Greece under pressure with Hellinikon project
Athens, Greece – The Hellenic Gaming Commission (HGC) is under pressure to create a casino currency with a newly released deadline for August 30. Country officials say that it is the only way for the long-delayed €8 billion (roughly $9 billion USD) Hellinikon project can continue in progress, the multi-million-euro investment is set to be the largest urban regeneration project implemented in Europe according to official records and Deputy Minister of Economy and Development Stergios Pitsiorlas.
Reports indicate that HGC has until the end of summer to launch a casino tender as the privatization of the former Hellinikon airport is now under license to casino operation. The project’s investor Hellinikon Global is transforming Athens’ the once airport complex into a metropolitan park and includes the development of hotels, shopping centers, open-air cultural venues and a luxury casino.
Sources have reassured that “if there is interest in the casino license, the privatization process will move ahead swiftly”.
Greece, which is still coming out of the countrywide financial crisis of 2010, is determined to make integrated casino resorts a reality in order to assure international lenders that they can accumulate the kind of revenue for the country to pay off its debt. The Hellenic Republic has remained on financial life support with the help of outside investors and large bailouts from within the European Union.
The Hellinikon project was greenlit before 2014, approving 99-year lease on 620 hectares of land with developers Landa and China’s Fosun Group. The ambitious integrated resort and development project has suffered multiples setbacks largely due to bureaucratic reasons and delays. Despite success in overcoming setbacks, the site has remained controversial, with investors angry over the fact that the casino currency should have been issued already in May of this year.
In addition, 32 residents of the neighboring municipalities filed a petition before Greece’s Supreme Court asked the court to annul a presidential decree in order to revoke a section of the property, regarding a 24.3-hectare expanse into the near forest as unconstitutional.
Opening of Grand Lisboa Palace not enough to stop SJM’s losses
The brokerage report released last week has stated that the Macau-based company SJM Holdings Limited will continue to see shrinking gross gaming revenues (GGR) for the coming year, despite the upcoming opening of the 2019 Cotai Strip casino dubbed the Grand Lisboa Palace.
Financial analysts Zhen Gong, Kelsey Zhu and Vitaly Umansky have publicly stated, “While we forecast a resumption in earnings before interest, taxation, depreciation and amortization [for GLP] we expect SJM’s share in GGR to continue dropping”.
Macau is currently facing a financial speed bump as the summer season is underway, and SJM’s decrease in GGR from 29% in 2011 has fallen to just 16.1% in 2017. The casino operator hasn’t seen a profit increase in almost eight years, a factor that does not bode well with SJM Holdings Ltd.’s CEO Sho Shu Fai.
In addition to the already low percentages, the new Cotai casino will cost SJM an estimated US$4.6 billion to complete, exceeding original projections. Fai stated last month that Grand Lisboa Palace will eventually help the company recover some losses, but critics are skeptical.
A report released by a team of brokers monitoring the issue closely stated, “Based on our research into the current phase of development, it is our view is that the cost of GLP’s construction [will see] a low return on investments the first few years after opening. We foresee poor value creation for the Grand Lisboa Palace compared with other new Cotai properties.”
The numbers show that GLP’s average cost per room is one the highest among the new properties in the Cotai area, almost reaching to Wynn Palace level, a much larger property. “Lack of cost controls” are reported to be at the center of the GLP project with analysts adding that they “would not be surprised if costs rise from current estimates.”
Macau casino revenues slow in two-month slump
Macau, the gambling mecca of the East, is currently experiencing a sharp drop in stock value as the monthly numbers fail to live up to earlier projections.
The “Las Vegas of Asia”, Macau, remains the world’s largest gambling destination, but recent revenue shortcomings have investors in a frenzy. For instance, the shareholders of Wynn Resorts Ltd. and Las Vegas Sands Corp. have reported a drop in profits for the second straight month since May of this year
Analysts report that the shares of Wynn Resorts are down nearly eight percent per share, its worst since January of this year, and the share percentages of Las Vegas Sands and MGM Resorts International are down almost seven and eleven percent respectively.
The region’s Gaming Inspection and Coordination Bureau estimates that although total gross gaming revenue (GGR) for June has increased to 12.5 percent in comparison to last year’s numbers, a figure worth nearly $3 billion, the current figures have failed to meet with analysts numbers, and are well below the 18 percent median estimate from earlier in 2018.
The stagnation of the past two months has a lot to do with the “World Cup effect” as sports bettors and fans alike are siding with bookies and online operators to wager on their winners. The casino floors have turned lukewarm and are seeing less action even from VIP-players, who generally account for nearly half of Macau’s total casino-gaming revenue each year.
U.S. casino operators have steadily been shifting their shares by depending on the gambling enclaves of Macau, weaknesses at home are the sole reason, with companies like Wynn Resorts and the Las Vegas Sands receiving more than 50 percent of their revenue from investments in Macau. MGM Resorts International also pulled in over 20 percent of its revenue last year from casinos in the region.
Furthermore, a recent proposal by Chinese authorities to allow for gambling on a nearby island has continued to scare investors, leaving room for uncertainty over Macau’s future dominance over the Asian South Pacific gaming market.
However, this is not the first time that Macau’s casinos have experienced financial turmoil. A corruption probe in 2014 sent revenues down to a five-year low, and although IRs have slowly bounced back with the help of foreign investors, the new slump in numbers is feared to mark the beginning of a more lingering impact.