Inside Asian Gaming

lous denial of reality.” StarWorld sits adjacent to the swanky US$1.2 billion Wynn Macau, which opened a month before StarWorld on September 6 with 600 deluxe hotel rooms and suites, about 220 gaming tables and 380 slot machines over approximately 100,000 sq ft of casino gam- ing space, seven restaurants, approximately 26,000 sq ft of retail space, a spa, a salon, en- tertainment lounges and meeting facilities. With discounts, rooms at StarWorld can be had at around US$100 a night, while rooms at Wynn cost twice as much. There is demand for both properties, showing the Asian price point is merely one segment of a broader market. Meanwhile, there is also likely to be demand for even more budget- conscious offerings. Morgan Stanley research analyst Rob Hart said StarWorld’s impact on its US rivals will only be “marginal,” with StarWorld pos- ing a greater threat to Stanley Ho’s SJM, the other local operator. Mr Hart believes “Star- World will do very well. It’ll be able to fill itself up basically at the expense of SJM.” Morgan Stanley predicts both StarWorld and Wynn will outperform the overall hotel market as junkets prefer to bring their cus- tomers to the best properties in town. The investment bank is negative on Macau’s oversupplied hotel sector as a whole, with massive supply coming in 2007 onwards. In the Pipeline Galaxy’s most ambitious mass-market proj- ect is under construction – the Cotai Mega Resort, slated to open in 2008. The Mega Resort will be completed in four phases by 2009, and will house 600 tables – includ- ing 550 mass and 50 VIP tables – and 1,000 slots in a 250,000 sq. ft casino, in addition to providing a full array of dining, retail and entertainment facilities. Galaxy is planning to invest a total US$1.02 billion in Macau by 2008, and Morgan Stanley points out that Galaxy may be running into cost overruns at the Cotai Mega Resort, which raises the company’s risks. There are some distinct Asian touches at StarWorld, and the bulk of its restaurants serve Asian cuisine. However,Wynn has plen- ty of Asian touches and dining options too, as will future properties like Las Vegas Sands Corp’s mammoth Venetian Macau. Both StarWorld and Wynn offer the best products and services at their given price points. Both will also find greater competi- tion at their respective price points in the near future. Told that Mr Carter believed the “Asian price point” for a hotel room is about US$100, LVS Chairman Sheldon Adelson re- sponded:“I’m going to have five price points in Cotai. I want the mass-market and the high-roller market. My target is to maximize every opportunity.” There are several Asian price points, and in each segment,customers will seek the best value for their money. StarWorld offers a styl- ish package and high-quality amenities at its price point. It also benefits from the critical mass of customers drawn by Wynn Macau next door and Lisboa across the street, creat- ing a second locus of mass-gaming concen- tration along Macau’s Friendship Avenue – at the other end of which sits the crowd-pulling Sands Macau. Galaxy has thus far profited at the ex- pense of its local rival, SJM, which has yet to completely shed its monopoly-era compla- cency. Going forward, Galaxy will further es- tablish its identity and prove its worth when it opens the Cotai Mega Resort and com- petes more directly with international rivals to retain its niche. 8 11 StarWorld guest room StarWorld Casino