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Business magnate Stephen Hung and his wife, Deborah Valdez-Hung, in their Hong Kong home.Photograph by Edmon Leong
OUTSIDE HONG KONG'S HISTORIC Peninsula Hotel one recent weekday afternoon, two men compare their Bentleys. A gun-metal gray edition with the license plate "Iron Man" looks positively understated next to a fiery-red model whose gold paint flecks and hood ornament coated in 100 carats of diamonds sparkle in the sun.
That vehicle, worth around US $1 million, is part of a nine-car luxury fleet that belongs to Stephen Hung, one of Hong Kong's most ostentatious dealmakers.
Hung, dressed in black pants and a T-shirt emblazoned with bright flowers and geometric shapes —both very tight and very Versace—is there to do some shopping. In a private room in the hotel's Graff Diamonds store, Hung tells Arnaud Bastien, the British jeweler's Asia president and chief executive, that he has recently been to Venice, where he sailed on founder Laurence Graff's 150-foot yacht. Bastien acknowledges that his boss "knows how to enjoy" life. "Except right next to it was a 250-footer!" Hung interjects. He pulls up some photos of the trip on his iPhone and passes it around the room.
Stephen Hung, a flamboyant Chinese entrepreneur, unveils plans to build an exclusive gambling destination in Macau for the ultra-wealthy. Kate O'Keeffe reports on his latest real estate project for WSJ.Money magazine. (Photo: Louis XIII)
"When we work with Stephen he's always eager to have something special," says Bastien, as he produces one of the designs Graff has prepared for Hung. It is a watch face adorned with diamonds in the shape of Hung's own visage. A line of rubies is planned to represent Hung's signature look: a swath of bright red hair sweeping across his forehead. "We came up with this and he asked, 'Can you make my hair more red?'" explains Bastien.
Hung lights a Dunhill cigarette with a gold lighter. "Not many men get to try these on," he says, as he slips on a flawless 23-carat diamond ring that out-sparkles even his bright green Christian Louboutin loafers covered in gold spikes. "These are all worth over $10 million…obviously," he says, pointing to the jewels on display.
Hung then starts admiring an enormous diamond necklace. His public-relations representative suggests it would look lovely on his wife. "No...I'm thinking for myself," Hung says, as he puts it around his neck and has the representative snap a photo of him wearing it. "It's never too big," Hung says of a diamond pinky ring. Bastien agrees: "It can always be bigger."
THOUGH HARDLY A HOUSEHOLD NAME outside Hong Kong, Hung is one of the more eccentric members of an exploding number of mega-rich businessmen emerging from Asia these days. His enormous wealth has come from deals in investment banking and real estate, including in the gambling mecca of Macau. And it is there that, at 55 years old—an age when he says he can afford to do whatever he wants—he has decided to stake his claim and make some headlines. His plan may make some scratch their heads, but it makes perfect sense to him: He wants to transform a patch of Macau into a unique playground for ultra-wealthy individuals, with perks as eye-catching as his lifestyle. Indeed, if he has his way, it will be a destination unlike any other in the world.
Hung plans to build the world's most luxurious casino resort, with suites for up to $130,000 a night.Photograph by Edmon Leong
About an hour's hydrofoil away from Hong Kong, the gambling center is a remarkable place, if only for the volume of cash that flows from its felt-top tables. That's currently about six times the gambling revenue of the Las Vegas Strip, even though Macau was hardly viewed as a competitor a decade ago. Yet even as it balloons in size, Macau has never really entered into the global consciousness in the same way that Las Vegas, with its Rat Pack heritage, or Monte Carlo, with its panache and pricey yachts, did. Those who know Macau know it as a haven of hardcore gamblers who prefer tea to cocktails, a bowl of noodles to a five-course meal and a quick change of underwear to a night in a luxurious hotel room. Most Macau gamblers would rather play baccarat for 24 hours straight than sip a martini in a dinner jacket.
