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Owners of Macau's newest casino resort hope 350 tons of beach sand, a rooftop wave pool and an emphasis on "Asian hospitality" will win them a bigger piece of the world's largest gambling market.
On Sunday, Hong Kong-listed Galaxy Entertainment Group Ltd. opened the doors of Galaxy Macau, a $2 billion casino complex with 450 gambling tables that will have 2,200 hotel rooms and more than 50 food and beverage outlets. The new resort will ramp up competition with Las Vegas Sands Corp., which runs the Venetian Macao resort down the road, and give Galaxy a head start on rivals Wynn Resorts Ltd., MGM Resorts International and SJM Holdings Ltd., all of which plan to build casino resorts in the area.
The ribbon was cut at a ceremony attended by the who's who of Macau, including top government officials and executives of rival casino operators—as well as lion dancers and women dressed as peacocks.
The Galaxy Macau is the industry's latest effort to tap into the surging growth of gambling in Asia. With gambling revenue totaling nearly US$10 billion the first four months of the year, the special administrative region of China is on track to generate five times the gambling revenue of the Las Vegas Strip in 2011. Analysts are predicting Singapore, which welcomed its first casinos last year—including one built by Las Vegas Sands—could overtake the Strip this year.
The new property will be a major test for the family of Lui Che Woo—the Hong Kong billionaire who controls Galaxy Entertainment. The Lui family, who initially made their fortune in the construction business, entered the gambling industry in 2002 when they won a license to operate casinos in Macau.
Until now, StarWorld on Macau's casino-filled peninsula has been the company's key asset. The property is highly profitable but has few facilities other than a casino and hotel. It has generated much of its business through deals with junket operators—the middlemen who recruit high rollers from mainland China, lend them money to gamble and collect debts.
Galaxy's Cotai property will be the company's first significant attempt to court mass-market customers, a strategy which yields better margins because it enables casinos to bypass hefty junket-commission fees. And it will be Galaxy's first try at running a resort of such a massive scale and scope.
The new project could also bolster industry efforts to develop Macau's Cotai region, a barren stretch of landfill that gambling companies and local officials hope will someday have enough entertainment offerings and retail space alongside gambling tables to become Asia's version of the Strip.
Current casinos in Macau include the Venetian Macao—the world's largest casino by floor area which opened in 2007—and City of Dreams, owned by Hong Kong-Australian joint venture Melco Crown Entertainment Ltd., opened in 2009.
The market looks set to get more crowded in coming years. Wynn Resorts Chief ExecutiveSteve Wynn said in an interview Saturday he expects to get land rights for his project in Cotai "imminently" and to open the property by 2015. Final sketches of the sleek building, which he said he drew himself, were on his desk. "It's embracing, it's female, it's reaching out to hug you," he said of the design.
Macau kingpin Stanley Ho's SJM Holdings Ltd., which is the territory's largest operator by revenue, and a joint venture including MGM Resorts are also awaiting land grants for their projects in Cotai. And Las Vegas Sands hopes by next year to complete a more-than-$4 billion expansion project across the street from the Venetian Macao.
To stand out, Galaxy is putting a special emphasis on what it calls Asian tastes at its new resort, as nearly 98% of the territory's visitors are residents in the region, according to government statistics. Galaxy Macau features Asian-branded hotels such as Singapore-listed Banyan Tree Hotels & Resorts and Japan's Okura Hotels & Resorts. It also claims to have Macau's widest selection of pan-Asian cuisine.
A focus on Asian culture isn't a surefire recipe for success or the only way to succeed. One of Macau's best-known properties is the Western-themed Venetian Macao, which tries to bring Italy to its customers, including gondolas captained by men in black and white striped shirts in a man-made canal. The Venetian Macao accounted for $638.3 million, or 30%, of Las Vegas Sands's $2.11 billion net revenue for the first quarter though it is just one of the company's eight properties.
