The initial performance of Melco Crown’s City of Dreams when it opens in June will go some way to answering whether Galaxy made the right call by effectively mothballing its own Cotai project next door.
Some cynics may wonder whether Galaxy really made an active decision on suspension at all, or whether it just couldn’t get anyone interested in selling project debt at the right price given the current parlous state of the debt markets.
When Francis Lui, Vice Chairman of Galaxy Entertainment Group (GEG), told our sister publication Inside Asian Gaming last month that work on GEG’s Cotai project would be suspended “until market conditions are right”, he didn’t specify whether he was referring to consumer markets or debt markets.
It’s certainly possible to argue that Galaxy is as much in need of a mass sector presence in the Macau market as is MPEL. Both companies currently have limited mass-market capacity or indeed appeal. Crown Macau is unrelentingly and unapologetically high roller-focused, although MPEL does have Mocha, the chain of slot clubs appealing particularly to local players. Galaxy’s CityClubs by contrast are mainly about table games and mainly aimed at medium- to high-end players. Galaxy’s flagship StarWorld property on Macau peninsula has a modest number of slot machines, with no plans to change that mix.
“I think Galaxy might want to look again at ramping up their slot offer at StarWorld, particularly as they’re delaying Cotai. I think slots could be the real growth area in the next 12 months,” one industry insider told AGI in response to last month’s IAG article.
Time will no doubt tell either way.
