Inside Asian Gaming

Asian Gaming 50 – 2011 land for development was just a formality. The government and business worked hand in hand with only a nod to the idea of public consultation. Nowadays the process has become more politicised. That’s for two reasons. The first is that nine years after the ‘Big Bang’ of casino market liberalisation in the territory, the presumption is no longer in favour of every casino project being nodded through by a grateful government. Like a plain girl transformed by a reality television makeover show, Macau now truly understands its power of attraction over a slavering investment audience and hyperactive players. Foreign operators are falling over themselves to get into the market or expand their presence here. Gazetting of land is the equivalent in Macau business of the second or third date in a boy-girl relationship. It’s the point at which the government (the pursued) can extract the maximum amount of concessions/ pledges/promises of good behaviour from the operators (the suitor) in exchange for the ‘heavy petting’ of land gazetting and ultimately the consummation of an actual casino project. The second reason for the politicisation of land gazetting is that although the Macau public is nowhere near as outspoken and militant as the populace in neighbouring Hong Kong, there is a growing chorus of voices calling for greater process and transparency in the planning and permissions process. The government is aware of that and appears to be anxious not to be seen to be high handed (even if in reality it still does what it wants). And that brings us back to the University of Macau donation. The payment of the donation in annual instalments until 2022 makes sound business sense. That’s the year Mr Wynn’s gaming concession is due to expire, although technically the Macau authorities can redeem all the existing concessions from the end of 2017 by giving at least a year’s notice and paying compensation. Mr Wynn also has some other ideas he’s workingon towin favour for his Cotai project. His recent purchase at auction in London of yet more of China’s ancient ceramic art (a lucky eight vases valued at US$12.8 million) looks like another part of the plan. Mr Wynn is interested in fine art and ceramics for their own sakes—he’s been collecting them for many years. But don’t be surprised if he turns at least part of his new Cotai project— assuming all goes to plan—into a private museum-cum-art gallery in the style of the former Wynn Las Vegas Art Gallery. Unlike the Vegas version, however, it might be free to the public as a gesture of goodwill. Lawrence Ho’s youth and family connections (as a son of one of the creators of modern gaming in Macau, Dr Stanley Ho) have sometimes been mocked by commentators. Arguably they have overlooked one of the key positives of youthful leadership in the Asian casino market—many of your customers will be a similar age. The median age in the People’s Republic of China is currently 35.5 years, according to data from the Chinese government. Mr Ho is only months shy of that. The cynics have hinted at but also essentially overlooked another important factor. In the West, a famous name often carries the burden of expectation (as Mr Ho’s joint venture partner James Packer, son of Kerry, has sometimes found), but in Asia a famous family name tends to confer respect as well as opening many doors. On the youth point, there’s certainly exuberance built into MPEL’s flagship Cotai property, City of Dreams (CoD). Aside from the Hard Rock Casino and Hard Rock Hotel brands, one of the outdoor features is a sculpture of Chairman Mao’s jacket fashioned in a terracotta colour. The installation—hinting at reverence for China’s modern past, but stripped of the actual face and body of the revolutionary leader and therefore stripped also of the hard politics of Mao-related iconography— is what clever Western writers like to refer to as ‘post-modern’. In other words, it looks back and looks forward, but doesn’t 5 (6) Lawrence Ho Yau-lung Co-Chairman and CEO Melco Crown Entertainment completely buy in to either viewpoint. Lawrence Ho’s leadership in the early days of his Macau joint venture with Australia’s Crown Ltd was also somewhat equivocal. Initially a lot of the senior appointments to the Macau joint venture were former Crown executives from the Australian side of the JV. This probably made sense at the time because of Crown’s extensive experience of running gaming operations in its home market. The early placements included Simon Dewhurst as Chief Financial Officer of MPEL and Greg Hawkins as President of CoD. Gradually, however, as Mr Ho found his stride and felt out the market, the Crown managers have been going back home, and MPEL’s management has become more localised. That localisation included the appointment of Ted Chan as Co-Chief Operating Officer, Gaming, across MPEL’s Macau operations. Mr Chan is a long-standing and trusted associate of Mr Ho, and shares his youthful outlook, being only 39. He worked with Mr Ho first at Mocha—the slot clubs operation aimed at local Macau players started by Melco—and subsequently at Altira Macau (formerly Crown Macau)—MPEL’s VIP focused casino on Taipa. Initially, Mr Chan went to work as CEO of an outside company, Amax Holdings Ltd, feeding high roller players to Altira. Then in November 2008, he was back in the fold as President of Altira, before taking up his current group appointment in July 2010. The advent of a distinctively Chinese feel to the management of MPEL has also coincided with a growing confidence among analysts and investors in the MPEL story. Some of that will be related to timing, given that it has taken a while since CoD’s opening in June 2009 for the resort to get traction in the market—especially in the key VIP segment. But it certainly has traction now. In the second quarter of 2011, MPEL’s net revenue was US$960 million— up 67% year-on-year. The company said the improvement was mainly due to improved rolling chip volumes in the VIP sector across its Macau operations; normalised (i.e., within statistical average) rolling chip win rates at CoD; continued strong growth in mass market and hotel operations at CoD, plus contributions from other non-gaming amenities such as The House of Dancing Water show and Club Cubic at CoD. Key to the prospects of MPEL in Macau is the effort to improve further the performance of CoD and the successful execution of the plan to take over the Studio City Project. Studio City was always going to use MPEL’s gaming sub-licence. But it was originally supposed to be developed and operated as a US$2 billion project with an opening date of 2009 by