China's corruption crackdown is threatening to put Macau's casinos out of business. A new multi-billion resort, starring Hollywood heavyweights, is hoping to turn the tide. But analysts warn against rolling the dice.
The casino capital of the world is gambling on a new breed of high-rollers to revive its fortunes, as Macau's newest hybrid opened its doors on Tuesday.
Studio City, a multi-billion-dollar glitzy "integrated resort" towering over the gaudy Cotai Strip, represents a break from the peninsula's other 37 casinos. By offering entertainment-crazed guests anything from crap tables to a House of Magic, a shopping mall, and the world's first figure-8 Ferris wheel, developer Melco Crown Entertainment (MCE) is hoping to attract mass-market gamblers from the Chinese mainland.
The threat of Xi Jinping
The grand opening comes amid a sweeping government crackdown on corruption, launched by President Xi Jinping, which has come at a huge price for the southern territory's gaming industry.
After opening up to foreign competition in 2002, Macau, the only part of China where gambling is legal, overtook Las Vegas in terms of revenues. But following Xi's war on corruption, profits have dropped to four-year lows as September marked the 16th consecutive month of declining revenues. Gross earnings for the month was 17.13 billion pataca (1.94 billion euros, $2.15 billion), down one-third from the same time last year, according to Macau's Gaming Inspection and Coordination Bureau.
Still, MCE said it was optimistic Studio City would help turn the tide for Macau's high-roller industry. "We hope that the opening of Studio City will be part of a catalyst that will improve gaming revenues," said co-chairman Lawrence Ho.
Glitz and glamour
While this remains to be seen, one thing is certain: the developers have put their money where their mouth is. The $3.2-billion entertainment resort was build to resemble a Roaring Twenties high-rise, replete with faux-Art Deco twin towers. Inside, it's packed with 250 gambling tables, 1,600 hotel rooms, a nightclub, and a 35,000-square-meter (380,000-square-foot) "retail mecca," fashioned after iconic shopping strips such as New York's Time Square and Beverly Hills. Suspended between the towers at 130 meters, a figure-8 Ferris wheel dubbed the "Golden Reel."
Sticking with the Hollywood-theme, Studio City also offers visitors a 4D simulation ride through Gotham City, called the "Batman Dark Flight."
But taking cake may be the one-minute promotional video, "The Audition," which might best be described as The Great Gatsby meets The Dark Knight. MCE reportedly paid Hollywood heavyweights Leonardo DiCaprio, Robert De Niro, Brad Pitt and Martin Scorsese $10 million each to star in the action-packed ad. Several of them even hit the red carpet for the big opening.
Roll of the dice
But according to Michael Ting, analyst at CIMB securities in Hong Kong, all that glitz and glamour may still not be enough to bring the boom back to Macau.
"Until the macro situation is resolved, it is unlikely that new property openings, no matter from which operator, will add significantly to industry revenues," Ting said.
However, with major infrastructure projects on the horizon, such as a light rail and a bridge linking the peninsula with Zhuhai and Hong Kont, MCE's Ho remained optimistic that Studio City will attract a new generation of high-rollers.
"We have great confidence in the long term," he said.
pad/hg (AFP, Reuters)