he fall comes as Melco Crown Entertainment prepares to open its new us$ 2.2 billion City of Dreams hotel and casino. Packer is relying on the success of the City of Dreams to vindicate his decision to invest billions of dollars of his own money and investors’ funds in Macau after his purchase of a casino license for us$ 1.3 billion.
Gaming revenues are expected to fall further this year with the Macau Government predicting they will average us$ 2.6 billion each quarter. The 31 casinos in the former Portuguese colony responded to falling visitor numbers by closing 300 of the 4300 gaming tables and removing 1000 of the 12,800 poker machines in the quarter.
Packer’s City of Dreams casino aims to lure high rollers to its 500 tables when it opens in the middle of the year, but it will have to compete with the established casinos for customers and will open in a virtual ghost town as neighbouring casino developments have been shelved due to the credit crisis and a downturn in the world’s largest casino market.
Turnover on VIP baccarat games, which are the biggest single source of revenue in Macau, were the hardest hit in the past three months, falling by 9 % from us$ 2.1 billion to us$ 1.9 billion, according to the Macau Gaming Inspection and Co-ordination Bureau. They had been as high as us$ 2.6 billion in the first quarter.
The VIP segment makes up about 66 % of gaming in Macau and is the biggest contributor to Melco Crown Entertainment’s Macau casino. The falls were expected as fewer gamblers visited from mainland China last year, after five consecutive moves to tighten visa restrictions by Beijing.
Last week, Packer’s business partner, Lawrence Ho, said he expected China to ease visa curbs on tourists in coming months. VIP revenues have also been stung as the operators of group gambling tours, who lend money to casino visitors, find it harder to get credit from banks.
Melco Crown has cut wages by about 8 % and forced its 3610 staff to choose between taking two and six months’ unpaid leave. The company plans to save us$ 25 million or 10 % of its salary base, by making staff stays home each month. Its only existing casino, Crown Macau, has also lost up to 10 % of its market share since April.