Wheels of fortune: Meet Pansy Ho, the billionaire behind Asia's gambling mecca in Macau
The former Portuguese colony is fashioning a plan to attract tourists beyond its famous casinos
James Ashton
Saturday 13 April 2013
Pansy Ho has a confession to make. Hong Kong's richest woman might have built her fortune on the phenomenal rise of Macau, China's very own gambling mecca, but don't expect her to take a seat at the baccarat tables or slot machines of her own moodily lit casinos. “I don't play,” she says with a rueful smile. “I'm a terrible gambler. I don't know half the rules and I'm not really patient enough to sit through hours of gaming.”
Her approach might not be such a surprise. After all, whoever heard of a
bookie or a croupier with a gambling habit? And Ms Ho, 50, has had all her life
to become inured to the lure of piling everything on red in smoky rooms where it is
forever night time. She is the daughter of Sir Stanley Ho, known as the "King of
Gambling" for turning a once-sleepy Portuguese colony into a glitzy tourist
hotspot that today generates five times the gaming revenues of Las Vegas.
One of 17 children from four wives, Ms Ho's emergence as her father's most likely heir now sees her spearhead a new plan: to make Macau appeal to more than just high rollers and Hong Kong day trippers. If she gets it right, the Monte Carlo of the Orient, which has suffered from tales of a dark past and mafia links, will enjoy a very bright future.
Looking beyond gambling for income is a move that almost contradicts Macau's make-up. Half of the jurisdiction's economy is derived from games such as blackjack and Fan Tan, or betting on horses and dog races. It is still the only place in China where table gaming is legal. But Ms Ho and the other industry players don't want tourists to spend less at the tables – they just want them to spend more elsewhere on their stay.
"We want to broaden out: we want to have the shows, the music, the retail experience, maybe even certain themed attractions," says Ms Ho, without wanting to compete directly with Disneyland Hong Kong across the water. So even though Macau has left Vegas trailing in its wake, it sounds as though she wants to emulate the famous Strip where Cirque du Soleil and Celine Dion play for months at a time.
Her eye is also on something closer to home, though. "We need to find ways to bring to Macau something interesting, maybe not unlike what Abu Dhabi is doing."
We are talking on the 45th floor of the Etihad Tower in Abu Dhabi, where delegates to the annual World Travel & Tourism Council summit can marvel at the emirate's Saadiyat Island project, which is creating a cultural quarter from scratch – with its own version of the Guggenheim museum and Louvre gallery – due for completion by 2020.
Macau's bright lights already draw 28 million visitors a year, and many more are expected when a road bridge linking the city to Hong Kong opens in 2017 and light rail adds a further connection to a high-speed line to Guangzhou. That infrastructure will be matched by new hotels that are being thrown up fast.
"One aspect of what everybody is keen to explore, is that in five years' time Macau will have 40,000 hotel rooms, close to Hong Kong but still really a much smaller place, so what do we provide when people come to visit?" Ms Ho asks.
"By taking into consideration the new infrastructure it is a possibility we can continue to grow the capacity, and therefore grow the visitor numbers very healthily. We don't believe the Chinese government will allow for excessive or incessant double-digit growth, but we believe they will also maintain a certain growth level that is commensurate with the investment activities."
Ms Ho is a surprise in person. Far from the expansive showmen such as Steve Wynn and Donald Trump that have led other casino groups, she is short and demure, dressed simply in shades of beige with an emerald pendant; a bleeping pink mobile and glass of orange juice set before her. Despite her wealth, the divorcee has joked to friends that her jewellery collection includes some of her best investments. If that is the case, she must have some impressive gems, because a joint venture she struck with MGM Resorts in her own right helped her personal fortune to soar to $3.3bn (£2.2bn) when it was floated two years ago, according to Forbes.
All the American casino chains have flocked to Macau since its gaming industry was opened up to competition a few years after the colony came under Chinese rule in 1999. As the monopoly operator for 40 years up to that point, the family's Sociedade de Jogos de Macau (SJM) casino company threatened to be overrun. Instead, it has prospered, still running nearly half of the casinos. One plus was Ms Ho's MGM deal, which has just won planning permission for a second casino.
