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Wishing everyone a Happy & Prosperous Lunar New Year of the Water Dragon ! In Macau and Hong Kong region, this LNY is one of the coldest in 16 years! The average temperature is below 10 degree with the first few days at 5 to 8 degrees…Brrrr!
Still, this is not a showstopper for visitors and gamblers to Macau!
Here goes for our Top 10:
1) We won’t see more than one new monthly gaming record
We called the MOP27bn mark for monthly GGR a year ago. We scraped the underside of that in October, at MOP26.8n. We don’t think that mark can be broken until possibly October 2012, despite recent trends in the mass market. The junkets are facing a macro picture in which their customers are grappling with a property market where transactions have fallen by as much as 70% recently, and prices are being slashed by developers in a brutal struggle for survival. Without the junkets firing on all cylinders, MOP27bn is like Mission Impossible, only harder.
2) Bad debt will be a challenge
This is not 2008 all over again. Sheldon Adelson is back in the Forbes Top 10, worth US$20bn. His company, and all the others, are well cashed-up. They could take a bad-debt hit or three. Many of the leading junkets have similarly improved their capital bases by loading up on private equity rather than debt. But little is really known of the way the junket world functions, despite the best efforts of Nick Niglio and the boys at AERL. These people, who still account for three-quarters of GGR, “own Macau” (to quote Adelson). And yet no one can reliably say how they manage their cash flows.
Here’s an educated guess: As in any industry, we see a period of consolidation for the junkets in 2012, as the good consume the bad and the ugly disappear. Relationships between concessionaires and junkets will be put to the test as this process unfolds. Once bad debt levels get to alarming levels for Western-trained casino managers, the question is whether they will pull in their credit lines, and stomach a drop in rolling-chip volumes, or accept the inevitable and write off the debt that they should have seen as a by-product of keeping Wall Street happy anyway.
3) Beijing will keep its grip on the property market, and tighten its grip on Macau
Frankly, we are surprised the Politburo Standing Committee has been able to hold its nerve this long. It’s not quite conflagration yet, but the negative effects of the country’s tight credit policy are being felt sharply across China. The SCMP had a great feature story this week about how the property market is in crisis, with the number of developers expected to be cut by a third this year as nearly a trillion yuan in private-lending loans fall due to people who cannot repay. Prices are being cut by as much as a half in cities such as Beijing and Shanghai as the survival of the fittest is played out, and hundreds of thousands of homeowners are being plunged into negative equity. Land sales have dried up, which means local cadres are having a hard time financing their development plans.
And yet there is no more than a slight change in rhetoric evident in regular dispatches from behind the walls of Zhongnanhai, plus a few cuts in the banks’ reserve ratio requirements. It is clear that the party leadership is united on the need to bring the property market under its thumb, and it may take some time yet. All of which is not good news for Macau’s VIP market.
We obviously wonder how much of this is really about bringing prices to within affordable levels for China’s middle class, and how much is about the center stamping its authority on the periphery. Regardless, we also see a year ahead in which it will be that much harder for Macau’s chief executive to get a sympathetic hearing in Beijing about Cotai land allocations or the table cap.
4) Mass will continue to grow, yet margin assumptions must change.
The equivalent of the junkets in the mass market are the travel agents. Although still smaller as a percentage of arrivals compared to FIT visitors, people who come to Macau via agents will be increasingly important as the longer-distance market grows. These agents need to be paid. But they will do their jobs well and, as long as there are enough hotel rooms available, they will continue to help grow the visitor market beyond Guangdong.
5) The opening of Lot 5 will disrupt the market.
Speaking of buying the mass market, the opening of Lot 5 in April 2012 will likely see an influx of visitors on tour groups as a big new hotel tower comes online. This is what you can do when you have around 1,200 new budget rooms and around 600 luxury rooms at your disposal: hand them out to the best-yielding suppliers. We are less bullish than many other analysts about the impact of these new rooms on gaming revenues for Sands China, simply because we think it’s harder to break a gamblers’ loyalty than it seems (as noted in the case of Galaxy Macau’s opening). However, Sands China does have an important weapon in its arsenal, which is the Venetian brand. Even without the necessary tables at Lot 5, there is still the Venetian across the road. Many predictions for what Lot 5 will do in the VIP market are way off, we believe, but the mass market will undoubtedly flock to the new property.
