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Sands exec calms Macao fears

21 August 2008

LAS VEGAS, Nevada -- A week before the opening of Las Vegas Sands' newest $1 billion addition to Macau's Cotai Strip, company President Bill Weidner downplayed Chinese media reports that the government wants to slow visitation into the gambling enclave.

During a conference call Wednesday to discuss the Aug. 28 opening of the 360-room Four Seasons Macau, which is attached to the company's massive 3,000-room Venetian Macau, Weidner said the bulk of the company's Chinese visitors come from areas of the country that would not be affected by government-imposed visa restrictions.

Weidner also said company officials aren't even sure China wants to enact the restrictions.

"This would be the fourth wave of visa restriction tweaking since 2000," Weidner said. "I think the primary reason is they want to separate the wheat from the chaff. The restrictions are aimed at bringing a higher quality of visitors."

The restrictions are reportedly focused on the Guangdong province in Southern China, which has 70 million citizens and supplies much of the day-trip customer traffic to Macau. Weidner said China's major cities, such as Beijing and Shanghai, would not be impacted.

"Visitors from those cities are staying two or three days and that's the visitor we want to bring to Macau," Weidner said.

News of the possible visa restrictions have affected the stock price of Las Vegas Sands and other casino operators in the Macau market. Shares of Las Vegas Sands fell 11 percent Tuesday on the New York Stock Exchange and the slide continued Wednesday, with shares falling another 8.19 percent to close at $41.80, down $3.73.

"A lot of people are making bets on any little pieces of news," Weidner said. "The way our stock trades, any little change can affect us 8 to 10 percent."

Jefferies and Co. gaming analyst Larry Klatzkin said possible restrictions should not scare off investors.

"The Macau gaming market continues to be on track for a total market size of over $17 billion by the end of 2010," Klatzkin said.

Also on Wednesday, Hong Kong's South China Post reported that Las Vegas Sands had reduced its funding needs for the Cotai Strip to $5.25 billion from an earlier target of $7 billion.

Weidner said the move reflected a slowdown in construction that had been requested by the Macau government. Las Vegas Sands expects to open three resorts on the Cotai Strip late next year -- Sheraton, St. Regis and Shangri-La -- that will add another 6,400 hotel rooms to the market. Work will slow on the company's other Cotai Strip sites that could include another half-dozen hotel brands.

"The time of Macau as a destination resort is now," Weidner said. "A trip to Macau is a complete trip."

The Four Seasons Macau will not have a casino, but will include a 210,000-square-foot retail space that will attach to the 1.2 million square feet of retail already open at The Venetian Macau. The property, which has been under construction for more than a year, also includes restaurants and a spa.

The opening coincides with the one-year anniversary of The Venetian Macau, which cost $2.4 billion and has a 546,000-square-foot casino. Las Vegas Sands will also open a new Cirque du Soleil show, titled "Zaia," on the same night.

Weidner said the company asked the University of Macau to survey guests at The Venetian Macau to determine changes in visitor trends over the property's first year. He said the entire report would be released in conjunction with next week's Four Seasons opening.

Weidner said almost 59 percent of The Venetian Macau's customers came from China while visitors also came from Korea, Japan and other eastern Asia countries. He said the average stay is almost three days, which is up from one day a year ago.

He said only 24.4 percent of all visitors came to The Venetian Macau primarily for gambling, a figure that is similar to the Las Vegas visitor.

"The marketplace is broadening because Macau is becoming a destination resort," Weidner said.