IAG 2006-06-07 Jun-Jul - page 4-5

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OnMay26,theSingaporeGovernment’s selectedLasVegasSands
Corp (LVS) tobuildandoperate thecity-state’sfirst integratedcasino
resortatMarinaBay–adecision that surprisedmanywhobelieved
that companies submitting jointbidswithgovernment-linked local
propertydevelopersweremuchmore likely towin.LVS’Vegas-based
rivals,Harrah’sEntertainment IncandMGMMirage,hadboth teamed
upwithpartnersaffiliatedwithSingapore state investorTemasek
Holdingson theirbids–Harrah’swithKeppel LandandMGMMirage
withCapitaLand.Theoddsof LVSwinning thebidwere seenas
havingplungedafter thewithdrawal of itsproposedequitypartner,
SingaporepropertyfirmCityDevelopments.
BychoosingLVSoveroneof theTemasek-linkedbidders,some
analysts claim theSingaporegovernmenthasproven the superiority
of thecity-stateovermanyothernations inbothAsiaand the restof
theworld,where lesserbiddersareoftenable to securecontractsby
marshallingpolitical influence.
TheSingaporegovernmenthad listed the selectioncriteria for the
operatorof theMarinaBay resort asknowledgeofAsia,aproven
track record in themeetings, incentives,conventionsandexhibitions
(MICE)business,experiencedevelopingpropertiesof the scaleand
qualityof theplannedMarinaBayDevelopment,a track record inat-
tractingall segmentsof visitors,andnoproblemswithprobity.
Analystswhobelieved theSingaporegovernmentwasmorecon-
cernedwithchoosing thebidderoffering thegreatest long-term
value toSingapore thanonewithaTemasek-linkhad tippedLVSas
the favouriteaccording to thesecriteria,with the syndicate ledby
Malaysia’sGenting International regardedas the secondmost likely
towin,andonlydisadvantagedby its lackofMICEexperience.
Thedeciding factorwas clearlyLVS’MICE strength.LVSChairman
SheldonAdelson founded theComputerDealersExposition (Com-
dex),andmade it themost successful trade show theworldhasever
seen.During itspeak in the90s,Comdexdrew2,480exhibitorsand
212,000attendees toLasVegas.
Mr.Adelsonhighlightedhis company’sedge in theMarinaBay
bidding inAprilwhenhe said that conventions, rather thangam-
blingmachines,will be thebiggest touristdraw for Singapore.LVS’
proposedMarinaBaySandswill havearound1.2million square feet
of conventionandexhibition space,givingSingapore the largest
installedbaseof expo space inASEAN.LVS is currentlybuilding1.2
million square feetof expo spaceat itsVenetianMacaucasino resort,
IfYouCan’tBeat’Em,Pick‘Em
andhasalreadyannouncedplans to raise itsexpo space inMacau to
2.4million square feet.Thiswill give thecompanyadominantposi-
tion in theburgeoningAsianMICE sector.
No Casino Contest
Singapore’scasinoswill facea10%grossgaming tax rateon incen-
tivisedplay,compared toGentingHighlands’28%andMacau’s39%
(35%directgambling tax,and3-4%mandatory social andwelfare
contributions).Thiswill allowSingapore’scomingcasinos theflexibil-
ity toofferhigher commissionsand incentives todraw junketopera-
torsandpremiumplayers.Still,Macau’scasinosare likely toappeal
more to themassivemainlandChinesemarket,notonlybecauseof
geographical proximity (abillionpeople livewithina three-hourflight
fromMacau,compared to550millionpeople fromSingapore,anda
mere150million fromLasVegas),butalsocultural affiliation.
Singaporecould,however,giveMacaua run for itsMICEmoney.
WhileMacaucurrently suffers from limitedair connectivity,Singa-
pore is aglobal-crossroads for air traffic,and is alsoanappealing
MICEdestinationbecauseof its stable,crime-freeenvironment.
Macau’smajorMICEadvantage is that the local industrywill beag-
gressivelydevelopedbyLVS from theopeningofVenetianMacau in
mid-2007.
Withan integrated resort fromanyof theMarinaBaybiddersonly set
toopen twoyearsafter theopeningofVenetianMacau, theSinga-
poregovernmentmusthave realised that rather thanpickinganon-
LVSoperator tocompetewith theworld’s leadingMICEcompany
enjoyinga significanthead-start inMacau, itsbestbetwas topick
LVS todevelop theMarinaBay resort, forcingLVS to share itsMICE
businessbetweenMacauandSingapore.
Furthermore, thecasinoatVenetianMacau is likely togenerate
muchhigher returns than thecasinoatMarinaBaySands.This could
encourageLVS togivegreaterpriority tobringingMICE toSingapore
than toMacau inorder toensureanequal returnacross itsAsian
properties.TheSingaporegovernmentmadeacannydecision,ap-
parentlyat theexpenseofMacau’sMICEambitions.
Kareem Jalal
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