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The Son Also Rises

Lawrence Ho debuts his iconic Macau property, City of Dreams

The Son Also Rises

For the people, Lawrence Ho has the proper respect for his father, Macau gambling magnate Stanley Ho. After all, he followed his father into the family business and recognizes what his father has contributed to the former Portuguese enclave, now a Special Administrative Region in China.

But it’s clear, soon after meeting him, that Lawrence wants to blaze his own trail in Asia and establish his own reputation. Together with Crown Casinos, Australia’s premier gaming company led by another “son”—Jamie Packer, whose father, Kerry, was a media giant in Australia and one of the world’s most sought-after “whales” or high rollers—Ho helped form and operates Melco Crown Entertainment, using a subconcession license purchased from Stanley Ho’s SJM company.

As one of Stanley’s 17 children (by several wives), Lawrence says he learned his work ethic from his father.

“He had a lot of money but his family lost it,” says Lawrence Ho. “He had to start from scratch. That’s probably harder than not having it at all. He’s taught me hard work and determination.

And it has been this determination that has helped Ho create and complete the new City of Dreams integrated resort on the Cotai Strip in Macau, across from the Venetian.

Dream Time

In the face of a global economic crisis, visa restrictions on visitation from mainland China and slumping gaming revenue in the SAR, Ho has put together an impressive property that is designed to take advantage of all Macau has to offer a casino operator.

“The opening of City of Dreams represents a culmination of nearly five years of planning and development,” says Ho. “As our flagship property, it represents a major step forward in Macau’s transformation as the region’s premiere leisure, entertainment and gaming destination.”

Ho says he considered many models before settling on his design for the City of Dreams.

“The original idea for City of Dreams that I designed came to me five years ago,” he explains. “At that time, I visited Las Vegas and a lot of international resorts to visit the casinos and the hotels. One of the things I disliked was the gigantic, 3,000-room hotel. If you have to wait 45 minutes for a cup of coffee or an hour and a half for a steak, that’s not good service. When you’re talking about the leisure business, it’s really about the total experience. Rather than try to build these resorts easier, as it would have been to build 3,000 rooms, we should try to accommodate the customer the best that we can.”

And that meant smaller hotels, a property that was more convenient to the guests and a something-for-everyone mentality.
   

“All the buildings are erected on a gigantic podium, so you have great access to each of them,” says Ho. “I’ve heard numerous complaints from people about properties where people have to walk 20 minutes from their rooms to a restaurant, convention center, the entrance or the casino. At our property, each hotel is conveniently located near all these things. From the hotel lobby to your room, it’s never more than two minutes. That was the concept at the beginning for the City of Dreams.”

Because the Macau government requires that visitors to a hotel or shopping area not be forced to cross the casino floor, Ho says his team designed the retail segment of the City of Dreams to be that conduit, thereby combining a passageway with entertainment.

“It’s part of the integrated approach that we have,” he explains. “Our overall common area is the Boulevard, where our retail shops are. Rather than just having access, we made use of the retail area as the main portal to take people from one place to another. People have been very pleased with this concept. And it helps our gaming, too. Our casino is located in the heart of the building, so to conform with the rules of the Macau government, people should be able to walk from one point in the property to another without having to cross through the casino. This allows us to do that in a creative manner.”

With 420,000 square feet of gaming space (520 table games and 1,350 slots), the City of Dreams is a massive expansion of the Macau market. And while it adds only a few hundred hotel rooms in the Crown Tower and the Hard Rock Hotel, another 800 rooms will come online when the Grand Hyatt Macau opens later in the year.

Ho’s gamble with City of Dreams is doubled down by his partner, Packer. Ho says business at this time is actually better than when the company opened its first casino, Crown Macau, now re-branded as the Altira Macau.    

