p14-20 Macau 16/1/09 08:27 Page 18
MACAU BUSINESS
other international jurisdictions are
Whale hunting haemorrhaging money, are you
happy you didn’t end up investing in
Market position-wise, and since you Macau from an early date?
joined Harrah’s, your strategy has been to No. I would have liked to have been
move away from the dependency on “whale in Macau many years earlier. We didn’t
hunting’’ and focus on the mass and family because we had a very demanding
markets with the Total Rewards loyalty American regulatory footprint to
programs which have since gathered close to address. But if we had been able to
40 million customers. Will that be enough? come to Macau when [LV]Sands
‘Whales’ is a concept that exists really in originally did, or some time shortly
Macau and Las Vegas and perhaps Australia, thereafter, that would have been a
but not in many other places. You don’t have wonderful opportunity for us.
whales in St. Louis or Chicago or places like Now, today, as you see across the
that. The customers we have in these regional skyline, we’re obviously going through
markets are not grind customers, they are not a period where there’s too much supply
US$20-a-day customers, they might be trying to come forward for what the
US$1,000 a day costumers, so in that market market will immediately absorb. But
they are in the VIP category and that’s really the long term fundamentals are still
where Harrah’s focuses its attention. terrific.
But in Las Vegas, the only property that we
have that caters to the whales is Caesers Do you think that if the Central
Palace and it does very well, it’s a very big Government eased the visa
player in that market. But what you’re restrictions that would have an
suggesting is accurate, the Total Rewards immediate effect on all of the Cotai
system that has 43 million American projects?
participants. It is by far the largest and I don’t know exactly what role that
organises interaction with those customers would play. I think it’s manly that the
around the country and has really helped us market has absorbed an
outdo our competition. That’s absolutely what unprecedented increase – percentage
we’ll keep doing. wise, far greater than Las Vegas has ever for golf and entertainment and we’ll see
experienced. When you have this kind of where that takes us.
You’ve recently stated that the industry capacity coming to a market, at least in respect
is going to have to get accustomed to the to hotel rooms in sheer square footage, it Asia expansion
notion that not every project is a good stands as a massive increment. Whatever the
project. Is Macau a “good project” now Chinese Government intends to do in the near Since the US and European markets have
that the Central Government has turned term, this situation will gradually ease itself arguably matured, have you turned your
off the tap? forward. I think the big unanswered question at focus to Asia? Vietnam, Taiwan, or even
I think most of the projects in Macau have the moment is about the convention and Japan?
certainly been good projects. Starting with meeting business and whether it is going to Our strategy is to be active in all of those
the first LVS project; the Sands Macao. This mature and be as promising a business as was markets but you have to be aware of the time
was an extraordinarily successful project. originally imagined. that these developments historically have
Steve Wynn’s project has also been an taken. If you look at Singapore, for example, of
extraordinarily successful project. I think Few believe that Harrah’s bought this an especially well organised process, from the
this big Venetian [Cotai] project will, over property just for a golf course. Many day that the decision was taken to go forward
time, be a very successful project and of speculate that if the next Chief Executive to the day that first casino will open, its eight
course several others. The same cannot be decides to open up the market to more years. It’s a long time. We’re optimistic about
said for some cases in the United States operators, Harrah’s would be one step ahead the prospects in Japan, Taiwan, Vietnam,
where I think there have been some projects with a prime piece of land… Cambodia, South Korea, and other markets,
that are either underway or have been We made it clear that we wanted to have the but we go into this mindful that these things
opened that are really facing a very tough Caesars brand active in Macau in the future. take a long time, so you have to position
future. The amount of money that was spent Before we bought the golf course we did not yourself carefully.
for what the markets could tolerate was just have the ability to serve Caesars customers We think we have a brand that makes a lot of
excessive and you wind up driving the rate of anywhere in Macau, many of which are sense in these markets, we recognise that real
return on capital down everywhere as a customers of ours in Las Vegas today. estate positions and partnerships are important
result and that leads to a very bad dynamic We could not entertain them, meet with in these markets and we’ll work patiently to
for the industry over time. them or take care of them - we couldn’t do that end, but – there used to be an expression
anything. This provides us with an option. It in economics that the stock market predicted
In Macau earlier provides a place for us to take care of those eight of the last three recessions - the same
customers and in the future, as events thing applies to casino development; people
With the current grim outlook, and the develop in Macau, at least we have a champion 12 of the next three casino
fact the multinationals who expanded into significant landholding here that we can use developments.
18 FEBRUARY 2009
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