6) The opening of Lot 5 will benefit COD and hurt Galaxy Macau.
As noted, it takes time to build up the mass business. COD had two years to do it before Galaxy Macau opened; Galaxy Macau will have had only one before Lot 5 opens. Moreover, COD is right next door to the new hotel tower, whereas Galaxy Macau is a long walk away. The center of gravity will undoubtedly form around the other side of Cotai this year. It will be tough for Galaxy Macau’s marketing team to cope.
7) Gingrich will get the GOP nomination, thanks to who?
Newt Gingrich didn’t come up with the line that the Palestinians are an invented nation on his own, we suspect. We don’t really care what his views on the Middle East are, to be honest, but we do care about what he might do to the balance of power between the US and China if he somehow makes it all the way to the Republican Party nomination for the US presidential election. With a certain person’s financial backing, that seems eminently more possible in 2012 than it was in 2011. But that certain person will also make it more likely that the incumbent and his Democratic Party choose to make China the central issue of the presidential election. Would that be good for Macau’s American concessionaires, and one in particular? Hard to imagine, but it might be worth the gamble for a certain person, because if Gingrich somehow makes it all the way to the White House, then the ball game would likely change for him in Macau overnight.
8 ) Jacobs will get his day in court, the question is when
There is little doubt that 30GB of data means the lawyers will be making all the money in 2012 as their billable hours stack up while they wade through tens of thousands of documents submitted into evidence by former Sands China CEO Steve Jacobs against his former employers. But it also means, to our educated guess-prone minds, that he must be pretty confident of having his claims verified. The only question is whether Judge Gonzalez wants to get Jacobs in court and be done with it asap, or whether she will keep allowing the case to be dragged out.
9) SJM will wake up and get moving
SJM management used to take delight in pointing out that Sands China was building on quicksand out in Cotai, and that real gamblers still preferred the peninsula. That complacency cost it dearly when the Venetian opened. Nevertheless, after a few years of struggle, the former monopoly operator regained the upper hand and widened its lead over the upstart. But as 2012 approaches, it is becoming clearer again that Lot 5&6 will tilt the playing field back in Sands China’s favor. Only this time around, it’s obvious that SJM’s brain trust are no longer resting on their laurels. In short, we expect to see SJM move aggressively against its American rival in the coming year.
10) Manila will be on everyone’s radar
A third regional force will arise in the gaming industry in 2012, led by Filipino tycoon Enrique Razon, who has employed an all-star cast to open and manage his new Bloomberry integrated resort in Manila Bay. Bill Weidner, Brad Stone, and Garry Saunders are obviously determined to show that the success of Sands China in Macau and Marina Bay Sands in Singapore wasn’t only due to the chairman’s vision. They have hired an exceptional team already, including Dennis Andreaci and Joe Valdez (who helped get Galaxy Macau open), and we understand one of the best senior executives in Macau, who has been hibernating for the past year, will run the property.
They will be joined in the neighborhood by the Henry Sy-owned integrated resort run by another former Galaxy stalwart, Ciaran Carruthers.
Will Galaxy’s loss be Macau’s loss as well in 2012? It’s hard to make predictions now about the impact of these two new resorts opening in Manila, which is not exactly known as a Chinese tourist-friendly destination. But if the brain drain is any indication, it ought to be competitive.
And that’s it for 2011, folks. As always, please stay tuned, and here’s wishing you all the best for 2012 and beyond. Used with permission and copyright IntelMacau.com.
I received an exciting email from David Sofer telling me that Master Zuan Xin materialized briefly earlier this month in Macau from his Confucian Analects translation project to play an exhibition shoe. Such wonderful news and to hear and see Zuan Xin fought another Baccarat fight! Sure was great that The Queen of Clubs was there,too!
We have the great fortune to have exclusive account from The Queen of Clubs on Zuan Xin’s demonstration of the advance learning of Baccarat Great Learning: the XuXu Siyou.
Click here for a special report of that day where we learn to become one with Zuan Xin’s teaching for 11/11/11 and beyond!
