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Venetian expected to alter gaming in Macao

28 August 2007

MACAO -- On the eve of opening a $2.4 billion resort in Macau that will double the casino and hotel capacity of the Chinese gaming enclave, executives from Las Vegas Sands Corp. said there is room for more.

The company's 3,000-room Venetian Macau, an 11 million-square-foot complex, opens today in what Las Vegas Sands President Bill Weidner believes will be a market-transforming event. The Venetian is the first resort to be developed on the Cotai Strip, an area of reclaimed land about 10 minutes from downtown Macau. Plans call for Las Vegas Sands to build 20,000 hotel rooms on the Cotai Strip.

The Venetian, Weidner said, will change Macau from a day-trip destination, primarily from Hong Kong, to a longer-term stay resort focused on the entire Asian region.

However, Weidner believes there will still be room for the single-day customer market that has been the primary source of revenue for the Sands Macau, which opened in 2004.

"I have no doubt that we are in the beginning stages of building the critical mass that will make Macau an extraordinary success," Weidner said.

The Venetian, modeled after the company's Strip resort, includes a 1.2 million-square-foot convention center, 1 million square feet of retail, upscale dining and a 15,000-seat sports arena.

A Cirque du Soleil-produced show is scheduled to open in the spring.

Las Vegas Sands spokesman Ron Reese said The Venetian's 500,000-square-foot casino was set to open to guests at 7:18 p.m. Macau time Tuesday (4:18 a.m. today in Las Vegas) as determined by the property's Fung Shui master.

Reese said Venetian security expected some 30,000 potential customers would be waiting for the doors to open.

Weidner said the opening would mark the start of a Cotai building boom. The company expects to open a 400-room Four Seasons next to The Venetian in the spring and 6,000 more hotel rooms on three sites by the end of the year. Las Vegas Sands plans to open three more hotels totaling 6,000 rooms in 2009.

Weidner said the growth through the end of the decade will create two markets in Macau: Cotai with its large-scale resorts, and downtown Macau, which in addition to the Sands has the 600-room Wynn Macau and the 600-room MGM Grand Macau, which is expected to open by December.

"It seems that we will be creating two distinct markets," Weidner said. "Macau will never match the critical mass of Las Vegas, but there will be some segmentation in the market."

Both Wynn and MGM Mirage have Cotai Strip sites the companies are planning for future development.

Earlier this year, Wynn Resorts said it would complete a $450 million expansion to its year-old Macau casino, but would delay construction of new hotel tower.

Adelson, the billionaire founder of Las Vegas Sands, told Bloomberg News that Wynn Resorts Chairman Steve Wynn, is wrong to slow his expansion in Macau, which is the only Chinese city with legal casinos.

The Chinese government in April began restricting visas allowing residents of neighboring Guangdong province to enter Macau, which prompted the Wynn delay.

"Competitors and venues should work to bring people to destinations and then fight over them later, but Steve doesn't think so,' Adelson said.

Las Vegas Sands was the first U.S. casino owner to enter Macau with the Sands, ending the 40-year monopoly of Chinese gambling magnate Stanley Ho. Since then, the number of casinos has swelled to 26, with gaming companies spending or planning more than $20 billion on construction through 2010.

Adelson's company will start a ferry service between Hong Kong and Macau. A new terminal is being built near the Macau airport on the Cotai Strip. The Las Vegas Sands ferry will operate routes servicing Macau, the Hong Kong International Airport and Shenzhen.

The ferries will compete with Hong Kong-listed Shun Tak Holdings Ltd., a company controlled by Ho. Shun Tak runs ferry services between Macau, Hong Kong and other cities in China's Pearl River Delta.

American gaming analysts are also watching to see how the opening of The Venetian Macau will affect the Chinese casino industry as a whole.

CIBC World Markets analyst David Katz recently met with executives from Wynn and MGM Mirage and said they share his cautious view of the market in the near-term in anticipation of The Venetian opening.

"From our initial meetings, there appear to be mixed views on whether an initial trial period will impact results for existing and soon-to-be-opened properties," Katz said in a note to investors. "We have maintained a cautious view on the opening of Macau. Although we recognize Macau has demonstrated unparalleled depth to date, history suggests that rapid expansion in supply has produced lumpy results."

Bloomberg News contributed to this report.