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Crown Macau, a favorite among high-roller gaming patrons
Underpinned by its innovative business operation and full portfolio of gaming products, Melco Crown Entertainment (MPEL) remains strong amid a global economic downturn and new government measures that have grayed Macau’s overall gaming sentiment.
When the liberalization of Macau’s gaming market was just in its infancy, Lawrence Ho, Chairman of Hong Kong-listed Melco International Development Limited (Melco) and one of the founding shareholders of MPEL, was well ahead of the game. Envisioning the dynamic future of Macau, Ho started the master plan in 2003 and unveiled the blueprints for a truly luxurious casino hotel in Macau and an integrated entertainment resort, which are now known as Crown Macau and City of Dreams, respectively. Ho also pioneered a new leisure-gaming concept called Mocha Clubs, which was an instant success.
Ho further seized the challenge of new Macau by steering the formation of an exclusive Pan-Asian joint venture, Melco Crown Entertainment (MPEL), with James Packer’s Australian entertainment firm, Crown Limited, in 2004 and orchestrating its NASDAQ listing (ticker symbol: MPEL) in 2006. The momentum continued in May 2007 with the opening of Crown Macau, MPEL’s first casino hotel. Its contemporary architecture has earned international recognition, including the “Best Casino Interior Design Award” at the first “International Gaming Awards 2008” in London and being named one of the 12 “Best Hotel Swimming Pools 2008” by Forbes Traveler.com. Ho has now moved his innovative thinking into the emerging multi-night stay market in Macau. MPEL’s next project is City of Dreams, a destination designed to be in tune with the “New GenerAsians” — the generation of 21st-century Asians.
Thanks to these moves, MPEL will become the first operator in Macau with targeted products in the substantial VIP segment, the burgeoning multi-night stay resort segment and the highly profitable non-casino-based slots market. And Ho is already clear of where the next gap is in the market.
Despite a global economic downturn and increased competition, MPEL has thrived under Ho’s stewardship. On August 14, 2008, MPEL announced its second full quarter of financial performance, reflecting its solid foundation and growth prospect in Macau. In response to these financial results, Chief Executive Officer and Co-Chairman of MPEL Lawrence Ho commented: “Competition for VIP business in Macau during the second quarter became a lot more aggressive. Crown Macau, the first of our three property developments planned for Macau, is strategically skewed toward the VIP segment of the market and has successfully held its position as the highest-volume VIP property in Macau during the second quarter of 2008.”
Buoyed by the success of its casino hotel and a variety of innovative products in the gaming scene, MPEL stands tall in the face of current market conditions.
- MPEL’s net revenue was US$384.6 million, 8.5 times up from US$45.1 million for the comparable period ending June 30, 2007. MPEL also recorded adjusted EBITDA of US$113.5 million in the first half of 2008.
- Crown Macau: For the quarter ending June 30, 2008, net revenue at Crown Macau was US$361.1 million versus US$26 million in the quarter ending June 30, 2007. Across the first half of 2008, Crown Macau recorded EBITDA of US$117 million, representing an annualized ROI of more than 60%.
- Mocha: Net operating revenue from Mocha Clubs totaled US$22.3 million in the second quarter of 2008, up from US$19.1 million in the second quarter of 2007.
- City of Dreams: The first phase remains on schedule to open during the first half of 2009. All four hotel towers have topped out and interior fit-out work is well under way.
(Note: Full version of MPEL second quarter 2008 earnings is available at www.melco-crown.com/eng/ir_pr.php)