MACAU - Sands China doesn't think small.
The US$4.4 billion Sands Cotai Central casino
resort that opened on Wednesday is the biggest
piece of the world's largest tourism development
project, featuring the world's largest Conrad,
Sheraton and Holiday Inn hotels.
Along
with Sands China's Venetian Macao and Four Seasons
Macao hotels, they've been built on what was 10
years ago unwanted half-submerged landfill linking
Macau's outlying islands, Coloane and Taipa.
"When we got this piece of land, I thought
we were being exiled," Sheldon Adelson, chairman
of Sands China and parent company Las Vegas Sands
(LVS), said at Wednesday morning's opening
day press conference. "I
went back to the Macau government and said, 'Thank
you for the land, but I can't find it.'"
Even though he was looking at muck,
Adelson imagined creating an Asian version of the
Las Vegas Strip in Cotai. In August 2007, LVS
opened the $2.6 billion Venetian Macao, a
supersized version of its Vegas namesake with
3,000 rooms, a million square feet (93,000 square
meters) of convention space, an 800,000 square
foot shopping mall, and the world's largest
casino.
That casino floor eclipsed the
Sands Macao that LVS built three years earlier on
the Macau peninsula, the traditional casino
district, and recouped its $265 million
development cost within nine months, proving that
Vegas could play in Macau.
It was also the
catalyst to transform LVS from an also-ran to the
world's largest casino company by market value.
American rivals Wynn Resorts and MGM International
followed with their own mega-properties in
downtown Macau.
Cotai comes
alive In August 2008, LVS opened the Four
Seasons Hotel next to the Venetian in Cotai, and
in June 2009 rival Melco Crown Entertainment
debuted its $2.1 billion City of Dreams resort
across the street with 1,400 rooms under three
international hotel brands. Last year, Galaxy
Entertainment Group opened Galaxy Macau with 3,000
rooms, introducing three new hotel brands to the
market.
All of the resorts have shopping
and, of course, casinos. Macau is the only part of
greater China where casino gambling is legal.
Before the opening of Sands Macao introduced
competition to the market previously monopolized
by Stanley Ho's Sociedade de Jogos de Macau (SJM),
Macau's gambling revenue was $2 billion, about
half the take in Atlantic City. Last year, Macau's
casinos raked in $33.5 billion last year, more
than five times bigger the take of Las Vegas Strip
casinos.
Now comes Sands Cotai Central,
originally slated to open in 2009 but mothballed
due to the global financial crisis of 2008 that
pushed LVS to the brink of bankruptcy.
"The opening of Sands Cotai Central is a
game-changer for the future of Macau as a leisure,
entertainment and business location," Adelson, who
also serves as LVS chief executive officer, said.
"Having changed Las Vegas to a city of convention,
business and leisure tourism, we're going to make
Macau a city of convention and leisure tourism."
Driving into Cotai now, seeing Galaxy's
Asian fantasy palaces, then the Gothic Venetian,
the sparkle and shimmer of City of Dreams, and the
blazing video boards of Sands Cotai Central, Cotai
has the look of Las Vegas.
Lessons
learned When completed later this year,
Sands Cotai Central will include 5,800 hotel
rooms, 1.2 million square feet of retail and
convention space, and two casinos totaling 300,000
square feet. "This place is 30% bigger than the
Venetian, but it doesn't feel that way," HSBC
regional gaming analyst Sean Monaghan observes.
"It's a more well-rounded property. They've
learned a lot about making things appeal to a
broad array of people."
In particular, he
cites the use of natural light, also a feature of
the Marina Bay Sands in Singapore, the most
profitable property in the LVS portfolio.
University of Macau associate professor of
business administration Ricardo Siu says: "I
believe that Sands China has learned from its
experience in Macau and is fine-tuning its
business strategies to be successful in this
Chinese-based and policy-driven market.
"For example, interior designs of the new
properties and related entertainment in Cotai
Central are more focused on the perceptions of
Chinese consumers and fitted into the long-term
growth of Macau."
Currently, most visitors
to Macau don't spend the night, just coming for
the day from mainland China or Hong Kong. Those
that do stay spend an average of 1.2 nights, a
figure that has stubbornly held despite a building
boom of more than 10,000 hotel rooms, nearly all
in the four- and five-star category with prices to
match, along with vast expanses of shopping and
casinos.
The Holiday Inn, with more than
1,200 rooms priced around $150 per night,
specifically targets China's emerging middle class
- projected to soon reach 700 million by 2020,
according to Euromonitor International. Sands
China president and chief executive Edward Tracy
calls it "affordable luxury. There's nothing like
it in this market."
Until now, nearly all
of Macau's new hotels have been in the five-star
category with prices to match.
"If you
build to a certain scale, you can make it
affordable," Tracy adds. "We recognize that not
everyone comes here for Gucci; some come here
because we have Levis."
Chasing
MICE Sand Cotai Central is a key piece of
making Macau, specifically Cotai, a major center
for MICE, the lucrative meetings, incentives,
convention and exhibition business that brings
business travelers spending company money to
destinations for multi-day stays.
Adding
Sands Cotai Central to Venetian Macao and Four
Seasons Macao will give Sands China nearly 8,000
hotel rooms, 9,000 conference rooms, and 600
retail and dining outlets, linked by an overpass
across what LVS trademarked as the Cotai Strip.
"This is the largest tourism project in the world,
an unprecedented, fully integrated resort city at
the center point of Cotai and the best of Macau,"
Tracy said.
"There isn't a convention in
the world that needs this much space," Adelson
said. "We have built a multiplicity of amenities
unlike anyplace in the world."
Before
Adelson, now 78 years old with personal wealth
estimated by Forbes at $24.9 billion, began
promoting Las Vegas as a convention destination,
the average stay there was 1.3 nights, according
to LVS president and chief operating officer
Michael Leven. The average stay in Las Vegas has
grown 3.6 nights.
More significantly,
revenue from non-gaming activities, including
hotels, shopping, shows and gourmet dining, has
overtaken revenue from casinos. In Macau, more
than 90% of the casino hotels' revenue comes from
gambling. China and Macau officials have said
repeatedly that they want Macau to become a more
diversified leisure and tourism destination.
Exclamation point Holiday Inn,
Sheraton and Conrad add global clout and global
sale force networks to Sands China's reach. "The
brands give us credibility to grow the MICE
business," Leven said. "Sands Cotai Central puts
the exclamation at the end of the sentence. It's a
game-changer for MICE in Macau."
"It's
more incremental," RBS director of equities
research for Asian conglomerates and gaming Philip
Tulk says. "There's no tradition of conventions
and exhibitions in Macau."
Comparing Cotai
to Singapore, where LVS built a million square
foot convention center as a key feature of Marina
Bay Sands, Tulk notes, "Singapore has the space,
but it also has the roads, the infrastructure all
in place. It's going to take for this place to
develop that.
"I believe in the vision
Sheldon Adelson has, but it's going to take time.
It's not a three-year thing. Maybe it's a 10-year
thing."
Macau Business magazine special
correspondent and former broadcast news producer
Muhammad Cohen told America's story to the
world as a US diplomat and is author of Hong
Kong On Air, a novel set during the 1997
handover about television news, love, betrayal,
financial crisis, and cheap lingerie. See his blog
and more at MuhammadCohen.com.
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