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Cotai pact with Venetian, even before there was a commission cap. Yes, we opened three new junket rooms in July. We had an expansion. So we built more junket rooms and we expanded. But by no means were we trying to go out and disrupt the pricing mechanism in the market. Our strategic plans for 2010, defined at the end of

last year, were that we wanted to go high margin. I can say it categorically. We have not touched our commission fee. We have not gone nuts with the credit support to our junkets or anything. We are probably one of the most conservative. I

even think the MGM thing is overblown. It is not like David and Neptune are shutting down [at Wynn Macau] and moving their business to MGM. They are merely expanding [into other properties]. It is not like the good old days where the junkets

dictated where to go. Players have preferences. They say ‘I want to go to Wynn. I want to go to City of Dreams’. So, it is important for a junket to have a presence [in different casinos]. If they don’t have a presence at that new place, then the person will say: ‘Well, I will find another junket’. You should really compete on the product and the

services you have to offer, rather than just be constantly saying: ‘I will give you the best prices’.

You have clinched third place on the gross gaming

revenue ranking in Macau, and a more stable market share. What is the next target?

We have never really cared about that market share

[ranking]. We would much rather have higher cash flow and EBITDA. The easiest thing in the world is to loosen up on

credit, open up a few more VIP rooms and convert a few more mass tables into VIP, then you can instantly grow the market share. Very easy. That is not really what we want. What we want is to

create more value for our shareholders. If we just cared about market share and growing the VIP numbers, we wouldn’t have put together all the shows. What we really want to do is to grow the long- term sustainability of the business. So far, we have had consecutive quarters of EBITDA

growth. But we look at our competitors and Wynn is probably going to do US$800 million in EBITDA this year, Sands China is probably going to do US$1.2 billion. We still have a long way to go but we have our targets in place.

Mass market is the part of the business that you are focusing on the most now? Yes. We have done a good job on the VIP market.

We have made some recent management changes, not just at top level but all the way down, in order to address some of our weaknesses. Now, we are putting more resources into those areas. The key for us is to grow on slot machines and on the mass market at City of Dreams because we have

22 DECEMBER 2010

committed so much capital to this property. If you look at our return on capital, it is inferior to that of our competitors. Our goal is very clear: we need to grow this segment of the business.

When Melco Crown posts results, the media report that

you’ve been narrowing losses. But ‘normal’ people do not understand the losses when it is such a lucrative market.

Exactly. Why not just present the net profit and

show that the company has been making a huge pile of money? Accounting principles. As I said, I spent US$900 million on the gaming license, close to US$3 billion on City of Dreams and another US$500 million on Altira. All that needs to be depreciated along with the length of the gaming license. That hits the bottom line and that is why we always like to talk about free cash flow generation. Of course we can do what Galaxy did and just simply write down the gaming license to zero and take the hit one time. Unfortunately, our US$1.7 billion project loan does not allow us that flexibility. Therefore, we will have to keep on amortising the gaming license the hard way.

In the past, you said you agreed with the government’s

restrictions on the importation of labour. So, what can be done in order for Macau to fill all the empty job vacancies?

Macau is running out of available labour, without a doubt. I know Galaxy Macau needs to hire 7,000 people to operate that property. Can you really find 7,000? I think it is going to be difficult.

On the construction side, we heard about the

problems with [Venetian’s parcels] five and six and some more problems at Galaxy. But, at the same time, I also understand why the government is reacting that way. [Demonstrators are] a very small group but a very loud one. I think the government is in a difficult position but I

certainly hope it will solve those issues. Even now, some of the service quality is becoming bad. People have a pretty low opinion of the service level in Macau.

Apartment hotel

Currently, you have almost a million square feet of space available on the City of Dreams parcel, right?

Yes, for phase three. It is called the apartment hotel but more likely than not it is going to be just a hotel tower.

Our view is that Grand Hyatt has ramped up very

nicely since it opened, especially looking at the occupancy levels and its correlation to our gaming revenue. We were very busy opening everything in City of

Dreams, so, probably next year we will consider what to build. If it is a hotel tower, will it be self-managed? It will depend. There are questions out there.

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