Galaxy Entertainment Group CFO Bob Drake is now officially a veteran of the media game. For a guy who was camera-shy in the extreme a few years ago, he now knows how to handle the press corps with aplomb. The latest example of this was his interview with Bloomberg, in which he confidently predicted the Galaxy Macau resort would be paid off in six years and, if current trends continue, the group will “announce (expansion) plans sooner rather than later”. In other words, stew on that, all ye skeptics: we’re open barely a month and I can already call out where exactly we are going to smack this pitch over the fence.
We admire the big guy’s bravado. We also think he’s on the right side of history. If we were Galaxy, we would be building like crazy while we still can and our competitors cannot. While the guys at Wynn, MGM and SJM fume over their land allocations, every day counts on Cotai.
Here is what we see. The group doesn’t face concerns (in our opinion) about license renewal after 2022; it has a massive land bank; the GGR forecast needle is pointing firmly upwards; and even if the table cap stays in place, if Galaxy can get construction on Phase 2 going fast enough, it might just be able to steal the march on others like Macao Studio City and Sands China’s Lot 5+6 when new tables are allocated after 2013.
What does Galaxy need? Duh! It needs more rooms. Even once the rest of the Galaxy Macau hotel rooms come online in a few months, the resort needs more, and more affordable rooms on its land bank. Getting day-trippers is the easy part: overnight guests are where the juiciest apples are – but they are a bit higher up the tree.
And it needs shops. Maybe an entertainment center, but a multipurpose one rather than a custom-built (and expensive) one. And something cultural, to please the Mandarins from Beijing. But that should be enough, for now.
