The 15th May unveiling of Galaxy Macau marks a milestone in the development of integrated resorts in Macau
The shimmering Galaxy Macau facade, adorned with its distinct gold cupolas, stands in marked contrast to the exteriors of its two Cotai neighbours—Venetian Macao and City of Dreams. One reporter unkindly likened the former structure to a “giant penitentiary”, while the latter has a distinct contemporary office-tower look to it, especially when the lights are switched off during the daytime.
“We wanted to have a facade that when people look at it, their first reaction is ‘this ia a destination resort’,” remarks Francis Lui, deputy chairman of Galaxy Entertainment Group (GEG). “One look at the building, you know that this is a resort. There’s some uniqueness to it.”
The property’s uniqueness flows from the facade to the small details, and is imbued by GEG’s “World Class, Asian Heart” philosophy. GEG opted to offer Asian, rather than Western, hotel brands at Galaxy Macau. The property’s combined 2,200 five-star rooms, suites, and villas are distributed across the internationally renowned Banyan Tree and Okura brands, as well as GEG’s own Galaxy Hotel. The Hotel Okura Macau is Macau’s first Japanese hotel brand, and Mr Lui hopes it will drive greater visitation from North Asian customers.
Another differentiator is Galaxy Macau’s centrepiece attraction, the 52,000-squaremetre rooftop Grand Resort Deck, where a 350-ton white sand beach surrounds the 4,000-square-metre Skytop Wave Pool, and which“offers guests the ultimate in relaxation amidst an enchanting network of swimming pools, luxurious bungalows, soaring palms and lush tropical gardens.” The outdoor Grand Resort Deck stands as a distinctly different attraction to the Venetian’s indoor canals and the ‘House of Dancing Water’ show at City of Dreams.
Galaxy Macau’s differences continue through to the pan-Asian selection of F&B outlets, the bright lighting in the main casino floor and even the diverse selection of slot games.
GEG has been operating in Macau since 2004, and its brand identity really began to emerge in 2006, when it opened its hitherto flagship property in the city, StarWorld Hotel and Casino. Owing to StarWorld’s small footprint, however, GEG’s brand-building to date has largely been driven by its strong service mindset and relationship building skills. Galaxy Macau finally provides the platform for the company to convey its broader identity.
The HK$14.9 billion (US$1.9 billion) Galaxy Macau has been shaped by GEG’s determination to “give our customers what they want,” states Mr Lui, “whether they are the mass market, hotel guests, diners, or our VIP guests. We want to make sure we not only give them what they want, but also to anticipate what they may want in the future. Saying ‘these are our customers over the next five years,’ and asking ‘what do we need to do in order to keep them coming back to us?’
“It starts from knowing your customer well. I have been working in China since 1985, so I keep saying that if there is a person in Macau who understands what the Chinese customer will look like in the next five or ten years, it is probably somebody like me, who has been there doing business in China, seeing them evolving.
“The product was designed in such a way that we are not going to be obsolete in five or ten years’ time. If you look at some of the properties that have been built in Macau recently, some of them might have a problem five years in the future, especially the ones built with a more gaming-focused design. I think the customers will evolve so that they prefer a more integrated and wholesome experience.”
Inside Asian Gaming caught up with a very busy Mr Lui ten days on from the Galaxy Macau opening, and spoke to him about the overwhelmingly positive reaction to the property and his prognosis for the Macau gaming and leisure market.
IAG: Although it’s early days yet, the initial results a week after Galaxy Macau opened seems to suggest it has expanded the overall market, rather than cannibalising other existing properties.
We would like to think so. The first week has been very encouraging.
There’s something I’d like to emphasise. We are not concerned about market share. Our emphasis has always been on creating a new market, and hopefully the customers are going to stay longer. This way there will be enough money for six of us to continue to be profitable. And this is the only way to do it.
