City of Dreams casino resort latest multibillion dollar bet on Macau

City of Dreams latest bet on gambling haven Macau

MACAU — The City of Dreams, a massive casino resort in Macau, was unveiled Monday in the latest multibillion-dollar bet that this once seedy Chinese gambling enclave will become one of the world’s top tourist destinations.

The sprawling $2.1 billion project will be Macau’s second-largest casino complex — complete with three hotels, more than 500 gambling tables, Las Vegas-style shows, an upscale shopping mall and restaurants.

Christening one of its centerpieces, the Hard Rock Hotel, the resort’s backers James Packer and Lawrence Ho, both scions of casino dynasties, smashed guitars hours before a celebrity-studded opening bash set for Monday night.

How the City of Dreams fares is being closely watched as a test of whether the territory can appeal beyond the hard-core Chinese gambling set and sustain its fortunes after years of white-hot growth.

The only place in China where casinos are legal, Macau boomed after the local monopoly was broken up in 2002. But the industry has cooled since Beijing began curbing the frequency and duration of travel by mainland residents over the last year. The global financial and economic crises have also taken a toll, forcing several operators, notably Las Vegas Sands, to delay construction on projects.

The first major casino to open here in almost two years, the City of Dreams marks the second project from Melco Crown Entertainment — a joint venture headed by Packer, one of Australia’s richest men, and Ho, son of Macau gambling kingpin Stanley Ho.

“It is a crucial project,” Lawrence Ho told reporters Monday. “What is good for us … is good for our competitors and is good for Macau.”

Ho said Macau’s “darkest time” was likely in fourth quarter of 2008. He outlined what has become the oft-stated strategy in Macau: wean the territory from its reliance on day-tripping high-rollers with shows, shopping and other attractions that lure mainstream tourists for extended stays.

Whereas Melco Crown’s first resort catered almost exclusively to VIPs, City of Dreams casts a wider net.

Targeting younger tourists is the Hard Rock Hotel, which sports memorabilia from Prince and Madonna, as well as from Hong Kong pop star Jacky Cheung, the first ethnic Chinese musician to contribute to its collection. A dome theater, called the Bubble, features multimedia productions with flying Chinese dragons. There’s also a theatrical water show created with the help of Cirque du Soleil veteran Franco Dragone. Tying together the complex is a thoroughfare of namebrand boutiques.

“With more quality attractions, more things for people to do and more diverse entertainment, people will stay. I think gone are the days when visitors are purely here for gambling,” Ho said.

The project also represents progress in converting a piece of reclaimed land known as the Cotai strip — located a short drive from Macau’s main casino area — into what executives hope will be one day be a well-rounded tourist mecca that rivals the Las Vegas Strip.

The first Cotai resort, Sands’ Venetian, has proved successful and helped the company weather the downturn in Vegas.

Sands and Melco Crown executives talk in glowing terms about the mutual benefits of their two mega resorts being located just across the Cotai strip from each other.

But the extent to which the City of Dreams will pull in new visitors — or cannibalize its neighbors — is still unknown, analysts said.

“It’s questionable how they can sustain the traffic,” said Gabriel Chan, an analyst at Credit Suisse in Hong Kong. “I have no concerns about the opening, but how can they manage to keep people coming after the honeymoon is over? That will be a challenge.”

The stakes are equally high for cash-strapped Sands. Should the two projects end up competing more than cooperating, the Venetian, one of the company’s breadwinners, could get hurt in an already tougher market.

Gambling revenues in Macau were down nearly 13 percent to just under $3.3 billion in the first quarter from a year earlier. With about 9 percent of the market, Melco Crown is the No. 4 operator in Macau, analysts said.