Casino operator Hard Rock International is pulling out of a €500-million project for the construction of what would be Europe’s largest integrated resort in the Republic of Cyprus.
The announcement emerged on the same day when the Cypriot government gave formal permission to the Florida-headquartered company and its partner Melco International Development to proceed with the plan. Melco, owned by Hong Kong businessman Lawrence Ho, is set to purchase Hard Rock’s 35.37% stake, thus increasing its own holding in the future casino resort to 70.74%. Local partner CNS Group owns the remaining 29.26% stake.
The Melco-Hard Rock consortium was the sole bidder for the Cypriot casino license after casino operators NagaCorp and Bloomberry Resorts Corp. pulled out their bids shortly before the October 2016 deadline set by the island nation’s government.
On Monday, the casino operators and their local partner as well as government officials signed the deal which authorized the project and sealed the terms of the license. Under said license, developers will build a full-scale casino resort in the city of Limassol, a smaller, satellite, casino in Nicosia and three slot parlors in the Famagusta, Larnaca, and Paphos districts.
The license will be valid for 30 years and Melco and its local partner will hold the monopoly over casino gambling in Cyprus for the first 15 years. After that period, the government will consider the possibility to authorize more such venues, provided that the country’s casino industry has produced the desired effect on the country’s tourism and overall economy.
Construction on the main casino in Limassol is set to commence later in the summer but it will probably not be before late 2019 that it swings doors open. A temporary casino will be launched in the city in the meantime.
News about Hard Rock and Melco parting ways in their joint venture in Cyprus came days after it was announced that the two companies would no longer pursue a license for an integrated resort at the Tourist and Recreation Complex (formerly known as BCN World) in Spain’s autonomous Catalonia region.
Action on the project has been delayed for years now and many believed that Melco-Hard Rock’s decision to withdraw its application could be explained with those delays as well as the two companies’ wish to focus on their joint project in Cyprus. Interested parties are to submit their applications before June 30. With the Melco-Hard Rock consortium leaving the process, there is only one bidder left for the license – a group of investors comprised of Malaysia’s Genting Group and local partner Grup Peralada.
There is not much information on why Hard Rock has decided to leave its Cypriot project. However, there could be several possible explanations. On the one hand, the company has previously expressed great interest in entering the newly legalized Japanese casino market. And competition for a spot in what is expected to be one of the world’s most lucrative markets is heating even before the legislative process is completed.
Bearing this in mind, interested investors have been gearing up for great investment in the Japanese market. Being one such investor, Hard Rock may have decided to sacrifice one potentially successful project to invest more heavily in another potentially more successful project.
The company is also in the midst of expansion in its domestic US market. It purchased the shuttered Trump Taj Mahal casino in Atlantic City earlier this year and announced $500-million-worth commitment into the resort’s renovation.
