Inside Asian Gaming

Oct 2007 | INSIDE ASIAN GAMING 15 Bigger Versus Better The battle of ideas dominating Macau’s casino market “I ’ve never been a person who thinks bigger is better. I happen to think better is better,” said Steve Wynn be- fore the opening of Wynn Macau last year. “The Venetian Macao podium will have 13 million square feet. That’s the equiva- lent of two Pentagons. At the time of con- struction the Pentagon was considered the largest building in the world,” countered Sheldon Adelson before the first phase opening of his integrated resort on Cotai this summer. Better versus bigger—that appears to sum up the guiding philosophies of two opposing giants of the Las Vegas casino market. Now that battle of business ideas has spread to Macau. Neither strategy has exactly been given a ringing endorsement by analysts just recently. Las Vegas Sands Corp (LVS) missed its third-quarter earnings target, but blamed it on higher operating costs and lower win percentages per table/ game. Wynn Macau’s mass-market rev- enue fell 5.4% in the same period, despite Mr Wynn’s assertions that The Venetian Macao’s arrival wasn’t hurting him. LVS’s third quarter adjusted profit fell 65% to US$41.8 million. Revenue rose 19.5% to US$661 million, but it was signifi- cantly below the US$783 million that some analysts had been expecting. All relative If that’s failure though, Mr Adelson will probably take it any time. Between early August—just before The Venetian Macao opened—and late October, his company’s stock rose 36%. Mr Wynn is entitled to feel equally san- guine. Although Wynn stock experienced a 5% correction in late October, it is still trad- ing at around 50 times its original earnings expectations for 2007. “They are getting more for their mon- ey by investing in Macau,” says Bill Lerner, Managing Director and Senior Gaming and Lodging Analyst for Deutsche Ban.”