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tv   Titans at the Table  Bloomberg  March 7, 2015 1:30pm-2:01pm EST

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>> tonight on "titans at the table," i traveled to what many consider the las vegas of the east. macau. this is part of what attracts people here, right? >> yeah. >> the small territory on the southern chinese coast raked in an unbelievable $45 billion of revenue last year. more than seven times that of vegas. >> did you ever think macau would surpass las vegas by that much? >> it makes perfect sense. the resorts in macau are world-class compared to las vegas. macau has taken off. >> we are talking about the next generation of people from china who have become more affluent.
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>> siblings lawrence and pansy ho have become leaders in the industry thanks to their father, stanley ho. brother and sister have a combined net worth of $7 billion. for the last decade, they have met stiff competition from a las vegas billionaire who is known for betting against the odds. >> they predicted i would not even open. they did not believe somebody else could do something better than they could. >> they underestimated you. >> they grossly underestimated me. >> sheldon adelson is ceo of las vegas sands with a net worth of $35 billion. much of that wealth made on his macau casinos. the race for macau pits billionaire against billionaire, all vying for the attention of the 1.3 billion chinese to the north. macau is an 11-square mile enclave on the southern coast of mainland china.
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for over four centuries, it was under portuguese rule. today it is the closest place to china where gambling is legal. in 1962, chinese businessman stanley ho was the first person to usher in a new era of casinos in macau. for decades, ho built a gambling empire that raked in billions. he paved the way for other investors to make it big in macau. today, one of those investors is stanley ho's son, lawrence ho. >> my father revolutionized the casino market 40 years ago in macau. he brought in a new style. throughout my career and life, it has been about trying to prove myself. >> it was important to you to prove that you could build a company from scratch? >> yes. definitely. >> determined to break out of his father's shadow, lawrence partnered with james packer, himself the son of a famous tycoon. together they formed melco crown. their properties include two
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extravagant resorts, whose opulence gives las vegas landmarks a run for their money. >> city of dreams is the ultimate destination for urban entertainment in macau. >> lawrence refers to the "city of dreams" as an integrated resort. where tourists come to spend at high-end boutiques and stay at five-star hotels. what has las vegas inspired and you, or what have the casino moguls in las vegas helped you in terms of inspiration in macau? >> many times in asia, a lot of people built slowly and are more conservative. when you go to las vegas, and you see the mega-resorts, the 3000, 5000 rooms with the shows, the theaters, and nightclubs, my philosophy is like that. go big or go home. having seen that that is workable and doable, that is how
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i developed "city of dreams." >> big vision. >> big vision, and we need to give our customers something they have not seen before. it is about being more innovative and being bigger and better. >> bigger, better, and wetter. part of lawrence's vision is attracting customers through live performances, including this acrobatic experience called "house of dancing water." it is the crown jewel of city of dreams. five days a week, 3.7 million gallons of water flow through the custom-built stage as actors dance, dive, and dazzle a captivated audience. building it was a huge gamble. it premiered in 2010 in the wake of the financial crisis. >> we went ahead and continued built out our $250 million "house of dancing waters" show.
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it has been a huge success. the fact that we try these things that nobody wants to try has really given us an edge. >> in the beginning, business was far from booming. lawrence ho's first casino opened to disappointing results. it seemed as if his gamble to go big in macau was destined to go bust. but then ho focused his attention on high-stakes vip clients. the tables quickly turned. last year, revenue topped an incredible $5 billion. >> are you surprised by how fast this has grown and developed? >> one of the greatest things that has happened in the last 10 years, 20 years is the growth of the middle income earning bracket in china. they are at an age where they would like to travel and enjoy life. >> did you ever think macau was going to surpass las vegas by that much? >> we all knew that was going to
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happen. ultimately, if you look at geographically -- a lot of our customers prefer things that are closer. since now the resorts in macau are world-class, comparable to las vegas, it makes perfect sense that if you look at macau within the five-hour flight time, there are over one billion people. whereas if you go from new york to las vegas, that is also five hours. >> while lawrence is bringing lots of glitz and glam to macau, sheldon adelson says he invented the concept -- in vegas first. now he says he is the one who will conquer macau. >> they vastly predicted and wrongly predicted i would not even open. i would never get it built. if i got it built, it would not open. and if it did open, i would be in bankruptcy immediately. they didn't want to believe someone else could do it better than they did. >> they underestimated you. >> right. they grossly underestimated me. >> when we come back, sheldon adelson tells us why he is the real king of macau. ♪
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>> for a man whose business caters to high rollers and big spenders, billionaire sheldon adelson's roots are decidedly unglamorous. today he can be seen at high-profile events with his wife, miriam. he was born the son of a cab driver in a poor section of boston. adelson first began in the convention business in 1979 when he founded one of the largest technology trade shows. he eventually sold that and other shows for hundreds of millions of dollars. he bought the original las vegas sands hotel only to demolish it and replace it with the venetian. it is the first integrated resort of its kind with hotel, casino, shopping centers, entertainment, and technology expos. sound familiar? in macau, he has built another
