Macau Casino Project Picking Up Steam

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ASIAN BUSINESS NEWS

Macau Casino Project
Is Picking Up Steam

Eight Hoteliers, Investors
To Help Las Vegas Sands
Build Cotai Gambling Strip
By BRUCE STANLEY
Staff Reporter of THE WALL STREET JOURNAL
March 21, 2005

MACAU -- At least eight hotel operators and investors have agreed to join Las Vegas Sands Corp. in an ambitious project to build a Las Vegas-style strip of casinos and luxury hotels in the Asian gambling hub of Macau.

The project is sure to ratchet up competition in Macau, the only place in China where gambling is legal and once the unchallenged gambling redoubt of Stanley Ho. (See related article1.)

About half the group, including Starwood Hotels & Resorts Worldwide Inc., will invest a total of $1.5 billion in the project's initial phase, which is set to open in 2007 with at least 10,000 rooms, Las Vegas Sands Chairman and Chief Executive Sheldon Adelson said Friday.

Four other participants -- Marriott International Inc., Hilton Hotels Corp., InterContinental Hotels Group PLC and Four Seasons Hotels Inc. -- plan to operate hotels at the site, dubbed the Cotai strip, without taking equity stakes. Las Vegas Sands would operate casinos at many of the planned hotels.

BETTING ON CASINOS

The remaining three participants are Dorsett Hotel Group, Regal Hotels International and Harilela Hotels Ltd.

"We're all making the same assumption -- that what Asia needs is an Asian Las Vegas," Mr. Adelson said.

Mr. Adelson acknowledged that not all the hotel operators and investors for Cotai have signed final contracts to participate in the project, but he said they were all committed to it.

"We really believe in the Sands' vision for Macau and Cotai for creating a Las Vegas-type strip," said Michael Evans, Marriott's head of hotel development in the Asian-Pacific region. "We want this to happen."

Las Vegas Sands is building a $1.8 billion resort, the Venetian Macau, to anchor the project, on land reclaimed from the Pearl River Delta in this former Portuguese enclave of southern China. Cotai could ultimately have as many as 60,000 rooms and cost up to $15 billion to build, Mr. Adelson said.

Mr. Ho's monopoly on the casino business here ended in 2002, when the territory's government awarded licenses to U.S. casino operators Steve Wynn and Mr. Adelson. Mr. Adelson opened the $240 million Sands Macau casino last May. Wynn Resorts Ltd. is building a $705 million resort, and MGM Mirage has formed a joint venture to open a hotel and casino in 2006.

Mr. Adelson said Mr. Ho would face a tougher fight once Cotai opens but added, "The question is not whether I'm going to put Stanley Ho out of business. ... The market is big enough, it appears, to accommodate two strong competitors."

Officials at Mr. Ho's flagship companies, Sociedade de Turismo & Diversões de Macau and Hong Kong-based Shun Tak Holdings Ltd., couldn't be reached for comment.

When the Cotai strip is complete in another seven to 10 years, Mr. Adelson said, he expects it to attract between 35 million and 40 million visitors a year -- a level of business on par with Las Vegas today. The vast majority of these visitors are likely to come from mainland China, where the ranks of a middle class have been expanding with the nation's surging economy. Las Vegas Sands hopes it can get them to stay longer than just one day by offering them entertainment and activities ranging from celebrity chefs to golf.

"The strip targets a customer that doesn't exist in Macau yet -- the multiday-stay visitor," said Las Vegas Sands President and Chief Operating Officer William Weidner.

The Cotai strip is situated near Macau's international airport and will extend for 2.2 kilometers between the islands of Coloane and Taipa off the territory's southern coast. Construction workers were busy last week pounding pilings into one section of the muddy landfill as a foundation for the Venetian, but signs posted nearby were already promoting the planned resort as blending "the charms of Venice" with "the glamour of Las Vegas."

Mr. Adelson's interest in casinos in Asia extends beyond Macau to both Singapore and Japan. Las Vegas Sands was among the companies that submitted a proposal to Singapore's government, he said, after officials there invited interested parties to offer ideas for a possible casino. He believes Japan is also likely to authorize casinos one day and sees it is a market with big potential.

Write to Bruce Stanley at bruce.stanley@wsj.com