In his first interview since the renewal of his contract as president of Sands China Limited (SCL) for a four-year term, Wilfred Wong says he is eager to see a “travel bubble,” initially comprising Guangdong, Macau and Hong Kong, to start walking that long and winding road to economic recovery – which he foresees will take a couple of years in the best-case scenario.
He understands that the governments of the three regions have to implement the “bubble” with safety, transparency and trust. But since the epidemic of Covid-19 “is basically contained in China,” Wong thinks the time has come to gradually ease cross-border restrictions. He hopes this could happen in July, inferring from recent comments by Chief Executive Ho Iat Seng.
In the interview with the Times, Wong spoke about the company’s policy on labor, layoffs and the repatriation of non-resident workers recently made redundant, many of whom “where identified” for possible rehiring when operations return to some normality, because the local workforce is in short supply.
As for the new concessions, Wong believes that the “big six” start with an advantage and sees no threat in the possibility of having “more competition”. He expects to break even with the latest non-gaming attraction in town: the resident show, teamLab.
Macau Daily Times (MDT) – Gaming in times of pandemic. Last week the Economy Intelligence Unit (EIU) forecast a 70% drop this year in Macau’s economy due to poor visitation and predicts a recovery only in late 2021. Can gaming be sustainable under these conditions. Is this a fair assessment and forecast by the EIU?
Wilfred Wong (WW) – There are so many uncertainties. A lot depends on how fast the government will allow the Individual Visit Scheme to resume. The sooner, the better. Right now, under these conditions, it’s very difficult. Everyone is struggling. All six gaming concessionaires are trying their best. We did not lay off local people. We managed to keep employment. We give a lot of discounts to local residents to support the government’s domestic consumption [lead] economic strategy. So, if you’re a Macau resident, you now come to our restaurants, you get 30% discount. But in the longer-term, we really need the tourists to come back. Macau really depends on it.
MDT – We are all expecting a so-called travel bubble, but nobody sees it happening before the end of July. What’s your expectation?
WW – I think, according to what the chief executive said to reporters last week at the Dragon Boat races, something will happen in July, but I do not expect a full opening. It will be gradual, and there will be a pilot scheme where maybe a select group of people, upon application, can come. The first group would probably be investors, business-people and professionals; Hong Kong, Guangdong, Macau and then subject to tests [other provinces]. Once they’re comfortable that the mechanism is working – the reciprocal recognition of the health code is working – then they can open up. This idea of a travel bubble really needs to be implemented. Given that China is now relatively safe, there is no reason why Macau should bar people from China, particularly from Guangdong.
MDT – By the way, Hong Kong as a visitor source market was growing steadily before this crisis, what was the main reason for this rise in the Hong Kong market?
WW – I think Hong Kong people really, now, find that Macau is such a good break away. Particularly over holidays and weekends because Hong Kong people used to go away all the time, but they used to travel overseas. With all the hassle associated with travel and expenses involved, Macau becomes a real option and our enriched offerings really attracted [them]. Many of my friends are asking when can they come to Macau because they all want to come and see teamLab and have a couple of good meals.
MDT – teamLab SuperNature at the Venetian had its soft opening on June 15. How has the response been so far?
WW – It’s been very encouraging because it’s still a soft opening. This is a resident show. Depending on the response, we’re expecting to hold it for at least two to three years because it’s a lot of investment. When we launched this with the MGTO, there were requests for additional capacity. We had two slots for them every day, but now we have to add another slot. It’s been very popular. I estimate that over the last weekend [June 20-21] we had almost 3,000 visitors.
MDT – This is a considerable investment in non-gaming. How much money are we talking about?
WW – USD25 million. It’s not something where we’re really looking for a quick return. This is something which we feel is going to help in diversifying and for the relaunch of Macau.
MDT – Do you really expect to break even or return a profit on this show?
WW – We’ll be happy to break even because it’s only two or three years and there are heavy operating costs. If the trend continues with the opening up of the borders, there’s a good chance.
MDT – Now, a very specific situation. Recently, there were periods of negative income in the gaming results. Is it just a lucky bunch of high rollers? Can you explain how this “negative income” happens?
WW – Gaming is a law of probability and when you have a large number of players, it evens out and therefore the house has an advantage because you have large numbers. Now we’re left with a [small] number of high rollers and so, if they get lucky that day, there’s no balancing off.
MDT – Who are those lucky guys?
WW – They’re very professional. They’re good [baccarat] players and we’ve been watching them. And they have deep pockets. They know how to play and they have the money behind them. So that could only happen when you have a handful of players. That’s why the earlier the border relaxation comes in, the better. Even if you allow Hong Kong business people, there are many more big players in the business circle that can come through and that would help support, because the junkets are also drying up. Then, China of course, Guangdong has always been a very important supply chain.
