Melco Crown Entertainment CEO Lawrence Ho said in an interview with Barron’s Asia that the poor quarterly performance of the company’s partly-owned property, Studio City, is due to a marketing failure.
“We have these great non-gaming attractions but we also have a casino and some great restaurants,” Ho said.
“We just need to do a better job at marketing ourselves and bundling offers – it’s not rocket science.”
Studio City, which opened in October, has not fared as well as analysts had initially predicted. Optimism ran high for what was considered the first resort of its kind, which targeted the gaming mass market and promoted non-gaming activities.
However, in the first quarter of 2016, Studio City recorded revenues of just USD195 million, well below market expectations.
“We had a lot of brand awareness and buzz [at our launch], but somehow our marketing team hasn’t really translated that,” said Ho in an interview with Barron’s Asia.
MGM Cotai, Wynn Palace and The Parisian will soon open three new resorts on the Cotai Strip, each eyeing the mass-gaming segment. These competitors threaten to crowd the mass market and attract customers who might otherwise visit Studio City.
Ho said that he expects the mass market in Macau to become “super competitive” between the six gaming operators in the future.
Nevertheless, he said, Melco should “keep delivering our products and services better” and strengthen the property’s emphasis on entertainment and other non-gaming elements.
Analysts have been less favorable toward Melco Crown Entertainment. According to Barron’s Asia, only 30 percent of analysts who rate Melco are advising “Buy” compared to an average 51 percent for Melco’s rivals, excluding SJM Holdings.
James Packer, the former chairman of Crown Resorts, recently relinquished his title and reduced his stake in Melco Crown Entertainment from 34 percent to 27 percent. Crown Resorts also intends to split its Melco stake from the rest of the company as part of a restructuring strategy.
In spite of the gaming downturn, Macau remains an important market for gaming operators, with nearby competitors in the Philippines, Vietnam and South Korea still far behind in terms of gaming development and relevant government legislation.
“For Melco, every time we build something, we want it to be at least a billion-dollar property,” Ho told Barron’s Asia.
“We don’t see any [other] jurisdictions that would be able to sustain that.”
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