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Jewel in the Melco Crown

Studio City opens its doors to the public in Q3. Complete with the highest ferris wheel in Asia, at 130 metres tall. It’s all part of the new paradigm. The cinematic-themed resort is chasing the non-gaming market. Although it needs to be funded by gaming . . .

The gaming industry is the territory’s primary source of revenue and that is not forecast to change in the near future. However, given the frequent political messages from the Central Government for the Special Administrative Region (SAR) to diversify its economy, speeches are increasingly non-gaming focused. Yesterday, the presentation of the Melco Crown Entertainment project by co-Chairman Lawrence Ho was just such an example. The son of Stanley Ho did not mention the gaming aspect of the resort until he was asked about it. “We built Studio City with a capacity for 500 gaming tables. But I have no idea how many we tables are going to get. That makes our faith in this market, and in the government, even more spectacular”, he said. “Gaming tables will be authorised based on contribution in terms of non-gaming activities and contribution to the promotion of Macau. Considering that 95 per cent of our facilities are non-gaming . . . our contribution to the promotion of Macau, which can be seen by the short movie directed by Martin Scorsese . . . [makes us] confident that the government will allow us to run at least 400 gaming tables”, the Co-Chairman and Chief Executive Officer of Melco Crown Entertainment said. “Studio City will represent Asia’s next generation of immersive, world-leading entertainment-driven gaming and leisure destination experiences, as we work to support Macau’s tourism development and diversification”, Ho stressed. While Lawrence Ho’s speech was primarily focused on non-gaming he did not forget to mention the importance of gaming activities. “We have built these non-gaming facilities but in order to invest in non-gaming we need financing from gaming”, he explained. While City of Dreams is more focused on the premium mass market segment, Studio City will allow the gaming operator to attract more mass market clients. “Around seven years ago, I said mass market would take over the gaming industry because of the emerging Chinese middle-class; that is the future”, he said. “People can cross Lotus Bridge and within 30 seconds they are at Studio City, which will allow us to tackle the mass and mass premium market”. Melco Crown hiring up to 10,000 employees Last year, for the first time since the liberalisation of Macau’s gaming industry Gross Gaming Revenue shrunk (2.6 per cent year-on-year). However, this will not result in layoffs, Mr. Ho claimed. “For the record, City of Dreams was launched in 2008 during the financial crisis and at that time we did not lay off any of our employees because of it. In fact, we are planning from March on to hire from 8,000 to 10,000 employees for Studio City so how can we consider lay-offs?” he said. The concerns of Mr. Ho are actually related to the need to find workers for his latest resort, mainly during a time when Galaxy is also in the market for labour, as Phase II of Galaxy is expected to open mid-2015. “Of course, we are worried about the rising costs of staff because everybody is hiring at this moment. But we are not too worried because Melco Crown offers good conditions to its workers and good career prospects”, he said, In spite of shrinking gross gaming revenue, Mr. Ho said, “Macau is still the best gaming market”. The CEO of Melco Crown also said that the decline of the VIP market is not benefiting anyone but is simply the market “rebalancing”. Melco Crown considers HKSE delisting a non-event Lawrence Ho said yesterday that the decision to de-list Melco Crown from the Hong Kong Stock Exchange market was purely made for administrative reasons and that it was not connected to the Chinese crackdown on corruption. “We have 99 per cent of our trading volume in the United States. From the very beginning out primary listing has been on Nasdaq. And so the board of the company decided to focus on Nasdaq”, the Co-chairman explained about Melco Crown’s decision to de-list from the Hong Kong Stock Exchange. After being asked whether the delisting was connected to the Chinese anti-graft crackdown Lawrence Ho Yau Lung denied it. “I always thought the Hong Kong delisting plan would be a non-event. I honestly do not know why it has been this big deal. In addition to Macau, we are regulated in all the gaming authorities that Crown is a part of. That includes Las Vegas, Pennsylvania, New South Wales, Victoria… The delisting has nothing to do with the anti-corruption campaign in China and it is not connected at all to the slump in Macau gaming revenue”, he said. “This change will not have an impact on our ongoing projects as they have already been fully financed”, Mr. Ho added. In addition to opening Studio City this year, the company chaired by Lawrence Ho and Australian billionaire James Packer will have the Grand Opening of City of Dreams Manila, in the Philippines, before the Chinese New Year. It is expected to start operating the 5th tower of City of Dreams in Macau by next year. J.S.F.

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