Today, 21 May 04

Sands castle in Sentosa?
by Val Chua

SINGAPORE : Two days after its brand new Macau casino attracted busloads of mainland Chinese and caused a stampede, Las Vegas Sands Inc is ready to talk business in Singapore.

Its president and chief operating officer, Mr William Weidner, said the company - which is also behind the successful Venetian Casino Resort in Las Vegas - is ready to pump in as much as US$2 billion (S$3.44 billion) to operate a casino on Sentosa.

"We are very interested in the possibilities of developing a casino in Singapore," said Mr Weidner, who was in Singapore for the 7th Asia-Pacific Hotel Investment Conference.

Discussions with the Singapore Government started a couple of months ago and a Singapore delegation is currently in Las Vegas, according to Mr Weidner. "They're studying various aspects of casinos. They've toured our casinos and talked to our department heads. They're thoroughly evaluating many aspects of casinos, like the employment, the economic impact and issues like compulsive gaming and job skill training, all the things you'd expect them to look at closely," he added.

However, talks are exploratory and no formal tender process has started, he stressed. Nor has the Government formally given a go-ahead for the casino proposal, although it has said a decision will be announced in six to nine months' time. Still, Las Vegas Sands, with cash of US$1 billion and planning an IPO to raise as much as US$300 million, may have a head start already.

For one, it has just opened a US$240-million casino in Macau. Next, it wants to create an Asian version of the Strip with another artificial Venice in Cotai, Macau, to be ready by 2007. In all, it's pumping in over US$2 billion to make Macau a "destination" for gamblers, betting big on just one market - newly-affluent mainland Chinese.

Singapore, which has previously resisted calls to have a casino due to its social dangers, has since floated the idea of an upmarket gambling paradise for high rollers, with restrictive access for locals.

However, analysts have said the most profitable casinos are the ones with mass appeal, with their slot machines, shopping malls, and themed hotels. Even in Las Vegas, the US$1.2-billion Venetian casino derives 80 per cent of its cash flow from non-casino operations, said Mr Weidner.

So if Singapore ditches this mass-market formula, and goes for the upmarket crowd, will it work? For instance, London-style casinos are only open to foreigners and require registration in advance, but don't appeal to investors because of its stuffy image, say industry players.

But Mr Weidner argues that although limited casinos cannot generate the kind of additional investments that an unlimited casino can, such as hotels and malls, "Singapore has all these already". "What it doesn't have is a casino. So for Singapore, a casino is just an extension to its tourism assets like its airport," he pointed out.

As an example, he said The Sands in Macau caters to two segments of customers. On the lower floors are 2,500 seats for day-trippers who make their way from Hong Kong and Zhuhai by bus, served with Asian buffet and fast food.

What Singapore could duplicate is its VIP area, which is "by invite only", with its four destination restaurants, 51 suites, and spas. And with its pan-Asian reach, Singapore can reach out to the Indian market -- which is currently untapped by Macau casinos, he said. "If the Singapore government says they want a US$2 billion destination resort, we'll do it. We have the capability. But I doubt it. They will want to take a step at a time," he said.

This step-by-step approach is natural, he said. "Most governments will want to put their toe in the water to find out its temperature," rather than plunge in immediately, he said. Singapore could be successful, even if it decides not to go further than that dip in the pool, he said. He added that Las Vegas Sands is open to taking an equity stake in a joint venture if there is an "appropriate partner". Nor does he rule out working with the Government, should it be involved in the high-stakes casino game as well.