Hung is out to change that. His vision is to build the most luxurious and exclusive casino resort ever imagined, boldly named "Louis XIII" and containing all the trappings of that king's genteel world. It starts with a 22-story, bright red building crowned with an enormous fake diamond, according to the latest designs. Inside, guests will find a 200-room hotel with what Hung claims will be the world's most extravagant hotel suite: a 20,000-square-foot-plus abode that will cost nearly $130,000 per night. Guests will be chauffeured by a fleet of some 15 red Rolls-Royce Phantoms.
Patrons will need an invitation to shop in private boutiques at the resort. Jewelry items at the atelier will cost at least $1 million, with some priced at over $100 million, while the fashion houses will only sell bespoke and couture pieces, according to the plans. Graff has signed on as one of the atelier's partners. There will be a casino, too, of course. Analysts expect it to have 66 gambling tables requiring a minimum bet of nearly $650.
Not surprisingly, Hung's bold ambitions have already drawn their share of critics. Wasn't it Las Vegas that a decade ago tried to become a place of unadulterated luxury but stumbled when the financial crisis struck? Isn't China's new leader Xi Jinping aggressively frowning on excessive displays of wealth? Never mind, says Hung, whose development company has already raised more than $400 million to launch the project and lined up some big players in the local finance, property, casino and luxury goods scene for the venture's board and senior management team. The dice are already rolling.
“The number of super-rich gamblers is very small, and everyone is going after them.”
JUST A FEW YEARS EARLIER, IT WOULD have been impossible to imagine a resort like Louis XIII opening in Macau, which used to be a gambling backwater. After winning monopoly rights to run casinos in the former Portuguese colony in the 1960s, a local businessman named Stanley Ho and his partners built smaller-scale, no-frills casinos with rainbow-colored light shows alongside the island's colonial core of old churches and patterned tiles called "calçada." They also invested in an airport and built a ferry service to bring in more business from Hong Kong. But by the late 1990s, the city had become a dangerous place, with rival gangs linked to the casino industry violently fighting for turf.
The tables turned in 1999, when Macau became a special administrative region of China, and a couple years later broke up Ho's monopoly. Billions of dollars poured in over the next decade as aggressive foreign casino operators moved in and the economy boomed. In rapid fashion, Macau became a giant, with gambling revenues shooting up from less than $3 billion in 2002 to $38 billion in 2012.
But as it grew, this new gambling powerhouse largely stuck to its roots as a haven for hardcore bettors. Even Nevada firms Las Vegas Sands Corp., Wynn Resorts Ltd.WYNN +1.26% and MGM Resorts International—famous for spurring bachelor parties, celebrity-chef restaurants and flashy stage performances—haven't had much luck convincing rich Asian gamblers to spice up their lives outside the tables. Cirque du Soleil, whose acrobatic shows are a Las Vegas staple, left Macau in 2012 after 3 ½ years of lackluster operations. Cirque filled just 40 percent of its seats the month before it closed.
Today, Macau has revenues about six times that of the Las Vegas Strip, catapulting it into a gambling mecca. Ian Trower/JWL/Aurora
Enter Hung, a showman of a different ilk, who thinks there is room for change. Casino gambling, which is banned in mainland China but not in Macau, is "like a new toy" for the Chinese, he says. The argument for such a joint is fairly simple, based on the explosion of new wealth in China. According to Wealth-X, a Singapore-based research firm, there are now nearly 14,000 people in China and Hong Kong worth at least $30 million. Forbes magazine counts 122 billionaires in China, second only to the U.S. In 2008, China had just 28 billionaires. "Over time, the Chinese will do gambling in a more normalized fashion," says Hung. "They will start to think 'I can still spend 10 hours at the tables, but I don't have to spend 20.'"
Indeed, some Macau gamblers are learning to live large beyond baccarat. Just last year, Wynn Resorts said the Vertu, Piaget and Cartier stores at its Macau casino were those brands' No. 1 stores globally in terms of revenue per square foot. And yet Hung says his resort will target an even higher-end customer than Wynn does, believing in his own philosophy that only someone who knows opulence personally—namely him—can really deliver it. "You can't develop something like this if you're not a part of it," says Hung, who according to both him and a spokesperson at Versace, is among the company's top clients.
