IAG September 2015 - page 10

inside
asiangaming
September2015
10
expansion “may raise investors’ concern over ‘industry over-supply’
andmay trigger a sector de-rating.We remain cautious.”
So far, theGalaxyMacau expansion doesn’t seem to havemoved
the needle much, with Macau casino revenue down 36%, 34% and
36%, respectively, in June, JulyandAugust.TheMacauoptimistsclaim,
however, that that’s because it was seen by consumers more as an
extension of an existing property than a game-changing newproduct.
Another issue is themajornew featuresmightbepositioned toomuch
at the higher end and the property arguably still lacks sufficientmass
market draws. For those, wewill likely have towait forGalaxy’s further
expansion. Indeed, the creationof an adequate criticalmass ofmass-
market offerings toenableMacau to competewith theworld’s leading
tourism destinations will likely take the combined efforts of all the
operators that aredevelopingnew resortsonCotai.
GEG Vice-Chairman Francis Lui said during the company’s
second quarter results announcement, “All of themiddle class from
the mainland are our potential premium-mass customers. We are
still very optimistic about that market. That’s why we continue with
ourplans forphases threeand four.Weneed tooffernewproducts in
order to cater to thesepotential customers.”
The company reiterated during its latest earnings call that it
had “an unrivalled development pipeline in Macau,” with plans to
expand its Cotai footprint by a further onemillion squaremeters in
the coming years with the addition of Phases 3 and 4. Meanwhile,
on themainland Chinese island of Hengqin, which sits adjacent to
the Cotai strip accessible by a short car ride over the Lotus Bridge,
GEG “continues to advance its conceptual plans” to develop a low-
rise, low-density leisure and entertainment resort on a 2.7 square
kilometer landparcel.
“They’re thebest-positioned for long-termgrowthandare focused
on becoming the dominant player in Macau,” observes Union
GamingSecuritiesAsia’sGrantGovertsen.
“If you believe in the China consumer story you have to believe
inMacau,” saysMr Lui.
A civil and structural engineer by training, he started his
career in the late ’70s in the quarries of Hong Kong with his
family’s construction materials business and in 1985 started doing
business directly inmainlandChina.
“If there is a person in Macau who understands what the
Chinese customer will look like in the next five or 10 years it is
probably somebody likeme, who has been there doing business in
China, seeing them evolving,” he says.
His father, Lui familypatriarchandGEGChairmanLuiCheWoo, is
ranked the 18th-richestman inAsia, according to
Forbes
, thanks largely
to the family’s 51% stake inGEG, contributing to a net worth of $7.8.
The family’swealth isdownsharply from lastyearafteraprolongedsell-
down inMacau casino stocks reducedGEG’smarket capitalization to
its current $13billion from$30billiona year ago.
TheelderMrLuiconfirmedpublicly in2012whatwasalreadywidely
known in themarket—his son is in chargeof thebusiness.
Francis Lui has done so well holding his own against SJM,
the legendary Stanley Ho’s former monopoly, and international
stalwarts Sands, Wynn Resorts andMGM Resorts International that
it’seasy to forget thatprior to2004hehadnogamingexperienceatall.
Galaxy began operations in Macau in July 2004, at the
Waldo, a third-party-owned venue, one of the three casinos
of the City Clubs brand that Galaxy now operates. But it was
only in 2006, with the opening of StarWorld Hotel, that GEG’s
brand identity began to emerge. Owing to the relatively small
footprint and limited amenities at StarWorld, that brand-
building was initially defined by a strong service mindset and
an ability to forge lasting relationships with players and junkets.
Those qualities, which continue to drive StarWorld’s success in
a challengingmarketplace, were carried through to the sprawling
Galaxy Macau, which finally gave Mr Lui a platform worthy of
fulfilling his vision of providing an experience imbued with a
distinctively Asian flavor rather than merely transplanting the
Las Vegasmegaresort model toMacau.
He defines his management philosophy as a mix of his
Chinese upbringing and Western education.
Forbes
said of him:
“When Lui CheWoo first won theMacau gambling license, Francis
was taking business courses at Stanford University and found
the casino industry in Las Vegas impressive. He noticed that the
Americanmodel added entertainment elements besides traditional
gambling inorder toattract tourists. Andduringhisglobal travelshe
found Southeast Asian-style service the best. It dawned on him that
he could combine the two.”
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