If attack is the best form of defence, then Sheldon Adelson’s side swipe at Galaxy Entertainment Group at an investor conference this week is just what Las Vegas Sands’ stockholders wanted to see.
When asked about the competitive threat possibly posed to his Cotai flagship property The Venetian Macao by Galaxy Macau, the new resort due to open just down the street in the first half of this year, Mr Adelson was quoted as saying: “They are not themselves good operators.” He cited as an example the modest performance of the Grand Waldo, a Galaxy-licensed property a short distance from The Venetian Macao.
No one could claim the Grand Waldo has exactly set the Macau gaming market alight since it opened in September 2006. In December, it generated total table revenues of only HK$45 million—a drop in the bucket for most Macau casinos. But to draw inferences about the US$1.8 billion Galaxy Macau based on Grand Waldo isn’t really comparing apples with apples.
Grand Waldo is one of Galaxy’s CityClubs—set up as predominantly VIP-focused operations to gain a foothold in the market prior to the opening of StarWorld in downtown Macau during October 2006. As such. Grand Waldo operates at arms length more like one of SJM’s satellite casinos than as a mainstream Galaxy property. The CityClubs model was set up on the basis that junkets would own substantial interests in the venues and Galaxy would then lease space in the property to run casino operations. In the Grand Waldo’s case, there have been a number of changes in the ownership structure over the years since 2006 that have left it with a bit of an identity crisis. One recent rumour suggested part of the property might be converted into a luxury shopping mall featuring brands popular in China. The DFS Galleria at The Four Seasons Macao arguably already has that covered. But judging by the frequent morning lines of shoppers from mainland China that form outside Prada and Chanel’s flagship stores in Tsim Sha Tsui in Hong Kong, you can never have too many outlets for the ‘right’ brands as far as Chinese shoppers are concerned. Galaxy Macau will have retail, but a relatively modest amount—21,500 square feet, compared to the 800,000 square feet LVS has planned for Cotai 5 and 6.
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