Melco Crown’s big gamble includes different hotels, casinos

Lawrence Ho’s attempt to forge his own business reputation separate from his father, Asian gambling magnate Stanley Ho, took a great leap forward last week when Ho’s Melco Crown Ltd. opened the City of Dreams on Macau’s Cotai Strip. As important as the new facility is to Melco Crown, it is also crucial to the success of the city.

City of Dreams is likely to be the last large stand-alone casino complex until the current economic problems are sorted out. While there have been some encouraging signs pointing to the recovery of Macau in the first quarter of the year, City of Dreams will point the way to determine whether the mass market can fill the gap made by the downturn in the VIP market.

While City of Dreams is a complete resort, catering to both segments of the market, there are concerns that the property will not grow Macau business enough and will end up cannibalizing existing business. Venetian officials were cautiously optimistic that the new resort would bring additional traffic to the Cotai Strip, where it had been on its own since opening almost three years ago.

“The opening of City of Dreams represents a culmination of nearly five years of planning and development," said Lawrence Ho, CEO of Melco Crown. "As our flagship property, it represents a major step forward in Macau’s transformation as the region’s premiere leisure, entertainment and gaming destination."

With 420,000 square feet of gaming space (520 table games and 1,350 slots), the City of Dreams is a massive expansion of the Macau market. And while it adds only a few hundred hotel rooms in the Crown Tower and the Hard Rock Hotel, another 800 rooms will come online when the Grand Hyatt Macau later in the year.

Ho’s gamble with City of Dreams is doubled down by his partner, James Packer, scion of the Packer family in Australia. Ho says business at this time is actually better than when the company opened its first casino, Crown Macau, now re-branded as the Altira Macau.

“Things were much tougher when we opened Crown Macau Tower two years ago. We consider City of Dreams' opening to be a much better time and business climate,” he says. “Melco Crown entertainment still believes in our future and also in the bright future of Macau. We were determined to complete City of Dreams this year and the recent turbulence in the global markets has not deflected us from our task."

The iconic architectural feature of COD is the domed “Bubble,” an attraction that features an immersive multimedia experience produced by Falcon’s Treehouse. The first few days produced a huge demand for the 15-minute show.

With more than 85,000 square feet of retail, COD is battling retail space that is already faltering at the Venetian and the adjacent Four Seasons. COD executives say the layout of the retail space, dubbed the “Boulevard,” should ensure lots of customer traffic. The Boulevard spans the property and is the main causeway between the various hotels and attractions.

Despite the luxury of the Crown Tower, aimed at the VIP market, COD will rise and fall with the mass market. Ho says they are ready.

“We all want to grow Macau into a multi-day destination," Ho said. "We believe that if we give people attractions, people will stay. Gone are the days when people only wanted gambling. We're very culturally sensitive to what our customers want."

Greg Hawkins, president of City of Dreams, believes that the project offers something for everyone.

"As an urban entertainment center," Hawkins says, “we believe City of Dreams delivers the ultimate in sophisticated entertainment, first class hotels, world class retail and the very best in Asian and international dining, providing an incredibly diverse and cosmopolitan collection of contemporary leisure and lifestyle experiences within this single city-like complex. We are confident that we will strengthen Macau as a multi-day stay market."

In many ways, Macau’s future is tied to COD. The economic downturn, combined with strict visa restrictions on visits from mainland China, has hit the former Portuguese colony hard. Revenues were down in both the fourth quarter of 2008 and the first of 2009 compared with the year earlier. Las Vegas Sands has halted construction on its $12 billion development. Galaxy Entertainment has delayed the opening of its Cotai development and Macau Studio City has yet to even begin construction. You can be sure that executives with each of those companies will be closely watching the business that flows through COD, because that business could be the harbinger of the business that will arrive at their doors in the near future.

By Staff

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