James Packer, Chairman of PBL, and Lawrence Ho, Group Managing Director of Melco, joined forces to kick off the groundbreaking ceremony for Crown Macau in Dec 2004.

Melco and partner PBL’s spectacular City of Dreams leisure, gaming and entertainment complex will surpass anything else in Asia.

While new foreign companies are moving into Macau’s gaming scene, fresh input is also coming from existing Macanese companies who are reinventing themselves to form a crucial part of Macau’s new future. One such company is Melco International Development Limited, one of the oldest listed companies on the Hong Kong Stock Exchange, whose origins date back to the establishment of the Macau Electric Light Company almost 100 years ago. Today Melco, under the leadership of its young and energetic Managing Director, Lawrence Ho, is determined to become the dynamic new face of gaming not only in Macau but also throughout Asia.

The company has turned the gaming sector on its head and already established itself a considerable base in Macau’s gaming industry with its Mocha Slots. Proving slot clubs really can work, the phenomenally successful chain combines an original blend of trendy coffeehouse appeal with the entertainment of a gaming lounge. Mocha Slots’ lounges have become so popular that the gaming business operated by Melco now captures roughly 35% of the total slot machine turnover in Macau with only 25% of the total number of machines, and take in daily revenues that double even those of the average Las Vegas slot machine. “When we launched Mocha there were only 800 slot machines in the whole market and people told us not to bother, that they just didn’t work in Macau,” explains Mr. Ho. “But we wanted to try it, so we packaged it and marketed it to a niche market – the younger, more leisurely crowd. Mocha is like a mix of Starbucks and an Australian slot club. We now have 700 machines in four slot clubs and have quadrupled the revenues that our predecessors were getting.”

Melco’s foray into the slots market has been an undoubted success. Although the slots market is the driving force of casino revenues in Australia and the U.S., revenues in Macau account for a small percentage of total income. Through this innovative spin on the traditional slot machine parlor, Melco has proved there is indeed a rosy future in this market and is set to be a major contributor to the gaming income of both Melco and Macau. Melco also plans to open two to three outlets in areas with high tourist flows, particularly within or near two-star or three-star hotels.

In 2004, Melco teamed up with Australia’s largest media and gaming conglomerate, Publishing and Broadcasting Limited (PBL), controlled by mogul Kerry Packer and with James Packer as Chairman.

PBL, which is the owner of Melbourne’s Crown Casino and Perth’s Burswood Casino, formed an exclusive Asian joint venture with Melco and the partnership has announced two new projects so far this year – Macau’s first six-star hotel and a spectacular mega-complex on the Cotai strip. Due to open its doors by the end of 2006, the $190 million Crown Macau will be located on the island of Taipa and will cater to the high limit players VIP market with 17 hotel room floors, five function floors and six casino floors. The hotel will be managed by the Melco PBL joint venture with substantial input from Crown, a globally renowned single-site VIP gaming hotel brand, and will be characterized by its exclusivity, luxurious decor and first-class service. In addition, the quality services and attractive loyalty program at Crown Melbourne can now be offered to VIP patrons in Macau through substantial cross marketing and referrals between the two destinations. “Right now 70% of the revenue in gaming comes from high rollers,” says Mr. Ho. “This has been the case for years, and the 32 Chinese cities where the individual traveler scheme is currently applicable are the most affluent so the Crown Macau will cater to this sector.

Turning the gaming sector on its head through innovation, Melco aims to become the biggest Asian-based gaming company in the world.

As for the mass market, which is expected to be the fastest-growing segment of the market in years to come, the spectacular City of Dreams complex in Cotai, complete with the world’s first underwater casino, will be unlike any other international resort destination in Asia’s Pacific rim. In addition to gaming, this first-class integrated leisure, gaming and entertainment resort will feature lavish accommodation, conference venues, a performance hall and a variety of restaurants, recreation and entertainment facilities. Visually stunning, visitors will be greeted by a modern oasis that appears to float above a crystal lake.

Despite the magnitude of these projects, they are only the beginning of Mr. Packer and Mr. Ho’s creative and ambitious visions for the future. The Melco PBL joint venture is now setting forward clear plans for its Asian expansion. Melco aims to become the biggest Asian-based gaming company in the world and proposals have been submitted for two casino licenses up for grabs in Singapore and the companies are eyeing other regional markets as well. Mr. Ho states: “Both Mr. James Packer and I have said that within the next five years our joint venture would be the biggest Asian gaming developer. We will use our synergies as a platform to enter other Asian gaming markets, and Singapore, Thailand and Japan are all markets that we are considering at the moment. We might not get all three, but I think we have a good chance of getting at least one, if not two.”