Master of the Galaxy

This article first appeared in the May/Jun 2011 issue of World Gaming magazine

Mr Francis Lui Vice Chairman and driving force of Galaxy Entertainment Group, kindly granted World Gaming an extended one on – one interview on the eve of the opening of the hugely anticipated Galaxy Macau mega-resort, the crowning glory of Galaxy’s seven years as an operator in the Macau gaming industry. Mr Lui spoke candidly with our CEO Andrew W Scott.

 

When Francis Lui walks into a room, everything stops. You can hear a pin drop. Senior Macau gaming executives hang on his every word like teenage boys enraptured by their sporting idols.

And who wouldn’t? Just less than seven short years ago, in July 2004, the then privately owned Galaxy Entertainment Group opened its first Macau gaming property: the modest yet elegant Waldo casino, with a mere 34 gaming tables and 161 hotel rooms. Macau’s new liberalisation policy meant 2004 was the first year since 1961 that casinos outside of Stanley Ho’s SJM group were permitted to operate.

The Lui clan has strong family ties, with the title of Galaxy’s Chairman still held by Francis Lui’s father Dr Lui Che Woo, who founded Galaxy’s parent company in 1955. However, there is no question Galaxy’s driving force is Francis Lui himself, who goes by the title Vice Chairman. His sister, Ms Paddy Lui, is also an Executive Director of the company.

The Waldo was an instant success and the Galaxy Entertainment Group never looked back. July 2005 saw GEG become the first Macau gaming company to list on the Hong Kong Stock Exchange. Galaxy had another busy year in 2006, opening four more gaming properties: Rio (February), President (April), Cotai’s first casino Grand Waldo (September) and finally GEG’s first flagship hotel and casino, StarWorld (October).

StarWorld raised the bar for GEG, boasting 500 world-class hotel suites, 16 VIP gaming rooms, five-star surroundings, truly internationalstandard food and beverage offerings and of course the eye-catchingly slender and beautiful Galaxy Ambassadors (with their Amazonian minimum height of six feet) strolling the lobby and entry points.

But StarWorld was just a hint of what was to come. The jewel in the crown was always going to be a multi-billion dollar integrated resort at Cotai, which would rival or even exceed the mega-resorts of the modern era Las Vegas strip. With the benefit of its parent company’s more than 50 years experience as a property and construction conglomerate, Galaxy Entertainment Group has made that dream a reality with the grand opening of Galaxy Macau, the new GEG flagship property, on May 15.

And to think all this started with just 34 gaming tables, in a humble retrofitted former office building.

With this kind of stupendous success, it is little wonder Mr Lui commands such respect within the Macau gaming industry, a real-world example of that now somewhat sexist but still evocative expression, “leader of men”. One might expect arrogance or hubris from such a person, but instead I found a much more humble man, exceedingly well spoken, whose voice could almost be described as soft. But there was no mistaking the quiet determination, quick wit and sharp focus behind his words.

Andrew W Scott

Mr. Lui, thank you very much for your time. It’s a great honour and pleasure to have you here. It must be a very busy and exciting time for you with Galaxy Macau opening. Let’s start at the beginning. As a young man studying engineering at the University of California at Berkeley, where did you think your professional life would take you, and could you have possibly imagined you would end up running a multi-billion dollar entertainment and gaming group?

Francis Lui

Well, first of all, I had a very good few years at Berkeley. It’s a fine institution where I met a lot of friends and learned how to get a structure up. You see, our family background has always been in construction and property development, so at that time my father said, “Well, maybe you should go into engineering and study at the finest engineering school”, which was Berkeley at the time. So I did that. It gave me very regimented thinking and a disciplined background. It applies to my day-today life where I am able to analyse problems and develop more systematic ways. Not only that, I was able to apply that engineering knowledge and refine layouts and structures so that we can be more efficient and effective.

If you had asked me 20 years ago if I had a dream to manage a multi-billion dollar gaming business I would have had no idea of that at all (laughs)! So it’s like the Chinese saying, it was a matter of fate and somehow fate has asked me to come to Macau and have this golden opportunity to build up a multi-billion dollar gaming empire. I’m very delighted to have this opportunity and I’m sure that we’re doing something right and we’re looking forward to a great future.

