MACAU BUSINESS


the concept of “made in China” has now become “made for China”. And being “made for China” means that brands and companies need to be sensitive to what works in China. We believe that, given Diaoyutai’s unparalleled


reputation for quality in hospitality and products, and MGM’s unparalleled reputation in entertainment and hospitality, we have a significant advantage over other new entrants into the market.


What is the responsibility of each partner,


exactly? MGM will only manage or will it be a 50-50 partnership?


The partnership was formed in 2007. Diaoyutai


owns 51 percent of the joint venture, MGM owns 49 percent. There is a board of directors and the chairman of Diaoyutai is the chairman of the joint venture and I am the vice-chair. That board governs the affairs of Diaoyutai/MGM Grand Hotel Management Co. Ltd. Diaoyutai and MGM jointly, there is no


separation of duties, develop the projects for the owners [of the properties] and manage all the hospitality developments. For example, at the first one, the Diaoyutai


Art Hotel in Beijing, MGM is responsible for sourcing a lot of the interior designers, the training of all the personnel and for the marketing plans. We will jointly manage the property [with Diaoyutai] once it opens. In Sanya, we contributed with our brands at no cost. In this case, MGM does not get a branding fee. In other words, the joint venture has decided through the owner of the hotel to call it MGM Grand. The joint venture Diaoyutai/MGM is responsible as the master developer with the owner.


On the financial side, is MGM bringing 49


percent of the investment needed? Both partners equally contributed for the seed


capital, a few million dollars each into the joint venture to start staffing the people that work for the company. The major construction costs are supported by the owners [of the hotels]. We are not an equity owner in any of these projects. We are the developer and manager.


Five years from now, 50 MGM projects will be underway in the mainland, including meetings, incentives, conferences, and exhibitions, entertainment, offices, residential and retailing in at least 20 cities. Those are impressive numbers. Will it take a lot of effort to run all those properties?


Yes it will. We both understand, Diaoyutai and MGM, that our efforts have to be outstanding. It is vital to the reputation of Diaoyutai and of MGM that, especially the early projects, are developed to the highest possible quality and are operated at the highest possible service standards.


24 FEBRUARY 2011


In Chengdu, the owner has very ambitious plans for the region. We are doing what we can to bring those dreams to reality. We have opened up quite large resorts many times, including City Centre [a multibillion dollar mega-complex in Las Vegas] just a year ago. We fully understand the pre-opening process, the interviewing process, the recruiting process, the training once the employment is secure, leading up to the opening and the post- opening, which becomes even more important.


Marketing opportunity


It is also a good marketing strategy. It will be easier to bring Chinese tourists to all the other MGM properties when they are already familiar with the brand.


No doubt there is a cross-marketing


opportunity. But we have a rich heritage. Many people still believe we make movies. That is part of our past, not of our present or future. It is a great corporate opportunity for MGM


to be able to plant its flag with the best possible partners in some of the major cities in China and not one that we take very lightly.


Vietnam’s project is still on track? Yes. It is called Ho Tram resort. I was there


recently and all the pilings were done, the tower cranes were being erected. That project slowed down but now has sped up again.


Any other places in Asia you would be


interested in investing in? We have not announced any others [but] we


are actively looking at other parts of Asia. I think that on a non-gaming side, we would very much like to be in Japan and in Thailand. We have looked at Taiwan as well [and] we have always aspired to be in Hong Kong. It is a difficult, crowded market to get into but there is a possibility. We are taking one step at a time but we are


really focused on the non-gaming element. To hope for a gaming jurisdiction to open


up, everybody has got their sights set on Japan. We have taken the view that if and when Japan decides to go down this path, it will be extraordinarily transparent. It will be well known to all that there will be no competitor advantage of being early or aligning to a province or location. Clearly we have an interest in it. But our time


is better spent in what is possible. And what is possible is non-gaming.


Listing to fund Cotai


Will the money raised with the estimated listing of 20 to 25 percent of MGM’s Macau joint venture be used to fund these activities?


I think we are well on track to go public with that joint venture. Part of the proceeds, when we do it, will be allocated to developing more in Macau, hopefully in Cotai.


Bringing some super junkets to MGM Macau from Wynn Macau was a good move for the company, even if it irritated Steve Wynn. If you are not raising the commissions paid to those super junkets, as we were told you are not, how did you succeed in having them open VIP rooms there? Exactly what did you offer them?


MGM Macau is a beautiful facility that has been underutilised since its opening. Some of the problems with MGM Macau were self- inflicted and others were beyond our control. Construction around the site made the


access very challenging. One Central was not opened when MGM was inaugurated and that impeded circulation throughout the property. Those were events beyond our control. What was within our control was marketing,


operations and developing broader and deeper relationships with junket operators. We did not do that as well as we could have done. We have made many changes since we opened and we


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