Adelson ‘engine’ humming along

May 24, 2005 2:45 AM

Back in the 1990s, when Sheldon Adelson was developing Comdex and The Venetian resort, GamingToday founder Chuck Di Rocco often referred to Adelson as "the little engine that could."

If Chuck were alive today he’d be calling Adelson the "little engine that has."

At 5-foot-7, the 71-year old Adelson might be little by haberdasher standards, but as an engine he’s a human dynamo. Just look at his accomplishments.

Adelson’s Venetian is one of the premier Las Vegas resorts. It has the highest occupancy rate (98.3%) and highest average daily room rate ($219) of any hotel on the Strip, and its annual revenues are second only to Bellagio’s.

Since its opening in 1999, The Venetian has added a 1,000-suite tower, Venezia, and Adelson is currently building a second resort, the $1.7 billion Palazzo, at the corner of Twain and the Strip.

Last year, Adelson opened the Sands Macau casino on the coast of China. The first of three casinos to be licensed by the Macau government, Sands Macau generated a net income of $60.7 million in its first full quarter of operation, based on a table drop of $972 million.

Capping his rise to billionaire extraordinaire, Adelson last December took his company, Las Vegas Sands Inc., public. His share of the $17.5 billion market cap is worth about $15 billion, which makes Adelson the 11th richest person in the U.S.

Although it may seem like everything Adelson touches — Comdex, the Sands Expo and Convention Center, The Venetian, Sands Macau — turns to gold, it hasn’t always been that way. In fact, Adelson often sees himself as an entrepreneurial Rodney Dangerfield.

"I’ve been met with ridicule in every industry I’ve entered," Adelson says. "It’s been that way all my life."

Adelson adds he’s always battled adversity, even as a youngster growing up in Dorchester, Massachusetts.

"All the Irish boys from South Boston used to beat up all of the Jewish kids," he says.

The son of Jewish Ukranian immigrants, Adelson went to work hawking newspapers on local street corners when he was 12. He expanded his "business" by borrowing $200 from his uncle and leasing two city corners, where he had the exclusive right to sell papers.

In the years that followed, Adelson worked as a mortgage broker, investment adviser and financial consultant in New York. He also ran his own tour business in Boston.

That tour operation in the 1980s brought him to Las Vegas, where he developed Comdex, the world’s largest trade show. His formula was simple: rent space for 15¡ a foot and lease it to computer industry nerds for $40 a foot. He also charged extra for loading, electrical outlets, on-site ads, flowers and other services.

"I’m not in business to make money for the other guy," he explains. "I’m in business to make money for myself."

And make it he did. In 1995, Adelson cashed out Comdex for $862 million (his 59% share was worth about $510 million).

A year later, Adelson leveled the old Sands Hotel, the former Rat Pack hangout that he purchased for $128 million, and built the Sands Expo and Convention Center. Soon afterward he began work on The Venetian, which generated raised eyebrows from some of Las Vegas’ old guard.

"The old way was to make the customer trip over the casino twice before they got to their room," he says. "I knew the business traveler and gave them what they wanted."

What Adelson gave them was a classy hotel with spacious and upscale suites, a real lobby, elegant architecture and tasteful decorations. He also threw in faxes and mini-bars, high-end retailers in the Grand Canal Shoppes, an established spa, Canyon Ranch, celebrity-chef restaurants and $50 gondola rides.

Today, Adelson calls The Venetian "the most successful hotel in the history of hotels" and that the old guard is now "copying" his design features.

Despite that success, Adelson is currently most bullish on gaming in Macau and other Asian destinations.

"The Sands has changed the face of Macau," he says, adding that, although there are no hotel rooms, the casino features a buffet, steakhouse and a comfortable casino tailored to the Asian player.

Those players are more interested in head-to-head gambling, rather than being entertained, Adelson says. And they are serious when they do battle.

A table at the Sands Macau brings in an average of $6,100 a day, about 50% more than at The Venetian. The average Asian gambler bets $85 a hand, compared to $25 for a gambler in Las Vegas. And Asian gamblers play more hands per hour — the decks are always pre-shuffled to save time at the table.

In addition to the Sands, Adelson is building the $1.8 billion Venetian Macau along an area known as the Cotai Strip. Like known as the Cotai Strip. Like its Vegas cousin, the resort casino will have 1.8 million square feet of convention space, a shopping mall and 3,000 guest rooms.

The Cotai Strip will also include six other hotel casinos, all of which will be managed by Adelson’s company. The Venetian Macau is expected to open in two years with the other resorts to follow.

The Cotai Strip "is the best business idea I’ve ever had," Adelson says. Then, paraphrasing a line from his rival, Steve Wynn, "Putting your heart into your hotel is more important than putting your name on it."

Ouch. The little engine has bite, too.