Photo used with permission and copyright Galaxy Macau Entertainment
I really like the look and feel of the Galaxy Macau experience. The design is on par with expectation of such a mega resort and here are some photos I took during a brief visit on a hot August afternoon. This is another children friendly casino-resort and you can see many families check-in for the last weekend of the summer holidays.
Also, Galaxy Macau hosts the recent Volleyball World Grand Prix featuring the 8 strongest teams of USA, Japan, China etc. I even catch the Team USA volleyball athletes walking in the lobby from their lunch. Within less than 50 days of openings, report that this establishment already commands 20% of the gaming market. This is simply incredible!
Main lobby with a gigantic ice-sculpture fountain for regular show times
The pretty Galaxy Macau guest relation ambassador
The first information just arrived from the Lion City of Singapore! In this lesson, we get to hear from MiZi, an American born Chinese who seems to have found his Queen of Diamonds and she recruited a group of beauties that must turn the heads of everyone at the casinos here. Study the three shoes that was played within the three hours and the victorious results using Xuan Zin’s Baccarat Great Learning. Go to Lesson 31 now.
Photos used with permission of Galaxy Entertainment Group Limited.
We told you all how much we liked the hardware of Galaxy Macau the day before it opened. We were still, however, reserved in our expectations for the actual opening, mainly due to the inexperience of the management team in the mass market. We were again surprised on the upside.
Indeed, in our humble opinion, this was the smoothest, most efficient opening of a mass-market property since Wynn Macau opened in September 2006. Don’t even mention COD, which was plagued on opening day by dealer mishaps that required repeated surveillance reviews. Nor even Venetian, which caused such chaos outside the property on day one that people ended up walking all the way back to Taipa in the scorching summer heat. Grand Lisboa? Not bad, but the paint was still drying when the doors opened. Crown Macau? It still provides the template for properties opened several months too early.
Galaxy Macau’s opening wasn’t perfect. The cage was inundated – we ourselves were unable to cash in the Lui family’s generous donation to our family’s college education fund from their blackjack tables, and so will have to return today in hope of shorter queues. Some of the dealers were extremely nervous, and many of the pit bosses seemed a year or two out of high school.
But it was damn close. Here is what we liked the best:
1) Traffic management. As mentioned by numerous analysts already, GM is a very well-designed property. Foot traffic flows easily and sensibly. All the way in, through, and out again. The buses were particularly well-managed. But what really got us were all the extra hands on deck to ensure safety and ease of movement of people. Someone thought this all through very carefully, right down to having porta-potties available for those people who queued up outside hours before the doors opened.
2) Restaurant and drink service.
We went to the noodle bar closest to the front of the casino. The staff were courteous and very efficient. This was clearly a place that had been going through serious drilling for days, perhaps weeks, prior to opening. Before that, we had ordered some beers at the blackjack table and they were delivered quite promptly, which was surprising given that most Chinese gamblers don’t mix alcohol with business. The only place where we heard whining about slow drink delivery was the Macallan Bar, but we discounted that because the room was full of executives from other casinos.
Photos used with permission of Galaxy Entertainment Group Limited.
3) Loyalty-card promotions.
At every table, the dealers and pit bosses were well-trained to push the Galaxy loyalty-club cards. We don’t see the same energy put into marketing cards at the dealer level by established casinos around town. Maybe it was opening day, but still …
4) The guest list.
It says a lot about the efficiency of a property when you go to its opening party and see who else is there. Never mind Ho Hau-wah and Tung Chee-hwa flanking Chui Sai-on up on the main stage (though that did get our Portuguese lawyer friends cracking some funny speculative jokes). Galaxy didn’t need a Tony Leung-type celebrity this time around because they could pull on the strength of their own guanxi. That showed us how good the people are running PR, government and community relations.
Now, one might argue that perhaps we shouldn’t have been so surprised about some of it. Dennis Andreaci is obviously the go-to guy for opening big casinos, having done so many of them now. He should offer a diploma course in how it’s done. Heinz Roelz is a master of hospitality, and he has some talented guys running the hotels and food and beverage outlets, including Paul Town, who opened the COD hotels, and Michael Au, who was the longtime lieutenant of Allan Ho, king of the Michelin-starred restaurants in Macau.