Wealth, of course, has always been part of his pedigree. He was born to rich property investors in Hong Kong and started his own career in banking as an intern at the local Citibank offices in the 1980s. (One telling story: Even as an intern, he says, he drove a Rolls-Royce to work.) But after focusing on Hong Kong real-estate deals and investment banking earlier in his career, he set his sights on Macau as the doors were opening up to the outside world. Although he doesn't play a day-to-day role in any casino there, many observers credit his ability to bring developers and funding together, helping convert the island into the world's biggest gambling empire. Name a project—such as a recent $578 million golf-course sale or the $2.4 billion Macao Studio City, a planned cinema-themed casino resort—and Hung has been involved.
BUT SKEPTICS SAY PLAYING A ROLE IN deals is a long way from actually pulling off one on your own, and some say Hung has quite a challenge ahead of him in hyper-competitive Macau, where experienced casino developers are investing tens of billions of dollars on a whole new fleet of flashy properties to draw in players.
"The number of super-rich gamblers is very small, and everyone is already going after them," says Ben Lee, managing partner of Macau-based consultancy IGamiX. Plus, these high-end players may not fork over a ton of money for expensive hotel rooms when they are used to staying for free at
other luxury properties. "To attract VIPs, complimentary rooms, cash rebates and expensive gifts are the norm," he says.
On the retail side, the ultra-rich may still prefer to shop in fashion cities like Paris—where the staff at top brands' flagship stores have mastered the art of selling to the extremely well-heeled—over tiny boutiques in developing markets like Macau, says Yuval Atsmon, a McKinsey & Co. consultant who has studied the habits of China's luxury shoppers. "It's a little bit tricky in those small stores to deliver the brand experience," he says.
In addition, some say a looming economic slowdown in China, coupled with the Chinese government's recent crackdown on corruption, make this an inopportune time for such an extravagant project. After three decades of annual economic growth averaging around 10 percent, China's government has set a gross domestic product growth target of 7.5 percent this year, and many economists worry the country's days of breakneck economic expansion are already behind it.
The Las Vegas Strip, littered with partially constructed, abandoned casino resorts, is a reminder of what can happen to multibillion-dollar projects when the economy goes south during a building boom. For example, the Fontainebleau resort, which was supposed to have 4,000 rooms, halted construction and sold off all its furniture after falling into bankruptcy in 2009.
“The idea behind the launch party: surpass the world's most glittering events.”
At the same time, criticism of the super-rich has become de rigueur in China after years of excessive displays of wealth, from the red Ferraris seen prowling Beijing streets to the flashy watches worn by small-town officials. To help set a new tone in the country, President Xi Jinping has stayed in modest hotels on the road and shunned the lavish banquets that used to be commonplace for Communist Party officials. His menu at one major event included just four dishes and one soup, a widely reported move that was interpreted as a sign that other leaders should curb their appetites as well. Sales of delicacies such as bird's nest soup and tabs at five-star hotels promptly tanked. Recently, a Beijing official was fired after spending too much—around $260,000—on his son's wedding, state media reported.
Still, Hong Kong-based gambling and luxury goods analyst Aaron Fischer, at brokerage CLSA, says these concerns are overblown. Fischer, whose firm worked with Louis XIII on its recent fundraising exercise, predicts that Macau's gambling revenue will double to $77 billion by 2017. He sees no end in sight to consumer spending on luxury goods either, citing results from a China Reality Research study showing that 94 percent of wealthy Chinese plan to spend the same or more on luxury goods in 2013 compared with the prior year. Macau, he says, is on its way to becoming the "luxury capital of China."
For years now, Macau has been a haven for hardcore bettors. Justin Guariglia/Aurora
"HOW MANY CARS DO WE HAVE HERE?" says Hung, as he leaves Graff for another appointment at Versace. "Only one?" he asks, concerned about space for his entourage, which includes a public-relations handler, a personal assistant, a reporter and a videographer. Hung is spending the day running errands in preparation for what he hopes will be the event of the year: a launch party celebrating plans for Louis XIII, attended by a Who's Who of Hong Kong's social scene.
