Inside Asian Gaming

November 2011 | INSIDE ASIAN GAMING 45 Briefs “He has only recently been discharged from hospital. But when conditions permit he would very much like to come to Macau,” said Dr So at an SJM press event. Asked if the company was preparing something special for Dr Ho’s birthday, Dr So said yes, but declined to elaborate. Meanwhile, SJM reported its 3Q 2011 profit rose 35% year-on-year to HK$1.17 billion, from HK$867 million a year earlier. Revenue in the third quarter was HK$ 19.1 billion, of which HK$13.3 billion was derived from VIP baccarat. Ambrose So relaxed about Macau plan to quadruple capacity of a ferry terminal serving his rivals Dr Ambrose So, Executive Director and Chief Executive Officer of SJM Holdings Ltd, said he wasn’t worried about a Macau government plan to more than quadruple the annual passenger capacity of a ferry terminal serving his market rivals. The scheme to enable by 2013 up to 15 million visitors per year to transit via the Taipa Ferry Terminal— next door to Macau’s latest casino hub Cotai—was announced in Macau’s Legislative Assembly on 25th October. “Given that the average stay in Macau is only 1.5 nights, and [the market] at the moment is still gaming centric, we think that Macau peninsula is the gaming centre, rather than Cotai,” Dr Ho told Inside Asian Gaming at a press conference to publicise SJM’s sponsorship of this month’s Macau Grand Prix. “Cotai has a different market. It is more eclectic in its offering of more non-gaming elements,” added Dr So. Were the additional Taipa capacity to be filled quickly, however, it would be equal to more than half of all the visitors Macau received in the whole of 2010. And in that year the Taipa terminal only welcomed 3.43 million arrivals—just 13.7% of the total 24.96 million by all methods of transport. Such a dramatic increase in Taipa’s processing capability in such a short time might also potentially shift the balance of power in terms of tourism revenue to Cotai and away from the traditional centre on Macau peninsula. SJM doesn’t have a casino on Cotai and won’t for at least another three to four years—though it would like one. “We are not saying we are only staying [operationally] on the peninsula. We will be there [Cotai] as well,” explained Dr So. “We have applied for a piece of land on Cotai and we are waiting for the government’s response. We hope we won’t have to wait too long,” he added. There are good reasons for not hanging around when it comes to a Cotai project. At present Cotai —with its focus on shopping malls and shows as well as gaming tables—only accounts for around 25% of Macau’s annual gross gaming revenues, and gaming accounts for 95% of all Macau tourism revenues. But that may change as China’s middle class grows and if transport capacity for Cotai ramps up significantly. There are also plans to expand the numbers handled by the Lotus Bridge crossing from Hengqin Island in the People’s Republic next door to Cotai. “But in fact there are also people coming from Gongbei gate [the land crossing between Zhuhai and the Macau peninsula] and from the Outer Harbour [the main ferry terminal on Macau peninsula],” pointed out Dr So, in his defence of Macau peninsula’s prospects. In 2010, Gongbei accounted for 12.02 million visits—48.2% of the total—and its capacity is also being expanded. The Outer Harbour terminal—also known as Macau Maritime Ferry Terminal —accounted for 6.46 million arrivals in 2010; 25.8% of all visitors. But it has no room to expand, and there is no sign yet of a mooted plan to build a new ferry base on Macau peninsula. Dr So’s apparently relaxed attitude to the expansion of the Taipa pier facility—known locally as Pac On— might be something to do with the fact that Ho family interests currently have a stranglehold on the Macau ferry market. It would be hard for Taipa to ramp up its capacity to 15 million arrivals per year even if the Cotai resort operators want it to happen. Shun Tak, founded by Dr Stanley Ho and now run by his daughter Pansy, controls both TurboJet (working the Hong Kong-Macau route) and—since September—New World, serving routes between the Chinese mainland and Macau as well as between Macau and Kowloon in Hong Kong. The Taipa terminal started with just one operator (Las Vegas Sands Corp subsidiary CotaiJet) when it opened as a temporary facility in October 2007. Four years later Taipa still has a grand total of one ferry operator (CotaiJet) after the failure in September this year of Macao Dragon. One of the reasons cited for Macao Dragon’s collapse was that its low fares policy was stymied from the beginning of its operations in July 2010 by the carrier being forced to operate at 62% capacity on inward journeys from Hong Kong and only 50% on the outward trips from Macau. Ironically the reason cited by the Macau government was “capacity limitations” at Pac On. Dr So’s sanguine approach is somewhat contradicted by public statements previously made by Angela Leong, fourth consort of Dr Ho, an Executive Director of SJM and a two-term Macau lawmaker. In November 2007 she asked Macau’s Secretary for the Economy and Finance Francis Tam during a Legislative Assembly session why the government had granted a ferry licence to a company (i.e. CotaiJet) serving the Taipa Terminal “which does not have experience in operating ferry services”. Another reason for Dr So’s calm may be the resilience of VIP baccarat—an activity that SJM, its satellite casinos and its junket partners excel at managing—more than a decade on from market liberalisation and fresh competition from overseas operators. Most VIP table players still prefer to play on Macau peninsula, where they have quickest access to the land border gate and to the territory’s only commercial helipad at the Outer Harbour. More than 70% of Macau’s live table revenues come from VIP baccarat. Stanley Ho Ambrose So