This article first appeared in the Jan/Feb 2017 issue of WGM.
WGM sits down with Lu Tsai, Chief Operating Officer of VIP operator Meg-Star International, to discuss the state of Macau’s junket industry and how Meg-Star has positioned itself to thrive.
Ben Blaschke: Thanks for speaking to us Mr Lu Tsai. Could you start by giving our readers a bit of background on Meg-Star?
Lu Tsai: Sure. Meg-Star was founded in 2011. Meg-Star International sets the goal of internationalization in entertainment, global travel and luxury travel concierge. Our distribution points include Europe, the United States, Singapore, Korea and the Philippines to name a few. Our vision is to provide the highest level of service around global travel and entertainment all with a “one stop shop” approach.
BB: Could you also tell us a bit about yourself and your background?
LT: I was born in Taiwan but when I was six our family relocated to the United States to start a new life in the land of opportunity. Like a lot of first-generation Chinese immigrants to the States, we were left to our own but with the drive and the will to survive became successful restaurant owners on the backs on my parents.
I was raised in Southern California, received my BA in Business Admin at UC Riverside and claimed my MS in Hotel Admin at UNLV where my career in gaming marketing was rooted. I broke into the industry in 1996 at the Monte Carlo, which had recently opened, and that’s where I built my foundation in gaming.
In 2000 I joined Harrah’s Entertainment which started a 10-year stint in which I opened Harrah’s Rincon in San Diego, re-opened Grand Biloxi after Hurricane Katrina hit and helped lead and develop Asian marketing strategies at the corporate level.
In 2010 I had an opportunity join City of Dreams Macau and given my background, education and diversity, I took the opportunity to return to my roots. I then joined Galaxy Entertainment in 2013 to progress my career and increase my responsibilities.
BB: You only joined Meg-Star quite recently. How did this move across to the junket business come about?
LT: Faith is something that can’t be avoided. I met Thomas (Pang, Meg-Star’s President and CEO) through a mutual colleague and we hit it off from the start. I was intrigued by his forward thinking about how to evolve an organization such as Meg-Star. My primary experiences are with large gaming operators and to transfer this knowledge and experience to a junket model was fascinating. In my opinion, to have Thomas’ vision and courage to evolve shows a high level of commitment to this organization.
BB: You’ve spent time both here in Macau and also in the US among other places. Do you feel this has given you a more rounded perspective on the global opportunities that may be available for Meg-Star?
LT: Absolutely. Gaming entertainment is a global phenomenon and it’s become a mainstream entertainment choice – not just seeded in remote locations but in major cities worldwide. Due to this phenomenon, as an independent service provider we have access to all types of entertainment venues for our clients, from ultra-exclusive locations to weekend getaways.
BB: It has obviously been a difficult few years for the VIP business in Macau. What is your vision for Meg-Star moving forward?
LT: Our first priority is to establish a solid foundation in Macau. This means investing in technology to assist in operations, introducing Customer Relationship Management that is catered to the junket model and creating a database for future development. Once our foundation is set, our growth will be in international travel and concierge. Utilizing our database, we can extend our reach beyond Macau as a global provider in travel entertainment.
BB: How has the changing face of Macau affected Meg-Star’s approach to doing business in Macau?
LT: Since the down turn, all of Macau’s operators have adjusted their business and Meg-Star is no exception. But due to our strong relationships and healthy cash flow we were able to withstand the market trend and are now in an expansion phase. We took what was perceived as a downturn to create opportunities for growth.
BB: What are the main challenges facing Meg-Star and other junket operators in the short-term?
LT: Operational efficiency was neglected more than it should have been during the industry’s heyday, which drove operational costs up. In today’s environment it’s crucial to review costs with extreme prejudice to ensure operational efficiency. Keeping cost at bay while driving revenue and sustaining a high level of service seems counter intuitive, but that’s what is required to be successful today. With China’s macroeconomics in flux and concerns over liquidity, positive cash flow and timely credit repayment are essential to keep revenue up. Coupled with those operational costs, it keeps all of us challenged.
BB: In regards to your customers, what does Meg-Star offer that sets it apart?
LT: Customer service is the gold standard when determining whether patrons return or not. All VIP rooms are similar in nature in regards to what’s in them, so the main differentiator is service. Meg-Star prides itself on providing the absolute highest level of service, which means we have to anticipate what our patrons will require and make our service philosophy active instead of reactive.
BB: A number of smaller junkets were wiped out by Macau’s recent downturn yet Meg-Star ramped up operations instead. What was the reasoning behind that?
LT: Our ability to create opportunities when the market seems to be running the other way is due to our network and our war chest. Even though smaller junkets are reducing their reach, they still require a place of operation and through our network we’re able to expand and help smaller junkets be partners with our organization. It’s a win-win situation.
BB: Can you tell us about Meg-Star’s newest rooms at The Parisian and StarWorld?
LT: The Parisian is one of the more successful openings by Sands and it has already brought in great traffic and headcount to the eight tables we have there. We also have eight tables at StarWorld on a dedicated sixth floor and that’s our anchor on the Peninsula side.
BB: How about Meg-Star’s operations outside of Macau?
LT: We have a room through our 88VVIP subsidiary at City of Dreams Manila. But at this point our goal is to stabilize Macau and then look to expand in the future as opportunities become available.
BB: There has been a lot of talk about Macau moving more towards mass market and certainly the numbers support that, but will VIP continue to play an important role going forward?
LT: I think VIP will always play an integral role in Macau. Until recently it has carried Macau. Realistically both mass and VIP will have their roles to play – our job is to define what our role is in that and be successful at it. That means we need to be innovative on the technology front, think progressively in how we operate and take calculated risks to drive incremental revenue.