The gaming sector in the region has largely dealt with the blow of a global health crisis for the past nearly two years. However, the goal of diversifying Macau’s offerings – despite global travel disruption – still remains.
MGM China has pushed on with the development of its luxurious accommodation portfolio following the Emerald Suites, Skylofts and The Mansion.
The move was aimed at offering its guests a diversity of experience across the new Emerald Villa.
While there are still no signs of borders easing to international arrivals, MGM is looking to lure clientele from Hong Kong, expressing hopes that the reopening of the mainland-Hong Kong-
Macau border will bring a positive impact to Macau – as Hong Kong tourists entering the gaming hub would be the “strongest message” to help boost mainland arrivals.
Back in November, the company reported that its properties have cross-property EBITDAR breakeven levels, led by the recovery in the premium segments.
Therefore, while borders remain closed, MGM has said it will better its offerings to the premium segment, which the president believes is the future of Macau’s gaming industry.
Kenneth Feng, president and chief strategic & financial officer of MGM China, sat down with the Times to speak about where the company puts its hopes amid the ongoing Covid-19 crisis.
According to Feng, “This year is better than last year.”
Macau Daily Times (MDT) — With MGMís current wide variety of accommodation options, was there a need to develop the Emerald Villa?
Kenneth Feng (KF) — When we opened Cotai in 2018, we had planned that we should do something to complement our total hotel products portfolio. We developed and started this development process a year ago. It took us about a year to complete this entire project which consists of 28 villas, ranging from 30sqm to 360sqm. […] Out of 28 villas, we […] needed more villas to complement our premium mass customers. Our team has done a great job. We took a lot of green energy concepts into the entire design development process, from construction to materials and lighting management system. After successfully launching these products, we won two international awards in interior design [which are] from the SBID International Design Awards 2021 in the Hotel Bedroom & Suites Design category as well as the Platinum Winner at the 2021 MUSE Design Awards in the Interior Design (Hotels & Resorts) category. Two awards are the first ones in Macau. We’re very proud of it. We have received tremendously good comments the past two months from our customers.
MDT — What do you think led to the awards in such a short period of time?
KF – We understand what our customers want. We had significant communication and briefing until the very end of the design and development process. We always thought of every detail based on what our customers want. […] Another function that we’re proud of is the shower function. This is probably the first computerized-controlled shower that conserves water but [through a] smart-shower system. The team has done a great job. The direction is very clear – every team member knows what customers we want to receive.
MDT – With the luxurious elements present in this new villa, does this reflect on the branding of the company?
KF — Absolutely. […] We really want to create an overall design that matches our branding standard.
MDT — Will we see the trend of repeat-premium mass customers continuing?
KF — I think so. We are going to see, not just repeat customers, but new faces. Customer experience is very special. We do see the trend – we are going to see new recurring faces in the premium mass segment.
MDT — In a previous earnings call with analysts, the CEO of MGM Resorts, Bill Hornbuckle, pledged to continue its investment amid the blow of Covid-19 to the business. Are these villas a testament to the portfolio addition?
KF — Absolutely. As I reported, I do have high confidence – which has already been proved across the past two months’ performance. We are going to have a pretty decent return on investment.
This project cost us about USD80 million. We’re really on budget and on schedule for this entire development.
MDT — Are there any trends in MGMís consumer market in terms of hotel occupancy and foot traffic?
KF — I think since the nucleic acid test (NAT) validity changed from 48 hours to seven days, the number of visitors went up. Right now, it’s close to 30,000 [arrivals in Macau] per day. Before the pandemic, we saw daily visitors of 100,000, and [what we have now] is about 30% of that.
From MGM’s perspective, we are seeing about 40% of the number of visitors [compared to the peak] to our properties. Before the pandemic, the visitors at MGM Cotai were about 15,000 [per day]. Right now, we are seeing some 6,000 to 7,000.
MDT — And this is a decent number for the company given the border restrictions?
KF — Yes. I understand it’s going to be a long way, it will take some time recover. But definitely, based on today’s trend, we are seeing [recovery]. This year is better than last year.
