Inside Asian Gaming

19 18 n September,Las Vegas-basedWynn Re- sorts will open Wynn Macau, the company’s first property in the city, and plans to com- plete an expansion by the first half of 2007, bringing the total project cost to over US$1 billion.Wynn Macau will trumpet itself as the city’s first full-fledged Vegas-style destination resort. Las Vegas Sands Corp (LVS) Chairman Sheldon Adelson says “that’s a joke.” Admittedly, Wynn Macau will pale in comparison to LVS’ ambitious US$2.3 billion Venetian Macau, set to open in mid-2007, and even to Wynn Resorts’ flagship property in Las Vegas.Wynn Macau will have 600 hotel rooms vs. the 3,000 suites at Venetian Macau and the 2,716 rooms atWynn LasVegas.Vene- tian Macau will have a whopping 1.2 million sq. feet of convention and exhibition space, compared to 24,000 square feet of meeting space at Wynn Macau. Wynn Macau’s 13- store retail mall will be dwarfed by Venetian Macau’s 350-store shopping mall, and the former’s 600-seat theatre is a trifle compared to the latter’s 1,800-seat showroom and 15,000-seat stadium. Wynn Macau is clearly focused on its ca- sino, which will house 200 gaming tables and 380 slot machines at opening, and 500 tables and 980 slots after the expansion. Mr. Adel- son says Venetian Macau will be Asia’s first real destination resort, with its integrated expo, entertainment, shopping and dining offering.“Oh, and we’ll have a casino as well,” he says, stressing the move away from Ma- cau’s previous casino-centric properties. Still, Venetian Macau’s casino will be the biggest in the world, with 750 tables and 4,000 slots at opening, and covering almost three times the floor area of the casino at the expanded Wynn Macau. Whence Came Vegas Many look to Las Vegas’ evolution to prog- nosticate where Macau is heading. Gambling was legalized in Nevada in 1931, and Vegas’ first transformative product was the casino resort, which took over from the erstwhile Ahead of the Pack “It’s too much too soon,” charge detractors of Las Vegas Sands Corp (LVS), which is set to open its US$2.3 billion Venetian Macau resort in mid-2007. LVS Chairman Sheldon Adelson argues other casino and resort operators, including his old rival Steve Wynn, will offer “too little too late” in the city downtown gambling joints – the first resort was El Rancho.The boom in casino resort de- velopment in the early ‘50s was followed by a period of consolidation, during which some operators sought to develop the convention market in order to drive mid-week occupan- cy. Properties began marketing themselves as resorts and business meeting venues, rather than places centered on casinos. This heralded the dawn of the mega-resorts. The mega-resorts’ diversified offerings have pushed up the Las Vegas Strip’s non- gaming revenues, which last year totaled US$9.5 billion, compared to gaming revenue of US$6.2 billion. Macau granted its first ca- sino license in 1937 – just six years after Ve- gas did – but the monopoly which lasted until 2002 has stymied Macau’s diversifica- tion from hardcore gambling until now, and 90-95% of revenue is still derived from gam- ing. As CLSA’s Aaron Fischer discussed in the last issue of Inside Asian Gaming, the growth of Macau’s non-gaming revenue “will be the more exciting side of the race.” Mr. Adelson views casino-centric prop- erties from rival operators set to open on or near Macau’s Friendship Avenue – where LVS’ Sands Macau and Stanley Ho’s flagship Casi- no Lisboa now stand— as “too little too late.” These include Galaxy Starworld,WynnMacau, Grand Lisboa, MGM Grand Macau and PBL- Melco’s Crown Macau (just across the bridge on Taipa). “All they can do is address the lo- cal market,” says Mr. Adelson, though given the boom in gaming revenue, that market is nothing to sneeze at. Mr.Adelson feels, how- ever, that “they should have opened two and a half years ago, when we saw the market, we came in and we addressed the market [with Sands Macau].” Ninemonths afterWynnMacau opens,LVS will make the first dramatic push in the non- gaming race on the Cotai Strip, and its “near- est competitor from Las Vegas” will remain at least two and a half years behind, according to Mr. Adelson. The Cotai Strip of reclaimed land between Taipa and Coloane Islands is where LVS is spearheading the creation of its trademarked “Asia’s Las Vegas” by developing a string of luxurious hotels around Venetian Macau with world-class convention and exhi- bition, retail, entertainment and dining facili- ties. And oh, it will have casinos as well. The casino-centric properties opening over the next two years will go after Macau’s proven market of day-trippers lured by gam- bling. Fewer than 20% of visitors to Macau currently stay overnight in a hotel or simi- lar establishment, with three- and four-star establishments the most popular, hosting 70% of the total. Most of the visitors are from mainland China, and skeptics fear they do not yet have sufficient appetite for high-end non-gaming offerings, including rooms at the glitzy resorts. Given the current market, doomsayers presage low occupancy at the new resorts as room supply triples over the next two years. Mr. Adelson offers the skep- tics a terse reply:“Forget the old market,it’s ir- relevant.”It is the new,“multi-night overnight stay market that will fill the [Cotai] Strip.” Visitors to Macau currently stay an aver- age of 1.1 days, though LVS sees potential to raise that figure closer to Hong Kong’s aver- age 3.4 days.Packages for longer stays will be marketed around the new mega-resorts. Mr. Adelson claims“we’re in the process of estab- lishing a network, and we do have a network of tour operators standing in line waiting to get allocations of rooms to send their people to.It’s another very exciting product for them. They see what tour operators have done go- ing to Vegas, and so they see this as a great product offering.” I The Cotai Strip