HONG KONG - Singapore made the right
choice last week when it selected Las Vegas Sands
to develop its first casino resort. The enthusiasm
that boosted the company's share price by nearly
10% on Wall Street May 26 was, like many aspects
of this project, greatly overstated. But the most
important change the announcement signals for
Singapore should not be understated.
The
Singapore government chose Las Vegas Sands (LVS)
among four international bidders for the right to
build the first of Singapore's two "integrated
resorts", which will include casinos. Prime
Minister Lee Hsien Loong, son of national
patriarch and current government Minister Mentor
Lee Kuan Yew, took the leap of legalizing casino
gambling last year in a bid to rebrand Singapore
as an edgy, with-it city, as opposed to the
straitlaced, do as you're
told, get rid of the chewing gum model of
successful urban autocracy.
Although the
city-state still can't quite grasp the notion of
free and fair democracy, Singapore has opened up
considerably in the past decade, scaling back
censorship on all topics except opposition
politics, introducing topless dancing, and quietly
repealing anti-gay laws, including a ban on
homosexuals in the civil service. But the award of
the Marina Bay resort site to Las Vegas Sands
represents the most important signal yet from
Prime Minister Lee's government that this is not
his father's Singapore anymore.
LVS has
proposed a US$3.85 billion convention, hotel and
entertainment complex, including 15,000 square
meters of gambling halls with table games and slot
machines, less than 5% of the expected total floor
area, on a bay front with a stunning view of
Singapore's financial district and the Esplanade
Performing Arts Center, better known locally as
The Durians (its appearance resembles that of the
spiky fruit). The Marina Bay Sands will get the
title of the world's most expensive casino, but
the price tag isn't the most stunning part of it.
The world's largest gaming company in
terms of market capitalization, LVS owns and
operates the Venetian casino resort and the Sands
Expo and Convention Center - the last Las Vegas
namesake of the former haunt of Frank Sinatra and
the "Rat Pack" - as well as the Sands Macao casino
in China's gambling enclave Macau.
In
winning the Marina Bay bid, LVS bested Malaysia's
Genting International and two US rivals, MGM
Mirage and Harrah's. But it's not the Vegas
connection that's important. MGM and Harrah's both
partnered with local developers controlled by
Temasek Holdings, the investment of arm of
Singapore's government. As if that's not cozy
enough, Temasek chairwoman Ho Ching is married to
Prime Minister Lee.
That connection led an
overwhelming majority of observers to conclude
that MGM or Harrah's would win the Marina Bay
site. The buzz grew with analysis by
Temasek-controlled DBS Bank's brokerage arm, and
swelled with every turn in the bidding process.
Even the projected early announcement of a winner
- original estimates said the award wouldn't be
made until late June or July - was perceived as
another sign that the fix was in for Singapore
Inc.
The early announcement indicates just
how above the field LVS's proposal stood out, and
more significantly, Singapore's commitment to
assessing the bids fairly. "The Marina Bay
decision once again shows the difference -
greatness - between Singapore and many other
countries [in] Asia and arguably globally,"
Merrill Lynch Singapore vice president Sean
Monaghan, a top gambling analyst, said. "The
Singapore government continues to make decisions
in the best long term interests of the majority of
citizens rather than for the benefit of a few."
LVS stood out because of its success in
Macau, where the Sands Macao has resumed
double-digit growth after a hiccup early last
year, succeeding with both whales - high rollers -
as well as the mass-market day trippers from Hong
Kong and mainland China. Neither Harrah's nor MGM
Mirage has ever taken a bet from a customer in
Asia.
More importantly, with tourism
appeal announced as the top judging criteria in
the contest, LVS offered the most appealing
package for not only China - which it projects as
the mass tourism source of the century based on
Macau's torrent of nearly 50,000 mainland tourists
a day - but MICE: meetings, incentives,
conventions and exhibitions.
LVS chairman
Sheldon Adelson founded the Comdex computer trade
show and is credited with reinventing Las Vegas as
the leading convention destination in the world.
"Casinos and the MICE trade are where you have the
high value tourism today," senior fellow Gillian
Koh of Singapore's Institute of Policy Studies
says. "The Sands proposal was front and center
directed at that."
It also didn't hurt
that LVS reportedly put the biggest development
budget on the table and committed to a 2009
opening. On both scores, Singapore should expect
the figures to stretch. The Venetian Macao,
projected to open in 2005 at $1.6 billion, is now
on track for a 2007 debut at something over $2
billion. But most of all, it didn't hurt that
Singapore decided it's ready to move beyond Lee
& Family Inc.
The decision may have
been even easier because of the size of the
investment and incumbent risk, particularly since
the government already holds a sizeable financial
stake through its 15% take on gaming revenue and
an even larger investment of its credibility. With
Las Vegas Sands, there's clearly someone else to
blame if things go wrong, while the government can
still take credit if things go right.
The
LVS win bodes well for Genting at the other
integrated resort site on Sentosa, an island just
off Singapore that the government has tried to
develop as a tropical beach resort with limited
success. The government wants a more
family-oriented resort for Sentosa, with a theme
park as its centerpiece.
Genting brings
many of the same advantages LVS held for Marina
Bay. It has a proven track record in Asia with its
Genting Highlands Resort outside Kuala Lumpur,
cited by no less an authority than Lee Kuan Yew as
the ideal integrated resort model for Singapore.
Genting pulls trade from Malaysia's Chinese
populations (Malaysian Muslims are barred by law)
and Singaporeans on holiday who bet an estimated
$1 billion overseas, as well as Gulf Arabs on
visa-free holidays. Despite a provincial
reputation, Genting also has holdings in the
Caribbean, the United Kingdom, the US and
Australia, plus its Star Cruises global franchise.
Like LVS, Genting also has no Singapore
Inc partner for its bid. Likely rivals for the
site include Kerzner International, developer of
the Bahamas Atlantis resort which has partnered
with Temasek's CapitaLand, as well as South
Africa's Sun International, Eighth Wonder of Las
Vegas, and possibly the Harrah's-Keppel Land
partnership. As the Marina Bay winner, LVS cannot
bid for Sentosa.
Genting's ace in the hole
for Sentosa is its exclusive theme park
partnership with Universal Studios. Just how right
Universal Studios is for Singapore - versus some
pumped-up water world or jungle habitat in a place
that already boasts a world class aquarium and zoo
- was underscored by Harrah's last-minute effort
to incorporate a faux Universal with James Cameron
of Terminator and Titanic fame into its Marina Bay
bid.
Rumbles from across the strait about
the possibility of a Disneyland just over the
Malaysian border in Johor arguably only strengthen
Universal's appeal, since it grew up in
Disneyland's southern California shadow. There's
no question that Universal has grown stronger and
progressed further as a result of that
competition. As long as Singapore sticks to the
fair competition script for assessing the bids, it
looks like a wrap for the Genting-Universal
partnership at Sentosa.
Gary
LaMoshi has worked as a broadcast producer and
print writer and editor in the US and Asia.
Longtime editor of investor rights advocate
eRaider.com, he's also a contributor to Slate and
Salon.com, and a counselor for Writing Camp.
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