Sands set to reap gains in Macao recovery
Updated: 2017-09-15 06:21
(HK Edition)
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Las Vegas-based gaming giant's president in Macao Wilfred Wong tells Duan Ting that they are looking to entertainment, conferences and mass market to broaden revenue base and boost the city's tourism.
Macao's gaming industry is showing signs of stabilizing after suffering a downturn between mid-2014 and the middle of last year; the city is transforming itself from Asia's largest gambling hub into a leading business and leisure tourism center in Asia, catering to tourism, entertainment and conventions and exhibitions as well as gambling in order to revitalize its economy.
Wilfred Wong Ying-wai, president of Sands China, a subsidiary of global resort developer Las Vegas Sands, told China Daily he is optimistic about the city's transformation and future development and believes Macao continues to gain popularity. Sands introduced the integrated resort concept to Macao when they built The Venetian, supporting the Macao government's proposals.
The Macao government had run the city's gambling venues from the 1960s to the late 1990s when, with the establishment of the Macao Special Administrative Region, concessionaires including Sociedade de Jogos de Macau, Galaxy Casino and Wynn Resorts won the bidding and initially established Venetian, MGM Grand Paradise and Mello PBL Jogos to enter the local market.
The city's gambling industry flourished but experienced a downturn starting from 2013. According to government data, full-year gambling revenue in 2014 amounted to 351.52 billion patacas ($43.68 billion), down 2.6 percent year on year compared with 360.75 billion patacas in 2013.
But the situation started to recover in August last year when Macao's gambling industry reported 1.1 percent growth year on year following the launch of Wynn Palace and opening of The Parisian Macao. The government also encouraged casino operators to develop non-gaming sectors.
Wong attributed the recovery to the rising number of visitors to Macao, and their tendency to stay overnight in the city, which is becoming more and more attractive as a leisure resort because of its top food and entertainment services and as the economic effect of the Cotai development started to come into play. He said Macao expected to win recognition as a City of Gastronomy by the end of this year.
Parisian flair
Sands China's latest property, luxury hotel The Parisian - which has a half-scale Eiffel Tower as one of its landmarks and is linked by a footbridge to other properties including the Four Seasons Hotel, The Venetian and The Plaza Macau - was opened in September last year.
Wong said The Parisian attracted visitors through its non-gaming offerings including an opera house and exhibitions, and stimulates development of surrounding areas.
The Parisian Macao accounted for $595 million of net casino revenue, partially offsetting a $96 million decrease at Sands Cotai Central driven by a drop in gaming volume and a lower win percentage for table games, and contributed $34 million of net mall revenue at the shops at Parisian. The Parisian's earnings before interest, tax, depreciation and amortization were $188 million in the first half of this year.
Sands China, one of the major casino operators in Macao in terms of market share, recorded profit gains from the bottom up. According to the group's financial report, in the first half of this year group net revenues amounted to $3.7 billion, representing a 19.5 percent rise from $3.09 billion last year, mainly driven by the opening of the Parisian Macao and the recovery of the Macao gaming market. Group profit reached $678 million, 23 percent up year on year. Adjusted EBITDA increased 22 percent year on year to $1.23 billion, compared with the $1.01 billion in the first half of last year.
"If you look at visitor flows in Sands China's property each year, we are quite healthy. There were 180,000 visitors a day in 2015, 200,000 visitors each day in 2016 and the number is increasing this year," said Wong.
Sands China offers nearly 13,000 rooms (almost one third of Macao's room inventory), 1.7 million square-feet of meeting space, over 850 shops and more than 140 dining options, all inter-connected by air-conditioned footbridges. Comparing all six gaming concessionaires, Sands China accounts for 45 percent of hotel rooms, 62 percent of total retail floor area, 60 percent of non-gaming revenue and 90 percent of MICE (meetings, incentives, conferencing, exhibitions) floor area.
Fierce rivals
Competition in the Macao gambling industry is fierce, according to Wong. They are focusing on improving their services by refurbishing hotels and casinos to improve customer experience and training employees. They have 28,000 employees at present.
Wong said VIP business is critical to them but the gaming industry cannot rely entirely on VIP clientele so they are working on developing the mass-gaming sector as well. In the first half of this year Macao welcomed 15.6 million visitors. Mass-gaming and slot business represented 43.5 percent of market revenue.
Wong said: "The group's business strategy is to continue to successfully execute our Cotai Strip developments and to leverage our integrated resort business model to create Asia's premier gaming, leisure, convention and meetings destination."
Wong is optimistic about Macao's future development as a place with plenty of recreational facilities and as an ideal conference venue. He said construction and development of the Hong Kong-Zhuhai-Macao Bridge and roll-out of the Greater Bay Area project will also boost business in Macao.
Looking elsewhere in Asia, Japan's parliament approved the Integrated Resorts Promotion Bill in December last year. Wong confirmed the Las Vegas Sands group remained interested in investing in a casino resort in Japan. He thinks the legalization of casino gambling in Japan should not impact Macao in the short term as it will still take some years for casinos to open doors.
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(HK Edition 09/15/2017 page9)