|MGM Mirage has just released news of its latest venture- a new casino resort in Macau. A Chinese city situated on the coast of Hong Kong, Macau is the only city the Chinese government permits gambling in and is a fast growing market, with growth estimated to continue at 25-30 percent over the next few years.|
The city already hosts a US owned and run casino - the Venetian owned and operated by Las Vegas Sands, and a site for Wynn Resorts is also currently planned. One of the many advantages that commentators have cited for US companies developing venues in this city is the opportunity for cross marketing in such a developing city.
Prior to these recent US involvements, Stanley Ho a Macau operator enjoyed a monopoly on the city’s casinos. This MGM mirage deal has been struck with his daughter Patsy Ho Chiu-king, with the site expected to be built and functional by 2006, and will bear the MGM Mirage brand.
Alan Feldman, a spokesperson for MGM Mirage has described the Macau market as “extraordinary”- currently taking into account the May opening of the Sands Macau casino, the city’s casinos are expected to generate US$4 billion in gambling revenue per year, compared to Las Vegas US$5billion generated in the twelve months period until 30 April this year.
The current growth and investments in developing more casinos is expected to create a concentrated area that will attract even more tourists, aided also by the Chinese government’s recent decision to allow more of its citizens to travel to this coastal province by the granting of more travel visas.
Taking into account all these factors, analysts and commentators have announced this plan for MGM Mirage as a shrewd idea. Joe Greff, a gaming analyst with Fulcrum Global Partners commented that “even without the cross-marketing opportunity, it’s a smart move to get into the market”, and estimated that the company could stand to make a 40% return on their investment, with share prices increasing as a result.
The planned deal still has to pass through several stages before the venture is definite. The Macau government has to review and approve the plans, and there are other regulations that need to be met in order for MGM Mirage to progress. Should these conditions be met the resort would operate independently in line with a sub concession agreement with Sociedade de Jogos de Macau- Stanley Ho’s Casino company.