SEARCH NEWS:

 

Macau Door to Growth for Sands

by Howard Stutz

LAS VEGAS -- When executives from Las Vegas Sands Corp. discuss their development sites in the Chinese gaming enclave of Macau, they describe the scene as something reminiscent of the movie, "Back to the Future."

In their eyes, Macau could eventually be the Chinese version of Las Vegas.

"We kiddingly say that an airplane from Las Vegas to Macau is a time machine," Bill Weidner, president and chief operating officer of Las Vegas Sands said last week. "Because we can see 1950s and 1960s Las Vegas in Macau right now. We live in what Macau is going to be. There is no question Macau will end up looking a lot like Las Vegas."

Las Vegas Sands already operates the Sands Macau, which opened in 2004, and is building the $1.8 billion Venetian Macau, which will serve as an entrance to the Cotai Strip.

That man-made island is being master-planned for seven hotel-casinos of 1,500 rooms each and is envisioned as the playground for 3 billion people who are within a five-hour plane flight to the area.

"The Chinese middle class is growing considerably," Weidner said. "The leaders have told us to build Las Vegas to give their middle class, that is growing by 20 million to 40 million people every year, something to do."

Macau is just the tip of the growth opportunities for Las Vegas Sands.

Thanks to the company's initial public offering in December, which raised $744 million of equity capital, along with recent bond and bank financing maneuvers, Las Vegas Sands is flush with close to $2 billion it can spend on development projects.

Weidner said Las Vegas Sands is looking to grow beyond its two revenue generating developments: The Venetian on the Strip, which is also tied to the Sands Expo and Convention Center, and the Sands Macau.

"The company ended up as the highest market capitalization company in the industry," Weidner said with regard to the IPO. "It's given us a different perspective on our business."

He said the company's completion in 2003 of the Venezia Tower at The Venetian gave company executives needed experience in design and construction of a facility. Las Vegas Sands also built the Sands Macau from the ground up and thus isn't apprehensive about taking on a development project.

The company has $3.5 billion of construction projects: the $1.6 billion Palazzo on the Strip, which has already been financed, and the Venetian Macau. Both are expected to open in 2007.

Las Vegas Sands is investigating gaming expansion throughout the United States and overseas.

"We haven't ruled anything out," Weidner said. "With our construction expertise, development expertise, design expertise, and operating expertise, we are looking for the right way to grow this company explosively."

Two deals have been signed to build casinos in conjunction with soccer clubs in the United Kingdom. All that awaits is government approval of reduced gaming restrictions.

Weidner said Las Vegas Sands has three other potential opportunities with United Kingdom soccer clubs, but nothing has been signed.

On a national level, Las Vegas Sands has an agreement to build the casino component of a proposed entertainment site in Bethlehem, Pa. Massachusetts and New York may also present opportunities.

Weidner said the company had interest in purchasing one of the two MGM Mirage-Mandalay Resort Group casinos in Detroit, but a subsequent meeting with the city's mayor led to discussions of a possible convention center redevelopment plan.

Las Vegas Sands was one of 19 companies to propose an integrated resort destination for the island-nation of Singapore. The company has proposed a resort complex for the Marina area of downtown Singapore that includes a casino, hotel, convention hall and a branch of the Guggenheim Museum.

"The model for an integrated resort is right here," Weidner said of The Venetian. "Our business model is what got us into Macau. We've shown that convention centers, malls, restaurants and other noncasino things can combine with a casino to create a multifaceted destination."

Macau presents Las Vegas Sands its most tangible development opportunity.

Casinos have operated in the region since the 1850s, and Macau was reclaimed by China from Portugal in 1999.

Plans are now in the works to construct an 18-mile bridge between Hong Kong and Macau before the end of the decade.

Sands executives believe they are far ahead of the competition. Wynn Resorts Ltd. is still far off from opening its Macau casino while MGM Mirage is still planning its potential resort.

Although there is still room to add a hotel component to the Sands Macau, the company is focused on its Venetian resort, which will be sort of like The Venetian Las Vegas on steroids.

The mall will be 2 1/2 times larger than the Grand Canal Shoppes at the Las Vegas property and its casino is planned for 546,000 square feet. In addition, there will be 1 million square feet of convention space and a 15,000-seat arena.

Las Vegas Sands Executive Vice President Brad Stone said the company is working with nongaming hotel companies to build the seven smaller properties. Las Vegas Sands would then operate the casinos, showrooms and restaurants in those properties.

Regal Hotels International of Hong Kong publicly said last week it would develop one of the hotels on the Cotai Strip. This week, Las Vegas Sands officials are reportedly meeting with representatives of the hotel companies.

"What we're attempting is to turn Macau from a day-trip convenience market to a true destination resort," Stone said.

Copyright GamingWire. All rights reserved.

< Gaming News