Inside Asian Gaming

inside asian gaming September 2015 42 In 1982, Cheng Yu Tung did Macau’s reigning casino king Stanley Ho a favor. Mr Ho had fallen out with one of the original four partners that formed Sociedade de Turismo e Diversoes de Macau and won the territory’s casino monopoly 20 years earlier. Mr Cheng, who married the daughter of Chow Tai Fook Jewelry’s founder and greatly expanded the company then founded Hong Kong’s New World Development, bought the partner’s 10% stake for HK$400 million ($51 million). The Hong Kong billionaire has tried to expand his family’s role in gaming since. During the past year, the Chengs finally began succeeding. When Macau liberalized the casino business in 2001, New World partnered with then-MGM Mirage to bid for a concession. Consultant Arthur Andersen rated its application the best, but the government’s Tender Committee saw things differently. Last year, the family’s Hong Kong-listed International Entertainment reached an agreement to buy 70% of Suncity Group for HK$7.35 billion, which would have effectively made Macau’s largest junket promoter a listed company. Regulators apparently put the brakes on that deal, but industry insiders say the two groups remain close. Last November, Chow Tai Fook Enterprises, the family’s privately held investment arm that controls the pieces of its estimated $11 billion empire, signed a letter of intent with the government of Incheon to build a $1.6 billion integrated resort in the city’s Incheon Free Economic Zone, near South Korea’s gateway airport, 50 kilometers (30 miles) from national capital Seoul. The IFEZ has two IRs under construction and is the focus of a request for proposals process that got underway last month for two additional foreigners- only casino licenses, after the concept phase drew 34 applicants. The growing throng of Chinese travelers to South Korea, numbering 6.1 million last year, is the main gaming target. South Korea’s decision on licenses is expected next year. In March, Chow Tai Fook Enterprises emerged as a partner with Macau junket promoter Suncity Group in Vietnam’s long dormant Hoi An South integrated resort project. Local investment company VinaCapital first announced the project in 2010 with Malaysia’s Genting Group as a partner, but Genting pulled out two years later. Early this month, Chow Tai Fook upped its investment to take the lead role from VinaCapital, which will remain involved. Vietnam requires a $4 billion investment for IRs, but allows developers to meet that goal in phases. The first phase of Hoi An South, in Quang Nam province about 100 kilometers from the nearest international airport in Danang, is expected to cost $500 million and include a hotel, golf course and casino with about 90 tables, to open by early 2019. Chow Tai Fook and Hong Kong-listed partner property developer Far East Consortium International Ltd joined Echo Entertainment Cheng Yu Tung Honorary Chairman Chow Tai Fook Enterprises to form Destination Brisbane as final contenders for the ambitious Queen’s Wharf Brisbane project. In July, Queensland’s government chose Destination Brisbane’s A$4 billion ($2.9 billion) proposal to remake a 9.3-hectare (23 acre) swath of the waterfront in Australia’s third largest city as an entertainment and leisure district. The project has to await relocation and demolition of government buildings on the site and isn’t expected to begin operating until 2022. Preliminary terms of the Queen’s Wharf agreement indicate Echo will fund 50% of the C-shaped integrated resort’s twin towers and related amenities, with Chow Tai Fook and Far East paying 25% each. The minority partners will independently finance and develop 2,000 high-rise housing units on the site. Queen’s Wharf Brisbane will further utilize the breadth of Chow Tai Fook’s holdings and expertise, including offering it commissions on direct VIPs from its database of wealthy Chinese that spans its property development history, Chow Tai Fook Jewelry’s 1.7 million VIP program members in the mainland, Hong Kong and Macau, plus 4 million more of its New World Department Stores VIPs, not to mention guests of its Rosewood luxury hotels brand. Perhaps more important, being approved as a casino investor in Australia could make authorities in South Korea, Vietnam and other destinations more amenable to Chow Tai Fook’s casino development ambitions. The 2nd February opening of the 18th-century-Prague-themed Harbourview Hotel at Macau Fisherman’s Wharf marked the first stage of redevelopment of the moribund theme park that sits beside the city’s main ferry terminal on the Outer Harbour. MFW, which includes the Babylon Casino and Flamingo Slot Club, was opened by local entrepreneur David Chow in partnership with Macau casino mogul Stanley Ho at the end of 2005. Its replica Tang Dynasty palace and erupting volcano failed to impress mainland Chinese visitors and have since been demolished to make way for a much-needed revamp, budgeted at HK$6 billion (US$770 million). The revamp, divided into three phases and slated for completion in 2017, will add two more new hotels bringing the total room count David Chow Co-Chairman and CEO Macau Legend Development