he company as a whole reported a 30 percent drop in first-quarter profits, due to a fall in revenue as well as the temporary closure of its Monte Carlo resort. In its first full quarter of operations MGM Grand Macau generated net revenues of approximately us$ 298 million, and property earnings before interest, tax, depreciation and amortization of us$ 43 million.
“We are generally pleased with the resort’s performance thus far, but clearly know that we have several areas to improve on going forward,” said Terry Lanni, chairman and CEO.
“We expect margins will improve at this joint venture as it grows in this dynamic marketplace and remain focused on improving results in all operating segments.” Wynn Macau reported property earnings of us$ 129,395 for the quarter and Las Vegas Sands Corporation’s Sands Macao us$ 65,618.
With the company holding approximately 9 percent of the gaming capacity in the city and reporting a market share of approximately 8 percent, it is under-performing, said Lanni. “Frankly since opening we are running about just under 8 percent of market share so we are below our capacity in market share,” he said.
Part of the problem has been the false assumption that mainland tourists would be drawn to the venue because of the reputation of its sister company MGM Studios. “The assumptions erroneously from us ... [was that] MGM is a known name because of our former sister company, the studios that people would flock there in the mass market and the slot area,” said Lanni.
“Well, those people come from the four coastal provinces of China, 90 percent of the business by most estimates there and frankly those people may recognise the studio but they didn’t recognize the fact that there was an MGM Grand hotel casino if will you in Macau.” In order to draw more tourists and lift the performance of the mass market gaming tables and slot machines the company is intending to lift its marketing effort in the mainland.
“You are able to advertise non-gaming aspects in a judicious matter in the People’s Republic of China, that’s something we had failed to do and it is something we are now addressing,” said Lanni.
As with the other operators, MGM also views the announced casino development slowdown as positive and it does not expect the new policy will hold back its expansion plans for the peninsula or Cotai. “We do not believe that it [announced freeze on new casinos] will have an impact on our expansion of MGM Grand Macau, which is under way or on our plans for a resort and Cotai,” said Lanni.
“We have submitted a development plan for that site (Cotai) and each of those initiatives seem to fall within the statements that chief executive Edmund Ho made and we’ll define that as we have upcoming meetings with him but we feel pretty comfortable with that."