New $5.4b Macau resort may struggle to hit jackpot
UNITED States casino tycoon Steve Wynn's newest pleasure palace in Macau boasts massive dancing fountains but the Chinese territory is anything but bubbly as it prepares to welcome the US$4 billion (S$5.4 billion) resort to its glitter strip next week.
Macau's most expensive casino yet is due to open on Monday, a month ahead of a US$3 billion gaming resort by US billionaire Sheldon Adelson.
But the properties - featuring thousands of hotel rooms, an aerial gondola and a scale version of the Eiffel - are opening as Macau gambling revenues languish at five-year lows and a corruption crackdown forces Chinese high-rollers to play in rival Asian destinations.
Casino bosses are upbeat, saying the new resorts on the Cotai strip will breathe life back into Macau, which generates five times more gambling revenue than Las Vegas.
Analysts, however, warn that additional supply could increase competition.
"If they (Mr Wynn) had known, they definitely would not have spent US$4 billion, they probably would have spent something like US$1 billion," Nomura analyst Richard Huang said.
With hindsight, it was clear that the operators, particularly Wynn, miscalculated their expansion during the boom years, he added.
Planned several years ago when soaring revenues seemed unstoppable, the projects initially forecasted earnings about four times bigger than what is currently being generated.
Regional rivals like the Philippines and Vietnam, meanwhile, are vying to lure Chinese gamblers to their casinos.
New openings from Melco Crown and Galaxy Entertainment last year have not significantly bolstered receipts.
Wynn Macau's share price tumbled after it confirmed it had received only a third of the gaming tables it had requested from regulators, as the government tries to rebrand Macau as a more mass-market "tourism and leisure" destination.
Wynn Palace and Mr Adelson's Parisian resort, due to open on Sept 13, will add close to 5,000 hotel rooms. MGM China, SJM Holdings and The 13 Holding are also set to open resorts in the next two years.