Inside Asian Gaming

February 2013 | INSIDE ASIAN GAMING 19 INSIGHTS newest property, Sands Cotai Central—the first phase of which opened on 11th April last year and the second phase on 20th September—hit its stride. The biggest decline was experienced by Macau’s erstwhile monopoly operator, Sociedade de Jogos de Macau, which saw a steady erosion of its market share, largely as a result of its capacity remaining relatively stagnant while rivals expanded theirs. Wynn Macau’s market share fall was also a result of its static capacity, with the reduction exacerbated by competitors starting to offer higher junket commissions while Wynn Macau has steadfastly refused to follow suit. The other major development over the past two years has been Galaxy’s emergence as a mass-market presence. Prior to the opening of Galaxy Macau, GEG had severely restricted mass-market appeal owing to the relatively small footprint and limited amenities at its former flagship, the $436 million StarWorld. Galaxy Macau gave the group a vehicle to court the masses, and the company has used it to steadily ramp up its share of mass revenues from Q2 2011. Galaxy’s growing share of Macau’s mass market has been closely reflected by corresponding declines in SJM’s share. The other clear mass-market trend since 2011 was the fall in Wynn Macau’s share as the operator concentrated its resources and capacity on its VIP business. In the VIP segment, GEG is again the big gainer, and once more the game- changer has been the additional capacity provided by Galaxy Macau. However, it is a testament to the company’s success in cultivating and maintaining the relationships that are key to the VIP business that even prior to the arrival of its Cotai flagship, with only StarWorld and four modest City Clubs-branded satellites, GEG had already managed to stake its claim to a considerable chunk of the city’s VIP business. GEG is set to lead the second wave of capacity expansion on Cotai with theUS$2.1 billion Phase 2 of Galaxy Macau, scheduled for completion in mid-2015. At that point, GEG should be able to finally unseat SJM and clinch the lead in Macau’s revenue- share league table. Phase 2 will almost double the size of Galaxy Macau to 1 million square meters, accounting for roughly 50% of GEG’s total Cotai parcel (the biggest land bank on Cotai at 2 million square meters), leaving plenty of room for further development. GEG recently announced its intention to invest as much as $6.5 billion on Phase 3, with work expected to commence at the end of this year or the beginning of 2014 and be carried out concurrently with development of Phase 2. Inside Asian Gaming spoke with Galaxy Macau’s Vice President of Loyalty and Casino Marketing Shirley Tam about the company’s market share gains and vision for the gaming experience in Cotai’s next wave. IAG : There’s been a lot of talk about the big improvement in Galaxy Macau’s mass-market gaming performance. What are the main factors behind this? Ms Tan : We call Galaxy Macau the place where fortune smiles on guests, and it has solidified this reputation by making many big payouts since its grand opening in May 2011. People tell us that our gaming floor is one of the main attractions for coming to our resort. It is spacious, with warm, inviting lighting, and the numbers prove that it is indeed very popular with players. We have a large capacity that offers a uniquemix of exciting table games and slots, which cater to a wide variety of people. Our success also validates our guiding philosophy of “World Class, Asian Heart” hospitality, our unsurpassed gaming and non-gaming offerings and our focus on providing an authentically Asian integrated Share of Mass Market Revenue by Operator Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Galaxy Entertainment Group 5.1 7.9 12.2 13.6 14.3 15.0 15.5 15.5 Melco Crown Entertainment 10.2 11.2 10.6 10.9 11.8 11.3 10.7 12.0 MGM China Holdings 8.6 8.5 7.3 7.1 7.2 7.6 7.3 7.3 Sands China 24.2 23.2 23.3 23.1 22.8 24.7 26.4 27.8 Sociedade de Jogos de Macau 40.1 38.3 36.4 35.3 34.3 32.6 31.6 29.6 Wynn Macau 11.7 11.0 10.1 10.0 9.5 8.8 8.5 7.8 Share of VIP Revenue by Operator Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Galaxy Entertainment Group 12.8 14.4 22.1 22.8 20.4 23.4 21.0 19.3 Melco Crown Entertainment 15.7 15.8 16.5 14.7 13.9 13.1 14.2 14.2 MGM China Holdings 11.6 11.4 10.3 11.4 10.9 10.4 10.2 10.5 Sands China 14.4 13.4 10.7 12.3 15.7 14.7 16.1 17.3 Sociedade de Jogos de Macau 30.5 29.2 26.3 24.6 25.9 25.5 24.8 26.7 Wynn Macau 14.9 15.8 14.1 14.3 13.2 12.9 13.6 11.9