MGM Resorts International has pushed back the opening date for its new MGM Cotai Casino Resort by three months while additionally explaining that the budget for the giant development is due to rise slightly.
The MGM Cotai Casino Resort had been due to open for business during the first three months of 2017 but Jim Murren, Chairman and Chief Executive Officer for Las Vegas-based MGM Resorts International, revealed a delay to the subsequent second quarter as part of an earnings conference call with analysts on Thursday.
Murren also stated that the development will now cost $3.1 billion to fully complete, which excludes land costs and any capitalized interest, instead of the previous predicted $3.09 billion.
“We have decided to push out the opening date a bit for the MGM Cotai Casino Resort into the second quarter of next year,” said Murren. “Recall that we’ve said, we [were] looking for March. This will give us just a little bit more time. It does increase the budget slightly by 1% to $3.1 billion but we think the time is worth it.”
MGM Resorts International owns 51% of the firm behind the MGM Cotai Casino Resort, Macau-based casino operator MGM China Holdings Limited, and had been thought to be in somewhat of a race to open the development before rival Wynn Resorts inaugurates the nearby Wynn Palace Macau.
Thursday moreover saw MGM China Holdings Limited release its financial results for the second quarter showing a 19% drop year-on-year in net revenues to around $452 million. The China unit furthermore reported adjusted earnings before interest, taxation, depreciation and amortization for the three-month period of nearly $119 million, which represented a 10% decrease, alongside operating income that was 11% lower at $51 million.
MGM China Holdings Limited blamed the declines on factors affecting the entire Macau casino market including the introduction of smoking restrictions in October of 2014 alongside “certain political initiatives” introduced by the Chinese government such as the ongoing measures designed to stamp out corruption along with currency transfer restrictions.
“This particularly affected the numbers of high-end or premium players visiting the group’s VIP, main floor and slot machine gaming operations,” read a statement from MGM China Holdings Limited as part of its filing with the Hong Kong Stock Exchange.
Thursday’s filing also saw MGM China Holdings Limited report first-half casino revenues of $903.8 million, which is a reduction of 22.4% year-on-year, with turnover from its VIP table games slipping 31.1% to $17.7 billion. Alongside these, VIP gross table games win down by 35.5% to approximately $545.4 million.
“Tightened regulations for gaming promoters that started in the fourth quarter of 2015 and a mobile telephone usage ban at gaming tables in the VIP gaming areas starting in May 2016 affected the group’s VIP gaming operations,” read the filing from MGM Chnia Holdings Limited. “In response to the volume decrease since 2015, we worked with our gaming promoters to optimize casino space and enhance table yield.”
MGM China Holdings Limited additionally explained that main floor gross table games win for the first half of 2016 fell by 5.4% year-on-year to just under $478.3 million.
“All components of gaming revenues in the Macau market were adversely impacted by these changed circumstances as well as the slower economic growth in China,” read the filing from MGM China Holdings Limited.