LUI CHE WOO Chairman of Galaxy Entertainment Group.

The founder of Galaxy Entertainment Group and an illustrious public figure who has contributed to Macau for over 50 years, Lui Che Woo has a unique vision

When Hong Kong-listed Galaxy Entertainment Group entered the casino and hospitality sphere – expanding from its roots in property construction – many people questioned its decision to venture into parochial Macau. However, Lui Che Woo, chairman of Galaxy, begged to differ. In retrospect, Lui has been proved absolutely correct in his business acumen. At the time of his initial decision, the gaming revenue of the Macau market was $2.8 billion. Just five years later, it has increased to $10.6 billion, representing growth of 279 percent.

Lui is Chairman of the Hong Kong-listed K. Wah Group, which is best known as a leading construction company and hotel operator. He surprised the world in 2002 by outbidding 18 contenders to win a gaming license in the newly expanded gaming industry of Macau. However, it was not a coincidence. Lui had a clear vision that Macau, as a gateway for mainland Chinese to reach out to the outside world, would become a leading global gaming and entertainment center – challenging many other prominent global tourism destinations.

“China is the second-largest and the fastest-growing economy in the world,” says 78-year old Lui. “There is a strong appetite amongst billions of Asians for the best entertainment and lifestyle the world has to offer. As a Chinese company, we understand the needs and aspirations of our people on the mainland. We are confident that we can meet the expectations of our customers and that Galaxy will become a leading brand in the gaming industry in Asia.”

Born in China’s Guangdong province, Lui moved to Hong Kong at the age of four, and built his success with his own hands. His business kingdom started from construction materials and quarrying, then expanded to real estate development, the hotel industry and then the gaming and entertainment business. The one constant in Lui’s rise has been his clear vision of business and sound business strategies.

As Lui anticipated, the Macau gaming industry has been experiencing rapid growth in recent years. In 2006, the total gaming revenue of Macau accounted for $7 billion, exceeding even Las Vegas. Among the 27 million visitors to Macau last year, 55 percent were from mainland China, with a surge in arrivals from South East Asia, South Korea and Japan.

“The business environment in Macau is highly competitive,” explains Lui. “We have the presence of a number of popular gaming brands from overseas. While there are things we can learn from them, we are confident that adaptation is required to meet local needs in Macau, and Galaxy has the distinct advantage of local knowledge. Galaxy’s business strategy to differentiate itself from other market players is to bring the best of Eastern and Western cultures, cuisines, entertainments and lifestyle together. Our business model focuses on both the world-proven Chinese VIP gaming market and the fast growing mass market that is made up of hundreds of millions of aspiring Chinese and southeastern Asian customers.”

In 2004 when Galaxy first entered into the Macau gaming market, it adopted a low-profile approach to establish a solid business foundation. This involved other parties putting up capital and supplying suitable premises from which Galaxy was able to run casinos on a management fees basis. Galaxy now manages four of those premises, universally known as City Clubs. They are Waldo Casino, Rio Casino, President Casino and Grand Waldo Casino. Every Galaxy City Club Casino is located in specially designed leased property. In total, these City Clubs provide more than 250 gaming tables and other gaming facilities. The City Clubs strategy allowed Galaxy to gain a thorough understanding of the gaming market, to recruit and develop staff, and most importantly to develop long-term strategic relationships with junkets in the critical VIP gaming segment that accounts for so much of Macau’s casino revenue.

The second phase of the Galaxy strategy was to acquire a premium development site in the central gaming hub of Macau and develop its own purpose-built 38-storey hotel casino complex – Star- World. As the first flagship entertainment complex of Galaxy, StarWorld provides more than 500 hotel rooms and a penthouse Presidential Suite of 6,000 square feet. StarWorld is the only hotel in Macau to be awarded the prestigious “Five-Star Diamond Award” by the American Academy of Hospitality Sciences, in 2007.

From a financial perspective, StarWorld is an excellent example of cost-effectiveness. The total development cost of Star- World was $385 million, a quarter of what its neighbour, Wynn Macau, cost. Currently, StarWorld is generating a 37 percent return on its investment.

Following the successful experience of StarWorld, Galaxy’s next initiative was to acquire a massive casino development site in Cotai Macau of 106 acres, with planning for the world’s largest gaming and casino resort – the Galaxy mega resort. Marketed as an all-in-one destination for gaming, entertainment and leisure, the Galaxy mega resort includes one of the largest gaming halls in the world – as large as thirty-six basketball courts – an unparalleled lush podium playground with white sand beach, the largest wave pool in Asia, cabanas and private villas, and three world-class branded hotels. The inauguration of Area I of the Galaxy Mega Resort is scheduled for 2009.

Galaxy strongly believes in the demand- driven approach. Only when Galaxy first identifies customer demand will they respond with the requisite construction. For example, the construction of StarWorld only took 21 months from breaking ground to the formal opening of the 38-storey Hotel Casino.
Another unique advantage that Galaxy has is its development pipeline is fully cash funded – it has successfully built a cash reserve of HK$9 billion ($1.15 billion) in just 5 years.
“I am extremely confident that the business strategies that we developed on day one are still relevant today and will continue to work in the future,” says Lui.

“My vision is for our business success in Macau to enable Galaxy to develop itself into the leading gaming and entertainment corporation in Asia. In addition, I also hope that as a result of our effort, we are able to find a new direction for the gaming and entertainment industry, which will strike a perfect balance between gaming and non-gaming activities. It is my vision that in the future, gaming will no longer serve as the single incentive for customers to visit us. Instead, customers will stay longer in our hotels for a variety of activities and services including gaming, leisure and entertainment activities,” he says.