Virgin Group to Build $3 Billion Macau Casino
Virgin Group guru Richard Branson has his eyes set on getting a piece of the rapidly expanding Macau gaming market. Reports say that the entrepreneur is set to acquire a 50 acre (20-hectare) site in order to build a $3 billion casino resort complex.
Already Sir Branson has conquered various industries including the music business, airline industry and mobile phones. He has also launched Virgin Galactic, which is expected to launch its first customers into the upper stratosphere in late 2008. Now he has told the Financial Times of London he is ready to make his first foray into the hotel and casino gaming business.
"We hope to get all the boxes ticked in the next couple of months and start developing the site soon afterwards," Branson was quoted by the paper as saying.
If he does sign a deal with one of the three permitted gaming concessions or its three sub concessions, he would work toward opening a three hotels and a casino on the land by 2010.
Virgin's strategy is to open a casino that targets the 20-34 age groups, the report said.
"The sector is growing but existing casinos are light on entertainment. There's little to attract the family crowd or make it a memorable value-for-money experience," the report quoted Branson as saying.
Incredibly, if talks pan out with Macau Chief Executive Edmund Ho, he expects to recoup his entire investment with 18 months of the grand opening. He expects to fund the project with a mix of Virgin equity and debt financing.
As we have frequently reported in onlinecasinocrawler.com, the Macau gaming industry has been expanding exponentially. Last year, the market started to pull in more money than the Las Vegas Strip, capturing the title of the world’s biggest gaming market.
In 2006, gambling revenue in the Chinese territory – the only place in the country where gaming is legal – increased to $6.95 billion. The Las Vegas Strip saw revenues of about $6.6 billion.
Overall Macau gaming revenues grew 23% last year while visitation was up 17.6%. As more properties opened later in the year, gaming revenues in and visitation accelerated, finishing with 57% and 29.7% growth, respectively.
Of all the companies getting into Macau, two American based companies are minting more money than the rest: Wynn Resorts (NYSE: WYNN) and Las Vegas Sands Corp. (NYSE: LVS) And their stock values are showing it. This week Wynn’s stock is selling for about $107 a share, almost double its 52 week low and five times what it debuted at four years ago. Las Vegas Sands has seen its shares increase from $46.16 in February 2006 to about $104 this week.
Macau is proving to be so successful because of the vast number of people, more than 1 billion, within a few hours flight.
"Las Vegas doesn't have the radius of the population that is as anxious to come to gamble," Sands Chairman Sheldon Adelson, ranked No. 3 on Forbes magazine's list of the 400 richest Americans, said.
"In Macau, the invitation has been rather one-dimensional -- just gambling," Steve Wynn said at a news conference in September, days before Wynn Macau opened. "Now the invitation is being enriched at a pace not seen in any other destination in the world. The speed of development is dizzying."
Visitation to Macau is also rapidly increasing, up 19.6% in October alone. Most of the increase was coming from guests arriving from Mainland China (53% of visitors), which is a up 10.3% monthly increase. Hong Kong visitation was up 36.7%, Southeast Asia visitation was up 108.4%, while Taiwan visitation was down 1.1%. Other visitation, including Europe and North America, climbed 29.0%. Overnight visitation was up 12.1% in September (most recent available figures).
Game revenues include a more than 60 percent increase in slot machine revenues, a 20 percent increase in roulette and a 6.5 percent increase in blackjack take.
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