AWS

Many of our readers wouldn’t know that Galaxy’s parent company, K. Wah Group, was founded in 1955 and is a property and construction conglomerate. How did this company become involved in Macau’s gaming industry?

FL

Good question, Andrew. In fact, 1955 was the year I was born, so I will always remember when we have anniversaries, as it is also my birthday as well. We have always been a construction company and also a property development company, but don’t forget, we are also a hotelier. We have been managing hotels for the last 30 years. So we do have some experience in the hospitality industry. At that time, we were looking around, we saw what was happening in Las Vegas and what was happening in other parts of the world where gaming was a major industry and we came back with a belief that someday the gaming industry in Macau was going to merge with hospitality and become a super-industry. That was our belief at the time, so we went in and we were very lucky to get a license. The rest, as they say, is history.

AWS

Many see the Macau gaming scene as a battle between the “old school” as represented by SJM with its older casinos and Grand Lisboa flagship, and the “new school” as represented by the new, western operators like Sands and Wynn. Galaxy Entertainment is somewhat of a hybrid: it’s still one of the new operators in the industry, entering after the liberalisation in 2004, but it has a long Chinese history and a Chinese heart and soul. Where do you see Galaxy’s position in this battle between the old and the new?

FL

I have to say that we are the best of both worlds. I don’t think we have a legacy like an old Chinese company that was in Macau for a long time, where a lot of practices are challenging to rectify immediately, and we are not a purely western company, whereby you have to learn the culture and how to build business and establish a network in this part of the world. So I guess we have the best of both worlds. We started with a clean slate and at the same time a lot of our executives, including myself, have been educated in the States. We know how Westerners think, we know how to deal with that. And also at the same time, we have been doing business in this part of the world, well, for almost 30 years for myself. And we know how to do business here, we know the people, we understand the culture, but we also have an open-minded management style, where we take what is working in the western world and bring it to Macau and make it work.

AWS

With the opening of Galaxy Macau, StarWorld loses its status as Galaxy’s flagship casino. What do you see as the future of StarWorld?

FL

StarWorld will always be StarWorld and will be very successful into the future as well. StarWorld and Galaxy Macau are two very different properties. StarWorld is on the peninsula in a great location and will continue to do well. But we feel StarWorld, because of the limitation in its footprint, will always be a VIP focused hotel, whereas with Galaxy Macau we have a big advantage in that we have the biggest piece of land in Cotai and this is where I think we will be making our mass gaming business much stronger. We believe that, eventually, Galaxy Macau will be viewed as the most successful resort destination in Macau because this is an area where, we think, there’s a space for us to own and this is why we are teaming up with hotels like Banyan Tree, which will give people a feeling that for the first time they are finally coming to a resort in Macau.

AWS

In terms of table games Venetian is the biggest casino on the Cotai Strip, and up until now, City of Dreams (CoD) has been the newest. Do you see those two casinos as the major competition to Galaxy Macau?

FL

Well, sort of. In a way we will be competing with each other because we are in the same region, but I’d also like to think that between the three of us, we will become a very big pull for people to come to Cotai. There are more reasons for people to come now because I think we very carefully positioned Galaxy Macau in Cotai. With Venetian, we believe they are more into MICE (Meetings, Incentives, Conferences and Exhibitions) and we believe CoD is focusing on entertainment. But here, at Galaxy Macau, we like to say that we will be the best destination resort in Macau, with the biggest sky wave pool in town and 350 tons of white sand beach which is something very different. So I guess between the three of us, while we are competing with each other, I’d like to think we are also complementing each other well.

AWS

What is Galaxy Macau offering to tempt the players away from the competition? What can players expect to find at Galaxy that they can’t get anywhere else in Macau?

