Inside Asian Gaming

September 2015 inside asian gaming 27 Linda Chen’s career in gaming began with the opening of The Mirage on the Las Vegas Strip in 1989, and she has worked for Steve Wynn continuously since the early part of the century. The experience she’s gleaned has been invaluable, and it is serving her particularly well now as she holds his Macau business to a steady course through the strongest headwinds it has ever faced. She is realigning portions of the vauntedWynnMacau VIPmachine toward the higher end of the mass market, which in her case is a lot more than a matter of geography, it requires a deft touch. Wynn does have a reputation to maintain, and she won’t be sacrificing the upscale positioning that has always been its great strength and the source of its appeal. Plus, her gaming inventory is relatively small in keeping with that “boutique” positioning. There isn’t a lot of room to maneuver. Wynn Macau and Encore at Wynn Macau have tended to rank behind only the much larger operations of SJM and Galaxy in VIP market share. Their mass share, conversely, tends to come in the smallest (a mere 7% in the first half of the year). This is costing the company heavily in the current downturn. Gaming revenue, which generated 89% of total revenues through the first six months, was down year on year by 37% percent as rolling chip volume and VIP win each plummeted more than 47%. Cash flow from operations fell from HK$2.89 billion in the first half of 2014 to $438 million. Operating profit was down by more than half, driving EBITDA to a 45% decline. Shoring up margins is the other side of this thorny equation. But where Ms Chen is cutting she’s proceeding with the patience of a surgeon. Expenses were down more than 31% in the first half, mainly because gaming tax and premiums have fallen with casino revenue. Staff costs actually increased by around 4%, in part because of salary increments and scheduled bonuses, in part because the company is purposely carrying more workers than it needs to prepare a trained team for next spring’s Wynn Palace opening on Cotai. For now, her strategy appears to be very much focused on weathering the storm, an approach that indicates how well she knows the mind of her famous mentor. Roughly 20 VIP tables went away in the first half as junket rooms closed. Mass inventory, however, was up in the first half by only eight units, and the fact that mass table drop has held up relatively well suggests that high-limit cash play is taking up an increasing share of the slack. Poker revenue has been fairly steady as well, and four more tables were brought on line, bringing the total to 13. Eighty machine games were added also. Next to gaming’s performance, the first half’s 28% fall-off in non- gaming sales looks pretty good, and on balance it was, indicating that that Wynn’s appeal on the non-gaming side remains undiminished. She’s got the product quality to pivot from comps to cash customers and she’s making the most of it. Hotel occupancy handily outperformed Linda Chen Executive Director and COO Wynn Macau the market at 96.9% in the first half, down less than 150 basis points year on year despite a HK$22million reduction in room giveaways and without having to slash rates. F&B revenue likewise survived roughly $97 million in reduced promotional allowances without an appreciable decline, so cash business is improving in the restaurants too. She learned her trade on the Las Vegas Strip, most of it with Wynn companies, and this is serving the China operation well in these difficult times. The 48-year-old Taiwan native worked at The Mirage fresh out of Cornell University’s prestigious School of Hotel Administration. She moved to Kirk Kerkorian’s MGM and was there for the MGM Grand’s opening in 1993 as the largest hotel in the world at that time. She later served as executive vice president of international marketing at Bellagio after Mr Wynn’s Mirage Resorts was acquired by MGM Grand (now MGM Resorts International). She also headed up international marketing for MGM Mirage, as the merged companies were known at the time. She rejoined Mr Wynn during the run-up to Wynn Resorts’ Nasdaq listing and has been with him ever since. She came to Macau in 2002 after Wynn Resorts won its casino concession, assuming the role she still holds today. She took on the COO title with Wynn Macau when it went public on the Hong Kong Stock Exchange in 2009. She also serves as president of Wynn Resorts’ Wynn International Marketing subsidiary. Resorts World Genting is where the gaming business started for Genting Group 50 years ago, when founder Lim Goh Tong began building a road through dense topical jungle to Gunung Ulu Kali, the 1,800-meter-high (5,904 feet) mountaintop where he would assemble 14,800 acres (5,992 hectares) to create a resort, first known as Genting Highlands. The 25-kilometer (16 mile) road originated at the town of Genting Sempah, and Mr Lim chose that town’s name for his new venture. The road took four years to complete, and the site’s first hotel opened in 1971. Malaysia authorities granted a gaming license, Lee Choong Yan President and Chief Operating Officer Genting Malaysia