Galaxy Entertainment Group Vice Chairman Francis Lui shares straight talk on the Pearl River Delta, retendering, Boracay, Hengqin and more.
“I’m very passionate … I look at myself as a perfectionist,” Galaxy Entertainment Group Vice Chairman Francis Lui admits. “Everything I do, I want it to be the best. This drives my passion, this drives my energy level, this drives, hopefully, my spirit such that our team members here would be able to resonate.”
Lui, who runs Galaxy under his father, 89-year-old Chairman Lui Che Woo, sat with IAG Editor at Large Muhammad Cohen for a rare interview.
Muhammad Cohen: How does further Pearl River Delta integration benefit Macau?
Francis Lui: Guangdong has been the richest part of China for the last 20 to 30 years. With improvements in infrastructure and accessibility, they’ll find it easier to come to Macau and enjoy themselves. At the same time, Macau within “one country, two systems” is the only city where gaming is allowed. We felt that Macau will always have this advantage in being the world tourism and leisure center of this [region]. That has been coincided by the government that the position of Macau should be the world tourism and leisure hub.
By understanding what the Central Government wants Macau to be, with improvements in infrastructure, I think we have the opportunity to make it happen sooner than later.
MC: Is there any potential downside to greater integration?
FL: There could be a few concerns, like more talent, more people, more capital wanting to come and do business in Macau.
While we think that we have all the opportunities to be very successful, at the same time, I feel that our businessmen, our young people will have to be sure they know competition is coming. They will have to be equipping themselves with better knowledge, better determination, better passion, to be able to compete in an economy that will be more open.
MC: For Galaxy to continue to grow, must it expand beyond Macau?
FL: I feel Macau will always be the mecca of the integrated resort world. With “one country, two systems,” with Macau the only city allowed to have gaming and with 1.3 billion people in China and growing, we are in a very unique position to do well into the future. I have full confidence that Macau, in the long run, is going to do great.
The challenge is on us as an operator to make it better and more in tune with what the government and the people want. We always say that from now on, it is not just a gaming hub, it’s got to be sold like a diversified integrated resort hub such that we don’t just rely on gaming. We have to rely on the other vital, diverse businesses, such as entertainment, F&B, shopping, retail, conventions to grow.
I feel that all of us, including Galaxy, are doing our fair share, and you can see the achievements over the last 19 years to make Macau a very different place than it was before. With that commitment, I feel Macau will continue to be great. At the same time, other countries are also recognizing, with the success they saw in Macau, that they can use the gaming industry to lead their tourism industry.
It started in Singapore, then other Southeast Asian countries using that same formula, with gaming driving more tourism. Now Japan is opening up. We felt Japan, being the third biggest economy in the world with 130 million sophisticated high-end customers, it’s almost like a no-brainer, the industry there is going to be very successful.
At the same time we felt the Chinese customer is evolving into a much more sophisticated group of customers. I’m sure that with cross-fertilization where Japanese people want to come here; vice versa, I’m sure Chinese people are going to go there, too. If we want to maintain our presence in the region, we feel that we need to be reaching out beyond Macau so that we would be able to continue to play a role in regional development.
Yes, surely we are committed to expanding outside of Macau but at the same time, Macau will always be our birthplace that will continue to grow and get better.
MC: What’s Galaxy’s thinking behind the partnership with SBM?
FL: We think it is a win-win situation because SBM Monte Carlo wanted to re-invigorate their brand.
Monte Carlo was the first integrated resort 150 years ago but somehow since then that glamor has been overtaken by Las Vegas, Macau and Singapore, so I think His Highness [Monaco’s Prince Albert II] felt it’s about time they do something to invigorate their brand and they were looking more into the Asian market.
At the same time we were looking to the Japan market. The more we understood Japan, the more we felt Japanese and European culture are very similar, where they love sophisticated things, they love things that are well made, they love things to be so elegant. And that was why we felt that if we found a partner in Europe, that will enhance our chance of winning a precious license in Japan.
MC: What about another partnership, the 4.9% stake in Wynn Resorts?
FL: That was being opportunistic. When some of their shares were available, we took the opportunity to buy into a very well run gaming company. We took it as a passive investment. At the moment, this is a [very] early stage, so it’s a matter of getting to know the company better, to understand what they can do.
MC: Does Galaxy need a US presence?
FL: No. By market cap, we’re already the second biggest [gaming company] in the world, and we built that in a short 15 years. We feel that we already have a very stable and capable management team, and we feel very, very confident with the talent we have now, with the capability we have now both in execution capability and financially, we should be able to take on any opportunities.
MC: How about a US stock market listing for Galaxy?
FL: It’s not something that is in our mind at the moment.
MC: What makes Galaxy the best choice for Japan?
FL: We like to say that we’re bringing the best of Asia and the best of Europe into Japan. If we could also find a strong Japanese partner, we think we would be able to showcase to the Japanese government and the people of Japan that we would be able to bring the best of three worlds together. We feel confident about that. In addition, we are the biggest in Macau and with Japan wanting to bring a lot of Asian customers into Japan – they have a vision to bring up to 60 million visitors into Japan by the year 2030 – we think we can play a role there, too.
MC: What will Macau look like after concession re-tendering?