FL

Our motto has always been “World Class, Asian Heart”. This means, when people come to Galaxy Macau, they will find world-class amenities with an Asian sensibility. With all the little things we do everyday, I’m encouraging my staff and my executives to remember this. Whatever we do and with every decision we make, we ask is that going to support our culture of being world class in Asia, and with an Asian heart? So probably you will see that in the way of design it will be very Asian. All our architecture has a very major Asian influence to it. Talking about service, you will probably find that we will use very Asian hospitality in offering our heartfelt service mentality not only to our customers, but also to our own staff. So this is how we think we will win this game. Our food will be pan-Asian with an emphasis on Korean, Japanese, Thai, Taiwanese and of course Guangdong and Sichuan food. These are the things we do. We keep saying that 95 per cent of our customer base is of Asian origin, or Chinese origin, and we think this is what they like to see and feel – something friendly, but something world-class.

AWS

I’d like now to ask about gaming versus nongaming activities in Macau. Las Vegas’ gaming revenue is now less than 50 per cent of its total revenue, but in Macau gaming still makes up more than 90 per cent. There have been some notable non-gaming failures in Macau where some big name shows and restaurants haven’t worked. What is your view on so-called “destination marketing” in Macau?

FL

Remember, the market in Macau has only been opened up for less than 10 years, whereas in Vegas, you are talking about a mature market, which is already 50 years old. So it took time for Vegas to actually evolve from a pure gaming and casino destination into a multidestination resort city. I believe that Macau is going through the same evolution, but faster, so that in 10 years’ time, you will see this very gaming-centric development moving more into integrated resorts. Already there are three or four integrated resorts established. We are the latest one to come in.

So with us coming in, I think we will also influence the future in that if there are new developments, I’m sure the government and also the developer, the license holder, would be more focused and would have a more balanced and experienced approach. We believe this will also attract more people, not only the gamers of today, but also people that want to have a total experience when they come to Macau. We had 25 million people come to Macau last year, but they only stayed for 1.5 days on average. Our belief is that we can drive that 25 million people up, but at the same time, hopefully have them stay longer with us, spending not just on the tables but also in shopping, entertainment and dining.

AWS

A question about baccarat versus other games. At World Gaming magazine, we’re very interested in games. The VIP and mass markets for baccarat made up 88 per cent of gaming revenue in 2009, and in 2010 that was up to 91 per cent. We’ve heard much about trying to diversify the gaming market into slot machines and other non-baccarat table games. What do you think might trigger that shift, if it is ever to happen?

FL

Well, first of all you have to accept that baccarat is a very interesting game. I mean, it has been there for many, many years, and somehow we still can’t find a game that can totally replace it because it is so interesting. I think, especially in Asia where people are passionate gamers, and baccarat is a game where the customers can touch the cards and squeeze the cards, that’s something that sort of relates to the customer better. So you will see that baccarat will continue to be very successful here. But having said that, I feel that for the next batch of customers, especially the resort destination visitors, slots are going to be very popular. We see phenomenal growth in the slot market and this is why at Galaxy Macau, apart from the table games, we are also spending a lot of energy to hopefully get our slot market up and be very successful.

AWS

We at WGM agree baccarat is a fascinating game, and given that fact, and the game’s absolute dominance of the market, do the operators even care about having games other than baccarat? Why even bother? Why not have a casino full of baccarat tables?

FL

Well, we have to satisfy every customer that walks into our casino and they need to find something that they love to do. Baccarat, like we said, is still the most popular game by far for the moment, but there are also people that come from southeast Asia and Japan, and they love other games. So I think in Galaxy Macau, since we consider ourselves as one of the biggest casino hotels in town, we have to offer a range of games, such that we satisfy all our customers.

AWS

Let me ask you a very broad question now. What do you see as the future for gaming in Macau? Where do you think Macau will be in 2015? In 2020?

FL

I wish I had a crystal ball, but I don’t. I think Macau has been very successful in the last 10 years. The growth has been explosive. I think this is only the first wave of our expansion. I think we will see a second wave of expansion coming very shortly. We are 33 casinos right now but of that, three, at the most four, are integrated resorts. The rest of them are more gaming focused casinos. In the future I believe you will see more integrated resorts built in Macau. This expansion will diversify our offerings and probably diversify the economy at the same time. Hopefully entertainment, food, retail and convention businesses will take root in Macau as well, so that it will become a truly world-class resort and tourist destination of Asia. That’s what I see in the future.

