When you imagine lavish fountains, neon lights, artificial canals, singing gondoliers, luxury shopping malls, celebrity chefs and exploding volcanoes, you’re thinking of Las Vegas, right?
Those Las Vegas-style amenities and more are being exported to Macau and have rapidly become part of the rising cityscape.
Stanley Ho’s Hotel Lisboa used to be the only casino in Macau. Now, the Lisboa and other casinos in Ho’s gaming empire are facing a horde of competitors, mostly entrepreneurs from Las Vegas.
All around the Lisboa, crowded into a territory measuring just 11 square miles, gambling billionaires Sheldon Adelson, Steve Wynn, and Kirk Kerkorian are building new resorts that would rival those on the Las Vegas Strip.
In all, foreign investors are staking $20 billion on making Macau, a special administrative region (SAR) of China, into the gambling capital of Asia.
"In 10 years, Macau will resemble Vegas on steroids," says Brian Summers, who helps manage $28 billion at Thornburg Investment Management Inc., including $240 million worth of Las Vegas Sands shares.
Summers points to the demographics. Macau (population: 500,000) is the only place in greater China — the mainland, Hong Kong, Macau and Taiwan — where its 1.3 billion people can gamble in casinos.
In total, 2.2 billion people live within five hours’ flying time of Macau, compared with 410 million in the same radius of Las Vegas. "They like retail, they like to gamble, their income is rising and they’re being offered something they’ve never had before," Summers says of the Asian gamblers.
Macau is already the biggest single gambling market in the world. In 2006, Macau’s casinos raked in an estimated $6.8 billion, probably overtaking the Las Vegas Strip, which took in approximately $6.5 billion.
Sheldon Adelson’s 740-table Sands Macau, which opened in 2004, is doing such good business that he recouped his original $260 million investment in eight months. At the Sands, the world’s biggest casino based on number of tables, as many as 40,000 gamblers a day, almost all of them casually dressed Chinese, besiege the croupiers.
Out in the lobby, a yellow Lamborghini is being raffled. At the curbside, convoys of courtesy buses drop off new customers, some of them lured by text messages sent to their cell phones.
Investors are buying into the plan to clone Vegas across Asia. Las Vegas Sands’ New York Stock Exchange-listed shares have more than tripled from its initial share sale in December 2004. Wynn Resorts’ stock rose sevenfold, to $96.27, since it listed on NASDAQ in 2002.
MGM Mirage stock hit a 52-week intraday high of $57.80 on Dec. 20, and closed at $57.57 last week.
Sheldon Adelson has ridden his casino investment to a huge fortune. His 69 percent stake in Las Vegas Sands stock had a value of $22 billion on Dec. 29. Though slowed by a nervous- system ailment that forces him to use a walker, Adelson said in an interview in Las Vegas that he aims to overtake Bill Gates to become the world’s richest man. Gates’s 9.54 percent stake in -Microsoft Corp. is worth $28 billion, according to Bloomberg data.
Adelson also has 50-story ambitions for Macau. He plans to spend as much as $11 billion re-creating the Las Vegas Strip on what he calls the Cotai Strip, a 1.2-kilometer (0.7-mile) long isthmus of reclaimed land linking Coloane and Taipa, the two islands that together with the Macau peninsula make up the Macau SAR.
That development will include a $1.8 billion replica of his Las Vegas Venetian resort, a 1.2 million-square-foot (110,000-square-meter) convention center and nine hotels, he says, including a Four Seasons, Sheraton, Hilton and St. Regis, to name a few. All together, Adelson’s properties will comprise 19,000 rooms and 3 million square feet of retail space.
Wynn, 64, is matching Adelson chip for chip. His 600-room, $300-a-night Wynn Macau offers a 220-table casino, seven restaurants and 26,000 square feet of luxury shopping.
In the casino’s opening weeks last year the gambling mogul pulled in thousands of potential customers by hanging paintings by Renoir and Matisse in the hotel lobby and placing a $10 million Ming vase in the Wynn Club, a 100-room VIP annex for high rollers.
Wynn is building an extension, scheduled to open in February, that will almost double the size of the casino. And he has plans for three more resorts on the Cotai Strip. "I’ll be building here for the next 10 years,’’ he reportedly told Bloomberg.
There are, however, obstructions in the path of the new casinos’ long-term success. Among the possible pitfalls: an oversupply of hotel rooms and gaming tables. There are currently 13,000 hotel rooms in Macau, and occupancy rates are only 75 percent. In 2009, there will be 30,000 rooms.
In addition, while more than 50 percent of Las Vegas’s tourism revenues come from non-gaming activities, most Chinese still come to Macau only to gamble. The average length of stay is 1.17 nights, compared with 3.5 in Las Vegas. And half of those who do stay overnight don’t take rooms in hotels, preferring to rest up for a few hours in Macau’s ubiquitous saunas.
Thus, not everyone is jumping on the Macau bandwagon. Skifeng Ke, who helps manage $21.5 billion for Edinburgh-based Martin Currie Investments, says he won’t be buying any Macau-related casino stocks.
Nevertheless, Adelson and Wynn say Macau’s demographics are too good for their ventures to fail. Sitting at his Las Vegas Sands boardroom table, a pitcher of iced tea and a bucket of ice before him, Adelson rattles off the number of potential visitors from Asian countries: 250 million from China, 128 million from Japan, 24 million from Taiwan, 75 million from Thailand.
"Ya get it?’’ he asks. "How much rocket science do you need, and how much arithmetic do you need, to say that the amount of the market I need is so infinitesimal? It’s just like a person in the desert needs water. These people need entertainment. There’s no question in my mind we’re going to achieve the level of success we’re shooting for."