Almost two years after the first shovel of earth was turned at the Pan-Asian City of Dreams (COD) development, the concrete skeleton that promises to morph into an “oasis interweaving fantasy and reality” is rapidly rising out of the Cotai Strip.
The four-storey bed or podium of the resort that will anchor five towers and house the main casino is more than 95 percent complete.
A cylindrical hotel tower in the centre of the site is climbing the fastest with almost all of the planned 28 storeys visible. A second 32-storey tower now stands at more than 12 floors.
Most of the 39,018 square metre casino complex and 13,470 square metres of retail space together with the two towers will comprise the resort’s opening act, slated to begin receiving visitors at the end of March next year.
Consistent with the approach of all of Macau’s new gaming entrants, the developer is promising to introduce as-yet unseen elements into both the world’s newest gaming hub and the region.
“The complex features not only Vegas-style gaming and entertainment facilities, but also provides a multi-dimensional, family-oriented resort experience, differentiating itself from other international resort destinations in Asia,” said Lawrence Ho Yau-lung, co-chairman and CEO of Melco-PBL Entertainment (Macau) Limited (MPEL) when he launched the project in May 2005.
The final form of the promised “integrated entertainment resort” has been the subject of much speculation, fuelled by MPEL’s secrecy.
One thing is clear: the plans have diverged much from the original concept. An architect’s original rendering bears little resemblance to the current ‘master plan’.
The impression saw seven buildings, including four sky-scrapers and three giant arched buildings all embedded on a common platform that sat above a man-made lake.
The hyperbole at the time of the launch matched the architecture’s grandness and a press release promised the “world’s first underwater casino”.
“All the buildings will appear to be floating on water whereas the casino hall will be surrounded by water and marine life”, said Ho. The current plan still sees the resort linked by a main platform, referred to as a podium; however the real estate has altered substantially. When the entire resort is complete (estimated late 2009) the 113,325 square metre site will house five towers.
The archways are gone from the current drawings, however the towers each promise to deliver an original design. Renderings also show a glass dome structure rising out of the podium, which is to be the project’s “main ‘wow factor’”. Four of the buildings will be home to three brands of hotels offering approximately 1,440 rooms, while the fifth is referred to as an 880 unit Apartment Hotel Complex and Vacation Suite Tower.
MPEL’s plot of land sits at the northern end of Cotai, directly across from The Venetian Macao resort. The development will also open together with the next round of Cotai’s resorts in 2009. Galaxy Entertainment Group will open phase one of its Cotai Mega Resort as will Macao Studio City, and joint venture between East Asia Satellite Television Holdings and a subsidiary of eSun Holdings, jointly owned with CapitaLand, and New Cotai LLC.
The developer has brought in some of the industry’s biggest names to give its vision form and build it. In October 2006, MPEL announced three contractors would join forces to tackle the project.
 Following the announcement, Leighton Asia Limited, John Holland Group Pty Ltd and China State Construction Engineering signed a MOP 2.7 billion (US$ 337.5 million) contract to manage the construction of the “super luxury development”. Leighton Asia and John Holland are part of Australia’s largest development and contracting group: Australian Stock Exchange-listed Leighton Holdings Limited. The company’s majority shareholder is the world’s largest international contractor, Germany’s HOCHTIEF AG.
The deal allows MPEL to retain control over selection of all subcontractors and suppliers.

Underwater gambling...
or something close

The master architect for the project underlines the theme MPEL announced when the project launched. Describing itself as “the most experienced designers of theme parks in… Asia-Pacific”, Hong Kong-based Leigh & Orange Limited is charged with giving shape to the company’s flagship.
From the beginning, adjectives used to describe the project all involved water. The architect’s more famed projects include Hong Kong’s Ocean Park and Chinese Middle Kingdom theme parks as well as the Hong Kong Jockey Club and Mandarin Oriental. The early promises of an underwater casino have now been wound back somewhat to an underwater-themed design. The body of water on which the resorts buildings would stand has been replaced by a more solid looking structure.
The word in the industry is that the initial underwater design was too costly and difficult to execute. Rumour has it the underwater aspects of the casino’s interior are now digital screens displaying aquariums. MPEL still refuses to divulge anything. “There are elements of the underwater theme throughout the property but it is very elegant and subtle,” said Irene Lo, director of corporate and brand communications.
The substantial amount of water has been a nightmare for safety consultants. “The theme and the retail area planning on the ground floor have brought significant challenges… in relation to means of escape planning”, suggests the website of the fire and communications engineers for the project, the Arup Group. The site also states that an internal aquarium and “water shows” are part of the design.

