Inside Asian Gaming

September 2011 | INSIDE ASIAN GAMING 33 Asian Gaming 50 – 2011 16 (-) Michael Mecca President and COO Galaxy Entertainment Group 17 (12) Jack Lam Chairman Jimei Group Galaxy Entertainment Group (GEG) has entered the second half of 2011 with a dazzling new Cotai resort in its portfolio and a shot at overtaking SJM for leadership in Macau in gross gaming revenues. It’s a combination of happy circumstances that ensures Galaxy’s President and COO Michael Mecca makes the top 20 of the Asian Gaming 50 – 2011 . The mid-May opening of the HK$16.5 billion, 550,000-square-meter Galaxy Macau catapulted the company to a record second quarter and record first half, highlighted by an 84% year-on-year increase in pre-tax earnings for the six-casino group on gaming revenues that were up 60% over the same period. EBITDA hit HK$1.1 billion (US$143 million) in the second quarter on a 72% jump in gross gaming revenues (GGR). It was GEG’s 11th quarter in a row of earnings growth. Galaxy’s Chairman Dr Che-woo Lui professedhimself“delighted”withtheresults. Mr Mecca, who got Galaxy Macau opened on time and only slightly over budget, had to be feeling pretty good as well. The resort was a major contributor, delivering HK$376 million (US$49 million) to group EBITDA in less than seven weeks of operation, and without its full complement of 2,200 hotel rooms, prompting Cotai rival Michael Leven of Las Vegas Sands Corp to declare the property a “formidable competitor”. Las Vegas veteran Mr Mecca has the entire group sparking on all cylinders. StarWorld Hotel and Casino’s HK$1.3 billion in first-half EBITDA and HK$10 billion of GGR both set property records. EBITDA at the property has grown in every quarter since Mr Mecca joined the company in March 2009. The group’s City Clubs division (Grand Waldo, President, Rio and Waldo) posted 2Q and 1H EBITDA increases of 20% and 53%, respectively, to HK$49 million and HK$106 million. Galaxy followed up in July by moving squarely into second place behind SJM on the Macau market share list, posting HK$4.3 billion in GGR, of which StarWorld contributedHK$2.1billion andGalaxyMacau HK$1.8 billion, with VIP play accounting for the vast majority of it (approximately 93% excluding slot revenue at StarWorld, and roughly 81% at Galaxy Macau). Mr Mecca, despite a background centred principally in the US mass market, has managed the high- end trade well. His watch has coincided with a VIP hold rate at StarWorld in line with industry averages (2.9%) while beating the average at Galaxy Macau (3.5%). Property- wide operating margins of 23% and 22%, respectively, point to efficiently run gaming floors across all market segments. Mr Mecca joined Galaxy from Planet Hollywood, Las Vegas, and held senior executive roles at Mandalay Resort Group, Caesars World, Crown and Station Casinos, the largest operator in the Las Vegas ‘locals’ market. He was hired “to take Galaxy to the next level,” in the words of Galaxy Vice Chairman Francis Lui. It appears the company has chosen well. Dr Jack Lam can’t boast the public profile of a SteveWynn or Sheldon Adelson. But the role he has played in the growth of Macau’s VIP baccarat market—and therefore Macau’s rise to number one casino market in the world by revenue—shouldn’t be underestimated. Dr Lam straddles the divide between ‘old’ monopoly-based Macau as it was until 2002, and ‘new’ multi-operator Macau with its earnings conference calls, gleaming hotel towers, spas and wave pools. Dr Lam first started working as a representative of a small Macau junket in 1981—back in the days when most high rollers were businessmen from Hong Kong. In the years since then he has gone independent and ‘gone global’— or at least regional—with investments including a casino cruise ship—the M.V. Jimei—operating from Hong Kong, and casino resorts in the Philippines as well as VIP rooms in casinos all over Macau. His junket business Jimei has been able to take commercial advantage of the Western operators’ hunger for Chinese VIP business and their initial inexperience of the intricate Macau junket system, thus making a good living from supplying this essential component of the Macau market. Jimei is one of the largest VIP operators in Macau. It has high-limit rooms across the territory, including at SJM’s Grand Lisboa, and SJM-licensed L’Arc; at Wynn Macau, MGM Macau and Sands Macao, all on Macau peninsula; at Altira Macau on Taipa and at