Inside Asian Gaming

INSIDE ASIAN GAMING | September 2013 22 The Asian Gaming 50 – 2013 that’s stability at the top, which will prove critical in the months ahead in the wake of the recent departure of Chief Operating Officer David Sisk and Vice President of Casino Operations Hugh Fraser. Certainly Mr Tracy’s steady hand was critical to getting the first three stages of the US$4.4 billion Sands Cotai Central resort complex up and running. And it has positioned the company not eight months since SCC’s third hotel was fully built out (and with a fourth under construction) to jump right into a major new project planned for its last developable parcel on Cotai. This will be The Parisian Macao, fully themed, as the name implies, with 3,000-plus rooms and suites, a freestanding half-sized replica of the Eiffel Tower and a projected cost of US$2.7billion, including land costs. Opening is expected in late 2015 or early 2016. His effectiveness has shown through equally on the operations side, where he has restored Sands China’s standing at the high end of the market and kept the group cranking at full speed as the dominant force in the territory’s mass gaming boom. He’s got SCC ramping up nicely across all sectors. Slot handle was up 272% in the six months ended 30th June. Mass table drop increased more than fivefold. A corporate-wide expansion of VIP capacity launched earlier this year helped triple rolling chip turnover at the property in the six months that ended 30th June. Plans are in the works there to add another 3,700 square meters of gaming space with 100 table games over the next year. EBITDA was up 39% to US$709.5 million at mass-market leader The Venetian in the first half, driven by a 38% surge in main-floor table play. The Venetian and SCC combined generated more than three-quarters of a record-setting $1.28 billion in six-month group EBITDA on total revenues that surpassed $4 billion. This extended beyond the gaming floor, too, with substantial increases posted in room sales (+45%), F&B (+59%) and retail (29%). An impressive run so far, all things considered, for a man who was entirely new to the China market when he arrived in August 2010. His 20 years in gaming up to that point were spent in the United States, where he served as Donald Trump’s CEO in Atlantic City in the early ’90s and later ran a chain of riverboat casinos in the Midwest. At The Venetian he’s got the most expansive physical plant in the market and he’s been employing it well, bringing a parade of Chinese and Hong Kong headliners to perform at the 15,000-seat Cotai Arena and taking it further with spectacles on a Las Vegas scale, among them two sold-out shows this month by pop star Rihanna. The strategy, which also envisions Macau as a destination for big- time boxing, really took flight in April with the professional debut of two-time Olympic gold medalist Zou Shiming, whose bout at the arena reportedly was viewed by more than 100 million Chinese on state broadcaster CCTV. He returned to the arena for a rematch in July, prompting his celebrated trainer, Freddie Roach, to remark, “I think I’ve got a new home.” Top Rank’s Bob Arum, who is promoting a highly anticipated Manny Pacquiao bout at Cotai Arena in November, says he envisions holding four to six fights in Macau a year. The Pacquiao spectacular, which will feature young Zou on the undercard, will be the Filipino superstar’s first fight outside the US since 2006. There are reports, unconfirmed as of this writing, that the arena also will be hosting the first Ultimate Fighting Championship in China and that will happen later this year. In July, Tracy & Co. brought a slice of Hollywood to town via a licensing deal with DreamWorks for a number of interactive family experiences at Sands Cotai Central that feature the studio’s Shrek, Kung Fu Panda and other characters from its popular animated films. Marina Bay Sands is an instantly recognizable structure that has come to define the Singapore skyline since its April 2010 opening. It is also probably the world’s most profitable casino, though growth is proving hard to come by given the tough regulatory environment. Still, operating income in the second quarter of 2013 rose 8.4% year on year to US$255.1 million, with adjusted EBITDA up 7.5% to $355.3 million on a 6.4% increase in net revenue to $739.5 million. Revenues at both MBS and its duopoly-market rival Resorts World Sentosa are buffeted by volatility in VIP win rate caused by their reliance on a relatively small number of high rollers, the result of Singapore’s effective ban on 11 George Tanasijevich President and CEO Marina Bay Sands junkets. MBS works on an expected long- term theoretical VIP win rate of 2.85% but achieved only 2.53% in the second quarter, a 0.11 percentage point erosion from the year-ago period. The deviation from theoretical VIP win rate at MBS is exacerbated by the property’s policy of taking bets up to S$1 million, though that policy also appears to be helping boost VIP volume, which rose 24.9% year on year in the second quarter to US$14.4 billion. Sentosa had led the market in its formative period, thanks to a two- month opening head start and a good deal more local knowledge and connections, derived mainly from parent company Genting’s longstanding casino monopoly in neighboring Malaysia. MBS parent Las Vegas Sands, on the other hand, had a steeper learning curve. Though the company had already gone through a tough but enlightening Asia- acclimatization process with Sands Macao and The Venetian Macao, those lessons did