"It has been a good success," she says. "Partially the reason is if we continued to operate from the standpoint of being the old guard and the past operator then it would be difficult for us from our own perspective to appreciate what it means for the new operators. Precisely how do we then go and represent to the government why there should be a balance, because we would always be perceived as the one left behind, on the defensive end."
The family's empire is split into three: Shun Tak, which houses huge swaths of Macau property, the ferry operator to the island and hospitality operations; SJM, the gaming assets including the Grand Lisboa casino; and then the MGM joint venture, which is Ms Ho's preserve. All three are listed, with varying degrees of family control.
Ms Ho emphasises that her father, now 91, who reportedly made his first fortune smuggling goods during the Second World War, has limited involvement in the day-to-day running of the companies. "He is not as active as in the past because he is no longer attending to the operational business side," she says. "My father is more obviously a leader who is respected by everybody, and he still provides his own views, but I think that the businesses are actually now quite independently run."
If there is anything to stop the progress of Macau – now, like Hong Kong, a special administrative region within China – could it be the lingering fear over the island's dark reputation of violence and money-laundering associated with Macau from days gone by? "No, it has cleaned up," Ms Ho says firmly. "We don't see any of that happening."
Some Americans have proved harder to convince. MGM gave up on its assets in Atlantic City three years ago when New Jersey gaming regulators found Ms Ho to be an unsuitable partner for the company. The family has denied links to organised crime, and MGM has since been given permission to reapply for its gaming licence in the state.
Most of Macau's controversy centres on the so-called "junket operators" who recruit, transport and often underwrite the high rollers that step into the casinos. Mainland residents can only transport so much money out of China each year, so that presents middlemen with a chance to act as financiers – as well as to collect debts too.
"We see a lot more discipline now, in terms of the regulatory environment. The junket operators now have a chance in a proper manner to build their own business and relationships with the gaming operators," Ms Ho says.
And even if the chips are down, don't expect her to be tempted to the tables.
Tables turned: Dip in high rollers
Fewer VIP customers because of mainland China's slower economic growth limited Macau's increase in gaming revenues to 14 per cent last year. The $38bn (£25bn) haul doesn't sound at all bad, until you consider that sales rose 42 per cent a year earlier. The Monte Carlo of the Orient overtook takings in Las Vegas six years ago. The ratings agency Fitch suggested recently that the good times will carry on rolling. It revised up its forecast for Macau's gaming revenues this year, saying it expects the VIP segment to grow 4 to 5 per cent and the mass market to soar by 20-25 per cent.
One of 17 children from four wives, Ms Ho's emergence as her father's most likely heir now sees her spearhead a new plan: to make Macau appeal to more than just high rollers and Hong Kong day trippers. If she gets it right, the Monte Carlo of the Orient, which has suffered from tales of a dark past and mafia links, will enjoy a very bright future.
Looking beyond gambling for income is a move that almost contradicts Macau's make-up. Half of the jurisdiction's economy is derived from games such as blackjack and Fan Tan, or betting on horses and dog races. It is still the only place in China where table gaming is legal. But Ms Ho and the other industry players don't want tourists to spend less at the tables – they just want them to spend more elsewhere on their stay.
"We want to broaden out: we want to have the shows, the music, the retail experience, maybe even certain themed attractions," says Ms Ho, without wanting to compete directly with Disneyland Hong Kong across the water. So even though Macau has left Vegas trailing in its wake, it sounds as though she wants to emulate the famous Strip where Cirque du Soleil and Celine Dion play for months at a time.
Her eye is also on something closer to home, though. "We need to find ways to bring to Macau something interesting, maybe not unlike what Abu Dhabi is doing."
We are talking on the 45th floor of the Etihad Tower in Abu Dhabi, where delegates to the annual World Travel & Tourism Council summit can marvel at the emirate's Saadiyat Island project, which is creating a cultural quarter from scratch – with its own version of the Guggenheim museum and Louvre gallery – due for completion by 2020.
