Inside Asian Gaming

Oct 2007 | INSIDE ASIAN GAMING 35 It appears that Galaxy—which origi- nally had plans to team up with LVS in Macau until LVS decided to go it alone— is convinced of the business case for in- tegrated resorts in Asia and IR monetiza- tion, as eloquently championed by LVS Chairman and principal shareholder Shel- don Adelson. If Galaxy does provide extra capacity though, it will be going head to head with LVS, which will be aggressively expanding its own capacity in phases. LVS is develop- ing a further 13 hotels on Cotai offering an extra 20,000 rooms, and more than dou- bling its current retail space to three mil- lion square feet and its convention capac- ity by the same area. By stating its position now though, Gal- axy could gain a competitive advantage against other operators in the scramble for Cotai project funding, if, as Mr Adelson predicts, demand for IR resorts in Macau quickly outstrips supply. “We have been in touch with some of the bankers and the feeling is that we have the support that we need,” Francis Lui, GEG’s deputy chairman said after the an- nouncement. Mr Lui’s statement is a little ambiguous though as to whether it’s the banks or GEG that is doing the ‘feeling’. At this stage it may be less about the banks saying yes, and more about GEG sending a signal to the markets. There’s no doubt though that by going public with such an ambitious project, Gal- axy gives itself a head start. “Once we see the demand we will pull the blueprint and start construction. At this point in time, given the buoyancy of the Macau market, we don’t see any great difficulty in raising project financing,” said Mr Lui. The timing of the Cotai plans also seems calculated to take advantage of the mild feelgood factor produced by Galaxy’s interim results. The company said net losses for the first six months of 2007 were down to HK$279.82 million compared to HK$736.28 million in the same period last year. It said earnings before interest, tax, depreciation and amortisation during the period were HK$737 million, exceeding the whole of 2006 by 70%. A total of HK$545 million of that EBITDA contribution came from just one venue, Galaxy’s StarWorld Hotel, which opened in October 2006.