Inside Asian Gaming

INSIDE ASIAN GAMING | Oct 2007 12 Cover Story suites and villas to be finished in 2009. The resort will continue the Galaxy philosophy of providing affordable luxury and catering to Asian tastes. Mr Lui is confident that “in the long term Macau will be the greatest gaming and en- tertainment destination in the world. It will be the greatest convention centre and the greatest retail centre. There’s no question about it. As long as China continues as a stable economy and the political arena stays stable, I think Macau offers the greatest op- portunity, period.” He cautions, however, that “demand it- self is not the only question we need to ask ourselves. There are other questions like in- frastructure.” According to Mr Lui,“the Macau govern- ment has already undertaken several sig- nificant infrastructure projects,” including expanding the capacity of the city’s land borders with Mainland China (at both the Gongbei Gate and the Lotus Bridge adjacent to the Cotai Mega Resort) and developing a second ferry terminal. These projects will be completed in time for the opening of the first phase of Cotai Mega Resort. Nevertheless, “right now the infrastruc- ture is not entirely ready. The workforce is not entirely ready. That begs the question: ‘do we want everything to be built this year, or do we want to phase it so that it can hap- pen in year two, year three, year four?’ “We just have to pick a good time” to in- troduce the various gaming, entertainment, retail and convention facilities.“We are going to build when we see the demand. We are not going to be slow. If we have the statis- tics or the gut feel to show the demand and infrastructure will be ready in three years’ time—for example, if we know exactly when the bridge [connecting Hong Kong and Macau] is going to be finished, or if we know when the LRT [light railway system that will be crucial to easing Macau’s traffic bottle- necks] is going to be done. More or less it’s all pointing to 2010. At that time most of the infrastructure will be in place, the workforce situation will be resolved. I think then we will see a new wave of visitation coming in and exponential growth.” Mr Lui emphasizes that GEG will be able to move quickly to have capacity in place to meet demand, when the infrastructure is ready to deliver that demand to Macau. “In this part of the world construction cycles are much shorter. StarWorld took 21 months to build, and on Cotai we are confident that if we have the signal to go ahead,we can finish it in two and a half years. In Vegas, it would take at least six to eight years.” Endorsing partner Last Month, Europe’s largest private eq- uity firm, Permira, acquired a 20% stake in GEG for close to US$840 million, in what Mr Lui considers“a big endorsement”of Galaxy’s achievements in Macau thus far. “Why we think Permira makes a good partner with us is, number one, they re- spected we have a very sound strategy and they endorse it and want to come along with us. If someone comes here wanting to take over our management and strat- egy, that’s not what we want to see or what our shareholders want to see. And also not what the Macau government wants to see,” as “it needs to maintain diversity in the in- vestment landscape.” “Permira has significant expertise in the international gaming sector through its investments in Gala Coral, Europe’s largest gaming company, and in Sisal, the second largest lotto operator in Italy,” ex- The follow-up to StarWorld, the Cotai Mega Resort, located adjacent to Venetian Macao on the Cotai Strip, will offer capacity to meet tremendous demand. Cotai Mega Resort will be completed in four phases, and will eventually boast 15 million sq. ft of gross floor area. Phase one alone will have 5 million sq. ft, which Mr Lui points out will be considerably larger than just about all other resorts on Cotai, including City of Dreams and Macao Studio City.