The St Regis Hotel is opening without a casino this week in Cotai and Sheldon Adelson will be coming to town for the occasion. This will be the first major event over which the new President and Chief Operating Officer (COO) of Sands China, Wilfred Wong – the well-connected man from Hong Kong – will be supervising.
At first one may think Mr Wong, who has been recently introduced to Macau and to the gaming industry, is new to both. Not quite.
“I think my entry into this industry came as a surprise to many people. I don’t have a background in the gaming industry, but when Mr Adelson and the management team talked to me, they convinced me that there are so many elements and components in this industry that I’m familiar with – the hospitality, the construction, the development, the F&B, entertainment, MICE.”
Mr Wong is also currently Chairman of the Arts Council (HK), Chairman of the International Film Festival of Hong Kong, and Chairman of the Asian Film Awards Academy. “So of all the components in the industry, the gaming part is the only part in which I have not had experience. The rest of them, I have been doing for the last 20 years as a developer, as a construction company, as owner of properties,” Mr Wong explains.
Wilfred Wong has served in a variety of senior business roles, including chairman and CEO of Hong Kong-listed Hsin Chong Construction Group Ltd. A unit of that group – Hsin Chong Engineering (Macau) Ltd – is a key contractor on Sands China’s USD2.7-billion Parisian Macao project. Wong has also held top management positions in a number of other companies in the property development and construction business sectors, including Henderson China Holdings Ltd, Shui On Group and K. Wah International Holdings Ltd – the latter a company linked to competitor operator Galaxy Entertainment.
“From Venetian to Cotai Central to St Regis to now the Parisian, everything is built by Hsin Chong,” his own property development company, which at the peak had 1,000 workers on Cotai. It’s a “long association” with SCL, but “I’d never met Adelson or Rob Goldstein then.”
For Adelson, he’s the right man for the job. “Wilfred has a unique combination of private and public sector experience which we think will be invaluable to the company at this point in our history.”
Many saw this as political play giving the connections Wong has in Beijing and greater China – he was elected a member of the NPC 15 years from 1997 to 2012 and was also a reader of HK’s Basic Law.
Mr Wong may have those “guangxi”, but as it happens with every relationship, “it has to be cultivated, it doesn’t come naturally. I know people in Beijing, but they may be doing different things, not in this area. I may know [some] government officials in Macau, but I don’t know them well enough… Any relationship has to be proven. You have to show your commitment. You have to work. There’s a lot of interaction and loyalty before you can have any relationship.”
Mr Wong is looking forward to meeting the new “gaming boss,” the head of the Gaming Inspection Office, Paulo Martins Chan. “I just read in the news about his background and his legal background. I think, he will probably have some strategy that will be slightly different from the past and we’re looking forward to it, yes, and we’re really looking forward to working with him.”
Besides, Macau “is very good because I have started visiting different government departments and the China Liaison Office and all that and really just to give the message that, as one of the largest business entities in Macau, we want to play our part as a good corporate citizen.”
Mr Wilfred Wong served top management posts both in the public and private spheres for over 40 years, and his tenure at Sands starts in difficult times, although the company still produces a robust return for investors “well over 20% for this year.”
Sands properties, which comprises almost half of the global offer in Macau, are achieving occupancy rates of 80% in times of “crisis”. That’s why for the billionaire executive, the cap on visitation is worse than the cap on tables, “although all deterrent measures have their impact on operations.”
Macau Daily Times had the opportunity to better learn about Mr Wong during an exclusive interview last week at his Venetian office, an austere but generous space with a personal touch: his paintings, his Silver Bauhinia medal and pictures of his two “kids”. “They are always kids for us, right?” comments the paternal Wilfred pointing at the pictures of two young adults. Center stage in his office, he proudly exhibits a porcelain bust of Christopher Columbus. “He’s always behind me. Every time I move to a new land the bust comes along with me.” And this is a new land, alright, that Wilfred Wong is sitting in.
MDT – How are you adapting to Macau and to the gaming industry?
WW – I’m lucky because I’ve always liked Macau. Even when I was in Hong Kong. I came very often. I like the heritage, I like the food, I like Portuguese food and I like Macau’s. So that makes life easy and also – I think so far – the people I’ve met from different sectors have welcomed me warmly and every visit to a government department has been very comfortable, very friendly.
MDT – And how are you adapting to the gaming business?
WW – I’m lucky, I have close to 27,000 people, very solid professionals in the field, particularly with the corporation based in Vegas, with a lot of experience and many of the people in charge here were from Vegas. So I have a very good team on the ground. I feel very comfortable. Every day I receive tonnes of reports covering different segments and analysing different data, which made my coming into this area very easy.
MDT – How often do you confer with Adelson and Goldstein?
WW – As often as needed. Probably once or twice a week. Goldstein probably more often, but Mr Adelson, not less than once a week. So I would be talking to him on what happened in the last few days, on what are the problems that we’re encountering because he’s the Chairman and CEO so I need to talk to him and let him know that everything is running fine on the ground.
