Wynn’s (WYNN) Macau subsidiary, Wynn Macau Ltd (HKG:1128) has been granted official approval for the construction of a major new hotel and casino development on the firm’s 51 acre location in the Cotai area of Macau. The firm plans to construct a 1,500 room hotel, along with up to 500 game tables at the site. The approval was granted as part of a competitive process that involved a number of gaming firms competing for six permits in the newly opened area.
The firm has existing properties in Macau, currently owning the Venetian Macao, the Sands Macao and the Four Seasons Hotel. The region is important to all of the gaming firms that operate there, accounting for, in Wynn’s case, 60% of their net revenues. This new property will continue to boost the importance of Macau for Wynn. The region of Macau collected $33.5 billion in gaming revenues in 2011, more than 500% of the revenues collected in Las Vegas. The growth opportunities are substantial as well, with Chinese disposable incomes increasing and new transportation links to the most promising markets. A new road bridge has been constructed to Hong Kong and a railway line to Guangzhou, shuttling more potential customers to Macau.
Wynn recently came under pressure after a filing was made to the SEC in error regarding the approval of the project earlier this year. In late 2011, the firm also made a claim that it had accepted the terms of a contract to build the resort; however, this didn’t mean the Macau government was on side with deal. However, this time it seems that the project is moving ahead.
Sands Corp. (LVS) also recently opened a portion of a new $4 billion casino and resort in Macau. The Sands Cotai Central is a huge property, with 2,200 hotel rooms, a modern movie-theater and a rooftop wave pool. While construction has been hindered by government hiring restrictions and limits on tables, the firm is optimistic the property can add substantial value to its portfolio. Hilton Worldwide and InterContinental Hotels (IHG) manage the hotels at Sands Cotai Central. The Sand’s property is the only new resort to open this year in Macau, which has analysts excited about the opportunity in a supply constrained, but booming, market.
With the continued boom in Asian markets and with a newly minted upper-class eager to enjoy the high life, further development in Macau is certain for all of the major gaming firms.
