Melco Crown's losing streak, by Vanda Carson - The Sydney Morning Herald - 20th November 2008

James Packer's Macau casino joint venture is facing further headwinds with VIP gaming revenues in the territory expected to fall 25 per cent next year.

The prediction by Karen Tang, a Deutsche Bank gaming analyst in Hong Kong, follows a Macau Government forecast that casino revenues would fall to an average of 7 billion patacas ($1.36 billion) each month.

It comes as a spokeswoman for Melco Crown Entertainment said management was discussing whether to close restaurants at its Crown Macau casino. Last week the company forced its 3000 staff to choose between taking two and six months unpaid leave.

Lawrence Ho, Melco Crown's chief executive officer, said the company planned to save $US25 million ($38 million), or 10 per cent of its salary base, by making staff stay at home each month.

Melco Crown's City of Dreams 1400-room hotel and 500-table casino opens next year.

Ms Tang said in a note to clients that revenues from high rollers would fall by about a quarter as the operators of group gambling tours, who lend money to casino visitors, find it harder to get credit from banks.

The VIP segment makes up about 66 per cent of gaming in Macau, the world's largest casino market, and is the biggest contributor to Melco Crown Entertainment's Macau casino.

Mr Ho said last week he and his co-chairman, Mr Packer, had agreed to remove the name Crown from Crown Macau, and it appears likely the City of Dreams will use the Crown brand.

Mr Packer owns about 38 per cent of the Australian-listed Crown, which in turn owns about 37 per cent of Melco Crown.

Melco Crown, which trades on the Nasdaq, hit $US18.15 a year ago. It is trading at $US3.20, after falling 4 per cent on Tuesday. Its slump is nearly twice as steep as the broader index with its shares weighed down by debt fears.

Crown shares yesterday fell fell 10 per cent, or 58c, to $5.20.

(Credit: The Sydney Morning Herald)

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