Word: macau
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...mistakes, perhaps. Ho admits the company "got a little too greedy" by rushing the opening and by targeting mass-market customers. Crown's managers believed all they'd have to do was set up shop to see a rush of gamblers. But with a growing number of casinos in Macau, success was no longer so automatic. "In an all-out competitive environment, it's really a game of inches," Ho says. "Management didn't adapt for the local market." Unlike in Vegas, where casinos are filled by average Joes pumping coins into slot machines, high rollers account for some...
...Melco Crown ripped out slot machines and low-end gaming tables and expanded its VIP casino. But more importantly, Ho outmaneuvered his competitors by coming up with an unusual arrangement to ensure a steady flow of big fish. Macau casinos attract most of their wealthy clientele by working with junket operators, companies that function like specialized travel agencies. By maintaining close ties to high-end gamblers and often providing them with credit to bet, junket operators funnel traffic to the casinos, which pay them commissions. Macau has scores of independent junket operators, making business unpredictable. Ho figured...
...gambit worked. In July, according to Citi Investment analysts, Melco Crown may have claimed the largest share of Macau's VIP market. Now Ho's challenge is staying on top. The Macau government has announced that it intends to cap commission rates paid to junket operators as part of a larger effort to bolster regulation of the industry. That could reduce Ho's leverage, but analysts say Amax's financing power still gives him an advantage. "Once you've got the kind of critical mass Ho's got, it will be difficult to dislodge him as a true contender...
...clear whether there will be enough chicken to go around. The red-hot growth rate of Macau's gambling market is set to ease in the second half of 2008 due to local government efforts to cool Macau's overheating economy. The slowdown could come as several major new projects are launching. Early next year, Melco Crown will open the City of Dreams, a $2.3 billion megaresort that boasts several hotels (including a Grand Hyatt and a Hard Rock Hotel), a 2,000-seat theater, a shopping mall and a 550-table casino...
...Located on Macau's Cotai Strip, the resort presents a whole new challenge for Ho. He'll have to compete head to head for mass-market gamblers with Adelson's Venetian, situated right across the street. Adelson, too, is bringing even more options to Cotai, including a Four Seasons hotel, which opened in late August. "In the beginning, [City of Dreams] may have a tough time," says Gabriel Chan, a gaming analyst at Credit Suisse in Hong Kong. Ho, though, says he isn't worried. "Unlike some of our competitors who have cookie-cutter projects from the U.S., my vision...