If we create an environment that attracts customers from all walks of life to come enjoy the experience of Macau, it’s good for Macau and good for the industry. Cannibalisation—trying to take market share from other people—is the wrong approach. We are happy that we’re part of the industry, we’re happy we’re going to grow the market, we’re happy we’re bringing new and different products into the place, and attracting people from different walks of life to come stay with us. The next thing we’d be looking at is to extend the stay of the customers here.
Right now it’s about 1.5 days. In Vegas it’s about 3.6, in Hong Kong 3.5, Singapore 4.2. So there’s still a lot of potential for us to make the customer stay longer.
What would you like to see the other operators do to help extend the stay of visitors in Macau?
I’d like them to bring in new products. We are not coming in with the intent of competing with the others with the same product. We are coming in here with a different positioning, different product, and hope that again our competitors in this industry would be able to see and learn from that as well.
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You seem to have accomplished a lot with the money you spent on this property.
I can say with confidence we’ve spent our money well. Every dollar and cent that we spent makes an impact. A lot of people ask me, ‘how did you do this with this sum of money?’ Everybody is just overwhelmed by the kind of experience we’ve created, considering the money we invested. And at StarWorld we did the same thing. We spent only HK$3.4 billion (US$436 million), and created the casino with the third highest turnover in Macau. Dollar for dollar, we have been fighting above our weight at StarWorld. And I’m sure you will find the same thing happens here [at Galaxy Macau]—that we will probably be fighting above our weight in terms of dollars invested.
Return on investment is something you always emphasise. How long do you think it will take to recoup your investment in this property?
We’re confident that we will give our shareholders a very satisfactory return, as we did at StarWorld. At StarWorld, our return on capital I believe was in the seventies range. We have high hopes for this one, but it’s still early days for us to be able to predict how much margin we’re going to make.
With this casino the key is we have put a lot of emphasis on the mass market, while StarWorld is more VIP-centric. So the return we are going to make here we believe is going to be substantially better than at StarWorld, simply because this is mass market driven [where margins are significantly higher].
Although Galaxy Macau is mass market focused, the VIP rooms and sections have been carefully planned and beautifully executed. Did you work closely with your VIP operations partners in coming up with the layout and positioning of the rooms?
We are a learning corporation. We listen to everybody. We listen and see what our competitors are doing. And we talk to our customers, especially VIP operators, on a frequent basis to understand what they need.
What kinds of entertainment do you plan to bring to Galaxy Macau?
In the long term, we would like to do bigger things in entertainment. But I want to start a little bit smaller and experiment, leading to bigger things. Because we still need to explore what types of entertainment will appeal to Asians. What works in the Western world, if you just basically transfer it to Macau, I think it will be challenging. So we want to take a bit more of a prudent approach to it, and we would probably see a little more how the market develops in future before we take a big step. You could be lucky, but you could be unlucky too. If you pour let’s say HK$1.5 billion dollars into an entertainment venue, you’ve got to be right. So although we have the financial muscle to be doing it, we want to test the market a little bit first, before we decide to do anything major.
What is the most important thing to be mindful of when operating in Macau?
You are always an invited guest in Macau. You have to show respect, and you also have to help the community in general. This is why you see Galaxy in the last couple of years engaged heavily in community work.
You are well known for your humility—something some of the other casino operators in Macau might be lacking, especially in their dealings with business partners and the local government.
In the casino industry, as you know, we have a lot of very big personalities. But Galaxy and I came into the industry from very humble beginnings. I had a clean slate. I wasn’t even in the industry eight years ago. So I came with Asian heart, I came here to learn, respect other people, and see what I can do to integrate all the lessons I learnt into my own creation.
Really it’s up to our clients, our friends, and business associates in the industry to let us know whether we’re doing a good job Even though we have achieved a lot with this product, I’m still driving myself and my executive team to get better.
Your father, Dr Lui Chee-woo, set up the first K. Wah company in Hong Kong in the 1950s, and the group has grown into a multinational conglomerate covering construction materials, property development, hotels and entertainment and leisure. What did your father teach you about business?
