MGM Cotai criticized for below average sized rooms
Analysts are bearish about MGM Cotai’s prospects, and they all agree on the reason why: room size. According to a recent report by GGRAsia, several analysts are worried that until the resort can increase their number of large suites, it will lose out to the competition.
Australian investment bank Macquarie Capital Ltd., after comparing the resort to its Cotai competition, stated:
“[MGM Cotai] may be too base mass-centric, and given limited cross-play/traffic on Cotai versus the peninsula, the property’s core room sizes may not attract enough quality overnight guests needed to quickly ramp EBITDA [earnings before interest, taxation, depreciation and amortization].”
The 43 square meter room size (463 square feet) of a MGM Cotai standard room might be good enough for an average joe like me, but it won’t compete well with larger room sizes found in the majority of the other resorts in Cotai. Only five operators of the 18 have smaller rooms. So if I’m going to Cotai anytime soon, my wife would probably be happier if we stay at one of the other resorts.
That’s not exactly what they said, but the idea holds. If MGM Cotai doesn’t increase the number of suites on offer fast, higher quality customers, with more money in their pockets to spend at the tables, will be driven to the competition if the situation doesn’t change.
U.S.-based investment bank Jefferies LLC agreed with this sentiment, but was more optimistic about the resort’s long-term prospects due to ongoing renovations of their accommodations. They also got approval to open VIP junket rooms, which if new Mansion suites open up soon enough, will be a draw for higher value customers.
MGM Cotai is also fighting for the right to add new smoking suites, which Macau has been slow to approve. If every little bit is going to make a difference in their long term financial outlook, having bigger accommodations and easy access to smoking areas could be two things that help bring in a few extra customers, and change some analysts’ minds.
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