City of Dreams has seen its business surge after a slow opening, with Nomura analyst Charlene Liu calling it "a key turnaround story" in Macau. Still, the Venetian's adjusted property earnings before interest, taxes, depreciation and amortization—an important performance metric in the casino industry—was nearly two and a half times that of City of Dreams' in the fourth quarter of 2010.
On Sunday, Hong Kong-listed Galaxy Entertainment Group Ltd. opened the doors of Galaxy Macau, a $2 billion casino complex with 450 gambling tables that will have 2,200 hotel rooms and more than 50 food and beverage outlets. The new resort will ramp up competition with Las Vegas Sands Corp., which runs the Venetian Macao resort down the road, and give Galaxy a head start on rivals Wynn Resorts Ltd., MGM Resorts International and SJM Holdings Ltd., all of which plan to build casino resorts in the area.
The ribbon was cut at a ceremony attended by the who's who of Macau, including top government officials and executives of rival casino operators—as well as lion dancers and women dressed as peacocks.
The Galaxy Macau is the industry's latest effort to tap into the surging growth of gambling in Asia. With gambling revenue totaling nearly US$10 billion the first four months of the year, the special administrative region of China is on track to generate five times the gambling revenue of the Las Vegas Strip in 2011. Analysts are predicting Singapore, which welcomed its first casinos last year—including one built by Las Vegas Sands—could overtake the Strip this year.
The new property will be a major test for the family of Lui Che Woo—the Hong Kong billionaire who controls Galaxy Entertainment. The Lui family, who initially made their fortune in the construction business, entered the gambling industry in 2002 when they won a license to operate casinos in Macau.
Until now, StarWorld on Macau's casino-filled peninsula has been the company's key asset. The property is highly profitable but has few facilities other than a casino and hotel. It has generated much of its business through deals with junket operators—the middlemen who recruit high rollers from mainland China, lend them money to gamble and collect debts.
Galaxy's Cotai property will be the company's first significant attempt to court mass-market customers, a strategy which yields better margins because it enables casinos to bypass hefty junket-commission fees. And it will be Galaxy's first try at running a resort of such a massive scale and scope.
The new project could also bolster industry efforts to develop Macau's Cotai region, a barren stretch of landfill that gambling companies and local officials hope will someday have enough entertainment offerings and retail space alongside gambling tables to become Asia's version of the Strip.
Current casinos in Macau include the Venetian Macao—the world's largest casino by floor area which opened in 2007—and City of Dreams, owned by Hong Kong-Australian joint venture Melco Crown Entertainment Ltd., opened in 2009.
The market looks set to get more crowded in coming years. Wynn Resorts Chief ExecutiveSteve Wynn said in an interview Saturday he expects to get land rights for his project in Cotai "imminently" and to open the property by 2015. Final sketches of the sleek building, which he said he drew himself, were on his desk. "It's embracing, it's female, it's reaching out to hug you," he said of the design.
To stand out, Galaxy is putting a special emphasis on what it calls Asian tastes at its new resort, as nearly 98% of the territory's visitors are residents in the region, according to government statistics. Galaxy Macau features Asian-branded hotels such as Singapore-listed Banyan Tree Hotels & Resorts and Japan's Okura Hotels & Resorts. It also claims to have Macau's widest selection of pan-Asian cuisine.
A focus on Asian culture isn't a surefire recipe for success or the only way to succeed. One of Macau's best-known properties is the Western-themed Venetian Macao, which tries to bring Italy to its customers, including gondolas captained by men in black and white striped shirts in a man-made canal. The Venetian Macao accounted for $638.3 million, or 30%, of Las Vegas Sands's $2.11 billion net revenue for the first quarter though it is just one of the company's eight properties.
City of Dreams has seen its business surge after a slow opening, with Nomura analyst Charlene Liu calling it "a key turnaround story" in Macau. Still, the Venetian's adjusted property earnings before interest, taxes, depreciation and amortization—an important performance metric in the casino industry—was nearly two and a half times that of City of Dreams' in the fourth quarter of 2010.
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