Inside Asian Gaming

inside asian gaming September 2014 20 over the last five quarters, and in four of those five it exceeded the rate of every other operator. As brokerage Union Gaming Research Macau recently analyzed it: “SCL, while operating fewer VIP tables is increasing the value of each VIP table by working with a lower number (of higher quality) junkets. As such, we would look for VIP yield/table to continue to increase.” It’s been a sizable benefit on the cost side as well. As a percentage of gross revenue, the company’s VIP commission/promotion allowance is the lowest in the market (20.4% in the first half, in relative terms, less than half of SJM’s, which was the highest). SCL continues to build on its pre-eminence on the non-gaming side, too, which is the source of about 10% of total revenues, the highest ratio in themarket. Here, too, Mr Tracy’s steady hand is evident. The company led the other five operators in non-gaming growth in the first half (+20.1%). Room revenue was up 21.2%; F&B was up 21.5%; the 23.7% increase in retail revenue was second only to gaming in percentage terms, totaling $147.9 million, and it will continue to rise with the build-out of the shopping mall at Cotai Central, which is slated to grow by 70% this year to 400,000 square feet. Entertainment has grabbed the most attention, though, and since Mr Tracy was appointed chief executive in July 2011, it’s grown into Sands China’s single greatest branding exercise—and for that matter, Macau’s. His 20 years in the industry 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 managed a chain of riverboat casinos in the Midwest. Within months of taking the helm at SCL he shut down a money- losing Cirque de Soleil production show three years into a planned 10-year run and reoriented the focus at The Venetian Macao’s 15,000-seat Cotai Arena and 1,800-seat Venetian Theatre to Chinese and Hong Kong headliners—sprinkling in global superstars of the likes of Rihanna, Alicia Keys and the Rolling Stones—and working to transform Macau into Asia’s capital of big-time boxing and UFC mixed martial arts, hosting a 2013 title defense by Manny Pacquiao (who’s returning in November) and the professional debut of Olympic gold medalist Zou Shiming, a spectacle reportedly viewed by 100 million Chinese on state broadcaster CCTV. There have been notable splashes of Hollywood and Bollywood glamour along the way and an innovative foray into family entertainment, a first for Macau’s casino industry, with last year’s opening of The DreamWorks Experience at Cotai Central. Next on the busy agenda for Tracy & Co. is the romance of Paris and the first Sands resort he is overseeing from the ground up. The Parisian Macao, a $2.7 billion themed extravaganza, will house 3,000 hotel rooms and feature a half-scale replica of the Eiffel Tower and will increase by something like 20-30% the gaming and non-gaming capacity he has managed so ably. James Murren Chairman and CEO MGM Resorts International performance. “We have been tremendously capacity-constrained on hotel rooms inMacau.We have the smallest number of rooms,” pointed out James Murren, chairman and CEO of MGM Resorts International, majority owner of MGM China, during the company’s Q2 earnings call last month. “It’s a problem,” he added. “We continually rent rooms out at the Mandarin Oriental next door and in the city itself. We know that we can drive more mass business, which we’ve been the innovator on and leader. When we open up Cotai with triple the number of rooms that we have in our current facility, and if we can expand it even further, then we think the ROI there is pretty spectacular.” Mr Murren reiterated that the US$2.6 billion MGM Cotai is on budget and on schedule to open in 2016 and said the project is now so far advanced that the company feels it’s in a position where it can petition the government for permission for a second phase of the resort. “Probably in the next quarter, we’ll be able to give you a budget on that,” he said. MGMMacau is by far the biggest revenue generator in Las Vegas- based MGM Resorts International’s bulging portfolio of gaming, The three Macau casino operators who have yet to open megaresorts on Cotai—SJM, Wynn Macau and MGM China Holdings—are all capacity-constrained at their peninsula properties, and MGM China more so than the other two. Of the 5,700 gaming tables in Macau in the first half of 2014, MGM China operated amere 423, by far the lowest count in town—WynnMacau was next to last with 465, but only because 30 of its VIP tables were shut during a renovation of the gaming floor, so its real count is closer to 500. A lack of hotel rooms is also holding back MGM China’s