Casino operator Galaxy Entertainment Group says Phase 2 of its Galaxy Macau resort will officially open to the public on May 27. At a Hong Kong press conference on Friday, Galaxy chairman Lui Che Woo (pictured) also vowed to spend another $7.4b developing Phases 3 and 4, representing a total outlay of $12.9b in Galaxy Macau.
Phase 2’s launch will coincide with the reopening of the Grand Waldo Entertainment Center across the street. Galaxy acquired the Waldo property in May 2013 for $419m. Rechristened Broadway at Galaxy Macau, the property aims to recreate New York’s theater district and will be connected to Galaxy Macau by an air-conditioned ‘sky bridge.’
Lui Che Woo noted that Galaxy owned the biggest plot of land on Macau’s Cotai strip, giving it definite advantages over other operators. Phase 2’s launch will still leave half of Galaxy’s land bank untouched and ready for future development.
Galaxy deputy chairman (and son of the boss) Francis Lui said Phase 2 had the capacity to host up to 500 gaming tables and 1k slots, although the company is still talking to the government about the number of tables the property will be allotted. The former Waldo venue hosted 45 tables, but how many the new Broadway venue will boast is equally unknown.
Macau has long insisted it will stick to its plan to cap table growth at 3% per year until 2022, when the last of Macau’s six casino concessionaires’ licenses expire. The official number of tables in operation in Q4 2014 was 5,711, of which 3% is just 171. And Melco Crown Entertainment will want a few hundred new tables of its own when it opens its new Studio City resort later this year.
However, Macau officials have occasionally suggested the 3% cap had a little flexibility, particularly for operators who devote a significant portion of their new properties to non-gaming elements. Galaxy’s new venues have non-gaming in spades, including a 3k-seat theater, 120 bars and restaurants plus 1.5k new hotel rooms. Lui Che Woo said the goal was to make things “more diverse, from entertainment, leisure, culture and art … to meet the requests from [Beijing] and Macau.”
Galaxy CFO Robert Drake told the press that the company was “quite confident we will get a sufficient amount of tables to generate the returns we have been forecasting.” The new properties will require Galaxy to add an additional 8k employees in 2015.
Macau’s ongoing revenue decline has laid waste to the VIP gambling business but Galaxy’s Q3 earnings report showed it was weathering the storm better than its competitors. While the market’s overall VIP turnover fell 19% in Q3, Galaxy posted a 4% gain. Phase 2’s additional non-gaming facilities will help Galaxy shore up its mass-market numbers, putting the firm on steady footing for 2015 and maybe even earning back some of the estimated $7b in paper wealth Lui Che Woo lost in 2014.
