In late 2004, James Packer and Lawrence Ho launched Melco PBL International, an ambitious joint venture with the aim of running the tables on Asia’s booming casino industry. Two years later they’re poised to play a very strong hand against the industry’s highest rollers in a key regional market–Macau. Next April, the pair will open Crown Macau, a six-star hotel-casino property catering to VIPs who bet $10,000 a hand and require extreme pampering. They plan to follow up with a $1.1 billion integrated resort in 2008, including an underwater casino, a Hard Rock hotel and a permanent show by Franco Dragone of Cirque du Soleil fame. And their joint venture recently agreed to acquire a site for a third hotel-casino project to be developed by 2009. To pay for it all, Melco PBL just filed to launch a $1.1 billion initial public offering on NASDAQ. (Due to the silent period required before listing, Packer and Ho declined an interview request.) Not bad for a team whose combined age is just 68.
James, son of the late Australian media tycoon Kerry Packer, was his own businessman well before he inherited Australia’s largest diversified media and entertainment group when his father died last Christmas. He’d been executive chairman of Publishing and Broadcasting Limited (PBL) since May 1998, and soon after taking control began steering the group into gambling–with his father’s grudging approval.
Lawrence Ho, son of Macau gaming tycoon Stanley Ho, emerged quickly from his father’s long shadow as a derivatives trader, high-tech entrepreneur and turnaround artist at Melco, a holding company for his father’s money-losing Jumbo Floating Restaurant on Hong Kong’s Aberdeen marina. Neither son was satisfied carrying on the family business. Packer Sr., a notorious high-stakes gambler, never saw this business as the wise investment James has shown it to be. Lawrence grew up in the industry, but he’s siding with the Las Vegas vision of high-end luxury hotel and integrated resorts and against his father’s no-frills gambling-hall model.
At first blush these two scions are an odd pair. Despite his towering presence, Packer is the shy one; at public functions he often takes a back seat to Ho, whom one business acquaintance describes as “the Energizer Bunny.” But their respective businesses are complementary, say experts, and together they’ve got the resources to emerge as industry leaders. “PBL has a strong entertainment legacy, and Melco understands the greater Asian consumer marketplace,” says Jonathan Galavitz of Globalysis, a Las Vegas-based leisure-sector consultancy.
But as relative newcomers in Asian gaming they will need all their youthful energy. Their initial plan in Macau was to fill a perceived gap for high-stakes gamers. Yet in addition to Stanley Ho’s flagship Sociedade de Jogos de Macau, which enjoyed a monopoly until 2002 and is rapidly upgrading its facilities, U.S. companies like Wynn Resorts (the namesake of Vegas kingpin Steve Wynn) have set their sights on the top end of the market. “That niche is not there anymore,” says Rob Hart, gaming analyst at Morgan Stanley. “They’re going to be competing head-to-head with the Sands and Wynn.”
Few count them out just yet, however. The pair are in Macau relatively early, and they have deep pockets. PBL recently sold half its media assets for $3.55 billion, giving it a huge war chest for strategic gaming acquisitions, and has already indicated its intention to expand beyond Macau once countries like Thailand, Vietnam and Japan legalize casino gambling. “There is a land-grab underway for gaming and entertainment assets around the world,” said Packer during a recent visit to Singapore. You can bet he and his partner Ho will be looking to do some shopping.
