MACAU BUSINESS

by Emanuel Graça

Spreading the bets

S

Officials in the new government are keen to encourage Macau’s casino giants to add value to their undoubted strengths in raking in the gaming dollar, by promoting diversification to create more non- gaming revenues. But some fear the casinos aren’t doing enough

how us the numbers”. That might well have been the question on many lips when Las Vegas Sands chairman and chief executive officer, Sheldon Adelson spoke at the CLSA Asia USA Forum in San

Francisco last month. Addressing an audience of investors, Adelson

insisted the company’s subsidiary in Macau, Sands China was posting non-gaming EBITDA percentages “of 25 to 30 percent (of overall operations) as the other guys are looking at single digits”. In 2009, the company’s non-gaming net revenues in Macau represented only 12.5 percent of the total, a residual year-on-year drop of 0.06 percentage points. At the Venetian Macao, Sands China’s flagship

integrated resort, approximately 81.4 percent and 78.8 percent of the gross revenue for the years ending December 31, 2009 and 2008, respectively, was derived from gaming activities, with the remainder derived from room revenue, food and beverage services, and other non-gaming sources. In Las Vegas, Sands’ figures are quite the opposite.

Approximately 62.7 percent and 64.9 percent of gross revenue for the same time period, was derived from non-gaming sources, while 37.3 percent and 35.1 percent, respectively, came from casinos.

Where are the MICE?

Sands China has promoted itself as more than a

casino operator, gambling on a strong MICE industry, witnessed by the company’s huge meeting and convention rooms at the Venetian. Adelson said: “We want to be in the integrated

resort business, rather than a simple casino because, competitively, we win, they [the competition] lose.” However it is not clear how much Sands China is winning: Conventions represented less than two percent of the company’s net revenue last year, with the company registered a decrease in convention operations at the Venetian, as a result of the decline in global economic conditions. In 2009, Sands China hosted 15 trade shows, which attracted more than 320,000 visitors, according to company figures. In addition, it hosted

22 MAY 2010

388 corporate groups, which brought an additional 60,000 delegates to Macau.

High expectations

Although it represents only a minor part of its

business in Macau, Sands China expects to see its convention business expand in 2010. “Given current trade show and group booking

trends, we are confident of strong growth in MICE visitation in 2010,” the company said ahead of its 2009 annual results. Sands China’s goal is to hold events at Venetian’s

convention and meeting room complex during weekdays when demand is down at hotels and casinos. As things stand, the US casino operator has the higher percentage of non-gaming revenues in Macau. The only other player in town also betting strong

in diversification is Melco Crown, which saw non- casino operating revenues fall below six percent of overall operating revenues in 2009. However, the company’s big bet in the MICE

business, Grand Hyatt Macau at the City of Dreams complex, only opened last September, offering a total of 15 individual function areas spanning more than 968,000 square feet (90,000 square metres). Wynn Macau’s, non-casino operating revenues were

below seven percent of overall net revenues in 2009, according to the company’s official data. For Stanley Ho Hung Sun’s Sociedade de Jogos de Macau, the casino industry’s market leader, non- gaming revenues fell below one percent in the first half of 2009. Overall, Macau is miles away from Las Vegas, where non-gaming revenues surpassed those of gaming a few years ago and now generate more EBITDA than casinos do.

Government plan

While the casinos might be more interested in

reaping the rewards from punters, the government wants a change of attitude. Last month in his maiden Policy Address to

lawmakers, Chief Executive Fernando Chui Sai On noted the importance of casinos but stressed Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46