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them, so that they can have their gaming experience here.

What has changed is the fact that in the past we had an aggregator of junkets. However, last year the government announced that there would be a 1.25 percent commission cap and the aggregator’s model – we paid a higher commission to the aggregator, who paid a little bit lower commission to the sub- junkets and retained a margin – was no longer valid. The collapse of that model created the opportunity

for us to deal directly with the junkets, which is good for us because in the past the big aggregator sometimes created obstacles for us to service the customer underneath the junkets. Now we are dealing directly with the junkets so we can provide the right service to customers. I am not criticising the aggregator but the fact is…

The new gaming boss Ted Chan has been promoted

to co-chief operating officer for gaming. The move is part of a wider management restructuring at Melco Crown Entertainment. The new operations management structure is organised along functional rather than property responsibilities, and has two newly created co-chief operating officer positions for gaming and operations at the top (see “Changing of the guard” in the Gaming section). The Melco Crown

Entertainment press release announcing the restructure says “Mr Chan has been a pioneer in the transformation of the gaming industry in Macau in recent years and is uniquely qualified for this position”.

The company stressed his

broad experience across Macau’s customer segments, reaching back to 2004 when he was chief executive of Mocha Clubs.

Were you too dependent on one major representative?

You are talking about AMA, under Amax Holdings? Ted Chan: Correct. And honestly we didn’t make

the wrong decision dealing with AMA because in this competitive landscape if anyone can guarantee you, for instance, 50 or 60 billion [of rolling chip], wouldn’t you like to give them a higher commission? Oh yes, of course.

As you said, times change. Is AMA still doing any

business with Altira? Ted Chan: AMA is not doing business here but the

junkets beneath AMA before actually are, as well as some new junkets. They are doing well.

Is it really possible to maintain a cap on the junkets’ commission? Ted Chan: Well, the government is actually implementing the cap. It is in the [Official] Gazette. The law was enacted. The cap is 1.25 percent and everyone in the market is doing so.

The problem is never to produce a law but how to enforce it… Ted Chan: At the very minimum, we maintain that

cap. A better deal So everyone is satisfied with the cap, including the

junkets? Ted Chan: The way we see this problem is how we see the market share. In the last seven or eight months, the level of remunerations and business has stayed at a quite healthy level. So, I agree this is the right level. And, honestly, the more you pay to the junkets, the more they have to repay to the agents and customers. Eventually the junkets would not be the ones actually benefiting from an increase in the commission.

Everybody forgets it is a very competitive world out

there and that the junkets need to repay the sub- junkets and the latter to give back to players, so


basically the margins are getting thinner… At Altira, we have about 16 junkets at the moment

and we believe that the level of business and the price we maintain with them is a healthy level.

Is there some junket sharing between Altira and COD or do all of them just work with Altira? Ted Chan: Very few overlap. I think it will be to our benefit in the future to have more collaboration between sister properties. If the same shareholders and the same junkets operate in Altira and in COD, we will be happy with business partnerships. This is one company and that will give more flexibility for junkets to bring in customers. For instance, they like to gamble here but it’s really because of luck. But if they lose money, the agent can suggest to the customer to go to COD and have a look to see other gaming facilities.

Not better, just different For the first quarter, net revenue at City of Dreams

was US$336.3 million and adjusted EBITDA was US$70.9 million. In the same period, Altira had net revenue of US$197.2 million and generated adjusted EBITDA of US$21.8 million (see box for second quarter results on these pages). Has Altira been posting stronger results than COD, especially if we note that it is just one property while COD has three big properties? As I said, in terms of VIP business, we have very few

overlapping, so there is no business collaboration. As one single property, Altira’s VIP business is among the top five in the whole of Macau’s properties. So, I’m quite satisfied with the results. Talking about Altira being a single property and earning a US$190 million revenue compared to US$300 million at COD, bigger by three or four times, I think our challenge is actually having a very high percentage of VIP business overall. The VIP segment represents about 80 percent of all revenue in the company. So, I believe there is huge room to go in the mass-gaming market. And I am a super bullish individual looking at the retail and mass-gaming opportunities in Macau in the next five years.

On non-gaming revenue, Altira beats COD in the occupancy per available room; 92 percent at the first against 75 percent at the second, according to first quarter figures. What’s the reason for such a difference? Ted Chan: First of all, the occupancy in both COD and Altira is not bad. I mean in the whole of Macau...

I didn’t say it was bad… Ted Chan: Altira is small, we only have 216 rooms. During the weekend, it is always full, 100 percent. So what we have been doing now is actually allocating some of the customers to stay at COD during weekends.

COD is different. It is bigger and has more rooms,

approximately 1,400 rooms and caters to another sort of customer. So, it is not fair to say Altira beats

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