Kicking things off

The casino is set to be one of Macau’s largest. Although the final configuration is tentative, it is expected to house more than 400 gaming tables and 2,500 slot machines. The first phase hotels will be branded the Hard Rock Hotel and Crown Towers Hotel, with MPEL managing both.
 The hotels have been designed by US-based Arquitectonica International Corporation. The most contemporary building is reserved for the Hard Rock Hotel and Casino.
Keeping with the central theme, the 28-storey cylindrical tower will resemble a “water spout”.
The building is created from curved octagons, each rotated to create a spiral effect, with “horizontal eyebrows” to block the sun. It will comprise 340 four-star guest rooms and suites and a 2,787m2 casino.
At least five food and beverage outlets will be available to guests, including a traditional Hard Rock Café, a Hard Rock Live Entertainment Venue, a pool and lobby bar and an “international disco” planned for the top floor of the tower. To recover from long nights, guests can visit the hotel’s luxurious 600 square-metre spa.
Hard Rock International CEO Hamish Dodds hopes it will help the group’s foray into Asia. “Macau is the perfect location for Hard Rock to continue building on its base of world-class hotel and casino properties, and as a gateway to China; this development will facilitate [our] further expansion... in Asia”, he said in October 2006. The Macau venue will be the group’s tenth hotel and casino complex with another five expected to open by 2010.
At the northern end of the site, the Crown Towers Hotel promises to match the six-star luxury of the MPEL’s Crown Macau in Taipa. The crescent shaped 32-storey building will contain approximately 300 rooms, suites and villas. Three floors will be dedicated to “VIP Gaming Salons” and outside dining options include an a la carte restaurant and the VIP Crystal Club. A 3,000 square-metre luxury spa will include a fully equipped gym, outdoor pool deck and garden area. The COD’s retail space appears to be the least progressed part of the first phase of development. Other than being described as “luxury shopping”, scant detail has been released about the 13,470 square-metres of malls. According to Lo: “The Tennant recruitment programme has just started… We’ll announce the details when they are available”.

Off-site

The changes behind the scenes at MPEL have been almost as dramatic as the site’s re-jig. The company is a joint venture between the Hong Kong Stock Exchange-listed Melco International Development and the Australian Stock Exchange-listed Crown Limited – formerly Publishing and Broadcasting Limited (PBL).
Crown Limited is led by CEO James Packer, son of the late Kerry Packer, who held a 38 percent share in the Australian media and casino company PBL. Stanley Ho was also initially a major shareholder of Melco and without a gaming concession in their own right until 2006; MPEL originally intended to have SJM operate their venue’s casinos.
However due to mounting concern about Ho’s involvement from shareholders and regulators of other jurisdictions in which MPEL operated a casino, or hoped to, he sold the majority of his stake in November 2006.
However this was not before the company managed to profit from Ho’s involvement. In 2005 MPEL announced the government had agreed to a 25-year lease of 113,325 square-metres of Cotai land for a total cost of 1.735 billion patacas. According to an independent evaluation by Savills (HK) that MPEL published, the market value of the land back then was approximately 4.64 billion patacas. “Through Stanley Ho’s enduring links with Macau’s business community over several decades and via a series of complex transactions the Melco/PBL JV is able to secure the leasehold land”, an announcement stated.
Last month MPEL announced it had received and agreed to the final terms of the land lease agreement from the Government which defines the premium, payment schedule and development rights. On 11 February, it made the first scheduled land premium payment of 300 million patacas.
In September 2006, MPEL received Government approval to purchase its own gaming sub-concession from Wynn Macau.

The bill

Rising construction costs in Macau have seen expenses for the development rise since it was announced in 2005. In June of last year costs, excluding land, were estimated at 14.87 billion patacas. This has now been raised to 16.88 billion patacas.
Funding MPEL needed for the project also became more difficult for the company to obtain. The US sub-prime mortgage crisis hit while MPEL was trying to secure 22.11 billion patacas of credit to go towards COD. The company ended up raising 14.07 billion patacas last September with the major shareholders agreeing to cover the shortfall.
However, funding was enough to cover the construction costs for most of COD, but for 2.65 billion patacas needed to finance a 47-storey apartment block to be opened in the second phase. Funds generated from a share offering opened late last year were reportedly going to be used for this project.

