Big projects ahead, Galaxy still backs govt controls

Friday, June 20, 2008
Issue 380, Page 1 & 3
Word count: 845
Published in: Macau Daily Times

By Poyi (Natalie) Leung

The Macau government’s plans to curb further casino developments and the mainland’s tougher issuance on travel permits “are not a great concern” for Galaxy Entertainment Group which has officially announced yesterday a deal to launch a jumbo VIP room at StarWorld Casino soon.

The statement was made by top executives of Galaxy including chairman Dr Che-woo Lui and his deputy Mr Francis Lui at the press conference after their annual general meeting in Hong Kong yesterday.

Galaxy registered HK$1.83 billion in total revenue in the first quarter of this year, a 28 percent increase from HK$1.43 billion over the same period of 2007.

Of this, the VIP gaming revenue also jumped nearly 49 percent quarter-on-quarter to HK$1.4 billion.

According to Group Chief Operating Officer, David Banks, the VIP sector is a “very important market especially in Macau” as reflected in the company’s result, adding Galaxy is “very happy” about their VIP positioning in the region.

Galaxy announced yesterday an agreement has been reached with a “leading” junket operator to launch a 100-table mega VIP room on the third floor of StarWorld Casino.

However, the group declined to disclose any further details about the operator at this stage.

Chairman of the Group, Dr Lui, said the deal is expected to “significantly boost Galaxy’s EBITDA [Earnings Before Interest, Taxes, Depreciation and Amortisation] and return on investment”.

Although deputy chairman Mr Lui said mainland China was “undeniably” a huge source for the VIP market, he affirmed that Galaxy will not overlook customers from Southeast Asia such as Japan, Korea, Hong Kong and Taiwan which will be the Group’s target market for their developing mega resort in Cotai.

Tourists from Guangdong province who wish to travel to Macau on the Individual Visit Scheme can no longer come as frequently as they used to and visa applications are now being restricted at one-month intervals.

Mr Lui said, however, it is a “positive” move of the Chinese government in order to ensure a sustainable and healthy development of Macau’s gaming industry.

“We don’t need to be too worried [about the visa restrictions]. The central government wouldn’t have let us liberalise the market if they were really planning to suffocate our development,” the deputy chairman said.

As for the SAR government’s recent announcements to freeze new casino development and to propose a 1.25 percent cap on junket commissions, both Galaxy’s chairman and deputy chairman are “fully supportive” of the “forward thinking initiatives”.

“A reasonable commission rate has to be established, and a 1.25 percent is a good start,” Mr Lui said, “but I will want it to be set even lower later in the future”.

He told the Macau Daily Times junket promoters used to receive 0.9 percent commission of chip sales in the very beginning, but he quickly added that it is “justified” for casino investors to acquire a “reasonable profit”.

Mr Lui also said he believes the six concessionaires and sub concessionaires will value what they have achieved through putting in tremendous effort and investment over the past five years and thus will coordinate well among themselves to ensure a stable growth of the industry.

Cotai mega resort

The Group also announced to the media yesterday the phase one construction of the Galaxy Mega Resort project is in “solid progress” with the opening expected to be due in mid 2009.

Francis Lui said StarWorld, because of its central location and limited areas, targets mainly high rollers, whilst the Cotai development with more comprehensive facilities will aim to become a “resort destination” for families who are after non-gaming entertainment and leisure.

Galaxy has signed agreements with an Asian resort hotel operator, Banyan Tree as well as a leading hotel brand in Japan and Korea, Hotel Okura for the Cotai property.

According to a company press release, Banyan Tree is experienced in operating spas facilities around the world. Its hotel property in Galaxy Mega Resort will house 238 luxurious suites, 16 floating villas with private pools and cabanas, as well as a specially designed world-class spa featuring a variety of treatments and therapies.

Meanwhile, Hotel Okura, which is renowned for its hospitality and luxurious guest services, will manage a hotel with about 410 five-star rooms in area 1 of the mega resort.

Chairman Dr Lui said in order to maintain a healthy growth of Macau and to stay competitive in the industry, more diversified types of entertainment and leisure should be developed, adding more facilities that suit Asian people’s taste will be announced in the future.

Although the Venetian Macau has brought in Cirque du Soleil, Francis Lui said Galaxy is looking at a “slightly different direction” which is a “leisure hub for families”.

“Whether a big show that cost you 800 patacas for a ticket is going to be welcomed by most of the visitors in Macau remains to be seen,” the deputy chairman said.

Mr Lui added that the Group’s financial status is “healthy” to support the full development of the mega resort, and they will be starting to hire about 5,000 staff for the Cotai property early next year.

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