Thursday, December 4, 2008
Shun Tak Plans New Macau Hotel
By JONATHAN CHENG
HONG KONG -- A member of Macau's Ho casino family unveiled preliminary plans to develop a five-star hotel on Macau's Cotai Strip, even as hotel and casino operators there grapple with a slowdown and travel restrictions from mainland China.
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Associated PressShun Tak plans to develop a five-star hotel on Macau's Cotai Strip, as other companies curb growth plans. Above, the MGM Grand Macau opening last year.
The hotel is slated for completion in 2013, and will be managed by Dubai-based Jumeirah Group, said Pansy Ho, managing director of Hong Kong-listed conglomerate Shun Tak Holdings Ltd. Shun Tak plans to fully finance the project, saying there were no plans to accommodate a casino at the hotel, to be named the Jumeirah Macau Hotel.
Ms. Ho's announcement was short on specifics, noting that plans were still at a "very preliminary" stage. She offered no details on the hotel's design or how much the development would cost. The project will also require government approval.
Even so, the move is a vote of confidence in Macau's future as industry experts question some of the growth figures that have been touted in recent years. It also comes as some of its rivals re-examine their ability to expand in Macau.
Last month, Sheldon Adelson's Las Vegas Sands Corp. put the brakes on growth plans in the Cotai Strip, while Galaxy Entertainment Group Ltd. has also announced plans to postpone construction on its project there.
Pansy Ho
Some experts said the announcement by Ms. Ho, the 45-year-old daughter of local gambling magnate Stanley Ho, is a chance for her to reaffirm her commitment to Macau as concerns rise about how other frozen projects will hurt employment in the Chinese special administrative region, whose economy is reliant on the casino industry. Ms. Ho already owns a 50% stake in a Macau casino with U.S. operator MGM Mirage.
"Shun Tak's view of the Macau economy is long term," Ms. Ho said in a statement Tuesday. "We remain positive that its fundamentals are strong and sound, and will continue to invest in its future, trusting that it will be one of the first destinations to recover from the recent market adjustments."
David Green, director of the gaming practice at PricewaterhouseCoopers, said the current environment is a good time for long-term players to exact better terms. "The message right now is that if you have access to capital, it's a good time to invest," he said. "It is an especially good time to be negotiating construction contracts and land premiums."
Visitor numbers to Macau have been hurt by the global economic downturn, as well as the Chinese government's restrictions on mainland Chinese citizens traveling to the special administrative region. In October, about 2.6 million visitors came to Macau, an 8% increase from a year ago. But mainland Chinese traveling to Macau under the individual visit system, hit by the new restrictions, fell by 26% from the previous October.
Analysts at Credit Suisse Group forecast Macau gaming revenue to remain flat in the last three months of 2008 compared with the same period in 2007, a pullback from the 45% year-on-year growth in the first nine months of this year.
Gabriel Chan, a gaming-sector analyst with Credit Suisse in Hong Kong, said Ms. Ho's announcement was designed to outlive the current market pessimism, calling the hotel an early bet that sentiment will eventually return. "The question is really when China's government will relax travel restrictions," Mr. Chan said.
Shun Tak Group owns half of the Mandarin Oriental Macau, and 34.9% of the Westin Resort Macau. Jumeirah Group is a member of Dubai's state-owned Dubai Holding, which operates that city's Burj Al Arab hotel. The Macau property will be Jumeirah's third hotel in China.
—Jackie Cheung contributed to this article.Write to Jonathan Cheng at jonathan.cheng@wsj.com
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