SINGAPORE - The crowd at the Resorts World Sentosa casino complex
on Saturday night won't be betting on cards or dice, but kids. The ChildAid
charity concert series this weekend marks the beginning of Singapore's attempt
to reinvigorate - perhaps even to reinvent - itself with a pair of so-called
integrated resorts (IRs).
Once seen as sure bets, Singapore's IRs now mirror the gamble of rearing
children: the outcome is uncertain, with lots of unexpected twists, and payoff,
if any, is years away.
"Within five years, the integrated resorts will meet all the targets the
Singapore government has set for increasing tourism and
visitor spending," a top industry consultant at this month's Gaming Executive
Summit Asia said on condition of anonymity. "But I think the operators will
look at them as giant millstones around their necks."
The cost of Resorts World Sentosa has risen to $4.7 billion from $3.9
billion. Owned by Malaysia's Genting, operators of the Highland Resort outside
Kuala Lumpur, this IR will open in stages. Company officials are standing by
the original forecast of a soft opening in the first quarter of next year, but
few bought Genting chairman and chief executive officer Lim Kok Thay's
statement last month that the resort will open in January, ahead of Chinese New
Year (February 14). March is now being considered the earliest likely opening
time.
Hard target
Across the causeway at Marina Bay is the casino resort of Las Vegas Sands
Corporation (LVS). When the US-based company won the bidding for the resort in
May 2006, it promised to have the $3.6 billion gaming and entertainment complex
fully open by the end of this month. Now, the price tag for Marina Bay Sands
has risen to $5.6 billion, and the resort will also open in phases, starting in
the first quarter of next year, according to the company. The word is that it
won't open until June.
When finished - probably not until sometime in 2011 - the IRs will be the two
most expensive casino resorts ever built (the $8.5 billion MGM City Center that
opened in Las Vegas this week combines residential and office space with its
hotel and casino).
Marina Bay Sands will include 2,500 hotel rooms, more than 93,000 square meters
of retailing, a museum, two theaters - one for a resident production of The Lion
King opening in September - and a pair of interesting, if impractical,
crystal structures that appear to be islands floating in the bay.
The crowning jewel is the Sands SkyPark, a 1.2 hectare platform, longer than
the Eiffel Tower is tall, with a pool area, observation deck, bar and
restaurant linking three 55-story towers and towering 200 meters above
Singapore.
The key to LVS winning the bid for the site in 2006, insiders said, was the
112,000 square meter convention center. Singapore wanted a world-class facility
to accommodate big gatherings that it previously couldn't handle. LVS almost
single-handedly created the convention business in Las Vegas, leveraging that
shift into a more balanced split of gaming and non-gaming revenue with its
Venetian property, which features shopping and fine dining, previously
dismissed as distractions from the main business of gambling. In the Las Vegas
that LVS helped shape - and the IRs Singapore wants to have - casinos account
for just half of total revenue.
Rocking the crowds
For Genting, the clincher was a Universal Studios theme park that will be the
biggest in the world, with 18 of its 24 attractions new or adapted for the film
studio's only outpost in Southeast Asia.
Singapore long-wanted a world-class theme park and especially wanted it on
Sentosa, an island south of the city that the government has tried for years to
turn into a recreation and resort destination for locals and visitors, with
limited success.
Resorts World Sentosa will also include six hotels, the world's largest
oceanarium, and Festive Grand, the theater where the ChildAid concert takes
place. When the resort opens, the 1,800 seat venue will host Voyage de la Vie,
the resort's "resident musical extravaganza" developed by Mark Fisher, an
alumnus of Cirque du Soleil and the Queen rock band tribute show We Will Rock
You.
Building the resorts stretched the resources of both LVS and Genting, as well
as Singapore; none of them really knew what they were getting into in 2006.
Although LVS and Genting submitted the best IR plans, each had only built one
integrated resort before embarking on these mega-projects. Under the guidance
of Singapore's government - which even now, weeks before gaming begins, still
hasn't issued its casino regulations - it was arguably a case of the blind
leading the blind while throwing money down a hole.
For starters, developing the projects simultaneously - while Singapore was in
the midst of a construction boom - put the IR operators in competition with
each other for material and labor. That contributed to their inflated costs.
The global credit crunch combined with lower revenues at its Macau and Las
Vegas properties brought heavily leveraged LVS to the verge of bankruptcy late
last year.
The company won a series of concessions from the Singapore government,
including the phased opening and additional gambling tables within the maximum
allowed 15,000 square meter casino.
LVS didn't get everything it wanted, including government financing or a larger
casino. Delegates at the Gaming Executive Summit Asia, held in Singapore
earlier this month, believed LVS also asked the government to let it scale down
the SkyPark, to separate, unconnected features on each roof. "They never
intended to build it, but the government insisted," one source said. On October
1, crews began lifting the first of 14 SkyPark steel structures to connect the
three towers. Each section weighs 330 tons and lifting requires 24 hours.
Losing record The performance of Venetian Macao, which opened a year after LVS won the
Marina Bay bid, doesn't inspire confidence, particularly in the areas that
matter most to Singapore. Its Grand Canal Shoppes retail mall has failed to
attracts shoppers or a buyer for the property. A Cirque du Soleil production
developed for the Venetian Macao at a cost of more than $200 million, including
its $150 million purpose-built theater, teeters on the brink of closure, unable
to fill the house, despite promotions and complimentary tickets.
The convention business, the cornerstone of the company's winning Singapore
bid, has also failed to develop. With that track record, LVS might not have won
the bidding for Marina Bay.
But Singapore is not Macau, and there are reasons to expect things will go
better in the Lion City. "I believe revenues at the two IRs will surprise
financial analysts," University of Nevada Las Vegas Singapore Campus Dean Andy
Nazarechuk said. "Singapore is already a financial business center and already
has a solid tourism industry."
CLSA gaming analyst Aaron Fischer said: "Both IRs benefit from Singapore's
location - 38 million people travel through the city's airport each year.
Infrastructure is excellent and can support a large number of overseas
visitors." Fischer forecasts $364 million in 2010 profits for Genting's
Singapore listed arm, to be driven by expected Sentosa profits.
Even before the IRs open, Singapore is the world's third-most popular city for
conventions. "The size of the Marina Bay Sands convention facilities puts
Singapore in a whole new league," said Robert Hecker, managing director of
hotel and leisure consultant Horwath Asia Pacific.
For retailing, Singapore has a local market nearly 10 times larger than Macau's
550,000 residents. "There is quite a bit of room for an increase in spending by
the locals," according to Devin Kimble, managing director of Menu, a restaurant
and catering group. "The turnout for travel fairs is astounding. If Singapore
actually had something for locals to spend money on here, perhaps they would
keep some more of their money working in town."
Yet even the most bullish observers admit the beginning will be tough, between
the construction, rough edges on service, and the inevitable bad press it
begets. Several analysts believe projected total IR revenue of $3.5 billion for
the first three years will make it difficult for both IRs to survive given
their huge construction costs.
"The IRs could be white elephants and go out of business," the gaming
consultant said. "Other gaming operators would love to get their hands on them
as second-hand properties." Though that might not be "as disastrous as the
Singapore government thinks it would be," he added.
But getting passed to new parents would only add to what is already shaping up
to be a difficult childhood.
Special correspondent for Macau Business magazine and former broadcast
news producer Muhammad Cohen told America's story to the world as a US
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