Macau's bright lights already draw 28 million visitors a year, and many more are expected when a road bridge linking the city to Hong Kong opens in 2017 and light rail adds a further connection to a high-speed line to Guangzhou. That infrastructure will be matched by new hotels that are being thrown up fast.
"One aspect of what everybody is keen to explore, is that in five years' time Macau will have 40,000 hotel rooms, close to Hong Kong but still really a much smaller place, so what do we provide when people come to visit?" Ms Ho asks.
"By taking into consideration the new infrastructure it is a possibility we can continue to grow the capacity, and therefore grow the visitor numbers very healthily. We don't believe the Chinese government will allow for excessive or incessant double-digit growth, but we believe they will also maintain a certain growth level that is commensurate with the investment activities."
Ms Ho is a surprise in person. Far from the expansive showmen such as Steve Wynn and Donald Trump that have led other casino groups, she is short and demure, dressed simply in shades of beige with an emerald pendant; a bleeping pink mobile and glass of orange juice set before her. Despite her wealth, the divorcee has joked to friends that her jewellery collection includes some of her best investments. If that is the case, she must have some impressive gems, because a joint venture she struck with MGM Resorts in her own right helped her personal fortune to soar to $3.3bn (£2.2bn) when it was floated two years ago, according to Forbes.
All the American casino chains have flocked to Macau since its gaming industry was opened up to competition a few years after the colony came under Chinese rule in 1999. As the monopoly operator for 40 years up to that point, the family's Sociedade de Jogos de Macau (SJM) casino company threatened to be overrun. Instead, it has prospered, still running nearly half of the casinos. One plus was Ms Ho's MGM deal, which has just won planning permission for a second casino.
"It has been a good success," she says. "Partially the reason is if we continued to operate from the standpoint of being the old guard and the past operator then it would be difficult for us from our own perspective to appreciate what it means for the new operators. Precisely how do we then go and represent to the government why there should be a balance, because we would always be perceived as the one left behind, on the defensive end."
The family's empire is split into three: Shun Tak, which houses huge swaths of Macau property, the ferry operator to the island and hospitality operations; SJM, the gaming assets including the Grand Lisboa casino; and then the MGM joint venture, which is Ms Ho's preserve. All three are listed, with varying degrees of family control.
Ms Ho emphasises that her father, now 91, who reportedly made his first fortune smuggling goods during the Second World War, has limited involvement in the day-to-day running of the companies. "He is not as active as in the past because he is no longer attending to the operational business side," she says. "My father is more obviously a leader who is respected by everybody, and he still provides his own views, but I think that the businesses are actually now quite independently run."
If there is anything to stop the progress of Macau – now, like Hong Kong, a special administrative region within China – could it be the lingering fear over the island's dark reputation of violence and money-laundering associated with Macau from days gone by? "No, it has cleaned up," Ms Ho says firmly. "We don't see any of that happening."
Some Americans have proved harder to convince. MGM gave up on its assets in Atlantic City three years ago when New Jersey gaming regulators found Ms Ho to be an unsuitable partner for the company. The family has denied links to organised crime, and MGM has since been given permission to reapply for its gaming licence in the state.
Most of Macau's controversy centres on the so-called "junket operators" who recruit, transport and often underwrite the high rollers that step into the casinos. Mainland residents can only transport so much money out of China each year, so that presents middlemen with a chance to act as financiers – as well as to collect debts too.
"We see a lot more discipline now, in terms of the regulatory environment. The junket operators now have a chance in a proper manner to build their own business and relationships with the gaming operators," Ms Ho says.
And even if the chips are down, don't expect her to be tempted to the tables.
Tables turned: Dip in high rollers
Fewer VIP customers because of mainland China's slower economic growth limited Macau's increase in gaming revenues to 14 per cent last year. The $38bn (£25bn) haul doesn't sound at all bad, until you consider that sales rose 42 per cent a year earlier. The Monte Carlo of the Orient overtook takings in Las Vegas six years ago. The ratings agency Fitch suggested recently that the good times will carry on rolling. It revised up its forecast for Macau's gaming revenues this year, saying it expects the VIP segment to grow 4 to 5 per cent and the mass market to soar by 20-25 per cent.
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