MDT – You took the helm at a difficult time, in a downturn of revenues. How good are you at crisis management? Do you understand this as a crisis in the industry?
WW – No, we live in a world of crisis. So when you live through this, it becomes a non-issue. Every day you see all this news in the world and everybody is trying to handle crises. The best way to look at crises is to look at them as part of life and that has always been my philosophy in my 40 years of working life. I have actually worked for 40 years: 17 in the public sector in Hong Kong, [with the] British Hong Kong government, and 23 in the private sector in Hong Kong and China. So 40 years of experience taught me that whatever happens, I am the one who has to remain calm and stable. As the top man in any organisation, when there is a crisis, you are the one who will inspire confidence if you remain calm and you go through all the problems and try to find the solution and the solution has to be immediate. Once you procrastinate, once you delay a decision, people panic. So I keep telling everybody that I’m here to make decisions. I know the buck stops here and I would like people to know that they can always come to me with a problem.
MDT – Your predecessor here, Mr Tracy, he had this vision (and I quote) “to put out the good word about Macau” to the world, by bringing over to the Venetian, world class acts and celebrities. From the Rolling Stones to Kevin Spacey, Nick Cage; from Beckham to Manny Pacquiao… So in a downturn, is this still your vision, knowing non-gaming entertainment is not a great contributor to the bottom-line?
WW – No, I think as an international tourist attraction, we need to continue bringing world class acts to the property. This is not just for our own benefit, but really for Macau, for our publicity overseas, and [for] all that in a downturn of the economy one has to be more budget conscious. So we are now examining all acts and the bottom-line more carefully. I’m not saying that we were not, but we would be very careful. We’ll still work with big names, but maybe with more people who appeal to the population, who appeal to the masses. For example, Korean performers, Cantopop singers or Beijing, China singers. So these are the people that we would be staging more because of the visitors. They’re mainly from China so, we need to adapt more to their taste, but we’re also bringing in, for example, next year, the Philadelphia Philharmonic Orchestra with Lang Lang. So those are the world-class performers we’ll continue to bring in… We are going to open the Monkey King in one of our theatres on a long running basis. It’s a resident show, one of the best original resident shows.
MDT – But do you agree the money is not there? It’s at a cost.
WW – Well, in the entertainment you don’t look to make a lot of money. I think it’s really the impact. For us, it’s neutral. We’re at least trying to make it neutral overall. So it’s not coming at a cost to us.
MDT – Do you intend to continue with the boxing, because Macau turned into “the capital of boxing” every time the likes of Manny Pacquiao came here?
WW – If the opportunity is there, we will look at it… Boxing is a big expense item and we will have to look at the pros and cons of doing it.
MDT – Is Macau’s government being helpful to the industry? In the sense that the gaming industry is the engine of everything else and is the major part of this economy, do you think the Macau policies are helpful?
WW – I think the Macau government is undoubtedly fully aware of the contribution of the gaming industry and that’s why, in the latest Policy Address the Chief Executive, despite what everybody said, he still puts the revenue at about MOP200 billion. What the government needs to do and is hoping to do now of course, is to try to promote Macau more as a tourist destination to diversify the economy away from the predominant gaming industry. We as concessionaires [have to ask] how we work with the government. When the policy is there, when the strategy is there, they are for the overall good of Macau. We as concessionaries who are operating in this environment, have to consider how we work with it. I think that’s the approach I would adopt.
MDT – And the profits are still there. The expected net income for 2015 is USD1.5 billion. So what is your message in terms of return of investment to the shareholders and investors?
WW – I think we’re still looking at a reasonable and healthy return to the investors. The return on investment is still above the 20% mark, well above. Of course, we’re not as good as maybe two years ago when we hit the peak. It’s now 18 months on a downward trend, but together with the other concessionaires, we believe that we are reaching the bottom because all the figures are telling us that it’s stabilising and even the analysts are predicting that next year is not going to see a dramatic decrease in the revenue, and judging from the visitations we have, judging from our own figures, I think next year the overall pie is not going to shrink, but the competition is going to be very keen. So next year is going to be a real challenge for all of us because so many new properties are coming to completion. Now, it has its challenges because we each have to put in our best, but it also means that we are trying to improve Macau as an attraction with more new properties. So hopefully, if the government and we all do the right thing, do the right promotion, we could bring in more visitors to grow the pie.
MDT – There are some issues, for instance the cap on tables, limits on visitation, the full smoking ban. Which of the three affects Sands China’s interests the most? Adelson was very critical of the cap on visitation when he was here last time.
WW – I think cap on visitation is definitely the most important because if you have more people, the pie is bigger, and it’s easier for everyone. I think on the cap on the tables, we can always redeploy some tables from here and there. All of us are trying to do that when we open new properties and less tables are given. We will try to look at our own stock and see what we can do.
MDT – So that’s what you’re going to do if you get 250 tables or so for the Parisian?
