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Melco PBL Mambo II

I was originally planning on posting a second little ditty about City of Dreams today, but it's esoteric nature requires a bit more linguistic attention that I had anticipated. Your loss is your win - at least if you're game to fire up the tap shoes and do the Melco PBL Mambo with me. Rather letting you stew for a day or two while I sort out my architecturally inspired cogitations (see the StarWorld review for an example) I decided to give a firm whack to the MPEL pinata and organize its droppings into a quick and dirty post stuffed to the gills with more half thoughts than an episode of The Hills.

Line up some espresso shots and slip into your lucky red speedo, it's time to boogie.

[Did I really just post that introductory paragraph? Jeez.]

AMA and Market Share

The AMA junket deal at Crown Macau is showing an 'upward trend' with market share steadily increasing over the past four months : December 9%, January 16%, February 18%. March numbers were characterized as 'we are continuing to see upward growth.' We'll just have to wait until the next earnings report comes (late May 2008), wherein the numbers for March, and possibly April will be revealed.

That one casino can lock in 20% market share (possibly more) is - in a word - WHOA. Imagine that, the teeny tiny Crown... with a footprint about the size of the fountain/plaza outside of the Sands Macao, in a location way the hell away from anything remotely interesting, luring in the absolute cream of the junket crop - in turn beating the living snot out of the big huge Venetian, the fancy and beautiful Wynn, the brand spankin new MGM, the breathtakingly weird StarWorld and the entrenched SJM monstrosity including its brand new cactus shaped neon death star of a hotel tower. This is like MacauTripping taking over Google.

Crown at Capacity?

Despite the roaring growth, Crown Towers Taipa is currently not at full occupancy rate. Holidays, including Chinese Labor Day (week) is already sold out, which will start May off with a bang (if house advantage works in their favor). They have not had to reconfigure the casino reconfiguration that was undertaken late last year which leads one to believe that the play they are getting is more high level than occupied seats. Assuming Crown is attracting biggest junket whales, replicating a similar growth spurt would probably be done by adding more player volume at a smaller whale levels. One could take any announcement that the casino floor has been reconfigured yet again as a sign that volume is encroaching on capacity, which is precisely why I asked.

Another area which I inquired about was any events related to the Olympics, i.e. celebrations, or viewing parties similar to what Las Vegas does for major sporting events. Sports betting is not a part of the Macau casino menu, and one would guess that even if it were the oh-so-sacrosanct Olympics would be off the book anyways. As of yet, they don't have any Olympics related events planned... not even a World Baccarat Tournament. Which they should. And pay me a finders fee. Of US$4000 plus three nights, one in each hotel entity at City of Dreams during the grand opening festivities. Nuff said.

Crown Taipa, City of Dreams and AMA

Regarding the reader question about the AMA deal being 'property specific' to Crown Towers Taipa, they haven't given me an answer on this yet. I truly doubt that the location of the Baccarat table matters as long as the property and the accommodations provided to the junketeer are similar in quality to Crown Taipa's.

Speaking of quality of accommodations, Crown Towers Taipa has amended its 'six star hotel' marketing phrase due to legal concerns. Now they are calling it a 'six star experience' instead of their earlier inference that the property has received a non-existent six star rating. Crown Towers Cotai will have the same 'six star experience' marketing phrase attached to it as well. Also related to the coming interrelationship between Crown Taipa and City of Dreams, it has yet to be decided whether there would be transportation (ie a shuttle or limo service) between the two. It would probably be to great advantage to keep junket players at the Taipa property where there is absolutely nothing to do but gamble, eat and sleep (and go to the floor show at the Greek Mythology on the other side of the traffic circle.) Keep the VIPs at Crown Taipa let the mass market players and tourists poke around on Cotai. Easier said than done.

Capacity : Crown Taipa in a post-City of Dreams Macau

With City of Dreams inching closer and closer to reality, one has to wonder what Crown Taipa's ultimate fate might be if players exhibit a preference to the Cotai property. The strategy of getting a high end property to market as expeditiously as possible was surely a good one, but what happens when Crown Taipa is no longer the main focus of the business? The question becomes even more complex when the mass-market centric peninsula project (aka Trinity) is added to the equation. The question of over capacity in Macau is a large and thorny one which nobody has an answer to.