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venetian but with more gaming space. this is what adelson says made him stand out among other casino tycoons. i was listening to you speak, and you mentioned you wanted to build a las vegas in macau, if you could just pick it up and move it, you would. how come no one else saw that? >> i guess that is what visionary is made out of. >> people thought you were crazy. >> of course. i have been in dozens of businesses. every time i go into business, everybody thinks i am crazy. nobody wants to recognize that doing something different than what people do routinely is viable. nobody wants to recognize that. the only way i could prove it is to do it and succeed. >> adelson did not just succeed. he dominated. his first resort, the sands macau, was so successful he made back the $265 million investment
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in the first year. >> 30,000 people showed up. more than 30,000 -- we do not have the exact number, because when they came in, they knock the doors down. >> he went on to build a massive hotel. and the 2900-room venetian macau. he plans on adding another property to be completed by the end of 2016. bringing his grand total to over 10,000 rooms. if he has his way, visitors would never leave. >> we are now developing enough retail malls of different types. you can be in 3000, 6000, 12,000 or 15,000 hotel rooms and never leave the building. i will give you a short anecdote.
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i had a friend from boston that came in with his wife to go to the jewelry show. they came in on thursday. on monday, he said, how is the weather? i said, you have not been out? he said, what would i go out for? everything i want is here. >> lawrence ho is talking about shows that are coming in. it is retail, it is restaurants. they are copying you. >> yes they are. they are trying to copy me. he's a nice guy and a gentleman. he has no exhibition and convention space. there is not a city in the world that does not want exhibition space and convention space. >> as many of adelson's peers have noted, it is his very success in macau that has left las vegas in the dust. a point not lost on the billionaire. >> did you ever think that macau was going surpass las vegas in the way it has? >> yes. >> what convinced you?
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>> when we first applied in macau in 2002, there was $2.5 billion in gross gaming income. by 2004 when we opened the sands, there was $5.5 billion. >> $5.5 billion? >> right. in two years. >> wow. >> the business was there. people were not recognizing it. how do i think it was going to grow? because there were 1.3 billion chinese. >> about 64% of his las vegas sands revenue comes from his macau properties. since opening the sands in 2004, he has expanded into other industries, including ferries, bringing people from his resorts in hong kong to macau in high-speed boats. >> what i recognized was there was not enough ferry service, so i set up a ferry business. what do i know about the ferry business? what i know about every business
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when i go into it. zero. but there's not much i cannot learn. i believe this industry in which we operate, the lodging or gaming industry, i believe it is a supply driven industry. if i put those buildings there, they will come. >> and they did. >> and they did, and they still do. >> when we come back, the battle for market share pits adelson against the ho family. not just lawrence, but his sister, pansy ho. she tells us how she is trying to keep the gaming industry all in the family. >> my father paved for the foundation for macau today. we carry that torch. ♪
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>> sheldon adelson may be trying to conquer macau, but patriarch stanley ho's industry
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is far from failing. his company, sjm holdings, operates the most casino tables in macau. nearly 2000. sjm accounts for nearly 1/4 of macau's revenues. we spoke with pansy ho, his daughter. she says gaming in macau is still a family business. you are the richest woman in hong kong. >> i don't know how they calculate it, but they say so. >> do you feel, and among your own siblings, the fact that you are part of a legendary hong kong family? do you feel you have an added responsibility? >> we feel like we have that sense of a legacy. there were 450 years of portuguese presence in macau. my father helped create and pave the foundation for macau today
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in terms of creating the largest industry, the gaming industry of 50 years. we would very much want to help grow macau to be something that is more exciting and more important. we definitely carry that torch. >> pansy has about a 27% stake in mgm china, which owns the mgm grand macau property. the casino made $3.3 billion in revenue last year. i know you have this partnership with mgm. >> yes. >> how is that relationship going? >> it is going very well. in a way this is the moment when we are resting on our laurels, and we have done fantastically well, especially last year. we are now snug in the position in a where we have formed a strong professional team, which
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really oversees the daily operations. we have the time and space to consider long-term perspective strategies for the future. >> of the 30 million visitors who come to macau to roll the dice year each year, more than 60% of visitors are from mainland and china. hong kong is a one-hour ferry ride. >> what has been surprising is the swiftness with which chinese consumers are changing. in many ways, they are not the in kind of stereotype that we would have thought about the chinese consumer market, their patterns and behavior. this is a very fluid group of people. they are full of curiosity. their requirements continue to change over time. we can already see that happening during the past seven or eight years. >> pansy ho also runs a company that operates turbo jets, a
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high-speed ferry service between macau and hong kong, competing directly with adelson. last year, pansy's ferries transported about 28,000 people a day. >> we have been running the terminals, the ferry terminals. and we have a direct experience. we know how to manage and how to commercialize the real estate, so it can be of great service to these people. >> that is not how adelson sees it. >> she does not like that we are a competitor in the ferries. i can't say that i am the ferry expert of the world, but she got bitter over the competition, so she has been bitter all this time. >> coming up, the clash of the titans continues as they look beyond macau for the next gambling mecca.