But the guys who we think deserve to take a really big bow today are those who made this all possible by hiring the talent in the first place. Yes, they were fortunate in having a boss who knows, like Steve Wynn, the importance of getting it right on opening day even if you have to wait a bit longer to open the doors – he could have forced his frontline staff to open before the May 1 Golden Week. Nevertheless, this was a major human-resource effort in the middle of the tightest labor market on record and one that, to be frank, we were raining on a few months ago by listening to silly gossip that suggested they were way behind on the recruitment goals and schedule. So Trevor Martin and Liviano Lacchia, please accept our humble apologies and take the credit you are due.
Now let’s wait and see how Lady Luck treats Galaxy Macau. Used with permission & copyright to IntelMacau.com
Photos used with permission of Galaxy Entertainment Group Limited.
We don’t usually write on the weekends, but we will make an exception today for Galaxy Macau, because we can’t remember the last time we felt so excited about a new property opening in Macau.
Oh, wait, yes we can: when the Venetian opened almost four years ago. The newest addition to the Taipa Strip opens its doors officially only tomorrow at 5pm Macau time (GMT+0800). But media have been given a sneak peek these past two days, and we sneaked in with them. Yesterday was spent touring the property and listening to briefings; today was spent shaking off the cobwebs after a night around the pool deck and in the Macallan Bar.
We have been trying to come up with clever, witty descriptions of the place. Unfortunately, all we can produce is this: If we had to imagine a perfect product being brought to market in Macau right now, this would be very, very close to it. Let us count the ways.
1) It makes even the Venetian look tired in the gee-whiz stakes. First impressions are everything in this business, which is something the Venetian did brilliantly when it opened in August 2007 and City of Dreams did terribly in June 2009. Galaxy Macau knocks both of them out of the park the minute you roll up to the massive front doors. The chandeliers, the marble, the glass, the colors, the design — everything about the place reminds you of other properties in Macau, only bolder and better.
2) It has learned well from the success and failures of others. Everywhere you walk in this property, you see glimpses of its competitors. Wynn is in the music and the chairs. Grand Lisboa is in the pragmatic use of space and the chandeliers. Venetian is in the vast expanse of the gaming floor and the photo-op backdrops. City of Dreams is in the boulevards that house the restaurants and a few shops around the casino. But at each turn and in each instance, you get the feeling that the developers of this property had time on their hands, and they used it well. The entrance is more gob-smacking. The layout of the floors is more varied, both vertically and horizontally. The mixture of restaurants is cleverer. The size is large but not overwhelming or disorientating. Everything seems to have been put together in just the right portions and proportions. And there is new stuff where the owners clearly went out and asked their prospective customers what they like and dislike before deciding to do it.
3) It’s an integrated resort. There is so much variety under the roof here that we have to wonder why anyone would want to go elsewhere once they walk in the door. The ladies in kimonos at Okura. The pool villas at Banyan Tree. The Starworld-templated rooms at the Galaxy Hotel. The top deck, which looks like something right out of Bali rather than a few sandpits and pools in among airconditioning vents. The 52 restaurants, covering everything from McDonald’s to the finest of fine dining, which absolutely blow their neighbors away for choice and quality. The high-limit table and slot areas on the main gaming floor, which are raised a few feet above the rest in order to seem like exclusive alcoves. The Macallan Bar, which has a whisky list as long as the Lisboa’s wine directory. The China Rouge, a high-end nightclub that will open in another month or two. The 3D cineplex that will open later this year. And so on. There appears to be something for every segment of the market above the HK$100 minimum bet entry point.
4) It has just enough for now. There is no concert hall, no mammoth shopping mall, and no cavernous exhibition center. But there is a huge piece of land out back where such things could be built once the market has shown it can support them for more than three or four days a month. Now that the Venetian’s malls are doing so well, we are hearing noises about Phase 2 having a mall. As the Lui family has always made clear, since the very first time we interviewed Francis, this is not a build-in-and-they-will-come company. The US$2bn they spent on this property is about two-thirds of what COD cost and about half of what the Venetian-Four Seasons complex cost. We think it will do more in revenues than either of them in its first 12 months. (Ebitda remains to be seen.)