In the works

With enough funding to push ahead, MPEL has signalled that all five towers will be completed by the end of 2009. By the end of next year a twin-tower Grand Hyatt and an entertainment centre are scheduled to be open.
In July 2006, MPEL announced a partnership with Hyatt International Corporation for the operation of two hotels at the resort. Through a subsidiary of the hotel chain, Hyatt of Macau Limited, the company was planning to offer a high range Grand Hyatt and a “mainstream guests” targeted Hyatt Regency.
However the two 32-storey buildings at the southern end of the site will now only bear the Grand Hyatt branding. The approximately 800-room hotel will also be managed by Hyatt, the only hotel in the resort not to be run by MPEL. The two rectangular buildings will be set almost at right angles to each other and both will be curved to give a wave-like shape.
The Grand Hyatt is set to open in September 2009 and will feature 6,039 square-metres of convention space, function rooms and ballrooms, including the 1,951 square-metre “Grand Ballroom”. The hotel will include extensive wine and dine options, including “Made in China” (Asian / international cuisine), “Mezza 9” (Asian / international), “Timber House” (Japanese), a pool bar, lobby bar and 24-hour room service. One of the towers will also include a “Skybar” on the roof. The hotel’s “recreation” facilities will include a 1,394 square-metre spa and fitness centre, two outdoor pools and a “Kid’s Club”.
 The water theme also carries to the complex’s entertainment venue. An approximately 2,000-seat arena is referred to as the “a wet stage performance theatre”. The Belgian entertainment group Dragone Entertainment GmbH has been contracted to put on a show starting in the last quarter of 2009, following six months of rehearsals. Dragone’s previous work includes the “Disney Cinema Parade” at Euro Disney and Céline Dion’s show, “A New Day” as well as Las Vegas shows at venues such as Wynn Las Vegas.
MPEL is keeping mum on how water will be integrated into the show, however it is promising audiences “will come away awe-struck after watching the show”.
World renowned Pei Partnership Architects have been contracted to design the venue. The New York-based group also designed the Macau Science Centre, due to open on Macau’s peninsula next year.
Details about the fifth and final of the resort’s buildings to open are vague. The 47-storey building will stand on the eastern perimeter of the site and will include approximately 880 ‘long-’ and ‘short-stay’ apartments. Little has been released about the design; however an impression shows the building is formed of cube shaped segments with each connected to give a curved shape.
It has been reported that other developers, including Las Vegas Sands Corporation (LVSC) are lobbying the Government to allow long-stay apartments to be developed in Cotai – an area that currently does not have a residential zoning. MPEL confirmed for Macau Business that it has permission to go ahead with the apartment complex. “The apartment hotel tower will be built in accordance to the ‘offer letter’ that we received from the Land, Public Works and Transport Bureau,” said Lo.
Last month executives said the company was intending to pursue a “right to use” model in place of residential leases.
The building is due to be completed by the end of 2009; however as is common practice in Macau, the flats will be marketed in advance.
The building is yet to be branded, however it was reported by the website Street.com last July that MPEL was in discussions with New York real estate tycoon Donald Trump regarding land at the site.
MPEL has also hinted that a second block may also be developed depending on market conditions.

Family values

The resort is targeting middle- and mass-market tourists which could be problematic for shareholders. Since last October, US-listed casino stocks have all tumbled on reported concern over the potential market size Macau’s casinos can attract.
MPEL’s NASDAQ stock price has dropped from a high of US$18.92 per share on 2 October 2007 to US$9.95 on 11 January this year. After showing gains in the VIP gaming market at its Crown Macau property during the last two months, its price climbed to US$12.64 by 21 February.
However, Lawrence Ho’s pledges to provide family entertainment at the property could prove a successful strategy. At a Christmas tree lighting ceremony last year, LVSC’s Asia President Stephen Weaver said the company had been surprised at the large number of families drawn to its Venetian Macao Resort.
MPEL is also encouraged by the more than 10 million visitors The Venetian has welcomed since it opened last August and is hoping to poach some of its premium customers, said Ho during the fourth quarter earnings call last month.
As of press time, construction of COD was still “on time and on budget with the expected opening of phase one remaining Q1 2009,” said Lo.
However, as the first two year’s development changes demonstrate – on- and off-site – in the world’s ‘new Las Vegas’, 12 months can be an awfully long time to cling to a dream.

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