“Things were much tougher when we opened Crown Macau Tower two years ago. We consider City of Dreams’ opening to be a much better time and business climate,” he says. “Melco Crown Entertainment still believes in our future, and also in the bright future of Macau. We were determined to complete City of Dreams this year, and the recent turbulence in the global markets has not deflected us from our task.”
   

The iconic architectural feature of COD is the domed “Bubble,” an attraction that features an immersive multimedia experience produced by Falcon’s Treehouse. The first few days produced a huge demand for the 15-minute show. The concern, however, is that it’s a one-time-only experience, even though Falcon’s Treehouse expects to install a new show every six months.    

“The Bubble is really a full-on Hollywood production that extends 360 degrees,” Ho says. “Technically, it’s impossible for any one person to see everything. It has a standing capacity of 500, so each time, you’re seeing a different show from a different angle. So far, the response has been tremendous.”

Ho also believes the Bubble will create an awareness of Macau by the general public that previously wasn’t there in Asia.

“When we embarked on this journey five years ago, there weren’t many attractions in Macau beyond gaming,” he says. “When people ask why we don’t have more visitors from other parts of Asia, the answer is simple. We just didn’t have enough attractions. Hopefully, this will be the first of many.”

All Things to All People
City of Dreams looks like a mass-market play—with the huge public casino, large retail development and non-gaming entertainment—and it is. But it’s also much more, says Ho.


“At City of Dreams, we’ve really taken a portfolio approach,” he says. “We have a lot of mass capacity in Hyatt and Hard Rock. But we’ve also segmented it. If you go on the property, from the furthest east and west sides, it’s almost a transition from the mass market to the VIP market. On level 2 and the upper levels of Crown Tower, we have private VIP salons. We’re not trying to be greedy, but at City of Dreams, we’re using different products to target different segments.”

Ho says Crown is the best at the VIP market in Asia, but bristles when it is suggested that is only because it pays the highest commission to the VIP operators.

“We were only the highest paying commission for just two months before everyone paid the same thing,” he insists. “And some people have gone beyond that pretty significantly. The VIP market is always going to be a big part of Macau. We’re still developing the credit history in China, so we’re going to need the VIP market for a long time.”

But Ho believes the mass market will be crucial to the success of City of Dreams, especially since it has not experienced the downturn suffered by the VIP market.

“The mass market has actually grown quite steadily,” he says. “Since 2008, the VIP market really dropped off, and for good reason. The global financial crisis has really affected the VIPs and their overall net worth. But the mass market has actually never fallen. Even in 2009, the market continues to grow and continues to be strong. Within mainland China, which is our primary market, there is a young and relatively wealthy group of professional people who are willing to spend. If you can give them a quality experience in Macau, they are more than happy to spend it.”

Ho is hopeful that Melco Crown can penetrate the Chinese market to a greater extent to grow the mass market.

“I think there’s a lot more work that can be done,” he says. “So far, the market has grown very nicely, but there’s more we can do. Visitation from Guangdong province in mainland China, for example, has fallen at a pretty staggering rate since the visa restrictions. But we can do more work. There are plenty of provinces where travel to Macau is still banned altogether. We can do more work with tour groups and travel agents.. The mass market is a developing market.”

To attract this mass market, Ho goes back to the name of the property, which he says truly reflects his philosophy.

“For me, there’s a deep meaning behind the name,” he explains. “Rather than us trying to force our customers to live our dreams by building a heavily themed property, we’re going to try to fulfill their dreams. If they want to be a rock star, they can hang out at Hard Rock. If you want to be a VIP high-roller, then Crown Tower is the place for you. Hopefully, we can do that.”

Service and Cooperation
Like all good casino operators, Ho understands that even the newest, brightest and most appealing physical plant won’t work without the dedication of the employees. So, Melco Crown spent months training its employees on something called “Dream Service,” the standard that is set for all company properties.

“I believe in continuous improvement,” he says. “I’ve asked for feedback from all our employees and visitors so we can get better. Without our employees, it would just be a well-built property. That’s the hardware, but we need the software, the people, to make it a success.”

