Inside Asian Gaming

May 2008 | INSIDE ASIAN GAMING 25 actually means in practice isn’t clear. “For the time being” is sufficiently vague to placate existing operators concerned about pressured margins and China’s leaders worried about social harmony, while still holding out the promise of more licences to come. Key role Until Galaxy Mega Resort opens for business, StarWorld’s gaming operation is essential to the group’s performance in Macau. The group sawa dramatic reduction in its operating loss from HK$1.53 billion in 2006 to HK$502 million in 2007, largely thanks to StarWorld’s contribution to a tripling in the group’s gaming and entertainment earnings before interest, taxes, depreciation and amortisation (EBITDA) to HK$1.22 billion from HK$306 million in 2006. EBITDA of the group’s construction division, meanwhile, was up a modest 3% to HK$219m. Galaxy’s depreciation and amortisation costs leapt 115.6%, however, from HK$192 million in 2006 to HK$414 million in 2007. Finance costs went up 6.7% from HK$522 million to HK$557 million. Amortisationcostsrelatedto“intangibles” remained steady at HK$998 million. Mass market Mass table drop at StarWorld in 2007 was HK$9.88 billion; generating HK$1.54 billion in revenue and an average house hold of 15.6%.This translated into a monthly average win per table per day of HK$29,500. Slot machine revenue was HK$190 million, averaging over HK$1,000 per machine per day with 476 slot machines. Of the total gaming revenue reported by StarWorld for the year,mass tables accounted for 19.9% and slots 2.4%, said the company StarWorld’s non-gaming revenue for the year was HK$234 million. StarWorld’s hotel had an average daily room rate of HK$1,090 and occupancy rate of 84%. “Our focus in 2008 is to further increase StarWorld’s revenue and continue with the construction of Galaxy Mega Resort,”says Dr Che-woo Lui, Group Chairman. Mystical Oasis The theme of the mega resort is to be a Mystical Oasis, with the resort podium featuring the largest wave pool in Asia and a 120-metre stretch of sandy man-made beach. In light of the continued steady growth in Macau’s gaming and tourism sectors, Galaxy has decided to add another hotel tower and larger gaming podium to the resort,bringing the project budget to HK$10.5 billion.Galaxy had HK$8.3 billion in cash at the end of 2007. This, along with cash flow from StarWorld and the CityClubs, ensures the company has sufficient funds to complete development of area 1 of the mega resort. The first hotel tower, which will contain 1,500 rooms, has been topped out, and is expected to open along with the casino podium in mid-2009, to be followed by the second hotel tower with 700 rooms, suites and villas towards the end of the same year. In December, Galaxy announced an agreement with Hotel Okura Co Ltd to manage a 5-star branded hotel in the mega resort. It will be one of three luxury hotels in the first tower. Galaxy has a landbank of an additional 10.2 million sq. ft on Cotai, giving the company ample room to expand to capture evolvingmarket opportunities.The company notes that the landbank is not reflected on its balance sheet. Galaxy mega resort StarWorld lift lobby