December 2, 2008 - Pansy Ho - Shun Tak Holdings, Hong Kong

A member of Macau's Ho casino family unveiled preliminary plans to develop a five-star hotel on Macau's Cotai Strip, even as hotel and casino operators there grapple with a slowdown and travel restrictions from mainland China.

The hotel is slated for completion in 2013, and will be managed by Dubai-based Jumeirah Group, said Pansy Ho, managing director of Hong Kong-listed conglomerate Shun Tak Holdings Ltd. Shun Tak plans to fully finance the project, saying there were no plans to accommodate a casino at the hotel, to be named the Jumeirah Macau Hotel.

Ms. Ho's announcement was short on specifics, noting that plans were still at a "very preliminary" stage. She offered no details on the hotel's design or how much the development would cost. The project will also require government approval.

Even so, the move is a vote of confidence in Macau's future as industry experts question some of the growth figures that have been touted in recent years. It also comes as some of its rivals re-examine their ability to expand in Macau.

Last month, Sheldon Adelson's Las Vegas Sands Corp. put the brakes on growth plans in the Cotai Strip, while Galaxy Entertainment Group Ltd. has also announced plans to postpone construction on its project there.

Some experts said the announcement by Ms. Ho, the 45-year-old daughter of local gambling magnate Stanley Ho, is a chance for her to reaffirm her commitment to Macau as concerns rise about how other frozen projects will hurt employment in the Chinese special administrative region, whose economy is reliant on the casino industry. Ms. Ho already owns a 50% stake in a Macau casino with U.S. operator MGM Mirage.

"Shun Tak's view of the Macau economy is long term," Ms. Ho said in a statement Tuesday. "We remain positive that its fundamentals are strong and sound, and will continue to invest in its future, trusting that it will be one of the first destinations to recover from the recent market adjustments."

David Green, director of the gaming practice at PricewaterhouseCoopers, said the current environment is a good time for long-term players to exact better terms. "The message right now is that if you have access to capital, it's a good time to invest," he said. "It is an especially good time to be negotiating construction contracts and land premiums."

Visitor numbers to Macau have been hurt by the global economic downturn, as well as the Chinese government's restrictions on mainland Chinese citizens traveling to the special administrative region. In October, about 2.6 million visitors came to Macau, an 8% increase from a year ago. But mainland Chinese traveling to Macau under the individual visit system, hit by the new restrictions, fell by 26% from the previous October.

Analysts at Credit Suisse Group forecast Macau gaming revenue to remain flat in the last three months of 2008 compared with the same period in 2007, a pullback from the 45% year-on-year growth in the first nine months of this year.

Gabriel Chan, a gaming-sector analyst with Credit Suisse in Hong Kong, said Ms. Ho's announcement was designed to outlive the current market pessimism, calling the hotel an early bet that sentiment will eventually return. "The question is really when China's government will relax travel restrictions," Mr. Chan said.

Shun Tak Group owns half of the Mandarin Oriental Macau, and 34.9% of the Westin Resort Macau. Jumeirah Group is a member of Dubai's state-owned Dubai Holding, which operates that city's Burj Al Arab hotel. The Macau property will be Jumeirah's third hotel in China.

Pansy Ho

Original Story - Wall Street Journal

Update February 11, 2009

Gambling Heiress Bets on Macau's Recovery

Pansy Ho Strikes Deals With Partners to Expand Shun Tak

At a time when Macau faces an uncertain hand, Pansy Ho is placing bets on the Chinese gambling enclave's future.

Ms. Ho, the 45-year-old daughter of Macau gambling magnate Stanley Ho, and her family face a difficult environment. The global recession is eating into demand from well-todo gamblers that casino operators depend on. Meanwhile, officials in mainland China have restricted the ability of some Chinese nationals to visit the city. The combination has led to drops in monthly gross gambling revenue for the first time in years -- in December, it fell 5.7% from a year earlier to 7.75 billion Macau patacas, or roughly US$970 million.

Longer-term, the Ho family is contending with rising competition from U.S.-based casino operators. Mr. Ho held a monopoly on the special administrative region of China until 2002, but his casinos have steadily lost market share to well-funded rivals with newer casinos.

Within that environment, Ms. Ho is making long-range plans to expand the family business and her own reach. As managing director of Shun Tak Holdings Ltd., a real-estate and transportation company controlled by the Ho family, she recently struck a preliminary agreement with a Dubai partner to build a new hotel in Macau's once-booming Cotai area.

Separately from Shun Tak, her joint venture with U.S. casino operator MGM Mirage remains in talks with Macau officials about building a second casino in Cotai, a spokeswoman for the venture said.

Long-term development could position Ms. Ho for a time when Macau bounces back and mainland officials relent on tourist restrictions, though analysts caution that the heady growth rates of earlier in the decade are probably a thing of the past. "As the economy recovers and as Macau becomes more ready in terms of infrastructure, [casino operators] will be in a position to welcome high levels of gaming revenue," said Gavin Ho, of CLSA Asia-Pacific Markets.

Before her emergence as a serious player in the Macau gambling scene, the U.S.-educated Ms. Ho was known primarily as the founder of a local public-relations firm and as a fixture of the society pages of Hong Kong newspapers. Her interests in Macau led to her selection as one of The Wall Street Journal Asia's Women to Watch. Through representatives at Shun Tak and the MGM Mirage joint venture, she declined to comment.

Ms. Ho and Shun Tak face an early test in the One Central project, a Macau luxury-property joint venture with real-estate company Hongkong Land Holdings Ltd. set for completion by early next year. While the vast majority of units have been presold, many were to investors who have hit tough times.

Analysts say a capital infusion from another arm of the Ho empire may help should defaults materialize. Shun Tak received roughly 700 million Hong Kong dollars, or about US$90 million, in proceeds from the sale of its 50% stake in the Mandarin Oriental Macau hotel to Mr. Ho's Sociedade de Turismo e Diversoes de Macau SA vehicle, a deal that valued the whole property at HK$1.6 billion. Shun Tak's shares jumped 24% after the deal was announced, and analysts said the deal provided a cushion in the event of defaults. Still, at Tuesday's close of HK$2.80 (36 U.S. cents) in Hong Kong they still remain well below their price of about HK$10 a share a year ago.

Update Story - Wall Street Journal