efforts have been less than overwhelming successes, but analysts believe he will do better this time. He probably shouldn’t get another chance if Macau Studio City lays an egg.

Totally globalized native New Yorker and former broadcast news producer Muhammad Cohen is author of Hong Kong On Air, a novel set in his adopted hometown during the 1997 handover about television news, love, betrayal, financial crisis, and cheap lingerie.

Macau’s boom trumps skeptics

There’s no room left to argue about the success of Macau. Optimism about Macau and gaming across Asia dominated last week’s Global Gaming Expo Asia (G2E Asia) in the world’s gaming capital.

The annual conference and trade show was also an opportunity to showcase the new Galaxy Macau resort that’s the most daring attempt since the Venetian Macao to transform the character of the Macau market from gaming-centric day trippers. In its four years, the Venetian has become a local landmark and tourist touchstone, but it’s done little to alter the composition and direction of Macau’s growth. This year, as I reported in Asia Times, gaming revenue is on track to surpass five times the take of the Las Vegas Strip.

You can’t dispute numbers like that, but smart investors and observers can ask how much they know about what’s behind those numbers.

Totally globalized native New Yorker and former broadcast news producer Muhammad Cohen is author of Hong Kong On Air, a novel set in his adopted hometown during the 1997 handover about television news, love, betrayal, financial crisis, and cheap lingerie.