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Howard Stutz

Sands opens first phase of Singapore complex

27 April 2010

SINGAPORE -- At 165,000 square feet, the casino inside Singapore's Marina Bay Sands resort isn't the project's overwhelming feature. In fact, the casino makes up about 1 percent of the building's total square footage.

When government leaders for the island nation in 2005 approved two casinos for Singapore in an effort to grow tourism, the edict was passed that gambling was not to be the facilities' primary purpose.

"The casino is not the overriding element of the project, but it allows us to do everything else," Las Vegas Sands Corp. President Michael Leven said on Monday, the eve of the $5.5 billion Marina Bay Sands' opening.

The resort was expected to partially open overnight with 963 hotel rooms, parts of the shopping mall and convention center, several restaurants and bars, and the casino. It celebrates its grand opening on June 23 when the remainder of the 2,560 hotel rooms, the Event Plaza along Marina Bay, additional shops, restaurants and nightclubs will open.

The Sands SkyPark, which sits 60 stories high, atop the Marina Bay Sands' three hotel towers, will also debut on June 23. The 7,000-ton feature -- large enough to park four A380 jumbo jets -- will have a cantilevered platform offering 360-degree views of the Singapore skyline through a public observatory, rooftop restaurants, nightclubs, gardens and a swimming pool.

Leven gushes enthusiastically about the building, which will also include a museum, theaters and other entertainment amenities.

"This is going to be the most photographed building of its kind in the world. It might even rival the Sydney Opera House," Leven said. "I wouldn't be surprised to see it on picture postcards."

But back to the Marina Bay Sands' casino, which will have more than 600 table games and 1,652 slot machines in a three-level facility.

"The casino has got to work," Leven said. "If it doesn't work, you can't make the project work financially."

Signs are already pointing positively.

Under the government-mandated duopoly, Marina Bay Sands shares the market with Resorts World on Sentosa Island, which is operated by Genting Group of Malaysia and opened Feb. 14.

Official gaming figures have not been posted, but analysts and various gaming sources have said Resorts World's slot machines are winning on average between $800 and $1,000 per day per machine. The gaming tables are reportedly collecting between $4,000 and $6,000 a day per table from customers.

"We don't really know the exact numbers and we think that might change for Genting when we open, but it's encouraging," Leven said.

Wells Fargo Securities gaming analyst Dennis Farrell Jr. said investors are still trying to ascertain the potential of Singapore's gaming market. The first 10 weeks that Resorts World was open, Singapore's tourism numbers rose 24 percent.

"While we have yet to see exact figures from Genting, thus far the casino floor has been flush with gaming patrons and could be a strong indicator for the future success of Las Vegas Sands' Marina Bay casino," Farrell said. "We believe (Marina Bay Sands) is in a better location and will be an iconic resort in the Far East when fully completed."

Gambling has flourished at Resorts World despite a government-imposed $70 per-person casino entry fee charged to Singapore residents as part of a campaign to warn against the dangers of gambling addiction. The Marina Bay Sands will have an entry fee of $100 per Singapore resident.

Analysts don't believe the entry fee will be a deterrent.

"The jury is still out on Singapore's gaming market potential," Farrell said. "But the recent opening of Genting's casino Resort World Sentosa has many investors trying to extrapolate what the future size of the Singapore market could be."

When Singapore requested proposals for the two locations, most of the major gaming giants showed interest, including MGM Mirage, Harrah's Entertainment and Wynn Resorts.

Genting won the Sentosa site by partnering with Universal Studios for a family-style theme park.

Las Vegas Sands stuck to its business model that tied the conventions and meetings industry with nongaming amenities, such as dining and shopping, along with gaming. The Marina Bay Sands convention center opens Friday with a meeting of Asian attorneys who have taken 500 of the property's hotel rooms. The group's keynote speaker is former Vice President Al Gore.

The shopping complex will eventually house 350 stores, the lineup of celebrity chefs includes Las Vegas staples Daniel Boulud, Guy Savoy, Wolfgang Puck, along with Spain's Santi Santamaria and Australia's Tetsuya Wakuda, while a production of Disney's "The Lion King" will open this fall.

Las Vegas Sands has made that business model work in Macau, but Leven doesn't believe Marina Bay Sands will divert the bulk of the company's business from either The Venetian Macau or Sands Macau.

He admitted that some of the company's customers from Hong Kong might want to make the three-and-half-hour airline flight to Singapore to at least check out the new resort.

"Some of our big players will go to Macau and Singapore for different purposes," Leven said. "Some of Macau's business will move, but it won't be permanent. Macau has a much bigger market potential than Singapore because of mainland China."

Credit Suisse gaming analyst Amir Markowitz, who began covering Las Vegas Sands, said the Marina Bay Sands could be a game-changer for the company stock price, which closed Monday at $26.20, up $1.08, or 4.3 percent, on the New York Stock Exchange.

"Initial anecdotal data-points out of Genting's recently opened Singapore project have been encouraging," Markowitz said. "If the opening of Venetian Macau in 2007 is a guide, then shares could move higher into the opening."