5 On May 26, the Singapore Government’s selected Las Vegas Sands Corp (LVS) to build and operate the city-state’s first integrated casino resort at Marina Bay – a decision that surprised many who believed that companies submitting joint bids with government-linked local property developers were much more likely to win. LVS’Vegas-based rivals, Harrah’s Entertainment Inc and MGM Mirage, had both teamed up with partners affiliated with Singapore state investor Temasek Holdings on their bids – Harrah’s with Keppel Land and MGM Mirage with CapitaLand.The odds of LVS winning the bid were seen as having plunged after the withdrawal of its proposed equity partner, Singapore property firm City Developments. By choosing LVS over one of the Temasek-linked bidders, some analysts claim the Singapore government has proven the superiority of the city-state over many other nations in both Asia and the rest of the world, where lesser bidders are often able to secure contracts by marshalling political influence. The Singapore government had listed the selection criteria for the operator of the Marina Bay resort as knowledge of Asia, a proven track record in the meetings, incentives, conventions and exhibitions (MICE) business, experience developing properties of the scale and quality of the planned Marina Bay Development, a track record in at- tracting all segments of visitors, and no problems with probity. Analysts who believed the Singapore government was more con- cerned with choosing the bidder offering the greatest long-term value to Singapore than one with a Temasek-link had tipped LVS as the favourite according to these criteria, with the syndicate led by Malaysia’s Genting International regarded as the second most likely to win, and only disadvantaged by its lack of MICE experience. The deciding factor was clearly LVS’MICE strength. LVS Chairman Sheldon Adelson founded the Computer Dealers Exposition (Com- dex), and made it the most successful trade show the world has ever seen. During its peak in the 90s, Comdex drew 2,480 exhibitors and 212,000 attendees to Las Vegas. Mr. Adelson highlighted his company’s edge in the Marina Bay bidding in April when he said that conventions, rather than gam- bling machines, will be the biggest tourist draw for Singapore. LVS’ proposed Marina Bay Sands will have around 1.2 million square feet of convention and exhibition space, giving Singapore the largest installed base of expo space in ASEAN. LVS is currently building 1.2 million square feet of expo space at its Venetian Macau casino resort, If You Can’t Beat’Em, Pick ‘Em and has already announced plans to raise its expo space in Macau to 2.4 million square feet.This will give the company a dominant posi- tion in the burgeoning Asian MICE sector. No Casino Contest Singapore’s casinos will face a 10% gross gaming tax rate on incen- tivised play, compared to Genting Highlands’ 28% and Macau’s 39% (35% direct gambling tax, and 3-4%mandatory social and welfare contributions).This will allow Singapore’s coming casinos the flexibil- ity to offer higher commissions and incentives to draw junket opera- tors and premium players. Still, Macau’s casinos are likely to appeal more to the massive mainland Chinese market, not only because of geographical proximity (a billion people live within a three-hour flight fromMacau, compared to 550 million people from Singapore, and a mere 150 million from Las Vegas), but also cultural affiliation. Singapore could, however, give Macau a run for its MICE money. While Macau currently suffers from limited air connectivity, Singa- pore is a global-crossroads for air traffic, and is also an appealing MICE destination because of its stable, crime-free environment. Macau’s major MICE advantage is that the local industry will be ag- gressively developed by LVS from the opening of Venetian Macau in mid-2007. With an integrated resort from any of the Marina Bay bidders only set to open two years after the opening of Venetian Macau, the Singa- pore government must have realised that rather than picking a non- LVS operator to compete with the world’s leading MICE company enjoying a significant head-start in Macau, its best bet was to pick LVS to develop the Marina Bay resort, forcing LVS to share its MICE business between Macau and Singapore. Furthermore, the casino at Venetian Macau is likely to generate much higher returns than the casino at Marina Bay Sands.This could encourage LVS to give greater priority to bringing MICE to Singapore than to Macau in order to ensure an equal return across its Asian properties.The Singapore government made a canny decision, ap- parently at the expense of Macau’s MICE ambitions. Kareem Jalal We crave your feedback. Please send your comments to
[email protected] Editor and Publisher Kareem Jalal Director João Costeira Varela Business Development Manager Ricardo Carvalho Contributors David J. Green, José Ho, Karen Tang, Octo Chang Photography Ike Graphic Designers Ricardo Borges,Vincenzo Zaccaria Inside Asian Gaming is published by Must Read Publications Ltd 9B Edifício Regent, 22 Praça de Lobo de Ávila - Macau Tel: (853) 646 0795 For subscription enquiries, please email
[email protected] For advertising enquiries, please email
[email protected] or call Ricardo Carvalho (Macau) tel: (853) 6828475; Herb Moskowitz (HK) tel: (852) 2838 8702 Editorial