MACAU BUSINESS


brought in a lot of talent operationally and from the marketing perspective. We have been building up our slot business


dramatically. We have attracted some junket operators that were not in our building [and] had been in our competitors’, which has lifted the eyebrows of some of the competition. The criticism is not factually based because we have not changed the terms. The market is becoming more competitive, the [VIP] operators are becoming more discerning and they are more selective in terms of where they would like to set up the “shop”. In the stunningly beautiful MGM Macau tower, there were opportunities to bring in junket operators and we did that. We are proud of being able to do that and we are going to do that more. We are opening our supreme gaming area that will cater to the upper-scale mass business. Some of our VIP slot business will be in that area. But we have over 40,000 square feet of shelled-out space that we have not touched yet. We have a theatre that we never fully built and we have many other facilities that we can expand and will do so.


Are you adding more tables? We will be expanding to the extent that we


are allowed to under the cap, yes. We have been working to that end and there are opportunities even within the current regulations for us to do that.


No restriction fears


In two consecutive days, top officials claimed that the Macau government is striving to control the gaming industry’s expansion, in order to promote an orderly and planned growth. Do you fear negative impacts ahead?


I am very encouraged by that, actually, and I


will tell you why. I had an opportunity to meet ambassador


Wang Guangya, the current director of the Hong Kong and Macau Affairs Office when I was in Beijing, and I had an opportunity to be with the chief executive and secretary Francis Tam Pak Yuen. The impressions I got from meeting with a variety of officials is that the vision for Macau is one that is thoughtful and very clever. There will be pauses along the growth path and diversification has been a very important keyword in all the dialogues around Macau’s future. How will it diversify? It will diversify into many


different business types, in other words, vertically. It will build upon the strength that already exists today, which is an emerging diverse hospitality centre, as Hong Kong is a financial centre. Macau can be a larger hospitality centre.


26 FEBRUARY 2011


How do you do that? Well, diversifying into integrated resorts that focus not only on the business traveller but also on the fit for the casual traveller, people like you and I that would visit for a long weekend, and leisure travellers. They [integrated resorts] can develop businesses that are attractive, whether it is theme parks, museums, galleries, public spaces and other forms of hospitality. But gaming, in my opinion, will always be a


very major part of that. I think that it will grow, but in a sustained way. The regulatory climate is going to be very cautious because the risks are great and I am sure everyone understands that. If any operator runs into any regulatory problem, it is going to cast a cloud over the jurisdiction and nobody wants that.


In Macau, it is more than time for the system to become more transparent.


Again, it gets back to my comments about the United States and its growth. That is what has happened in Las Vegas. Las Vegas grew very rapidly and the regulatory environment struggled to catch up and stay ahead. I am very proud of what I believe to be the


best regulatory environment in the world. I think it is a standard by which other people judge themselves in other parts of the world. But it did not come without a lot of work by the regulators here in Nevada. They had to evolve and grow as rapidly as the gaming industry. The same is true in Macau.


Atlantic nightmare


Is Atlantic City a nightmare to forget once and for all, after their regulators ruled against your partnership with Ms Ho in Macau, eventually obliging MGM International Resorts to quit that market?


[Laughs] Well, we have not forgotten Atlantic


City, since we still own half of the Borgata. There will be a time, hopefully in the not too distant future, that our equity interest in a casino in Atlantic City will be a memory. However, we are still a very large landowner, something people tend to forget. We own an awful lot of land in Atlantic City. We are disappointed about how this has turned out. We feel very strongly in the value of this partnership. We know clearly what Ms Ho has brought to this partnership. She is an extraordinary CEO and an accomplished person, and I think the process could have been handled much better. We felt that [leaving Atlantic City] was the


better course of action for our company to settle with New Jersey [regulators] at this point in time, rather than to continue to prolong this process to its next phase, which would be going to the casino control commission. It could have dragged out for months or years.


Do you still have hopes that one day they will review their opinion on Ms Ho?


I do not have high hopes now. I think it is a possibility but not one that we are actively going to pursue. Our company’s energies should be focused in


Las Vegas where the great recession has taken its toll on the resorts. We are starting to recover our business now. We think the best opportunity for our company is to get these resorts back to their pre-recession levels of profitability. Growing in Asia is a parallel priority and everything else we are looking at comes secondary.


Finally, of course, City Centre. It is an


astonishing property but it came with a price. What are the expectations in overcoming the related financial challenges?


City Centre is a fascinating book of which


only about three or four chapters have been concluded. And those were the toughest ones. Actually, the first two chapters were exciting and fun and then the last two chapters have been extraordinarily painful. But we turned the page on that last chapter because the financing of City Centre is underway right now. It is profitable as an enterprise. It is


progressively doing better and it is going to be, in my opinion, the most profitable resort in Las Vegas for many decades to come.


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