Four Seasons to Join Sands Casino Strip in Macau - Saturday 12th of March 2005

InterContinental Hotels Group Plc, Four Seasons Hotels Inc. and Marriott International Inc. will join Las Vegas Sands Corp. in the development of a $12 billion Vegas-themed gambling strip in southern China's Macau.

``What Asia needs is an Asian Las Vegas,'' Sands Chairman Sheldon Adelson, 71 said today in Macau as he unveiled the $1.8 billion first phase, which includes seven casino-hotels. Four Seasons, Marriott, InterContinental and four other global hotel groups will be among a group of investors bearing 83 percent of the cost, Adelson said.

Regal Hotels International Holdings Ltd. will join Sands to construct the Venetian Macau, Adelson's second casino hotel in the former Portuguese colony, the only place in China where casino gambling is legal. Macau's gaming revenue may match that of Las Vegas by 2008, said analyst Jonathan Galaviz.

``Las Vegas, as a model, has shown that when you increase supply of entertainment, you inherently increase macro-demand for the destination,'' said Galaviz, a partner at Las Vegas-based equity research company Galaviz, Ong & Co. Adelson's vision to replicate Las Vegas in Asia is ``achievable.''

In Macau today, Adelson was joined at a briefing by hotel executives including Michael Evans, vice president for Asian hotels at Marriott International, the largest U.S. hotel company; and Matthew Fry and Stephen Ho, vice presidents for acquisitions at Starwood Hotels & Resorts Worldwide Inc., the No. 2 U.S. hotel company.

The hotel executives declined to comment on their plans for Macau's Cotai, a stretch of reclaimed land in about the size of two football stadiums. Adelson aims to fill Cotai in seven to 10 years with casino resorts providing 60,000 rooms.

`Untapped Segment'

The Venetian, which will be bigger than the $240 million Sands Macau that opened last May in downtown, will be sited on Cotai. The new resort will provide 3,000 suites, about three- quarters of the size of the Las Vegas Venetian, which has some of the most expensive room rates in that city.

Hotels in Macau should be able to develop ``an untapped segment of the market,'' said Eric Wong, an analyst at UBS Securities Asia Ltd. in Hong Kong. ``All you need is for the current Macau visitor to stay longer, rather than just the typical middle-aged male going there to gamble.''

Regal Hotels said this week that it signed an agreement with a unit of Sands to build a hotel in Macau. The first phase of the project will be a 1,500 room hotel to be run by Regal and a casino and convention center run by Sands unit Venetian Group, Regal said in a Hong Kong stock exchange statement on March 14.

Manuel Joaquim das Neves, director of the Macau Gaming Control Board, estimated more than 20 casinos will be operating by 2007 in Macau. Tax revenue from gambling made up about a third of the city's economy in 2003 as more visitors from neighboring China gambled in the city after the Chinese government eased travel rules.

Singapore May Compete

Chinese personal incomes rose last year as surging Chinese trade pushed the mainland's economic growth to 9.5 percent. Per capita disposable income in China's urban areas, home to a third of the nation's 1.3 billion people, rose 7.7 percent to an inflation-adjusted 9,422 yuan ($1,138) last year.

In Las Vegas, the four-mile Strip is filled with almost two dozen casinos, two-thirds of which are run by Sands' larger rivals Harrah's Entertainment Inc. and MGM Mirage. The city of Las Vegas had about $8 billion in gross gambling revenue last year, compared with $4 billion in Macau, Galaviz estimates.

Singapore is considering whether to legalize casino gambling and has invited proposals for a casino resort. Sands and 18 other companies have submitted offers, aiming to tap some of the $13 billion in legal gambling revenue generated last year in Asia. Galaviz projects Asia may generate $24 billion in legal gaming revenue by 2007, up 85 percent from 2004.

`Big Investment'

Adelson and Wynn Resorts Inc., the casino company led by rival Stephen Wynn, aim to tap the imagination of the Chinese by decorating their casino resorts with fake volcanoes and mock Roman amphitheaters. Wynn is building the Wynn Macau, set to open in 2006.

Sands President William P. Weidner said today the company was sticking with its forecast that the Sands Macau will become profitable after its first year.

``It is, after all, a big investment,'' he said.

Macau has 15 casinos, 13 of which are run by Hong Kong-born Stanley Ho, who held a 42-year gambling monopoly until 2002. Ho has no participation in Cotai, Adelson said.

``Stanley Ho has other casinos to protect,'' Adelson said ``If I were him, I would protect them.''

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