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>> the explosion of the casino business in macau has been a huge windfall for this tiny territory and the beijing government. casinos paid the government almost $18 billion in taxes and fees in 2013 just to operate in macau. with great success comes a great amount of squabbling. adelson, a man who is not afraid to wade into conflict, whether it is about israeli rights -- >> there is no such history as the palestinian people. >> or how the gop can take back the white house -- he has seen his share of battles against the ho family. >> there was a meeting of a coalition of the concessionaires. pansy ho was there. it was not a very congenial environment.
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>> she was not nice to you? >> i don't think she was nice to most of the people. she doesn't like that we are competitive in the ferries. i think it is a matter of jealousy. i think they never anticipated that i would succeed. if you go back to when i first opened in 2007 with the venetian, and you look at the clippings, you look at the articles, it would be very clear that they thought i would fail. the day i opened it, we opened at like 6:00 or 7:00 in the morning, by 7:00 in the morning we had over 114,000 visitors. there were 30 million people visiting macau. last year, we got 63 million visitations. how can i get 63 million visitations from 30 million visitors? because 30 million visitors went
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to one of my four properties twice. >> it remains to be seen who will claim the crown as king of macau. but for lawrence ho, he says sometimes bigger is not always better. some things that happen in vegas, he says, should stay in vegas. >> sometimes you lose the experience somewhat. in a 3000-room hotel, sometimes people have to walk for five minutes or 10 minutes just to go to their rooms. asians are not used to that. >> do you understand the chinese tourist naturally more, because you are chinese versus sheldon adelson or steve wynn? >> that is an advantage we would have as well. i was born in hong kong. spent time in hong kong and macau. at the same time was educated in north america. i get a good sense of the best
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of both worlds. the formation of melco crown 10 years ago was based on that belief. how do i marry the best of the east with the best of the west? >> it is easy to see the asian touches when you walk around his properties. the dragons. the feng shui that ho incorporates into the layout. >> when we first started, it was gold and iron metal bars. it resembled the bamboo, but then feng shui came in and said no, no. >> it has to be real. >> it has to be real. >> but adelson, who once called himself the richest jew in the world, says there is no monopoly on culture. >> by vast majority, most of our employees are chinese. my chinese dealers and my chinese service people interact with chinese customers. what is the difference?
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>> they would say they know the people. they are chinese. >> oh, they know all the people? really? >> that they know what they want. >> i can't be a successful businessman if i don't respect who and what my customer is. the resorts are a commercial enterprise. the measurement of success is the bottom-line profit. why are we seven times more profitable than each one of them? >> some casino watchers warn warned there is a bubble of hotels forming in macau that is about to burst. fears of a smoking ban and a stricter visa rules have investors worried that the inflow of tourists may slow down. but they are doubling down. they are spending $26 billion on new resorts, and doubling hotel capacity. they won't stop there. and these casino titans want to
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in score big in the rest of asia. >> japan is the holy grail at this stage. and they have pachinkos. pachinkos are slot parlors. but technically you don't win money, you win prizes. very popular. that industry itself is $35 billion. it has a lot of potential. >> with the olympics slated for tokyo in 2020, the casino industry could win big in japan with the worldwide publicity. the government still has to approve. but win, lose, or draw, the titans have already made a killing in macau. ♪ . .
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♪ emily: by now, you know his story. the kid who started the social network in his harvard dorm room, grew it to 1.4 billion users, and became one of the wealthiest men in the world. but mark zuckerberg may not be done changing the world just yet. since taking facebook public, his bets have only gotten bigger. spending billions expanding his empire into photos, messaging, even virtual reality. internet.org may be his most audicious bet yet. featuring an epic battle with

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