James Packer’s third Macau casino, Trinity, is expected to cost at least USD 675 million (AUD 767 million) and open in late 2010, according to investor presentations to analysts by Melco PBL Entertainment in Macau.
Located in the main peninsula area of Macau, the third casino project of Mr Packer’s PBL and its joint venture partner Melco is expected to appeal to day-trippers arriving at the Macau ferry terminal or at border points from China.
The partners told analysts at recent briefings that the Trinity project would consist of two towers – one with serviced apartments and a second containing a boutique hotel and a casino with 215 gambling tables and 500 poker machines.
It will be slightly smaller than the USD 584 million Crown Macau, which opened earlier this year with 222 gambling tables, 550 poker machines and 216 hotel rooms.
Mr Packer’s second project, the USD 1.85 billion City of Dreams, will be the largest, with an expected 450 gambling tables, 2500 poker machines, three hotels with 1600 rooms and two towers of serviced apartments.
The first stage of City of Dreams, which is being constructed by Leighton Holdings, is set to open in early 2009.
The partners have engaged Las Vegas casino architect Paul Steelman, who designed the Sands casino in Macau, which opened in 2004, and the massive Venetian hotel-casino, which opened this month, and the New York-based Pei Partnership, to design their third project.
The joint venturers announced in July that they had negotiated an extension to the agreement to buy the third Macau site from the end of this year to July next year.
They said this would give the company „the flexibility to evaluate the uncertain impact“ of the recent restrictions by Chinese authorities on granting visas for its residents to Macau and to „thoroughly review development plans“ for the site.
At the recent briefing for analysts in Macau the company indicated that it was still very committed to the project.
In a report issued last week, JP Morgan was critical of what it saw as the high cost that Mr Packer and Melco paid for the land at the Trinity site.
„MPEL has paid USD 180 million for 1.5 acres to develop their third property,“ the report says, adding: „we are increasingly concerned about the price paid“.
The report also notes that the opening of Crown Macau in May was „premature, with construction of the building and training of staff incomplete“.
It notes that Crown Macau is poorly located and is a „complex that relies on large volumes of high-rollers to achieve their cost of capital“.
Melco PBL executives estimated that Crown Macau’s share of the VIP market in Macau had reached 9 per cent.
This was criticised in the JP Morgan report as „an underperformance relative to the venue’s cost base“.
The 9 per cent market share estimate was made before the August opening of the massive Venetian project, the world’s largest casino, with 1150 gambling tables, 7000 poker machines, 3000 hotel rooms, 350 shops and a 15,000-seat theatre.
PBL and Melco have not made any comment on how much the Venetian has bitten into revenue at the much smaller Crown Macau.
The Trinity site is much closer to the current Macau casinos, located along from the MGM Macau, which is being built by MGM and Pansy Ho and expected to open later this year.
While it is currently set to open in 2010, a Macau blog, Macau Tripping, on the weekend predicted that if experience with Crown Macau was any guide „cost estimates will probably increase and the opening date may sneak into 2011“.
Meanwhile, Macau is bracing for mass demonstrations expected today for its National Day as its citizens express their frustration about the fallout from the casino boom, which has transformed the tiny former Portuguese enclave into a massive construction site.
While the casino boom has benefited investors and some locals, there is increasing concern about the social disruption caused by rising prices, higher land and apartment costs and the substantial influx of foreign labourers working on construction sites.
There is also increasing concern among locals about corruption, with some AUD 20 billion worth of development under way or slated for a relatively small area.
On May 1, some 6000 demonstrators joined public rallies during which police fired shots in the air – in sharp contrast with the slow-paced life that has been the tradition in the city.
The May Day demonstration led to some reports that Macau chief executive Edmund Ho might have incurred some displeasure in Beijing with his handling of the city’s rapid development.