WW – Of course, we are hoping that the government would help us by giving as many as possible, but we understand there’s a limit to how many the government can allow. So we’re looking at how we can rationalise everything with the opening of the operation. In terms of smoking lounges, I think if there is a complete ban, it will be a serious hit and that’s why all the concessionaires are now trying to work with the government on improving the standards of smoking lounges to the highest level and that would be to protect all the clients and the workers. So this is our goal. So I think it’s right now going through the Legislative Assembly. All the six concessionaires have worked together and the Legislative Assembly is looking at it.
MDT – Gone are the days of the ‘build it and they will come’. How many years do you expect the so-called Cotai 2.0 will take to break even and return a profit? Two, three, five years? I mean as a whole, and in particular the Parisian.
WW – I think we are probably the best covered, in terms of segments of the market. So we have at the top, Four Seasons and St Regis now. Then we have Conrad, we have Holiday Inn, Sheraton and we’ll have Parisian. The Parisian is really trying to cover the more demised market, the big groups that are coming in because the rooms are smaller, but it also adds another 200 retail shops. So hopefully this will create another destination in itself. Depending on the economy, I would have hoped that the Parisian will be another success for us.
MDT – Also, you’re not exactly in a hurry considering the market condition…
WW – No, it’s not like that. We look at things as ‘business as usual’. Whatever pace it should take, it should just be natural. We’re not forcing it, we’re not delaying it, we’re just [taking it as] work as usual. That’s the approach we have adopted so far.
MDT – We are a week away from the St Regis opening. So what are your expectations for this?
WW – St Regis is going to be one of the top brands in our whole portfolio together with Four Seasons. So we will probably see many of our high rollers and mass premium clients coming to stay there, but it’s not a big number. It’s about 400 rooms. So basically, this adds a very interesting dimension to our whole portfolio. This hotel has no casino. So it’s a pure five star hotel and we hope that there will be more families coming in because of that and really, people who can afford top end. [People] who can afford to spend money in our retail shops, the F&B, the entertainment, they would use this hotel.
MDT – Speaking of that, the VIP segment has been hit more than the mass. Sands China has more of a balanced operation between mass and VIP, but do you foresee that the VIP model of the past is gone?
WW – No, I think it would stay for a while.
MDT – Junkets are saying that they can only collect 30% of their debts in China, against 70% before.
MDT – Yes, I think depending on individual operators. There are obviously people who can collect better and people who are less comfortable, but as a whole, we are very prudent in extending our credit to these operators. So we adopt a very prudent approach. We have been reducing the exposure.
MDT – Using due diligence?
MDT – Yes, we do due diligence. Even with our top operators, we have been reducing their exposure. Basically because of the downturn in the market, they don’t need that much credit. So on a mutual basis, we have been reducing our exposure. I think the junket operator is a unique feature of Macau and it will stay for some time. It would not be healthy if they all disappeared overnight. So it will be an adjustment in the balance.
MDT – What is Sands China’s promotional strategy for the mainland?
WW – We can never promote the gaming element in China and therefore, any promotion in China, even for our other properties is non-gaming: it’s the retail, it’s the hotel. So I think for the Parisian right now, our promotion is that we’re adding another very attractive tourist attraction, an Eiffel Tower, which is half the size of the real one and that we will have a French restaurant at the top of the Eiffel Tower. This becomes a must-see because recently, I was told that the Venetian is the second most recognisable attraction in Macau – the first is the St Pauls Ruins – and I am hoping that Parisian will become number three.
MDT – The Eiffel Tower, yes. But you don’t want to surpass the St Paul’s Ruins?!
WW – They’ve been there for hundreds of years. Let’s be modest. [Laughs]
MDT – Do you feel that Xi Jinping’s leadership supports gaming in Macau? Do you agree that Mr Chui Sai On has a clear mandate to lower the weight of gaming and the visibility of gaming in Macau?
WW – I think Mr Xi Jinping has a full understanding of the operations of Macau. Of course, really the whole central government knows. So the mandate for the gaming industry in Macau will stay and that’s why even though now they are trying to shift to other areas of economic activity, they are still looking at the gaming industry as a main pillar. That will not change, that will not change. But I think what the Macau government wants to do, is to make sure that over time, they are less reliant on the gaming industry and I think that’s the right thing to do.
MDT – Yet, that never happened.
WW – You must remember, Macau only started to become very prosperous in the last ten years. So in the past, many years ago they didn’t have the resources to do it. Now, I think the government has a lot more resources at their disposal and by talking to the government departments, I can see a stronger sense of direction in where they are going, what they are trying to do and they really have the resources to do it.
MDT – Hengqin. Do you have any plans to invest in Hengqin?
WW – We have no plans in Hengqin at the moment, although it is close. I think it’s going to be, in time, with the limitation in space in Macau. And of course, even though Macau may reclaim some land from the sea, it’s going to take time. So Hengqin will be a very good support base for Macau in its back-office operations or for the spill-over of tourists. Now we see some very attractive tourist facilities there.
MDT – Do you think Macau will benefit?
WW – Overall, yes. Because if you look at tourist patterns, normally when people come to the Pearl River Delta, they don’t want to just stay in one place, especially if you’ve come with a family, you travel from destination to destination. So the more Hengqin develops, the better it will be for Macau.
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