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Macau’s casino queen doubles down on Vegas-style expansion alan
[HONG KONG] As a fresh Cornell University graduate, Linda Chen was by her then-boss Steve Wynn's side when he opened the Mirage in Las Vegas in 1989 -- the biggest hotel in the world at the time complete with a boxing ring and a magic show featuring a white tiger.
Thirty years later, while her mentor has quit the casino scene after sexual misconduct charges, the 52 year-old has continued her rise as one of the most powerful women in Macau, the world's biggest gambling hub. Top of her agenda as vice chairman of Wynn Macau Ltd is to revive the fortunes of the enclave -- and her company -- by making it more like, well, Vegas.
Although Macau has sixfold gaming revenues compared to its American counterpart, pure gambling activity accounts for 90 per cent of its revenue -- a reliance that's hurting the casino operators as an economic slowdown, exacerbated by the trade war and ongoing protests in Hong Kong, keeps high rollers away.
Ms Chen, who helped Wynn also open the Bellagio and MGM Grand cementing his dominance on the Vegas skyline, says the company plans to invest 20 billion yuan (S$3.9 billion) in an ambitious complex that's designed to wow tourists and broaden Wynn's appeal to non-gambling visitors.
Called Crystal Pavilion, it's designed in a shape of Macau's symbolic flower lotus and includes two hotel towers, interactive sculptures, a planned theater, art gallery, food pavilion and gardens and was called "a bit aggressive" by JPMorgan when first unveiled to investors in July with a US$2 billion price tag for the first phase. Construction is expected to start in 2021, with an opening set for 2024.
"Destination is the most important engine," Ms Chen said in an interview at the Wynn Palace in Macau earlier this month. "People have to choose Macau as the destination before any industry can thrive. The non-gaming drives the visitation. Once they choose that destination, then everything else comes."
Ms Chen, who has headed the Macau operations for more than a decade, needs to urgently shift the company toward tapping Macau's potential as a tourist mecca. Of all the casino operators in the China-controlled territory, Wynn is the most reliant on the declining VIP gambling business, which slid 23 per cent in the third quarter from the previous year.
A rise in recreational gamblers and day-trippers, aided by the new mega-bridge linking Zhuahai to Macau and Hong Kong, has been partially making up for the slump in high rollers. But Wynn is "most exposed" to the VIP segment at a time when Chinese tycoons with less confidence are opting to "save up for a rainy day," said Robin Yuen, an analyst at UOB Kay Hian.
The Hong Kong protests may also not bode well, as many tour groups combine Macau tours with Hong Kong, Ms Yuen said.
Born in Taiwan, Ms Chen moved to the US as an adolescent with little knowledge of English. After studying hotel administration at Cornell, she went on to oversee international marketing for the Mirage, Bellagio and MGM Grand.
When Wynn expanded into Macau in 2002, Ms Chen went along as an executive director. She led the launch of the Wynn Palace in 2008, and began deepening her ties in China. She is a member of the Nanjing People's Consultative Conference, a political advisory body. Chen was one of just five women ranked in the top 50 most prominent Asian executives by Inside Asian Gaming in 2018, and the highest-ranking who isn't an heiress.
As Ms Chen leads the operator's push into wooing tourists, her time with Steve Wynn will come in handy. The departure of the king of Las Vegas has in some ways opened the way for Ms Chen, who was named vice chair two months after he quit. Mr Wynn has said the allegations of sexual misconduct are "preposterous."
"Of course, you don't want to lose the chairman of the company," said Ms Chen. "But our culture is, no matter who left the company today, if I wasn't here tomorrow, everyone would still function. You can't rely on one person."
Ms Chen declined to comment on whether the allegations came as a surprise but said she learned a lot from Wynn's innovation and attention to detail in design. Wynn Macau continues to invest in innovation, she said, citing how the group is introducing an AI waste-tracking system for cutting food waste.
While Ms Chen is borrowing some lessons from Wynn's playbook, she is careful about drawing too close a comparison between Las Vegas and Macau.
Macau's location in China's Greater Bay Area, its luxury offerings, Chinese temples and heritage as a Portuguese colony make it a unique cultural hybrid. It now needs to figure out how to earn more from the swarm of tourists.
Wynn Macau said third quarter revenue from VIP gaming fell 32 per cent from a year before. The stock has advanced just 2.7 per cent this year, lagging the 11.6 per cent rise in the Bloomberg Intelligence index of Macau casino operators, as investors worry about its reliance on the declining VIP business.
Licenses for Macau casinos are also expected to come up for renewal over the next few years, with Wynn's due in 2022.
While the government is unlikely to disturb business of the territory's biggest employers, license renewals are an incentive for casino operators to display their commitment to Macau through projects such as the Crystal Pavilion despite headwinds in the VIP segment or geopolitical tensions.
"Of course, Macau is also being affected by the US-China trade issue," Ms Chen said. "However, those are temporary, short-term concerns. Our goals are long term."