Analysis SOUTH EAST ASIA


While plans appear on track for Parcel 5, Sands must also complete its build on Cotai land Parcel 6 or forfeit the licence. The 58 per cent growth rate in Macau in 2010 has slowed, with this year expected to see growth of 20-25 per cent. Future expansion is going to be reliant on the cap of 5,500 tables in Macau being relaxed. Galaxy Macau Resort has all but used up the quota, with just 100 or so table licences left.


While the tables quota has a two year limit, locals believe that the biggest problem remains the lack of labour in Macau. There are 500,000 locals in Macau with 2.5 per cent unemployment, which in economic terms is full employment. There are too few people to meet the needs of the operators due to the fact the law requires that there must be four locals employed for every single work permit issued to a foreign labourer. Operators have warned that if the government isn’t flexible on this restriction that there will be no new openings in the near future, scuppering plans for the continued expansion of 'other' forms of entertainment in the market. Without gaming, nothing else can exist in Macau.


COTAI DEVELOPMENTS Macau faces ongoing challenges in terms of infrastructure deficiencies, labour and land shortages as well as the challenge of moving towards becoming a leisure destination, rather than simply a gambling enclave. One leading industry figure, Grant Bowie, CEO of MGM China Holdings, predicted that the move towards being a leisure destination was ‘still 10 years off.’


The challenges haven’t actually done much to slow growth. The industry in Macau is growing by 30 per cent a year, though while most of the attention is focused on the Sands, MGM, Wynn and Galaxy Entertainment, Macau remains dominated by Stanley Ho's conglomerate SJM, which has about a third of the market share. Other players have invested significantly to expand their presence across the region, grabbing the headlines, while SJM’s revenue grew 70 per cent last year and its hotel and catering business grew 60 per cent.


Tourists are now coming to Cotai, though the hardened gamers have been more difficult to convince. Wynn and MGM have been chasing the hardcore gaming market very successfully, but see the need to start to pitch towards the tourist sector in a bid to diversify their customer base and throw their lot into Cotai developments. Wynn Resorts is known to have requested a parcel of land on the Cotai Strip, though the timetable at


present would set the project back into 2014-15. MGM has also requested its own parcel on Cotai.


MGM China is believed to have identified a site of approximately 17.8 acres in Cotai and has submitted an application to the Macau Government to obtain the right to lease this parcel of land. The site that MGM is eyeing is almost three times smaller than the plot targeted by rival operator Wynn Macau, a 52-acre area site next to City of Dreams and Macau University of Science and Technology.


MGM Grand Paradise, which operates the MGM resort in Macau, made profits last year (the first since 2007) and raised about $1.4bn in net proceeds from an initial public offering on Hong Kong's stock exchange in early June.


The MGM is a joint venture between MGM Resorts and Stanley Ho's daughter, Pansy Ho Chiu-king. About two thirds of MGM's revenue came from the casino floor while the turnover from VIP gamblers jumped 48.5 per cent, about


G3 I AUGUST 2011 I PAGE 28


Francis Lui, Galaxy Entertainment.


double the turnover growth registered by mass-market tables, but slightly less than the slot machines. In other words, play is predominately focused around hi-rollers.


Michael Leven,


President and Chief Operating Officer, Las Vegas Sands .


Steve Wynn announced in mid August 2010 that he would be building a new casino resort on a 52-acre Cotai plot. He said the Cotai project could break ground in 2011, as the building’s design is complete, with the location opening in late 2014 or early 2015. However, the 20bn MOP development may have to wait until at least 2016 to open in Cotai.


In the first quarter of this year, the Wynn Macau saw its net revenues rise 47 per cent. About 70 per cent of Las Vegas- based Wynn Resorts net revenues came from its Macau operations. Non-casino revenues grew 50 per cent to $94m, a fraction of overall net revenues of $1.26bn for the quarter.


The Galaxy Macau cost HK$14.9bn (€1.36bn) and spans 550,000 square meters. It will include three hotels (two at present) with 1,500 rooms, 250 suites and


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