When Stephen Hung decided to unveil plans for his hotel in Coloane he invited a genuine descendant of King Louis XIII – Her Royal Highness Princess Tania de Bourbon Parme – to be one of the images of the project (named Louis XIII).
Between 2012 and 2015, Hung decided to change the name of the venture: it happened to be only The 13. In the Chinese tradition, this number is associated with fortune but the Hong Kong businessman was apparently unaware that in the West it represents the number of chance. Stephen Hung has often remembered this in recent years, superstitious or not.
2014 was the year that everything started to go wrong – albeit only in the final part because in September it was reported that Hung had placed the most expensive Rolls Royce order ever, valued at $20 million by the Financial Times. At that time, the project was still called Louis XIII.
In December, Xi Jinping spoke of the need to diversify Macau’s economy away from VIP gaming, while driving China’s anti-corruption campaign, the largest and most effective in recent years.
“The 13 project was predicated on a premium mass model whereby ultra-high end direct casino customers would pay to indulge in a lifestyle experience. Unfortunately, that particular premium segment no longer exists due to the exigencies of the anti-corruption and anti-ostentation campaigns of 2013 and 2014,” Ben Lee, a Macau-based managing partner at Asian gaming consultancy IGamiX, told Macau Business.
“We conducted studies of the premium mass market in 2012 and then again in 2016, and we found that the topography of that market segment had changed tremendously,” adds the expert. “In short, the original business model that The 13 has is no longer viable. However, their cost structure and setup would make it very difficult for them to reposition themselves without a drastic wholesale makeover.”
“The 13 project was predicated on a premium mass model whereby ultra-high end direct casino customers would pay to indulge in a lifestyle experience. Unfortunately, that particular premium segment no longer exists due to the exigencies of the anti-corruption and anti-ostentation campaigns of 2013 and 2014,” (Ben Lee, IGamiX)
In Coloane, work proceeded apace, with the opening scheduled for 2016, but it seems these words had a devastating effect.
Between December 2014 and December 2017, Hung experienced difficulties never seen and never imagined.
The work stopped, holding shares sank, and management had to resort to more bank loans and offload assets.
The only thing that went well – the delivery of the 30 Rolls Royces per the scheduled date in 2016 – turned out to be at the same time a nightmare of management and of image (waiting in a garage, as they were, to be used).
At the end of last year positive news finally arrived for Stephen Hung: he was able to resume work inside the building, finding money to equip and decorate the premises. “On or before [next] March 31” became the mantra regarding the new opening date.
The truth is that no-one dare say yes or no. Everyone will wait and see. Also, because the great doubt is not when it opens but under what conditions.
“The company’s intention is to include gaming operations in The 13 Hotel as soon as practicable, subject to the progress of the licensed operator in submitting an application for and obtaining approval for the gaming operation after the licences for the operation of The 13 Hotel have been granted or when it is clear such licences are almost certain to be granted as a matter of procedure,” said The 13 Holdings in a filing with the Hong Kong Stock Exchange.
Hung’s company revealed that it had entered into a Memorandum of Understanding with an affiliate of a Macau concession or sub-concession in April 2008, confirmed twice until 2012 albeit “as such, gaming operations may or may not commence at The 13 Hotel, but will not affect the opening and the hotel operation of The 13 Hotel.”
Not everyone shares this optimism, however: “If the property operates as a standalone hotel, it may be difficult to justify room rates to match its high-end focus. Without a casino, it would be almost impossible to have gamblers book rooms separately with them,” is the opinion of Margaret Huang, a Bloomberg Intelligence gaming and hotels analyst.
How much will The 13 cost?
The answer is another unknown.
Observers say the HK$1.6 billion announced two years ago is out of date.
In its last filing, of the group’s interim results for the six months to September 30, no reference was made to the capital cost of The 13 Hotel project.
What is known is that the group’s current liabilities exceed its current assets by approximately HK$3.63 billion.
Last October, shares of The 13 Holdings Ltd. fell to their lowest in 21 years (a fall of 49 per cent, the lowest price since April 1996).