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Melco Crown to open US$3.2 billion Macau casino amid slump

[HONG KONG] Melco Crown Entertainment Ltd plans to open a US$3.2 billion casino in Macau on Oct 27, joining in a competition to lure Chinese tourists amid an industry downturn that has seen high rollers vanishing.

Melco, controlled by billionaires Lawrence Ho and James Packer, and other Macau gambling houses are spending US$27 billion to build new resorts and tourist attractions to woo holidaymakers as China's slowing economy and graft crackdown keep high rollers at bay. That has led to a 14-month downturn.

"Macau is going through a transitional phase from a very VIP gaming centric market to more mass focused," Mr Ho, co- chairman of Melco Crown, said in an interview in Macau. "It's probably going to be a rough second half. Hopefully with Studio City opening it would be a new catalyst for the market."

Studio City, opening in Macau after new projects by Galaxy Entertainment Group Ltd. in May, is a Hollywood-themed resort with Asia's highest Ferris wheel and family entertainment developed with Time Warner Inc Melco paid US$70 million to make a promotional film directed by Martin Scorsese and starring Robert De Niro, Brad Pitt and Leonardo DiCaprio.

The resort will have a flight simulation ride with Batman flying through Gotham City and a 40,000 square feet (3,700 square metres) indoor play center with rides and other interactive facilities featuring DC Comics characters such as Daffy Duck and Bugs Bunny.

Melco is "actively" in talks with the Macau government on gaming table allocation for the new project, and is hoping to get 400 of them, Mr Ho, the son of 93-year-old Macau gambling mogul Stanley Ho, said, adding he is "very concerned" if the project doesn't get that amount of tables.

"We hope the government will reward us more, for the hard work we have put in over the last 10 years," he said at a press conference. Gaming will always be the financial engine for Melco Crown, while non-gaming amenities are an additional draw for customers, he said during the interview.

Studio City, Melco's fourth casino with about 1,600 new hotel rooms, will also have a theater for magic shows, a 5,000- seat entertainment center and a TV production studio. The resort is situated next to the Lotus Bridge, which links to the developing Hengqin island in China's Zhuhai city.

"The combination of new entertainment attractions will really focus on the mass market and goes beyond most of the other properties that still have a core of just casinos and shopping," said Tim Craighead, an analyst with Bloomberg Intelligence.

The new resort in south of Macau's Cotai district comes after Galaxy opened its expanded and revamped projects in May, the first in Macau in three years.

Billionaire Steve Wynn, who last week announced his new casino for March 25, said he finally felt confident to set an opening date for his second project in Macau after the local government approved the number of workers needed to build the resort. Sands China Ltd chairman Sheldon Adelson said its new US$2.7 billion Parisian resort will open in a year.

Macau relaxed travel rules from July 1, allowing Chinese nationals to stay in the city longer and more frequently. The government has also proposed a comprehensive smoking ban inside casinos, extending the law to cover VIP rooms and abolishing airport-style smoking lounges on mass market gaming floors.

Mr Ho said he hopes "the tide is turning" and that the government will announce more supporting policies for the casino industry after a year of restrictive measures.

Melco will announce its second-quarter earnings on Aug 6.

BLOOMBERG