MDT — With the aim of diversifying offerings, how confident is MGM in terms of seeing a bounce back to pre-pandemic levels, and with Chinaís zero policy, what are the plans on how to accelerate its recovery?
KF — We are working on that. We are going to have a residency show, Awakening Lion [this month]. The first season has eight shows. Last month, we just held [the concert of] Jam Hsiao at the MGM Theater. We are definitely planning to have some non-gaming shows and events. We are going to announce it very soon. MGM has been [working] on this since Macau [borders] opened. We have quite a few signature events like Oktoberfesst. It’s hard to be profitable [with that event] but we’re still doing it. We help to contribute to Macau’s non-gaming diversification effort.
MDT ñ Now to gaming revenues, is MGM expecting a positive close this year?
KF — The entire market was very good in July. It was 50-60% of pre-pandemic levels. But the local cases in August impacted [the recovery] for a couple for months.
We do see customer [arrivals] pick up in November, but I personally think the major catalyst is going to be Hong Kong.
The upcoming border relaxation between Hong Kong, mainland and Macau is extremely important for Macau.
For Macau, we can travel to the mainland, unlike in Hong Kong. They have been living in their city for two years with nowhere to go. Hong Kong residents are famous for having the [desire] to travel. Pre-pandemic, [studies show they go on] five trips per year.
If Hong Kong comes to Macau, it’s going to be the best TV commercial for mainland to travel to Macau because Hong Kong [residents] traveling to Macau is going to be major news.
I personally think we have high expectations about Hong Kong’s [easing of] border policy.
I’ve said for a long time, Hong Kong’s gaming revenue contribution is only 10 to 15% but its overall contribution factor is not only that: […] it sends the strongest message across mainland China.
MDT — All eyes are on the gaming renewal concessions, is MGM still currently talking with the government? Hornbuckle does not see any alleged tightening of the new amendments, where does MGM stand on this?
KF — We submitted our comments to the government and have participated in the meeting. We [have] always believed the gaming law – and after two decades of exponential growth, Macau’s gaming industry – [needs amendments].
In 2000, gaming revenue was USD1.8 billion. In 2019, revenue was USD35 billion. Definitely, gaming law needs certain improvements and amendments. We do believe the government is going to take a balanced and rational strategy and action on the gaming law.
After the amendment, I think Beijing, even the Chinese customers, will have confidence in Macau’s future. We will support the government efforts; we believe this entire process will position Macau well, and the operators well.
MGM is quite confident in its efforts. As I said, I was personally involved in the gaming concessions bidding in 2001. I came here on behalf of MGM – after 20 years, we are still here. We want to continue to follow the government’s directions to give back to society, as we have been doing.
MDT — Although there arenít any official ties with Suncity, how is MGM affected by the arrest of casino junket leader Alvin Chau?
KF — I don’t think what happened to Suncity will have a dramatic financial impact to us; definitely, it is manageable for us. MGM will continue to focus on what we are good at [such as attracting the] mass premium market. I think it’s going to be the future of Macau’s gaming sector; we will be focused on what we should do.
MGM co-leads alliance on Low Carbon Green Hotel Alliance
Driven by a mission to reach carbon peak and carbon neutrality in line with the nation’s climate goals, MGM China co-led the Low Carbon Green Hotel Alliance (LCGHA) in a bid to collaborate with and ride on respective edges of hotel, tourism and construction industries.
Jointly founded by Macau’s hotel and tourism industries, industry partners and professional alliances of the mainland and Macau, the alliance aspires to collaborate with and ride on respective edges of hotel, tourism and construction industries, to further deepen regional exchanges and raise the awareness of the importance of low-carbon behaviors. The LCGHA — which is grounded in science and action-oriented — intends to map out various innovative, feasible measures to cut back on carbon emissions.
Kenneth Feng, president and chief strategic & financial officer of MGM China, told the Times that through these kinds of engagements, the groups seeks to create a platform to deepen regional exchanges and raise the awareness of the importance of low-carbon behaviors.
Co-chairperson and executive director of MGM China, Pansy Ho, is the founding chairperson of the LCGHA.
