Inside Asian Gaming

September 2013 | INSIDE ASIAN GAMING 17 Another indicator of the unique non- gaming attractions to come is contained in a deal struck with an influential cultural organization in Beijing to develop a “Wonderland of Art and Literature”at the resort featuring Chinese-themed performances, exhibitions and tourism-related promotions. The challenge Dr So faces between now and the resort’s opening in late 2016 or early 2017 is keeping Macau’s largest casino operator at the top of the competitive heap in an increasingly crowded marketplace where much of the growth, certainly in terms of mass gaming, is already shifting to Cotai. The company’s operating arm, Sociedade de Jogos de Macau, saw its citywide share of mass table revenues decline almost 7 percentage points in the first six months of this year from the same period in 2012, while its overall market share slipped from 27% to 25.3%. The loss of one of its four self- promoted casinos to renovations and the closing of one of its self-promoted slot halls had something to do with that. Interestingly enough, though, the company actually grew its mass table revenue by almost 4% year on year in the first half. But such is the impact of Cotai. Of course, the company also has to contend with the fact that 14 of the 17 operating casinos in its current portfolio are run by third parties under a variety of revenue-sharing arrangements. Generally, these are older, smaller, lower-margin venues mostly tucked into the neighborhoods of the Macau peninsula. Which is not to say they’re unprofitable. These “satellites,” as they’re known, contributed to the group a 7.8% increase in adjusted EBITDA during the first half on a 5% increase in revenues to HK$20.52 billion (US$2.6 billion). Total group EBITDA was up 11.6% year on year to HK$4.27 billion in the toughest operating environment the company has ever faced. Combined revenues were up 8.1%. Non-gaming sales were none too shabby either, up 8.3% to HK$323.7million (US$41.5 million). The group’s flagship Grand Lisboa continues to shoulder the heavy lifting in admirable fashion. Visitation there was up 9% in the first half. Average daily room rate was up more than 4% to a robust HK$2,230 (US$285), and the hotel ran at 95% occupancy. Revenues across all segments of the property were up 12.6%. VIP was strong as ever, up 13% to HK$11.8 billion even after backing out the effect of a reclassification of 31 high-limit tables on the main floor as VIP. Clearly, Dr So continues to make the most of the experience he’s gleaned from a relationship with Stanley Ho that dates back to the mid-1970s when he joined SJM’s predecessor, STDM, three years out of university. He was a longtime executive director of Dr Ho’s Shun Tak conglomerate, and like his mentor he moves in the highest circles of the Macau political establishment. Hehas been a director and amember of SJM’s senior management since the company’s founding at the end of the monopoly era. He was named an executive director in 2006, responsible for overall management and strategic execution. The Asian Gaming 50 – 2013 Macau has more than 200 licensed junket operators, but one stands head and shoulders above the rest. Suncity Group runs 18 VIP clubs with 284 tables in the city, and according to company sources, handles around HK$135 billion (US$17 billion) in bets each month. Still, more than commanding the largest share of rolling chip turnover, Suncity is the leading innovator among its peers, not only in its core business but also in pursuing other opportunities, from media and entertainment to IT solutions. Suncity’s humble beginnings in 2007 saw 30 employees running a small-scale VIP operation atWynn Macau. Its gaming division nowhas 1,200 staffandneedsmore. Hastening this expansion has been the youth and vigor 7 Alvin Chau Chairman Suncity Group of the group’s 39-year-old chairman, Alvin Chau, who balances an aggressive appetite for growth with an emphasis on caution in extending credit, enabling Suncity to avoid the liquidity problems that have plagued some of its less prudent rivals. Suncity strives to distinguish itself from other junkets by providing its clients the most complete and highest-quality range of supporting amenities and services, and to that end has invested heavily in businesses outside the gaming realm. In 2008, the group established Sun City Tours, which offers comprehensive travel agency services in Macau. Suncity also owns SKY 21 Bar and Restaurant atop AIA Tower, offering panoramic views from one of the trendiest hangouts on the Macau peninsula. The group runs an über-exclusive boutique called SKYLuxewithin SKY 21, offering a collectionof limited-edition andone-of-a-kind timepieces, jewelry and fashion accessories. Suncity promotes its brand heavily by sponsoring big-name concerts and live performances. The group’s media investments often directly bolster its gaming and tourism businesses. The movie “Poker King,” starring A-list Hong Kong actors Louis Koo and Lau ChingWan, was produced to support Suncity’s efforts to develop poker’s following among baccarat-focused Chinese players. High rollers at Suncity’s Poker King Club at StarWorld Hotel and Casino now play for the biggest