Inside Asian Gaming

September 2014 inside asian gaming 31 “Premium mass is currently what everybody is actually looking for to grow their markets,” COO Ted Chan noted during parent Melco Crown Entertainment’s latest earnings call. “Our company really focuses more on the total experience of the customer, rather than cash, credit, rebate to customer, etc.” That “total experience,” according to Mr Chan, entails offering the right mix of hotel rooms, F&B, retail and perks and is something he has been striving to improve ever since he joined Melco Crown’s Cotai flagship. In August, City of Dreams unveiled its SOHO social hub—billed as “the place in Macau to see and be seen, chill out with old friends and connect with new ones”—featuring 16 restaurants, bars and daily performances. It’s the latest effort by Mr Chan and his team to bolster the property’s non-gaming appeal and joins such attractions as the popular “House of Dancing Water” spectacular produced by Franco Dragone, the thumping Cubic nightclub and sultry “Taboo” cabaret show. “We are always raising the bar on leisure and entertainment offerings, which have been extremely well-received by our patrons,” added the 42-year-old Mr Chan, who is no doubt mindful of the need to do so, given that among the city’s six casino operators his company is the most reliant on VIP players, who contributed 84% of its total gaming revenue in 2013, compared to a market-wide average of 66%. Melco Crown’s Q2 net revenue fell 7% year on year to US$1.3 billion and adjusted EBITDA declined 11% to $313.6 million. Weakness in Macau’s VIP sector was largely to blame, with the company’s VIP-centric Taipa property, Altira, taking the largest hit, with adjusted EBITDA plunging 62%, while adjusted EBITDA at City of Dream, where the premium-mass segment constitutes a much greater proportion of total earnings, was only down 3%. Adjusted EBITDA at the company’s Mocha Clubs chain of Macau slot parlors was down 11% to $8.6 million in the quarter. Mr Chan took up his current position with the company in February 2012. For two years prior to that, he had been co-COO, Gaming, while Nick Naples headed operations. Mr Naples left in conjunction with Mr Chan’s promotion, the culmination of a gradual assumption of all senior roles at the company by Chinese executives. Mr Chan is a longstanding and trusted associate of co-Chairman and CEO Lawrence Ho’s, having worked as his assistant between 2002 and 2006. He went on to head Mocha Clubs before leaving to become CEO of an outside company, albeit one that worked in close cooperation with Melco Crown—Amax Holdings, a Hong Kong-listed junket aggregator that played a key role in sustaining Crown Macau (now Altira), Melco Crown’s first casino, when it opened. He returned to the fold in November 2008 as president of Altira prior to assuming the co-COO position at City of Dreams in the summer of 2010. Resorts World Manila remains on top of the gaming heap in Manila. The largest private casino venture in the Philippines when it opened in 2009, the US$800 complex has defied conventional wisdom that the market was too small and government-owned regulator/operator Philippine Amusement and Gaming Corporation too protective of its own turf. A joint venture between Genting Hong Kong and Philippine billionaire Andrew Tan’s Alliance Global Group, Resorts World Manila struck the right chord with the market and continues to capitalize on its size and scale, combining a firm grip on the local consumer pulse with international reach and a prime location opposite Terminal 3 of the city’s Ninoy Aquino International Airport. Kingson Sian, president of RWM parent Travellers International Hotel Group, is one of Mr Tan’s top lieutenants. Mr Sian serves as president and a member of the board of directors of Alliance Global and is a top-level executive at some of its real estate and hospitality subsidiaries. Most RWM operational executives come from the Genting side, many with experience at Star Cruises, which is under the same GENHK umbrella as its Resorts World Manila stake. Kingson Sian President Travellers International Hotel Group Travellers also is licensed to build the fourth and final IR atManila’s Entertainment City about five miles to the west on Manila Bay. For now, though, Travellers remains firmly focused on RWM. Gaming revenue for the first half of US$311.5 million led its Entertainment City competitor Solaire Resort & Casino by $63.2 million, but in peso terms was down 22% from a year earlier. Win percentage for VIP play, which accounts for 80% of table volume, fell from 3.7% in the first half of 2013 to 2.2%. Hotel and F&B income fell 17.5%, despite occupancy rates of 87% or better at its three hotels. But the