My father told me the best management style is probably to blend a Western management style with Chinese culture. And I think we have achieved that, both in the larger K. Wah Group, where we have a mixed bag of people coming from Australia, Singapore, Malaysia, China, Hong Kong, Macau, America, coming together to work as a team.
I was born and raised in Hong Kong, but I went to school in the US. So I know a little bit about how American people think, and understand Western style management, but I’m still Asian at heart.
I consider Macau my home turf, and in this part of the world, I know the customers, I know the place, I know the government, I know the people, much better than many of the others. I’ve been doing business in China since 1985, and our family has been doing business here since 1955, so all that actually plays to our strong suits.
The only thing we didn’t have when we came to this market is gaming experience. But why did the government at the time choose Galaxy? We have Chinese experience, we run the construction business and real estate business, and we run a big time hotel portfolio as well. The reason in eight short years we’ve been able to be successful is because we can build property economically, quick enough, and we hit the positioning right.
If we didn’t have gaming experience ourselves, take a look at how many people we hired from overseas to come and work for us to fill the gap. I’m a good listener, so if I’m not that good at gaming, I’m prepared to listen to what other people suggest to me.
Gaming can be learnt, but perhaps relationship building is something much harder to learn.
The VIP business is all about servicing and customer relations. We handled that well in our VIP business, and now we are about to prove that in the mass market, we will be as successful. Only time will tell, but we are quietly confident that with our capacity and our service mindset, we should not be doing too badly.
What are your expansion plans?
We want to be the leading gaming corporation in Asia. We have the biggest land bank on Cotai, and Macau is still going on this explosive growth curve. Everybody wants to be in Macau, so I’m fortunate enough to have the best piece of land in Macau right now, and for the time being we will be focused on making sure Galaxy Macau works, and then we will plan for the future
I continue to believe that Macau will be the only city in China that will allow gaming in the future. This is why we’re so optimistic about the future of Macau, as long as we can continue to evolve, diversify and live up to expectations. Macau is going to be the world leading leisure, recreation and entertainment centre. Macau’s future is limitless. But apart from that, I’d be very interested in a big marketplace such as Japan, and also in Taiwan. These are the usual suspects [for future gaming expansion] that everybody should be interested in, including Galaxy.
Can Macau’s infrastructure support Galaxy Macau’s ambitions?
I think the government is acutely aware of the pressure. Visitation in Macau reached almost 25 million last year, and it continues growing. This year, to date, it’s been growing at least 15-20% year on year. So there’s great pressure on the infrastructure, but I understand that the central government, the Guangdong government and the Macau SAR government are all doing the best they can to improve it. We understand the [Hong Kong-Macau] bridge will be built, the Lotus Bridge depot will be enlarged, there are plans to expand the airport, and the high speed train is coming.
It is an issue that needs to be addressed for us to continue to grow the economy in Macau, but more capacity is on the way.
So far this year, Macau’s growth continues to be stellar. But are there any risks that you’re conscious of that could slow growth?
Definitely infrastructure is an issue that we need to pay attention to, because bridges and railway stations and roads are not built in one day. Even if you make a decision now, it’s going to be at least four or five years’ time before you see the thing working. So I think there’s a sense of urgency there.
Another critical issue is the labour force. Right now, we practically don’t have any unemployment in Macau. Every person of legal age, able to work, can find a job, and with good pay too, compared to other Asian countries. So will Macau’s labour force be able to keep up with the economy growing at 25% a year?
One good thing is you manage to keep hold of your labour. You have one of the lowest staff turnovers among Macau’s casino operators. What do you attribute that to?
We have this Asian heart culture, where we look after not just our customers, but Asian heart means we take care of and respect our colleagues too.
I also think all our people are proud to be part of Galaxy, because in these eight short years we have achieved a lot. All the staff feel they have had a little contribution to make towards making the company so successful. This makes them want to stay with the company. Of course, you have to pay market [salary levels], no question about it, but at the same time people have choices. I like to think that Galaxy, at the moment, we are the preferred employer in Macau.
