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Sands Progresses With Cotai Plans

27 September 2006

MACAU -- Las Vegas Sands Corp. has begun construction on its last two resort locations on the Cotai Strip in Macau that will ultimately bring to the Chinese community 10 different hotel brands with a combined 9,400 rooms.

Included in the Cotai mix is the Venetian Macau, a 3,000-room version of Las Vegas Sands' Venetian on the Strip. The company is spending $6 billion to develop Cotai, including $2.4 billion on the Venetian.

Las Vegas Sands controls seven sites on the Cotai Strip, an approximately 250-acre area of land reclaimed from the South China Sea between the islands of Taipa and Coloane. Cotai is in the People's Republic of China Special Administrative Region of Macau.

"As planned, we have now undertaken work on each of the properties necessary for us to complete our vision of the Cotai Strip," Las Vegas Sands Chairman Sheldon Adelson said.

Las Vegas Sands' sites on Cotai, which the company is developing for the Chinese government, encompass 147 acres and comprise a U-shaped Strip.

Adelson and company executives persuaded some of the world's largest and most profitable hotel companies to open locations in a joint venture with Las Vegas Sands on Cotai. The hotel operators will manage their own rooms and restaurants. Las Vegas Sands will run the properties' casinos and showrooms.

This past week, development began on a 1,200-room Hilton Hotel, a 300-room Conrad Hotel, and 1,500 rooms that will be divided between the Fairmont and Raffles hotel brands. Previously, construction started on a Four Seasons, Shangri-La, Traders, Sheraton and St. Regis hotel brands.

Jefferies & Co. gaming analyst Larry Klatzkin the company's joint venture relationships with brand-name hotel operators was smart way to give the planned Cotai Strip hotels a way of tapping into worldwide customer databases.

Cotai, Klatzkin said, will give Las Vegas a valuable revenue source into the next decade. His only concern, however, is that the company has to hire a large number of middle-management executives to operate the Cotai casinos.

"I think they'll be fine in that regard, but what Las Vegas Sands is doing is setting up the company for growth for years to come," Klatzkin said.

In 2005, Macau casinos generated $6 billion in gaming revenue. Analysts expect the region, including Cotai, to generate between $15 billion and $18 billion in annual gaming revenues by the end of the decade.

Las Vegas Sands executives said the company hopes to open the Cotai hotel-casinos in phases starting with the Venetian next summer and continuing throughout 2008. The last hotels are expected to open in early 2009.

"Starting construction on these two remaining sites is a testament to our construction team on the ground in Macau," Las Vegas Sands Executive Vice President Brad Stone said.

The Venetian, with its 565,000-square-foot casino, is considered the anchor for Cotai. The hotel-casino is being built on 67 acres and includes 1 million square feet of meeting space, a 2,000-seat showroom, and a 1 million-square-foot version of the Grand Canal Shoppes. A 15,000-seat sports arena is also part of the site.

Las Vegas Sands is negotiating with a group called the Far East Consortium for a joint venture on another Cotai site that would include a yet-to-be-determined number of rooms divided between four additional hotel brands: Intercontinental, Holiday Inn, Cosmopolitan and Dorsett.

"We are joined by the finest names in the hotel industry and we will continue to add the premium retailers, restaurants, entertainment and other amenities that will redefine Macau as north Asia's premier leisure and convention destination," Adelson said.

Las Vegas Sands spent $300 million in 2004 to open the Sands Macau and recently spent another $99 million to increase the size of its casino to 740 table games and 1,254 slot machines.

Earlier this month, Wynn Resorts Ltd. opened the first phase of Wynn Macau while MGM Mirage is building the MGM Grand Macau, which is scheduled to open in late 2007 or early 2008.