Daniel Beitler
Two new mega resorts opened in Cotai during the late summer: The Parisian Macao and Wynn Palace. But why has one been off to a sluggish start while the other is posting returns that suggest it may develop into a smash hit?
As is the case with comedy, it seems that resort openings are mostly about timing. The numerous ‘delays’ – intentional or otherwise – that the two resorts encountered in the run-up to their respective opening dates seem to indicate that their openings have coincided well with the recent gaming resurgence. Gross gaming revenue was up 8.8 percent last month, representing the third consecutive month of gains and the strongest year-on-year growth in more than two years.
Yet despite these figures, not all resorts are faring equally well. While The Parisian can be said to be off to a storming start, Wynn Palace was last week blamed for Wynn Macau’s disappointing third quarter profits, which fell short against the expectations of industry analysts.
Was market cannibalization to blame? Wynn Macau’s original resort in the MSAR suffered more than analysts expected after its sister property opened in Cotai. The carefully worded conclusion: business at the resort is slower than expected.
Meanwhile, The Parisian Macao, which opened just a few weeks later, seems to be off to a promising start. Las Vegas Sands Corp. saw its profit rise to USD0.72 a share, significantly higher than analysts’ prediction of $0.6 per share.
Perhaps one reason that Sands China has better shielded itself from market cannibalization is simply down to the number of properties it operates in the territory. That alone might soften the blow of a new opening drawing loyal guests away from other properties.
But that can’t be the only reason. In The Parisian’s opening month, an aggregate of some 19 percent more visitors stopped by Sands China’s properties, and the Four Seasons resort posted a 7 percent increase in retail sales. Both statistics are being attributed to The Parisian opening.
It may be more to do with the fact that although the two operators’ target markets overlap, they and their markets differ slightly.
Despite Steve Wynn’s assurances at the opening of Wynn Palace that the new resort would offer competitive room prices – he specifically maintained that the difference in price between the cheapest rooms at Wynn Palace and the cheapest in the territory is “very tiny” – it turns out that there is a noticeable margin.
That might not have meant much back in 2014 but today, in the far more competitive gaming scene, positioning a resort outside the purchasing power of residents only serves to limit the target market. The Parisian Macao, being that much closer to “new normal” Macau rates, might just have a wider appeal.
Taking this into consideration, one might understand Wynn’s recent confession that it underestimated demand for the property’s casual dining options in an entirely new light.
As for me, I am not surprised that Wynn Palace has been off to a slow start, but I also didn’t anticipate such a warm welcome for The Parisian. In my opinion, neither resort offers anything particularly exciting or revolutionary… but maybe that’s just me.
With particular regard to Sands China’s latest property, I have always seen it as more of an extension to The Venetian – or at most a rebranding.
“The Venetian is based on Venice, but The Parisian is about Paris!” Sands representatives once assured me when I asked whether they thought there were any tangible differences between the two city-themed resorts.
If The Parisian is best understood as an “extension” of The Venetian, who can blame Sands China? The latter resort is one of the most memorable and distinct resorts in the territory, in my opinion, and the recent results from The Parisian are testimony that the formula is working.
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