5) The VIP facilities will take Galaxy’s junket partners to a new level. Forget Paiza. Seriously. Sun City has a room right off the main lobby, with an ascending staircase that leads to a well-signposted entrance. All the big operators in Macau are here, in rooms that were designed to help them gain face with the high-rollers who like to play at a variety of places. Unlike at Wynn, where the Dawei room looks like a Wynn room and the Dore room looks like a Wynn room, these rooms look like Neptune Galaxy rooms and Sun City Galaxy rooms and …. you get the drift. Some of them have private spa facilities next to the baccarat tables. Indeed, Macau has a new must-play attraction for anyone who considers themselves a big shot. Master designers might quibble with comparisons to Encore on the quality of finish in these rooms, but it’s close, and the luxury of the accommodation at Banyan Tree and Okura will be hard to beat for its Cotai rivals.
Who to credit for this achievement? Well, there were obviously a lot of hands that went into creating this product. But the name that keeps coming up is that of the boss. To call Francis Lui a hard-driving micro-manager would be an understatement, and we can certainly say from first-hand experience that the man seems tireless. But what clearly stands out in this product, as compared to StarWorld, is that he has come a long way in evolving his own understanding of what an integrated resort needs in order to be successful in this market. From the color of the table tops to the shape of the walkways through the main floor, his fingerprints are everywhere, staff assure us. We find it easy to believe. Asia’s Steve Wynn? It might well be a moniker that sticks after this resort opens. And he’s just getting started on the biggest single piece of real estate in Cotai. Stay tuned for more. Used with permission & copyright IntelMacau.com
PokerStars Macau at Casino Grand Lisboa hosted the Macau Millions 2011 from April 2-10 and the tournament may ultimately be regarded by historians as one of the monumental landmarks for poker in Asia.
The Macau Millions had a staggering 1,329 entries for the HKD $2,200 buy-in event which created a prize pool of HKD $2,631,420 — smashing the HKD $1,500,000 guarantee and becoming the first venue in Asia to break the 1,000-entry mark.
The historical event was won by Chinese Taipei’s Hung-Sheng “Shaq” Lin who was awarded HKD $400,000 for his triumph.
A day before the final numbers were determined, Danny McDonagh said, “I was quietly confident about reaching 1,000 players but with a total field now possibly hitting 1,300, this has exceeded our wildest expectations!”
“This year the popularity of the Macau Millions is so much greater, particularly within the region.” continued the PokerStars Director of Live Operations for Asia-Pacific. “Poker is really taking off in Asia. It’s a proud moment for our PokerStars Macau team and speaks volumes about Grand Lisboa’s well deserved reputation for quality and success.”
Sunday’s Day 3 final began with 34 players. Shaq and German Khiem Nguyen was jousting endlessly as they remained amoungst the chip leaders throughout the day.
The duel would continue during final table play and set up the turning point of the tournament. There are 3 players left and blinds are 50,000-100,000, with a 10,000 ante. Nguyen raises to 250,000 on the button and France’s Brice “Pada” Renaud folded his small blind. However, Lin decided to raise to 605,000 which was called by the German.
The two biggest stacks received a flop of Th-3s-As and chip leader Lin opened for 850,000. Nguyen then proceeded to move all-in and after slight hesitation, the call was made.
Nguyen showed Ts7s for a pair of tens with a flush draw. Lin held Ad6s for top pair. The turn and river blanked out and that elimination gave Shaq a 6-to-1 chip advantage going into heads up play with Pada.
“That hand where I was up against the pair and flush draw was the most important one for me.” said Lin through a translator. “The player to my left (Nguyen) was the biggest threat throughout the day. He played very well.”
Shaq vs. Pada didn’t last long as the first hand was also the final hand. A short stacked Renaud decided to re-raise for all his chips holding K6 but was quickly called by Lin who had pocket Jacks. The Jacks held and Lin becomes the Macau Millions 2011 champion.
Asked how it felt to win, the 29-year old poker pro responded “I’m very happy but also very tired. I didn’t sleep last night because I was so excited about today.”
Photo used with permission & copyright of Poker Stars Macau
