- Wealth of Lui Che-Woo, 86, more than halved since 2014 peak
- Company to build water sports facilities for Hengqin resort
Macau’s decade-long gambling boom made Lui Che-Woo a multi-billionaire and his casino company number three in the world’s largest gambling hub. The Galaxy Entertainment Group Ltd. chairman is now venturing into something more family-friendly: theme parks.
The next two phases of the HK$86 billion ($11 billion) Galaxy Macau project will include “something special and high-tech” similar to the movie “Avatar,” said Lui. Compared with larger theme parks such as Walt Disney Co.’s $5.5 billion Shanghai park that’s due to open in June, “our park will be smaller but unique,” he said in an interview in Hong Kong.
“Nowadays you already see that all these theme parks all have different special ideas,” said 86-year-old Lui, who made his first fortune in construction before entering the casino industry in his 70s. “So we’re thinking of how to compete against them.”
Casino owners in Macau are under pressure to come up with ways to attract tourists two years after President Xi Jinping ordered the city to diversify from gambling. As China’s campaign against graft continues to scare off many of Macau’s high-stakes customers, Lui isn’t the only one looking for new ideas, with Melco Crown Entertainment Ltd.’s Hollywood-themed Studio City opening last October.
“Theme parks are a great idea and Macau is desperate for more non-gaming attractions,” said CLSA Ltd. analyst Aaron Fischer. “These investments are in line with government demands so this will further strength relations and reduce the risk of the license not being renewed.”
Returns on theme parks are “quite low” however, Fischer said, adding he would also like to see Galaxy to add another 6,000 hotel rooms and convention space to help improve its mid-week occupancy rates.
Competition for the mass-market segment, referring to gamblers who don’t play in VIP rooms normally reserved for high-stakes players, is heating up as Las Vegas tycoons Steve Wynn and Sheldon Adelson get ready to open new resorts in the second half of this year.
Casino shares fell in Hong Kong trading, with Adelson’s Sands China Ltd. and Wynn Macau Ltd. down as much as 4.7 percent and 4.6 percent respectively and Galaxy fell as much as 3.9 percent. Bloomberg Intelligence’s index of Macau gaming stocks fell as much as 3 percent, while the Hang Seng Index lost as much as 1.2 percent.
The move to attract more Chinese tourists comes as rising average wages over three decades have spawned a working and middle-class with more discretionary cash that’s more willing to spend on leisure and fun. Going head-to-head with Disneyland, China’s richest person Wang Jianlin opened Dalian Wanda Group Co.’s first theme park in southern China last September and is spending 50 billion yuan ($7.7 billion) on a movie-plus-theme park in China’s eastern city of Qingdao.
The Galaxy Macau Phase Two and Broadway Macau projects started operations last May incorporating a 3,000-seat theater that’s meant to broaden its appeal to families and tourists. The two properties boosted Galaxy’s market share in the mass-market segment, helping its fourth-quarter earnings beat analysts estimates.
Construction of the third and fourth phases of Galaxy Macau, which will cost as much as HK$50 billion to build, were originally planned to start by end-2013, according to the company’s 2012 annual report. The expansions were delayed as Galaxy re-evaluated the plans amid Macau’s casino downturn, deputy chairman Francis Lui, son of the chairman, said in a briefing last month. Site investigation on the new phases is expected to start this year, the younger Lui said.
Galaxy makes up three-quarters of the elder Lui’s $7.3 billion wealth according to Bloomberg Billionaires Index, making him Hong Kong’s 10th-richest. As Macau’s gambling business tumbled, Lui’s wealth more than halved since the peak in 2014, when he was at one point Asia’s second-richest person. Wynn and Adelson’s fortunes both declined about 30 percent as their Macau units struggled.
Lui, who has transferred $1 billion worth of his companies’ shares to charitable foundations last September and set up a “Lui Che Woo Prize” for contributions to areas such as food safety and medicines, said he’s circumspect about the current state of Macau’s gambling market, calling the recent decline “reasonable” after a decade of rapid growth.
“We continue to invest in Macau," he said. Another of Galaxy’s non-gaming resort will include water sports facilities located on Hengqin, an island that’s part of mainland Zhuhai city neighboring Macau, with details to be announced in the second half of this year, Lui said.