FL: Surely we’re moving in a direction where there will be more diversification. It is up to us to convince the government that we will be able to support that vision of making Macau a truly diversified city. We [want to support] what people in the community want, too, so partnerships with SMEs, for example, is important. Galaxy was the first gaming operator to actually reach out to SMEs and partner with them.
When we bought Broadway Macau [in 2013], we already had a vision that we want to turn Broadway into a more local authentic position, to build a food street where we would be able to partner with local brands such that they would be able to expand their businesses, too. At the time most of the F&B brands in Macau were small, family brands. We had to reach out to them and do our part to make sure we offered them training, offered them better terms, financially supported them so they would feel comfortable to come in.
It was not an easy task initially because there was a lot of skepticism. [They said,] you’re such a large company and you want to gobble us up. ‘No,’ I said, ‘no, we are not going to make money in partnership with you, but we want to bring you in here because you’re authentic and you represent truly what Macau stands for. Finally we succeeded and that really started the whole thing where the government was supporting it, too. We partnered with SMEs and now a lot of other people are doing the same thing, but we were the first.
I feel in the future we probably need to be partnering and caring about the community more, like doing more CSR. Again, we were one of the earlier ones to be forming a volunteer group where we do services for the community. We formed this HK$1.3 billion foundation to help local people, especially young people, to start up businesses and [continue their] education. We [want to] be more regarded as part of this society, and certainly we’re committed to that.
MC: Do you see more taxes and more regulation with retendering?
FL: Probably the government would want to be a little bit more quantitative and clearer in their asking in the bidding process. We would not be surprised by that.
MC: What do you see as the biggest threat to Macau?
FL: First and foremost is regional competition. With so many other countries following our footsteps to use gaming as a catalyst to improve their business, the economy, the tourism industry, we need to be strong and sophisticated in our services to make sure that we will maintain our competitiveness. To me, it’s not a matter of just growing, but it’s got to be sophisticated. It’s got to be special service.
You can take a look at what the other countries are doing and with Japan’s gaming industry looming, we know that you’re going to have a very strong competitor closer to Beijing and Shanghai than us. The other challenge here I feel is that while we are wanting to get bigger, stronger and more diversified, the talent, the driving force is something that we have to be able to reach an agreement with the government and the community: How do we do it together?
We understand that and we support the government and the community wanting to make sure that certain industries are being protected, but at the same time, we have to ask ourselves the question: How can we do it, making sure that at the same time we don’t lose competitiveness? We do offer a lot of training and we do actually have a program where we give priority to local people for promotions.
While we are all doing that, at the same time, we still need to be realistic and say that from here on, Macau’s not just competing among the six of us. We’re competing with competitors outside of the jurisdiction and that is where we need hopefully to have the understanding and the sympathetic view of the community. We will continue to communicate to the government and people [so] they all understand that they have to support us to be successful. We are the biggest taxpayer in here and this is the biggest industry that we have in Macau. We need to make sure it will continue to be healthy and growing stronger.
MC: A lot of people say Galaxy seems to be the best plugged into what the government here, and the government in Beijing, want from Macau.
FL: We are grateful that we are a concessionaire. At the end of the day, we need to do what the government and the people want us to achieve so we continue to be a concessionaire.
MC: How do you know what the government wants?
FL: Communication is a big part of it. You always have opportunities to be sitting down with the government at functions and events. You read the newspaper. You go to meetings and so on, so you have all sorts of opportunity to be able to read what the government and the people want. We have to make sure that we are sensitive to what’s going on and continue to toe the line.
MC: What about Galaxy’s project in Boracay?
FL: It’s a new concept we want to try. We felt like customers are sophisticated enough to be loving the sun and the sea. They’d like to have an alternative destination and Boracay seems to be the perfect place. We’re not thinking about bringing Galaxy to Boracay. No. We’re going to bring a low-density eco-friendly resort, a beach resort, to Boracay. It’s very different.
MC: Is there more clarity on the project?
FL: So far, no. We’re still communicating through our partner. We are still wanting the people there to understand that there’s a misconception. I’m sure that once the truth is being told and understood about how our project would not be a big project, then people will come to know that this is the type of project that is needed to invigorate the brand Boracay used to have. It’s always been one of the top five beach islands of the world and we truly want to be part of it and make sure we would be able to elevate it back to the same position as before.
MC: You’re not worried about airlift to get enough people to your resort?
FL: Currently our plan is only about 100 villas. We are not going to worry too much about the logistics. It’s going to be low density, a beach resort of 100 villas.
MC: Let’s talk about another beach resort, the project in Hengqin?
FL: Hengqin, we continue to be very optimistic for the long term, but there are certain policies that need to be [enacted]. We talk about the Greater Pearl River Delta. Truly, we felt Hengqin and Macau are two sides [that] should cross-fertilize a lot more. Right now, the immigration policy is that our customers, when they go from Macau to Hengqin, they do not have the visa to come back.
This is a national policy that needs to be in place before Hengqin can become much more integrated with Macau. This is something that we continue to be communicating with the government. We think it is going to happen, now the question is the amount of time. We continue working on the plan to make sure what we’re going to build in Hengqin is going to complement what we have in Macau. Meanwhile we wait for the policy to be introduced.
MC: To start the resort, does Galaxy need eased movement between Hengqin and Macau approved?
FL: It is a little bit tied together, because without the policy of getting our customers in there and back, it is difficult for us to start any project soon.