Quarry miner turned Galaxy casino boss doubles down on Macau
MACAU (Reuters) - Francis Lui's rise to the top job at one of Macau's biggest casino operators was far from glamorous. At 23, the son of Hong Kong construction tycoon Lui Che Woo was forced to don a hard hat and boots and sent to work in a quarry for three years before he was allowed to sit behind a desk.
"People think you come from a wealthy family, you probably had a chauffeur driving you to work and you put on a tie and jacket. No!" laughed Lui, now the 57-year-old head of casino operator Galaxy Entertainment Group Ltd.
Lui, who formally took over last year from his father, has helped build Galaxy into Macau's No. 2 casino operator by stock market value. He has drawn on both his China and overseas experience to expand in the booming Chinese gambling hub and compete with rivals like Wynn Macau Ltd and MGM China Holdings Ltd.
A graduate from the University of California at Berkeley with an engineering degree, Lui is among a new generation of Asian corporate leaders with international savvy taking the reins at family-owned businesses. His peers include Lawrence Ho, head of rival Melco Crown Entertainment Ltd, and retail heir Adrian Cheng.
Galaxy, which had a background in construction and engineering but no gaming experience, entered the former Portuguese colony through a joint venture with U.S. billionaire Sheldon Adelson in 2002 - a time when Macau was better known for violent gangs than luxury casino resorts.
Months after winning a concession in Macau, the only place in China where the country's 1.3 billion people are allowed to gamble in casinos, the two companies parted ways citing differing management styles. Las Vegas Sands Corp, through its Macau unit Sands China Ltd, went on to build four properties, while Galaxy started operating small city clubs before developing two large-scale casino resorts.
Galaxy, Macau's only homegrown player besides Stanley Ho's SJM Holdings Ltd, had been doing business in mainland China for 20 years before entering the territory. Lui said this experience helped it to see early on Macau's potential as a place to capitalize on the growing ranks of wealthy Chinese.
HOT POT AND INSTANT NOODLES
Macau, the world's biggest casino market, raked in $38 billion in gambling revenue last year - more than six times that of the Las Vegas strip. It relies heavily on mainland Chinese tourists, with more than 25 million visiting last year.
Despite the recent boom, Lui said the family took a leap of faith by entering Macau more than 10 years ago when financing appetite for projects was tepid and security concerns were rife. Its initial investment in Macau of HK$8.8 billion ($1.1 billion) was seen as crazy at the time, he said.
Lui said the company's lack of prior experience in the gambling industry did not prove to be a major hurdle.
"I feel this is not rocket science. This is about understanding who your customer is," Lui told Reuters in Galaxy Macau's Macallan whisky bar, where patrons sit under stag-antler chandeliers and a fireplace illuminates the lounge.
"We felt the customers in Macau would want something very different (from the Vegas model)," said the bespectacled Lui, dressed in a slate-colored suit.
Being Chinese has helped Galaxy better understand the preferences of Chinese customers compared with foreign rivals, Lui said, citing as an example stocking some rooms with a hot pot and instant noodles rather than a coffee machine.
Experience in the hotel business through Lui Che Woo's K. Wah Group, and in construction and real estate in Chinese cities like Shanghai and Guangzhou, has helped Galaxy build efficiently and economically in Macau, Lui added.
Galaxy Macau, which opened in 2011, cost $2 billion to develop, half of what Sands China spent to open Sands Cotai Central in 2012 and what Steve Wynn has budgeted for Wynn Resorts' new Macau property, scheduled to open in 2015.
Armed with the biggest plot of land on Macau's Cotai strip, Galaxy is set to double its footprint on Cotai by 2015 with a new casino. The casino will be one of six new properties scheduled to open in Macau over the next four years.
NOT PURE CHINESE
While Galaxy focuses on Chinese and Asian clientele, Lui maintains that the company is not a "pure local Chinese company who does the Chinese way". Management style is participative and relies on a large team of expatriates.
Lui said his father had encouraged him to bring in international expertise to manage the gaming operations and had fostered a culture in which most employees have been with the group for more than 20 years.
While the Lui family's assets include Hilton and Stanford hotels in the United States, the casino operations have been the most lucrative, propelling Lui Che Woo's net worth to $11 billion this year, making him Hong Kong's fifth-richest person, according to Forbes.
Shares of Galaxy Entertainment have surged to around HK$41.00 ($5.28) from a 2008 low at HK$0.50 when development in Macau had ground to a halt. Galaxy has a market value of $23 billion, ranking it second in Macau behind Sands China.
Looking ahead, Lui said that the development of Hengqin island over the next few years would be a game changer for Macau.
Situated 200 meters across the water from Macau's Cotai strip, Hengqin is three times the size of Macau and has been designated a state economic development zone. No gaming will be allowed but the mountainous island is gearing up to open recreational facilities that include a 22,000-cubic-metre whale and shark aquarium.
Galaxy is already looking at potential investments such as sports stadiums, golf and a marina to complement its casinos.
Lui said he is so bullish on Macau that he is not as keen to expand overseas as other players have been, like Melco in Manila and Caesars Entertainment in South Korea. Galaxy recently bought Grand Waldo, an old casino resort next to Galaxy Macau that will be revamped.
"What we have seen in Macau in the last 10 years has been a miracle ... certainly I think this is just the beginning," he said. ($1 = 7.7598 Hong Kong dollars)
(Reporting by Farah Master; Editing by Chris Gallagher)
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