Inside Asian Gaming

23 22 restaurants, night clubs and spa found at its Vegas property in Macau. Critical Mass is Costly Creating critical mass on Cotai requires a huge invetment,but Mr.Adelson is convinced it will yield returns.“Do I look stupid? Do you think I’m spending US$6 billion because I want to throw money out the window?” The media has highlighted that LVS is footing the bulk of the bill for Cotai itself,sug- gesting that the company has been unable to convince others to share the risk of real- izing its ambitious vision. Mr. Adelson coun- ters LVS merely wants to keep the returns for itself. “We never hoped to have partners to share the financial risk. We [initially] wanted the partners because of the development concept. We thought that we wouldn’t have the capability to develop all of these proper- ties at once. But then we found out when we started to deal with other partners that they wanted to make a casino deal with the Ho or- ganisation [in order to gain] a much greater percentage of the gaming income. So they dragged their feet, and they were dragging their feet too long, and we decided that the deal looked so good that we were going to take it over ourselves.” “We’re turning them down because they wanted a bigger piece of the pie, they want- ed to be involved in the gaming income and we can’t and won’t involve them, even if we could, because this is a concession that we won, that we have. And we’re investing US$6 billion. Then other investors come in and say if I give you a couple hundred million dollars, I want you to guarantee a return on our in- vestment. I just sold personally US$3 billion worth of stock. I’ve got US$3 billion plus sit- ting in the bank, looking for investments. We don’t need other people.” The Island Annex LVS plans to further single-handedly broaden its offering to visitors through a US$2 billion investment on the underdeveloped main- land Chinese island of Hengqin, which sits strategically adjacent to Cotai. Macau is the most densely populated place in the world, and Hengqin provides much-needed space for expansion. LVS has the right to develop over 60 million sq. feet of land on Hengqin. “That’s a lot,” points out Mr. Adelson. “The whole Cotai Strip will be 35 million sq. feet.” LVS plans to develop a diversified mix of leisure amenities on Hengqin Island, includ- ing top-rate hotels and villas, a marina and yacht club, an outdoor amphitheatre, several golf courses and a tennis village.“We’re going to make it a lifestyle destination, and we will make it sort of like the South of France is to Eu- rope,” says Mr. Adelson. The water at Macau’s beaches are brown and murky, but a short yacht-ride fromHengqin sit mainland Chinese islands with surprisingly pristine, clear waters. Of course, LVS will not pass up on the op- portunity to create more convention and ex- hibition space on Hengqin,and plans to build one of the biggest such facilities in the world on the island.The company sees value in hav- ing a set of expo facilities on both Cotai and just across the border, with the former pos- sibly specializing in exhibiting international products, while the latter focuses on show- casing China-made goods. In addition to its investments on Cotai and Hengqin, if LVS wins the bid to operate Singa- pore’s first integrated resort, it would commit a further US$3.6 billion to Asia, bringing its total project costs in the region to near US$12 billion. Where skeptics see potential overca- pacity, Mr. Adelson sees a potentially infinite market, and the chance to clinch a huge first- mover advantage. “That’s okay that people are skeptical,”he says.“I wish they would con- tinue to be skeptical because we will develop and they’ll be several years behind us.” than the three major shopping malls of Hong Kong combined.” On April 4, LVS announced it had reached commercial terms with more than 115 premium retailers to open stores in Venetian Macau’s one million sq. foot Grand Canal Shoppes, which will feature 350 luxury and super luxury shops, including 20 leading food and beverage outlets, a 1,000-seat food court, an upmarket nightclub and 50,000 sq. foot luxury spa. LVS could potentially master- plan and develop 3 million sq.feet of malls on the seven lots it controls on the Cotai Strip, with all properties on Cotai connected by an enclosed all-weather air-conditioned moving walkway. Over the next few months, LVS will make big announcements on the upcom- ing entertainment and dining offerings at Venetian Macau. The Venetian Las Vegas has hosted the wildly popular Blue Man Group at a purpose-built 1,760-seat the- atre since October 2005, and the Phantom of the Opera will find a permanent home at the resort from June. LVS is no doubt busy sourcing similar spectacles for Vene- tian Macau.The 15,000-seat stadium will be more “opportunistic,” as Mr. Weidner puts it, hosting performances by whichever big name in music is touring the region, for ex- ample, or a variety of sporting events. LVS will also seek to replicate the world class William Weidner adds that when the multi- night overnight market emerges, visitor stays will on average place less of a strain on the immigration checkpoints of a city which, with only 488,000 residents, recorded 18.7 million predominantly day-tripping visitor arrivals in 2005. Other Multipliers In addition to conventions, an increased and improved retail, entertainment and dining offering will also extend the average length of stay of visitors to Macau, multiplying the demand for rooms. All will have to go hand in hand in “creating a critical mass of qual- ity product,” as Mr. Adelson puts it, will at- tract and extend the multi-night overnight market. TheVenetianMacauwill create a fair bit of critical mass by itself,but will be joined within twelvemonths by a string of world renowned hotels being developed by LVS along the Co- tai Strip, including a Hilton, Conrad, Four Sea- sons, Sheraton, St. Regis, Shangri-La, Traders, Intercontinental and Holiday Inn.“We’ll have two more brands we’ll announce in the very near future,” adds Mr. Adelson. In addition to the world class bars and celebrity chef restaurants, critical mass on Cotai will be bolstered by “more shopping Construction progress on Venetian Macau LVS announced it had reached commercial terms with more than 115 premium retailers to open stores in Venetian Macau’s one million sq. foot Grand Canal Shoppes