They’re both part of the huge US expansion plans of the Genting Group that’s seeking to move beyond its Asian roots – not just in New York and Las Vegas, but in Miami and suburban Massachusetts as well. Genting is to start construction on the US$400 million project near New York’s John F Kennedy International Airport.
“We want to diversify the portfolio, spread out the risk and be able to leverage international travel by having the right assets in the right cities,” said Edward Farrell, president of Genting Americas.
In 2020, Genting plans to open the 3,000-room centerpiece of its US strategy on the northern end of the Las Vegas Strip, where construction on the US$4 billion project has recently started, Farrell said.
The Strip hasn’t seen a major hotel opening since 2009, and with no new projects on the horizon, Genting is positioning itself well, said Brent Pirosch, director of gaming consulting at real estate brokerage CBRE Group Inc. in Las Vegas. He said the company will benefit from a planned expansion of the city’s convention centre and the arrival of the National Football League’s Raiders, scheduled to move from Oakland into a new US$1.7 billion stadium nearby.
“It will be the newest and one of the best offerings out there on the Strip,” said Genting Americas’ Farrell.
Big Proceeds
Genting’s Resorts World New York City, as the only operator there, generates plenty of proceeds: Last year it had organic gaming revenue of US$826.5 million, according to Bloomberg Intelligence, 13% more than Atlantic City’s biggest casino, MGM Resorts International’s Borgata Hotel Casino & Spa, and 26% more than the casino revenue of Wynn Resorts Ltd’s flagship Las Vegas property.
“Now it’s a good regional gaming product,” said Farrell, who said the hotel is due to open in mid-2019. “It will be much more of a destination, a full entertainment facility.”
Resorts World pays 70% of its gross to New York State, according to the company, which says it has paid more than US$1.9 billion to New York’s Lottery Education Fund since opening in 2011. The casino offers electronic slots and other games but isn’t allowed to have live table games.
Like other casino operators, Genting is implementing a hub-and-spoke model, said Michael Pollock, managing director of Spectrum Gaming Group, a New Jersey-based consulting firm that has done work for the company. The model operates by having properties in densely populated areas that help to build demand for Las Vegas through loyalty programmes that reward frequent customers. That helps build revenue on both ends of the business, Pollock said.
Earning Points
“You encourage your higher spending, most profitable customers to stick with you,” he said. “People in Queens will play more often if they can earn points redeemed in Las Vegas.”
Yet Genting has had less success with other parts of its US strategy. A US$1 billion project with the Mashpee Wampanoag tribe for a resort with three hotels and a casino, about 60 km south of Boston, is being delayed by a legal challenge over the tribe’s right to operate it. The tribe is contesting the challenge, and a decision by the US Department of the Interior has been delayed, according to a statement by Cedric Cromwell, the tribe’s chairman.
Further delays in resolving the dispute could be costly for Genting. The group has invested US$347.4 million in promissory notes issued by the tribe, Genting Malaysia said in a filing with the Malaysian stock exchange on July 7, noting that recovery depends on the case’s resolution. Genting said in a statement that the new deadline for parties to file replies to opposing submissions in the case is Oct. 30.
A plan to build a large casino at the site of the former Miami Herald building, which Genting purchased for US$236 million in 2011, is also in limbo, with Florida lawmakers balking at proposals to expand gaming in the city. Genting’s Farrell said there’s little reason to expect the company will be able to move ahead.
“The likelihood of anything major happening in southern Florida is very slim,” he said.
Demand for Miami property has waned. The city’s condominium boom, which fuelled much of the construction, led to a glut in residential high rises, and now many developers are putting off new projects.
The downtown Miami site has attracted interest from would-be buyers, according to Farrell, who described it as a “premier piece of property.”
“We have had several opportunities to sell that we have not accepted,” he said. “We are going to hold on to our property and see what happens.”
Genting, through an affiliate, owns 88% of Empire Resorts Inc, which is building a US$1.2 billion casino resort in the Catskill mountains outside of New York. Also branded as a Resorts World property, it is expected to open in March.