Kanye West's album "My Beautiful Dark Twisted Fantasy" plays in the red Bentley as Hung travels across town. Hung says he likes hip hop but that he's unfamiliar with criticism of West for excessive arrogance. In response to a recommendation that he read some of West's quotes in recent interviews, Hung says: "Kanye West should read some of my quotes."
At the Versace store in Pacific Place, a luxury shopping mall in Hong Kong's business district, Hung consults with staff about a couture tuxedo he had ordered for his launch event. "According to your request, we have added more royal blue," a Versace employee says, as she shows Hung the revised design on an iPad. The sketch, which even incorporates Hung's face and signature hairstyle, reveals a bright red suit covered in a gold-patterned print. The collar and cuffs are blue, as well as the lining of the jacket's tails.
The next stop is Dreamodels, the modeling agency run by Hung's wife, Mexico-born Deborah Valdez-Hung. As he exits his car, Hung sees a more muted red Rolls-Royce across the street. "Our red is much better than their red," he says. "It's boring." Valdez-Hung strokes Hung's back as he reports to her how impressed his friend was with Hung's new Bentley. Valdez-Hung says she met Hung several years ago, when she came to Hong Kong for a vacation after finishing her law studies in Mexico. "I came from a very conservative family. When I met him I didn't want him to impress me with anything but his mind," she says. "He has this magnetism. Designers, investors, everyone wants to talk to him."
The idea behind the launch party is to surpass the world's most glittering events. Held in the ballroom of the Grand Hyatt in Macau's Cotai area, down the road from where Hung's own project will be, guests walk through red velvet drapes drawn together by a giant fake diamond to enter a makeshift "Versailles gardens" with plastic grass and shrubbery and a palace façade adorned with statues. Photographers, models and waiters serving champagne pace the area. Inside the faux palace is a dance floor surrounded by long banquet tables labeled with the names of French royal families, such as Bourbon and Orléans. The centerpieces include bouquets of flowers, candelabras replaced by white-gloved waiters throughout the night as they burned down, and silver trays of pears, marzipan and cupcakes whose pastel frosting ruffles like the skirts of Rococo dresses. Foie gras and wagyu beef are on the menu, among other delicacies.
Guests include Hong Kong socialites, celebrities, investors and some casino royalty such as Angela Leong, Stanley Ho's fourth wife. Hung, dressed in his red and gold Versace suit, and Valdez-Hung, dressed in a mermaid-like gown covered in sparkly green tiles, stand in the doorway receiving other ornately dressed guests.
Toward the end of the main course, the glass windows of the palace light up, revealing models posing with Graff diamond necklaces, earrings and bracelets. Guests look around, wondering what is happening. The chandeliers lower from the ceiling, music starts blaring, and models march into the room, dressed in brightly colored bustiers and wide, theatrical skirts and thigh-high stockings with heels. They sport big, Marie Antoinette-style hair, with faces covered in heavy, pale foundation.
Up next come dancers performing to a techno can-can remix and Christina Aguilera's "Lady Marmalade" song from the 2001 Baz Luhrmann film "Moulin Rouge." Princess Tania de Bourbon Parme, a designer, descendant of Louis XIII and special adviser to Hung, is at the head table, dancing with her male companion and Valdez-Hung.
It is what everyone expected from Macau's kingmaker turned king—and very much the vision of what he hopes to create in a drab, but enormously rich, gambling city.
And the party isn't over: The next day brunch is served in the courtyard. Decked out in sunglasses, a kiltlike skirt over pants, a bright yellow sweater and another pair of spiked Louboutin loafers (gold this time), Hung arrives to an applauding group of fawning guests. Hands on hips, he stands amid a sea of food: blinis with smoked salmon and caviar, eggs Benedict, assorted cheeses, pastries, desserts—and, of course, more champagne.