Inside Asian Gaming

Mel Hansen speaks for MGM Mirage South African-born Mel Hansen, MGM Mirage Development Vice President, has been in the casino business since 1987 - he swprises himselfwhen he admits ii. Before arriving in Macau last year he worked in Las Vegas, then in South Africa, and was also in the cruise ship business for some time. In this article reprintedfi'om Macau Business, Mr. Hansen talks about his experiences that give him a broad point of view on how to build a successful operation in any market. MGMGrand Macau is slated for completion in mid-2007, a late­ comer to the local game, long after Sands' opening last year and Wynn's planned completion next year. What will be the strategy for competing with existing operators who've had a head start? The project has been in the works for at least two and one-half years. We hope to open on 7-7-7, or within a couple of months of that. I think we have the best partner we could have locally. Pansy [Ho] has a huge understanding of local and regional markets. For us, that's a major plus. We may end up being better off than if we'd won the original con­ cession tender. Las Vegas-based analyst Jonathan Galaviz has said that having only three concessions in Macau is limit­ ing investment. Is operating under a subconcession of Sociedade de Jogos de Macau a disadvantage for MGM Grand, in your view? I disagree. Each concession can have a sub-concession. There can be a third coming in with Wynn. You could have six operators. That's not very limited. We're in a 50-50 venture with quite a few other properties in Las Vegas, At­ lantic City, and other places. The groundbreaking on June I was for the first MGM Grand property in NAPE, but where will the next project for the joint venture be and when do you expect to announce it? We are looking at the Cotai Strip and we are also looking elsewhere, but we won't be making an announcement on the next project before the end of the year. There are a lot of little things you have to get right in this part of the world to be market leade1'. The atmosphere of a place can be very different.for one thing. In the Las Vegas market, high ceilings are a negative. As for the financing of the project, we know that 60 per cent of the US$975 million price tag will come from a syndicate of local financial institutions, including BNU and BES East. What other institutions are likely to be involved? Nothing is finalized yet. We have un­ til February of next year tomake our de­ cision. One of the Macau banks has to be a lead arranger, so one of them will certainly be chosen. What will distinguish MGM Grand among its local competitors? We're going to be a modem property. Of our 600 hotel rooms, a large percent­ age will be suites and villas. We'll have eight or nine restaurants, all offering dif­ ferent kinds of cuisine, a 1,500-seat the­ ater or may be two smaller theaters, and we're thinking of entertainment options now. I think it will be a combination of what works in Asia with the feel of an American operator. The whole business model is very different from what goes on in say, Las Vegas or South Africa or elsewhere. There are a lot of little things you have to get right in this part of the world to be market leader. The atmosphere of a place can be very different, for one thing. In the Las Vegas market, high ceilings are a negative. It's surprising that this has been successful here at the Sands. The business model is very different in the US. There, business comes from the mass market; here it's the high end of the market. That's where our partners (SJM) come in. In our Las Vegas market, our compa­ ny controls most of the high-end busi­ ness. With Pansy [Ho] we should be even more successful, and get the lion's share of the Macau market. How long do you think it will take to start seeing a return on your invest­ ment? Most companies here look to get a return within five years. What will it take to be successful in this market, in your view? Inside Asian Gaming September 2005 21