As part of his latest bid to increase business influence over global markets, Lawrence Ho Yau Lung, Chairman and CEO of Melco Resorts & Entertainment, tells Business Daily that an expansion of the group’s aviation business is on the cards.
“Managing the customer experience is probably the most important experience in the casino and hospitality business, and it is only going to get more competitive over time in the Philippines or in Macau, or in any gaming jurisdiction,” says the chairman.
Mr. Ho, who already owns and operates an airplane and helicopter, said that he is considering increasing the size of his fleet and focusing more on routes to connect Southeast Asian countries. Several of these countries, which host casino jurisdictions, including Cambodia, Vietnam, Laos, Singapore, and the Philippines, are still considered to be untapped markets.
Melco Resorts has established businesses both in Cambodia, in a partnership venture with Naga Corp., and in the Philippines, where its casino, City of Dreams Manila has been the “number one property” over the last couple of months, according to Mr. Ho.
He claims that expanding the fleet is a decision mainly attributable to the fact that Melco’s business is performing strongly in the Philippines.
“We’ve been very fortunate that our Philippines business is doing very, very well, and the fact that more and more tourists are going to the Philippines and also high-spending, high-roller VIPs are deciding to choose the Philippines as one of their destinations. I think that is why it has prompted us to potentially increase our fleet,” he notes, specifying that one focused on the ASEAN (Association of South East Asian Nations).
According to the mogul, the “cautious approach” they crafted for entering the Filipino market was a strategy devised for tapping an entirely “new jurisdiction” for the company.
“We wanted to grow into the market rather than flooding it,” he explains.
And that’s also the reason why Melco chose to “start off with very little VIP” business there, Mr. Ho adds.
Overall, he expresses, “we are very happy to be in the fastest growing gaming market in the world, and have the fastest growing property in the fastest growing gaming market in the world. So, it is an exciting time, and I think that, even internally, when we first did the Philippines, a lot of people were uncertain about that opportunity, and I think that it has worked out very well.”
Losing a crown, gaining ground
While seeking to strengthen Melco’s connections between gaming jurisdictions spanning Southeast Asia, Mr. Ho’s business has profited from another change that came Melco’s way about a year ago. The separation of Crown Resorts from the Melco-Crown partnership happened at a time when Mr. Ho said he “sensed [the market] coming back.”
“I think it came at a critical time, because the unwinding of the partnership really started twelve months ago, in May 2016, [when] the market was still in a year-on-year decline basis. But even after two years of decline, I said ‘the market is coming back,’ in terms of some of the data that I followed. Global luxury goods sales were improving and the Chinese population now accounts for 30 per cent of the entire world’s purchase of luxury goods. So, I saw the data turning around,” points out the chairman.
Mr. Ho claims that whereas he was “bullish” at that point in time, Crown Resorts’ CEO James Packer, was not as confident about the recovering potential of Macau’s gaming market.
Ultimately, though, Mr. Ho agrees that the relationship with Mr. Packer was an important step in the consolidation and ripening of Melco and Mr. Ho’s early experience in business, in gaming, and in Macau.
Although the son of the local casino legend, Stanley Ho, grew up around the business, he only effectively entered the gaming world following the industry’s liberalization in Macau in 2002, when then-Melco PBL Entertainment was granted a sub-concession from Wynn Resorts in 2006. Mr. Ho was not yet 30 years old.
“Crown and James [Packer] felt it was time, after ten years of being in the market, to make a great return for their shareholders. They had some domestic Australian assets that they are committed to building out and we had a great, adult conversation and decided to start unwinding,” says Mr. Ho.
As Melco’s CEO further notes, “[Packer] was very strategic at the board level, but he wasn’t living it every day like I am. I’m here every day, kind of living and breathing this, going to China, talking to people. But he needed to do what he needed to do and it was a great opportunity for me and for the company”.
At last tally, though, the separation turned out to be strategic for the company, in view of encouraging prospects from VIP rolling and revenue quickly picking up steam in Macau, and with the expansion of the gaming market in the Philippines – although the latest developments following a deadly attack at Resorts Worlds Manila have prompted a call for structural changes, with members of the House of Representatives calling for divesting PAGCOR (the Philippines gaming regulation authority) from its licensing functions, which might still shake things up a little there.
Entrusting for better governing
In addition to the termination of the Melco-Crown partnership, which was followed by some share buy-backs from Melco Resorts, and the cashing in of other Melco subsidiaries – Melco International sold its lottery business, MelcoLot, in mainland China earlier this month – Mr. Ho says he was kept busy by restructuring plans within the company.
“Last year was a very busy year for us. In addition to the conclusion of the Crown partnership, was a massive management organisational restructuring. I wanted to put more emphasis on each of the properties because I felt that Studio City and Altira were not really getting the attention they deserved,” states the Melco chairman.
“In any market, they are great stand-alone properties; but within how we used to do it, with everything centralised, it was like, well, if something didn’t work at CoD [City of Dreams], it passed to Studio City, and if that didn’t work, then it was passed to Altira,” he notes.
Altira, points out Mr. Ho, caters to “a totally different customer base,” and since the property’s opening he says he has “learned a lot,” explaining that the restructuring at the management level was done to maximize decision-making and efficiency in business.
“Now the focus with Andy [Choy] at Altira and David Sisk at Studio City, and Gabe Hunterton at CoD is that they need to decide. They are all part of my Executive Committee team, but they are driving the properties. If there is something wrong with it, they need to fix it right away, rather than constantly saying ‘give me ideas, give me ideas.’ And that’s why our organisational structure has improved, and it is a lot more high-powered now,” he points out.
Looking back at his early hits and misses in his time in the gaming and entertainment business, Mr. Ho admits that this aspect of business is much of what his company is made of.
“We always have a mindset that we want to continuously improve. And that theory is all around the whole company. We don’t just want to be one of the boats that when the tide is rising everybody benefits. We always look at relative performance,” explains the Melco chairman and CEO.