...Trinity

Design on the Trinity project is currently underway, apparently with Steelman handling the designs (unconfirmed during the call). As stated in Melco PBL's annual report published last week, the deal for purchase of the property (through an acquisition of Omar, the company that owns the parcel) was purposefully delayed to take advantage of better financial terms. Even when the transaction is completed, there are still a bajillion hoops and horses to jump through with the Macau government. Real estate transactions, particularly for gaming purposes, are interminable all you can eat bureaucratic buffets. Design and planning will continue concurrently with all the paperwork, permits, agreements, licenses and other paperwork. Demolition and construction will commence shortly thereafter. There is no timeline for when the shovels to hit the ground or the ribbon cutting ceremony.

Mocha Clubs

Mocha Slots (which we've yet to give the big round up on) are small, cozy, groovy, funky coffee shop slash slot machine joints tucked away in the ground floor of various non-gaming hotels. Mocha Slots were the first properties opened by Melco PBL as work and planning was underway at Crown Taipa and City of Dreams. There are seven Mocha Slot locations currently open in Macau, five on the peninsula and two in Taipa. One location, Mocha Square. has been closed since December as it undergoes expansion. Expansion was supposed to take approximately four months, which has elapsed. They gave me no date when Mocha Square will reopen.

During the first Q&A call, I got the impression that more Mocha locations would be announced relatively soon. Not exactly. Some properties will be expanded and new locations are being investigated, but there are no concrete plans to do either right now. One might guess that an expansion/increase in the number of Mocha locations would be revisited after City of Dreams' construction enters its final phases.

Another Mocha related question I posed was related to their Tripartite Lucky Draw sweepstakes in which the winner would drive away in a brand new BMW. The drawing was scheduled to be held a few days before we spoke. Being a guy who loves to look at photos of jackpot winners holding giant cardboard checks and other prizes, I had to inquire if there was a winner and who that was. They've yet to get back to me on this. Booo!

So...

I've gotta say that they were great to talk to, yet again. I threw a lot of hardball questions at them which they answered when they could and passed on only when it was either tagged confidential (ie City of Dreams timelines and casino design features, March market share) or they haven't exactly figured out (Trinity timeline and specifics, Mocha expansion, City of Dreams Apartment Hotel details).

They've got a lot in their pipeline some of which invites even more questioning, specifically the 'capacity' issue that all of the concession holders are sharpening pencils over. Las Vegas Sands Corp seems to be the lone operator to adopt a 'build it and they will come' philosophy, and apparently their market share is taking a bit of a beating.

I hope that some of this information is worthwhile to you and my inquisitiveness between factoids didn't muck up the proceedings too much.

As for the future, I've got another post or two on City of Dreams on the way as well, in addition to finally putting the Venetian Macao review to bed. Beyond that, there's a ton of Vegas stuff, some analysis of the Credit Suisse market share document that reader BrokenQB generously shared with me, the next wave of research and discovery for Cotai's hotel row (Hilton, Conrad, Raffles etc) plus the Four Seasons, the Far East project and Macao Studio City. Whew. Oh, and there's still a bunch of photos that AceMacau sent us of the Galaxy Cotai property that haven't been posted yet. You should be happy to know that I'm almost done cloning myself, the last few bugs in the time machine have been just about fixed and I've developed a betting strategy that beats single and double zero roulette with no past posting, bet capping or ray guns involved.

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Comments & Discussion:

Another great review Chuck. Thanks! Plenty of very valuable information here.

I actually just read a UBS report that said AMA is hoping to extend their services to CoD, but it is up to MelcoPBL to decide if they want to or not. Their main decision factor is whether or not it will take away business from Crown, which they wish to maintain. MPEL is most likely going to extend the AMA agreement to CoD if they believe it is incremental to total business.

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