Las Vegas Sands may spend $2.75 billion on Macau projects

Jeannine DeFoe

Friday, June 10, 2005 | 11:16 a.m.

Las Vegas Sands Corp., which opened the $265 million Sands Macau in 2004, may spend about $2.75 billion to build a casino resort and finance the development of three hotels in Macau, Chief Executive Sheldon Adelson said.

The company originally planned to finance two hotels along the Cotai Strip, a 200-acre area Adelson says will become the Las Vegas Strip of Asia.

Macau, a Chinese territory that ended a 42-year monopoly for casino owner Stanley Ho in 2002, surpassed Atlantic City to become the world's No. 2 casino market last year. Las Vegas Sands wants to own more of the hotels to enjoy a greater share of the market's growth, Adelson said in an interview.

"There was a pastry chef who once said that there was a cake he was making for a banquet that looked so good, he ate it himself," said Adelson, 72. "The deal looked so good to us we decided to build a couple more ourselves, so that's what we're doing."

Las Vegas Sands, which owns the Venetian casino in Las Vegas, will invest $1.8 billion to build a Venetian casino resort in Macau, about $200 million for a luxury hotel operated by Four Season Hotels Inc. and about $400 million each for two other hotels, Adelson said. He said he eventually wants the Cotai Strip to consist of 20 hotels with a total of 60,000 rooms, about equal to the number of rooms on the Las Vegas Strip.

Macau's gaming revenue may match that of Las Vegas by 2008, according to Jonathan Galaviz, a partner at Las Vegas-based Galaviz, Ong & Co., which tracks the gaming industry. Two-thirds of the world's population lives within a 5 1/2 hour flight of Macau, Adelson said.

Adelson said he expects no difficulties securing financing for the Macau project. "The capital markets seem quick to embrace us and hold our hands in our developments," he said.

Macau generated $5.1 billion in gaming revenue last year, according to the government. The Las Vegas Strip produced $5.33 billion in revenue in 2004 and Atlantic City $4.81 billion, according to the American Gaming Association.

"The opportunity for Macau is tremendous; it can be five times what Las Vegas is," said Joe Fath, a casino-industry analyst for T. Rowe Price Group Inc. in Baltimore, which oversees $212 billion including shares of Las Vegas Sands.

Las Vegas Sands, based in Las Vegas, is also bidding to open a casino in Singapore, which in April scrapped a four-decade ban on casinos to boost tourism. The proposed resort would cost as much as $2.5 billion, Adelson said.

The chief executive said his background in conventions will be a plus for the Las Vegas Sands bid. Adelson started Comdex, an annual gathering of the computer industry, in 1979, and built it into North America's largest trade show before selling it in 1995. Adelson said convention managers who have stopped holding meetings in Singapore would reconsider the market if he opened a resort.

Adelson said more visitors have come to the Venetian in Las Vegas since the opening in April of the adjacent $2.7 billion Wynn Las Vegas, owned by Wynn Resorts Ltd.

"We're at a plus," Adelson said. "Certainly his being there enlivens the corner. It's certainly brought some traffic there."

Shares of Las Vegas Sands rose 7 cents to $36.95 today. They've fallen 11 percent so far this year.

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