AWS

Traditionally Guangdong province and the other southern regions of China have been the greater catchment area for Macau, but we are noticing through feedback from our readership more interest in Macau from the northern areas of China. Is Galaxy noticing more interest from northern Chinese wanting to come here?

FL

Well, I believe that we should look at the phenomenal growth of the middle class in China. We all know that the central government wants high salaries and wages for the middle class so that they become wealthier. I think this is where the 12th five-year plan comes in, too. (Editor: the five-year plans are Chinese government economic development initiatives. These plans have existed since the 1950s.) More domestic consumption is being encouraged, and the middle class is also being encouraged to spend and travel more. I believe these middle class mainland people will, very shortly, become the number one consumers in the world, and the number one travellers in the world also.

So we are concentrating on the middle class, but at the same time, we are thinking about the high-speed train that will connect Beijing to Shanghai to Shenzhen to Zhuhai one day. This is going to make travel easier for people living in the north, who want to travel to the south into Zhuhai, and into Macau. So I think with all this improving infrastructure we will expand. The northern people who couldn’t afford to come to Macau before will find it easier and more economical to visit Macau.

AWS

Will the Cotai strip become the Las Vegas strip of Macau? What do you think of the so-called battle between Cotai and Macau peninsula? Is it even relevant with most companies having properties on both sides? Who will win, Macau or Cotai?

FL

Well, it’s an interesting question. I think in the foreseeable future, the Macau gaming industry will still have two centres. One centre will always be the traditional Macau peninsula and the new area will be here in Cotai. You have to accept the fact that there are still a lot of people coming from Gongbei to Macau for the day experience and these people will continue to go to the peninsula properties. I think for people who wish to have a total experience, to spend a few more days in Macau, you would think Cotai will be their choice. In the near future, hopefully you will see both areas continue to grow strongly.

AWS

You have strong links to mainland China: you’re a member of the Chinese People’s Political Consultative Conference and your business interests extend into mainland China as well as Hong Kong and Macau. How do you think the PRC views Macau in the posthandover context?

FL

The one country system is working. I think the central government really wishes to establish an example that the one country system can work. They can leave the decision making to the local government here and we will still be very successful. I think the success of Macau is proving that right. So hopefully it will be encouraging people in Taiwan today; the success of Macau can be an example for them and they can come back to China one day soon.

AWS

Galaxy and its parent company have a history of giving back to the community. The one that springs to mind for me is K. Wah’s 55th anniversary last year, when your family donated a staggering HK$180 million to worthy causes. What role do you think philanthropy should play amongst the Macau casino concessionaires?

FL

Well, I think it’s a corporate responsibility. Let’s not just talk about gaming companies for a moment. I think for all companies making their riches locally in Macau, or for example in Hong Kong, each of us have a responsibility to give back to society and the community. There’s an old saying in Chinese where you always give back to where you earned your money. I think this is where we started. We give a lot of donations in Hong Kong and in the mainland where we made our wealth and now that we are in Macau, I’m sure the family and the company will continue to be good corporate citizens and we will try to do our best by not just giving out money, but also helping out the needy. We have a social club, and we have a mission to play a role in the community. We want social responsibility to be a part of the culture within the company as well. We’re not just a company; every one of us does care about the community. We are lucky to be earning a good living and a good profit and when you look at the poor, we have all been taught in school, we have to look after them, and we will.

AWS

Mr Lui, you are undoubtedly a busy man. How much spare time do you get, and what do you like to do away from the business world?

FL

These days, I actually don’t have much spare time. I guess after Galaxy Macau successfully opens on 15 May, then I will take a short holiday. My hobby has always been working, but apart from working, I do have a life. I enjoy spending time with my family; I love my family, and I love my dog. So normally, my pastime would be walking the dog on the hill on a Sunday morning. I love to spend some time with the family, just eating and walking around. I used to enjoy hiking and if I had some time I would restart my hiking hobby again.

AWS

Thank you once again for taking the time to chat with us and all the readers of World Gaming magazine.

FL

It was my pleasure, Andrew.