Inside Asian Gaming

INSIDE ASIAN GAMING | March 2009 10 Cover Story dollars, and you have to feel responsible. For us to be pushing all the way and maximising leverage is not the way forward for us. Of course, if you use that approach and everything works out for you, you could make a lot moremoney. But I live in a realistic world, not a perfect one.” Rescheduling Cotai The operative word when Mr Lui discusses the Cotai project is ‘will’. So when will the company’s Cotai project actually open? “We would like to answer that question closer to the end of this year,” smiles Mr Lui. “The reason is that we would like to keep an eye on what’s happening this year first before making such an important decision. This year’s going to be a very turbulent time, and so many things could happen overnight. For us to be fixing a date and being committed to opening regardless of market conditions is not a wise thing for anybody to do. By the end of the year we hope we will have seen a market recovery. Then the decision will be easier. “We want to go ahead and finish Cotai, there’s no question about it. We certainly have enough confidence in Macau to believe that the market will recover. We are just saying that we need to see the market improving. When there is a sign of that, we will build, because we believe if the market improves then the liquidity will be available,” adds Mr Lui. Interior motives “We will probably still finish the exterior—the façade, the curtain wall, the cupola on the top and so on—this year,” he explains. “Our schedule is that we’re going to do it by the end of the year. At that time everything should be finished apart from the interior fittings. That was for cost reasons. We believe if we delay the tender right now we can save a lot. The second point is that once you install the interior you have got to start using the property, otherwise the fittings will deteriorate. “A majority of the drawings and the tender documents are already on the shelf, so if we feel the market is coming back, we can pull the trigger. Conservatively, then we can get it going in less than a year—probably within nine months,” he states. Tables Turned Galaxy’s bosses outline their thoughts on the Macau market in general and the company’s prospects in particular during 2009 I n a wide ranging discussion with Galaxy Entertainment Group Vice Chairman Francis Lui and Group Chief Financial Officer Robert Drake, Inside Asian Gaming touched not only on the future of the Cotai project, but also the general thrust of Galaxy’sMacau strategy, including the future of the CityClubs and the positioning of StarWorld Hotel & Casino. The conversation also covered macroeconomic issues including the prospects for the general Macau market for the remainder of 2009. I AG : Do you think given current economic conditions there will be overcapacity in Macau’s table gaming market in 2009? Mr Lui: “I think 2009 is going to be a challenging year. I think if you read most of the reports by themerchant banks—Morgan Stanley, Deutsche Bank and so on—they are all predicting that themarket is going to take a downturn this year, ranging from 15%, to 10%, to 5%. Even theMacau government has mentioned that 7 billion patacas in turnover per month is the expected number. In January in fact we hit 8.5 billion, much more than previously estimated, so everyone’s happy—at the moment.” Mr Drake: “January ’08 was also the highest grossing month ever in the market with north of 10 billion patacas.” Mr Lui: “You have to understand that last year there was a huge growth, because of the credit and the liquidity put into the market. Last year in January you saw an explosive growth. So this year, compared with last year, we have something like a 17% drop in gaming revenue.” Would you say that last year the VIP table market was a little bit artificial in that Amax’s commission offer at Crown Macau drove a junket war? Mr Lui: “ There were a lot of tables