MDT – Now onto the labor front. How deeply have the staff at Sands China been affected by the financial burden?
WW – Of course, there’s not enough work for everybody. So we’ve been asking staff to take leave [without pay], but on a voluntary basis, and so far, especially, among the local employees, we have maintained a very stable workforce. There was no cut in salary, we did not lay off people, but for the foreign labor because it’s always seen as a supplement, when there’s not enough work, then we unfortunately have to let some go when their contract expires.
MDT – Do you foresee rehiring them when this becomes normal?
WW – We have identified people [to take] no-pay leave for an extended period because according to the labour law, blue cards will still be valid for 90 days. So, if they take three months and the work comes back and the border relaxation comes in, [and] we need them, we can always take them back. We have assurance from the Labour Affairs Bureau, saying that they will respond very positively and quickly to people who’ve been on no-pay leave or laid off during this period, when they need to come back.
MDT – If this goes back to normal you will need them as you don’t have it in the local market.
WW – Yes. We have to keep the jobs for the local people, but we also need that supplemental workforce.
MDT – According to Macau Daily Times, “Wilfred Wong, will remain in his position until February 20, 2024, a year more than the term initially approved by the gaming operator’s board.” Can this be read as a sign of confidence that SCL will bid successfully in the 2022 tender for the new concessions?
WW – Don’t you think so? (laughs). I think we are all hoping for the best and hope that this sends a signal to the market that we are preparing, we’re well prepared for it. God knows what would happen. At this stage, stability for Macau is so important, particularly on the road of recovery from the pandemic. It’s going to take a couple of years to recover. So, this is a very critical time.
MDT – Do you see more concessions being granted and if that’s the case, will that affect Sands China and all the other operators?
WW – It’s really not for me to say. A lot depends on what the government is doing. They’re looking at the whole landscape. They are going to conduct a public consultation and then, there will be discussion between Macau and Beijing. A lot is going on. I really cannot speculate.
Things depend on the government’s survey. Already, we have six mature concessionaires, who are investing a lot of money. In total, we have invested USD50 billion into this place within the last 15 years, but a lot of the money invested was in the early days. We invested 2.5 billion in the Venetian at that time. This could easily be 10 billion, today. So, if you were to build something new now, it’s going to be 100 billion. So, by proportion, one more is not going to change the landscape that much because we’re still building, right?! Galaxy is building phase three; Studio City, phase two. And the Lisboa Palace is still to open. So, there’s a lot in the game already, but if the government thinks that to introduce some more competition is a good thing, so be it. We’re ready.
MDT – LVS dropped Japan’s plans. Is the company looking at other possibilities?
WW – Yes, we dropped Japan. But we already have a lot of commitments. In Macau, we have a USD2 billion commitment on The Londoner investment. In Singapore, we have another USD3 billion commitment for expansion. So the company, in the next two years, is not without opportunity and that’s why [Sheldon Adelson] prefers to focus on these investments, [where] the return is justified. And then of course, if any other opportunity arises, a merger or acquisition, he’s looking at it, but so far, I have not heard of any prime targets yet.
MDT – I asked you this question a couple of years ago on the US-China trade war and you were very optimistic at the time that it wouldn’t affect Macau. Will this affect American operators going forward?
WW – This is like America’s overall strategy towards China; it’s not just a trade issue. Some say we’re entering into a Cold War type of mentality, but we’re not in trade and Macau is a special administrative region. So I do believe the Chinese government is going to look at Macau’s overall stability as a very important consideration. I hope we’re not being used as a pawn in any of this because we need a rational analysis of what we have done, what our contribution is, why we should be here. So far, we haven’t heard that we’re being used in this context of the US-China trade war.
MDT – One last question on the GBA. How much do you want to be part of this project of which Chief Executive Ho Iat Seng seems very keen?
WW – We are very keen. I think there’s a good prospect that there’ll be greater integration between Hengqin and Macau. Now, if that happens and if cross border arrangements are made more convenient, it may help us fill the gap for hotel accommodation and it also may mean that we have bigger space for exhibitions. Right now, one of the biggest challenges for Macau is that overnight accommodation is still in great demand. If you look at before the pandemic, our occupancy was over 95%. That is a very high ratio. If we can [access] land supply in Hengqin, we can build hotels, then shuttle people here every day.
MDT – It all depends on having a seamless connection.
WW – Yes, a seamless connection. For example, our staff going to work there every day; how are they treated for tax? There’s a lot of government measures that need to be put in place for a full integration or better integration. We are interested in following the government’s lead.