In addition to the feedback, Ho says his company is poised to respond to concerns from employees.

“At City of Dreams, ‘Dream Service’ ensures that each one of our 7,000 staff understand what is expected of them,” he says. “But it all starts with the philosophy that Crown brought to Macau. We treat our staff very well because we understand at the end of the day, happy employees mean happy customers. I even have the ‘Dream Service’ mission statement in my wallet!”

Another crucial element to the success of City of Dreams is cooperation with its Cotai Strip neighbor, the Venetian. It hasn’t been easy so far. For months, Venetian executives refused to meet with Melco Crown officials to discuss ways they could work together, but the recent formation of a Macau casino association has thawed the chill in the relationship.

“There are a lot of areas where we have common and mutual interests,” Ho explains. “We’re very happy that after two years of negotiations, we got at least the pedestrian crosswalk installed. Hopefully, the footpath is going to come next.

“Ultimately, we’ll work closely together. We’ll use some of their Cotai ferries since their terminal is closest to us. We’ll have extensive discussions on areas where we can cooperate.”

Asian Ambitions
For Melco Crown, becoming established as the leading casino company in Asia is one of Ho’s goals. He’s been actively searching for new venues in the region.

“We’re focused on Asia,” says Ho. “We’re definitely looking for opportunities in this part of the world. That said, for the next 12 to 18 months, we’re going to concentrate on operating City of Dreams. That is our priority.

“We’ve been looking at Japan and Taiwan for two or three years now and built up some very good contacts. When the time comes, and all our assets are performing well, I’m sure we’ll jump in with both feet.”

Major casino companies also do the small, but important, things that Melco Crown has embarked upon, like a focus on responsible gaming.    

“This is an issue that is especially close to my heart,” he says. “At Melco Crown Entertainment, we are one of the leaders in terms of corporate social responsibility in Asia. There are definitely problem gaming areas that we focus on. That’s why we’ve implemented several programs. We imported one from Crown in Melbourne years ago. We continue to use that program and we’ve refined it for the Macau market with our CSR team. We’re happy to work with the government on these issues because it’s good for society and reduces the negative publicity for the gaming industry.”

Melco Crown also wants to play a leading role in the development of gaming in Macau. He’s concerned about the impact of the Singapore casinos, which will debut next year. He says it may be time for the government to consider reducing the somewhat onerous Macau tax rate.

“I would like to see a lower tax rate,” Ho says. “A case can be made that a lower tax rate would actually create higher tax revenues. There’s a portion of the business going to other Asian countries where the tax rate is lower. And this is even before Singapore opens, which I believe is really a credible threat, unlike some of the smaller Asian countries. We’ll see what happens when more integrated resorts open.”

Ho recognizes that the casino association was the brainchild of his father, Stanley, and is central to Stanley Ho’s understanding of corporate involvement in the community and its wellbeing.

“He’s a very popular individual in Macau. He’s always told me that we should all get along because we’re all involved in the same community. It makes a lot of sense.”

In Macau, the son may eclipse the father. 

Roger Gros
Roger Gros is publisher of Global Gaming Business, the industry's leading gaming trade publication, and all its related publications. Prior to joining Global Gaming Business, Gros was president of Inlet Communications, an independent consulting firm. He was vice president of Casino Journal Publishing Group from 1984-2000, and held virtually every editorial title during his tenure. Gros was editor of Casino Journal, the National Gaming Summary and the Atlantic City Insider, and was the founding editor of Casino Player magazine. He was a co-founder of the American Gaming Summit and the Southern Gaming Summit conferences and trade shows. He is the author of the best-selling book, How to Win at Casino Gambling (Carlton Books, 1995), now in its fourth edition. Gros was named "Businessman of the Year" for 1998 by the Greater Atlantic City Chamber of Commerce, and received the Lifetime Achievement Award from the American Gaming Association in 2012.

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