Inside Asian Gaming

INSIDE ASIAN GAMING | September 2012 6 Asian Gaming 50 – 2012 Francis Lui has developed a penchant for working within constraints and exceeding expectations. That is pretty much the defining characteristic of the East Asian economic miracle that began in the 1980s, the beneficiaries of which Mr Lui’s Galaxy Entertainment Group has done an extraordinary job courting in the face of its well-established competitors in Macau. Mr Lui has a particular affinity for his clientele. A civil and structural engineer by training, he started his career in the late ’70s in the quarries of Hong Kong with his family’s construction materials business, and in 1985 started doing business directly in mainland China. “If there is a person in Macau who understands what the Chinese customer will look like in the next five or 10 years, it is probably somebody like me, who has been there doing business in China, seeing them evolving,” he says. When Mr Liu made his maiden foray into the casino industry in July 2004, running operations at the Waldo, a third- party-owned venue in Macau—one of the four casinos of the City Clubs brand that Galaxy now operates—he had no gaming experience at all. Waldo was the second new property to open in the city following the end of Stanley Ho’s decades-long monopoly. Two months earlier, Las Vegas Sands Corp had unveiled the glittering Sands Macao, which at opening contained 277 gaming tables and 405 slot machines and featured a crowd-pulling interior design unlike anything the city had ever seen. Waldo, on the other hand, opened with 38 tables and 150 slots, had been hastily converted from an office building, and its most notable feature was the garish neon sign out front. Still, Waldo’s concentration on the VIP market enabled it to out-gross the much-hyped Sands in 2004. Armed with that experience, Mr Lui unveiled his first flagship, StarWorld Hotel and Casino, in 2006, and it was then that GEG’s brand identity began to emerge. Owing to the relatively small footprint and limited amenities at the US$436 million StarWorld, that brand-building was until recently largely defined by a strong 1 Francis Lui Deputy Chairman Galaxy Entertainment Group service mindset and an ability to forge lasting relationships. That changed with the unveilinglastMayofGEG’snewCotaiflagship, the $1.9 billion Galaxy Macau, which was shaped by the company’s determination not only to “give our customers what they want,” according to Mr Lui, “but also anticipate what they may want in the future. It’s 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?’” Following the Galaxy Macau opening, GEG soared from near the bottom of the revenue-share league table to second place. Only the city’s previous monopoly operator, SJM, has a larger share (inflated by its 14 “satellite” operations from which it derives only a small proportion of earnings). GEG has maintained its position almost consistently over the past 12 months, and that’s no small feat for a company that has only eight years’ operating experience to pit against international stalwarts such as LVS, Wynn Resorts and MGM Resorts International. More than market share, however, Mr Lui cares about capital efficiency. “When I started the business here, people asked me, ‘What do you use to measure your performance?’” he says. “At that time, a lot of people assumed market share or revenue or EBITDA or EBITDA margin. But I always said, ‘No, it should be based on ROI—return on investment.’” Galaxy has delivered consistent returns and punched above its weight in terms of capital efficiency by showing that it really understands its players and junket partners, cares about them and wants their repeat business. Success in VIP gaming has been the cornerstone of GEG’s success. If you speak privately to those in the junket trade—which currently delivers about 70% of Macau’s gross gaming revenue—they will tell you that the support provided by Galaxy is second to none. Then there’s the corporate culture. Mr Lui has been able to assemble an executive team that’s not only good at what it does but seems to be happy in the job and isn’t afraid to connect with staff on the floor. Walk through one of Galaxy’s properties and you frequently see top executives making the rounds—more often than not with smiles on their faces, a rare sight among senior staff in this business. It’s no wonder that many Macau locals view GEG as the city’s preferred employer—a company that will treat them well and afford them the opportunity to grow and make an impact. It begins with the humility that Mr Lui