I suppose it's true that Disney World didn't open without a hiccup. And in contrast to Jurassic Park -- well, at least Melco PBL Entertainment
And then there's the rest of it.
Tuesday morning, Melco reported first-quarter earnings, and most of the numbers are inconsequential. The big story is an update about the opening May 12 of the company's first casino, the six-star Crown Macau. The problem is that, in addition to the construction delays and cost overruns, the property opened with only 26 VIP gaming tables, with the other 54 planned VIP tables due within the next month. Meanwhile, the hotel apparently is either not open at all or just not yet complete; Melco said in its earnings release that it expects to have 60 rooms ready within three weeks, with 216 rooms complete by the end of July.
The Crown already suffers from a relatively remote location away from Macau Peninsula and north of the development on the Cotai Strip. And while this is supposed to be the market's high-end property to compete with Wynn Resorts'
Melco also has the City of Dreams project due for the mass-market Cotai Strip in late 2008. It will include four hotels, including a Hard Rock hotel, Crown Towers, and two Hyatt-branded hotels. The obvious concern is how much more this is going to cost and whether the opening of the first phase of the flagship project will be delayed into 2009 (or how much of the project will actually be open when it opens). The company has a third project on the Macau Peninsula that will target the day-trip market, with a projected mid-2010 opening.
I have to admit to taking a bit of a gamble on Melco, though it is less than 2% of my portfolio. The safer bet would be MGM Mirage
For related Foolishness:
- Gaming Roundup: LVS and MGM Disappoint
- Gaming Roundup: Macau Continues to Roll
- The Ultimate Rule Maker: MGM Mirage
- The Future of the Mississippi Gulf Coast
Who says it's a small world? To find the best companies to invest in wherever they do business, join Bill Mann and his team at Global Gains.
Fool contributor Jeff Hwang owns shares of Melco PBL. The Motley Fool has a disclosure policy.