Deft hand from a card king
In the fuss surrounding the Grand Lisboa casino's first-phase opening at the weekend in Macau, observers have largely overlooked the extraordinary example that Stanley Ho Hung-sun is setting for his peers in Hong Kong.
The story so far seems pretty straightforward. Mr Ho's Sociedade de Turismo e Diversoes de Macau SA (STDM) ran an immensely profitable gaming monopoly in Macau for 40 years. The special administrative region's first chief executive, Edmund Ho Hau-wah, opened the market in 2002, and so Mr Ho formed Sociedade de Jogos de Macau as a subsidiary of STDM to bid for a gaming licence.
Since then, SJM and STDM have had to adjust to the reality of competition, as the newcomers, Wynn Resorts and Las Vegas Sands, opened their own casinos and split their licences with Melco-PBL and Galaxy Entertainment, respectively (SJM split its licence with MGM Mirage). Casinos under the control of SJM still have more than half of the gaming market, but their position has eroded rapidly.
The foremost beneficiaries of this change have been the people of Macau. Since 2002, visitor arrivals have doubled, to 21.9 million last year. Gaming revenues, and therefore taxes paid, have risen by more than half since the first of the new casinos opened - the Sands in 2004 - beating all expectations last year at US$6.9 billion. Employment is full, and wages are soaring.
You could say that little of this is directly thanks to Mr Ho, as he was forced to give up his monopoly, and market forces are taking care of the rest. But that would overlook the genius of how he has played the cards dealt to him over the past four years.
He has paired his children off with international groups - daughter Pansy Ho Chiu-king is in a joint venture with MGM Mirage, and son Lawrence Ho Yau-lung is in a joint venture with PBL of Australia. Further, Mr Ho convinced his own shareholders of the need to revamp their operations to prepare for a public listing, and launched a strategy to re-engineer a monopoly into a powerful competitive force.
To be sure, SJM and STDM don't need anybody's help to compete in the new Macau. They still run all the ferries and helicopters going into Macau, its main airline and much else of the tourism support infrastructure.
What Mr Ho opened on Sunday is astonishing: resembling a giant Faberge egg, the Grand Lisboa's first phase has a casino and six restaurants. The complex will open its hotel tower, in the shape of a lotus flower, by the end of the year.
Perhaps more significant is what Mr Ho is doing on the software side. All of SJM's new projects under way in Macau, which include Ponte 16 at the old ferry building, and a gigantic mixed-use development next to the existing ferry terminal, are under a new management team led by Frank McFadden, an experienced Australian who was until recently overseeing the Sands' operations. SJM is competing hard in the market for talent, with attractive packages and benefit schemes that are hard for anyone to beat.
Mr Ho is providing a noteworthy example to tycoons in Hong Kong who fear an erosion of their own cosy set-ups in sectors of the economy where little real competition exists: embrace change, open up, bring in new ideas and capital, and look for new opportunities as the market takes off. Everyone stands to be a winner.
Anthony Lawrance is the publisher of destination-macau.com.
