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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Wynn sets sights on Singapore

1 August 2011

SINGAPORE -- It took awhile, but Singapore finally caught the attention of Steve Wynn.

It's hard not to notice the tiny island-nation.

Singapore's two casinos are poised to pass Las Vegas as the world's No. 2 gaming destination less than two years after gaming began.

If you want further proof, just look at the results posted by Marina Bay Sands in the second quarter.

Last week, parent company Las Vegas Sands Corp. said its 2,560-room Singapore hotel-casino recorded $405 million in property cash flow -- reported as earnings before taxes and other expenses -- between April and June. That single quarter is more cash flow than what the company expects to collect from its two Strip resorts in all of 2011.

No wonder Wynn wants a piece of the action.

"Naturally, anybody would be interested in Singapore," Wynn, chairman of Wynn Resorts Ltd., said July 18 during the company's quarterly earnings conference call. "It's such a great place to be in business. It's easy to say that Singapore is exciting."

There are two issues, however, that will keep Wynn on the sidelines.

One matter is Singapore's exclusivity agreement with Las Vegas Sands and Malaysia-based Genting, which operates Resorts World Sentosa. The market is capped at two casinos until 2017.

The other concern covers Wynn's comments about Singapore in 2005. Wynn insulted the government when he became disenchanted with its casino operator selection process. His words haven't been forgotten.

Wynn Resorts was among 14 bidders for Singapore's two casino developments. Wynn didn't like some of the advice he was getting from Singapore's government. He suggested authorities were micromanaging the process.

Wynn said at the time the "control and direction" offered by Singapore tourism leaders was "unsophisticated" from "people who have never done this before."

After Singapore Prime Minister Lee Hsien Loong publicly rebuffed Wynn's remarks, the company withdrew from the bidding process, saying it would concentrate on projects in Macau.

Maybe time heals all wounds.

Loong, who is still prime minister, pushed for Singapore to add casinos as a way to increase visitation. The idea has been a model of success. Tourism figures grew 20 percent in 2010 and the market shows no signs of slowing.

Royal Bank of Scotland gaming analyst Phillip Tulk told MarketWatch.com recently that Singapore gaming revenues would increase by 25 percent this year, to $6.4 billion. Last year, Strip gaming revenues were $5.8 billion.

No wonder Wynn has changed his tune.

In June, he told the Singapore Business Times that he was "dying" to enter the market.

"That's the next goal in life (is) to build a hotel in Singapore," Wynn said.

He tempered his remarks during the earnings call when faced with the reality that it could be five years before expansion is even considered.

"If we were ever given the chance to be a business in Singapore, we'd be thrilled and delighted to bring our best work there," Wynn said. "But that's not a decision for us to make."

It's unclear whether Singapore would even expand its casino market beyond the two properties. Adding gaming in 2005 was met with resistance. The government mandated that casinos remain a small portion of the entire integrated resort.

The Marina Bay Sands has more than 1 million square feet of retail and 1.2 million square feet of convention and meeting space.

No one, however, anticipated the gaming revenue explosion. More than two-thirds of two resorts' total revenues are directly from gaming.

"The government and the tourism board don't blatantly promote the casinos, but (they are) attracting the audience," Aaron Hung, a professor with Singapore's Management University, told MarketWatch.com.

The Marina Bay Sands' performance was much discussed during Las Vegas Sands' quarterly earnings conference call last week. Company Chairman Sheldon Adelson hinted that Singapore's limited hotel capacity might be the only hindrance that could slow the market's growth.

Here's an idea: Maybe Wynn could build a nongaming hotel in Singapore that could feed business to the Marina Bay Sands?

After all, Wynn and Adelson are new-found BFFs, having recently dined together with their wives.

For now, this solution might be Wynn's only entrance into the gaming industry's latest boomtown.