Every day, tens of thousands of tourists visit The Venetian. Sure, they play the slots, bet at blackjack, and spin the roulette wheels, but they aren't drawn solely by the gambling—far from it. They also enjoy The Venetian's chic shopping, fine dining, and high-end guest rooms. And should they grow tired of The Venetian's options, there's a string of casino-hotels up and down the street where they can find dozens of other entertainment offerings, from buffet dinners to Broadway-style extravaganzas. Just ask anyone who's been to the Strip lately.
The Cotai Strip, that is. In Macau.
That's the vision that Sheldon Adelson, owner of Las Vegas Sands Corporation (which includes The Venetian), has for what right now is a little-developed area of land on a tiny, former Portuguese colony next to Hong Kong. Macau is the center of gaming in Asia, where the appetite for gambling is enormous—by some estimates more than twice that in the United States. But until recently, the Macau market was limited to day-trippers arriving by ferry from Hong Kong. Now, Adelson and other Las Vegas casino kings are betting that in the next couple of years they can convince Asians to spend money not just on gambling but on glitzy, Sin City-style entertainment. And with other Asian nations looking to get in on this $140-billion game, the stakes are rising. Here's a look at the rush to recreate Vegas in Asia, and what it could mean for meeting planners.
LET'S MAKE A DEAL
A funny thing—actually, several funny things—happened in Macau on the way to the 21st century. Number one: Macau's sovereignty transferred to China in 1999, in effect creating a vast new market for the casino destination, which had previously been off-limits to China's millions of increasingly affluent travelers. Number two: The monopoly on Macau gaming held for 42 years by Stanley Ho, the octogenarian billionaire owner of Sociedade de Turismo de Macau group (which also owned most of Macau's prominent hotels), expired in 2002, when the new government upped the ante by issuing casino licenses to Adelson and fellow Vegas mogul Steve Wynn.
Number three: Other Asian destinations, from Japan to Thailand but especially Singapore, began toying with the idea of introducing their own casinos. It isn't hard to see why: In 2003, Macau reported $3.6 billion in casino revenues, but Jonathan Galaviz, an Asian-gaming consultant based in Las Vegas, estimates that only 10 percent of the Asian gaming market is legal. In other words, by introducing sanctioned casinos, Asian governments hope to get their hands on some of the proceeds from the 90 percent of gaming that goes on under the table.
Combine these factors with the maturation of the gaming market in the U.S.—where legal gambling now exists in some form or another in nearly every state—and it's no surprise that the usual Vegas suspects are jumping over one another to replicate their success in the Far East. "There's tremendous room for growth in the Asian market," says Alan Feldman, senior vice president of public affairs for Vegas-based MGM Mirage, which is currently wooing Singapore with a top-secret, tentative casino project that insiders have said would target the convention and business-travel market. "Currently there are opportunities for gambling there, but not for entertainment where gambling is part of the mix, and that's what we see developing in Asia."
WHEEL OF FORTUNE
So far, the only Las Vegas outfit in Asia is the million-square-foot Sands Macao (the company prefers the Portuguese spelling), which in May opened adjacent to the Macau ferry terminal, with four restaurants, more than 350 gaming tables, over 800 slot machines, and a live-performance theater slated to open this summer. In less than a year, the venture has already earned back the $265 million spent to build it, a return on investment "unheard of" in the casino world, according to Galaviz. A weekend at the Sands Macau sees 40,000 guests spending an average of $1.37 million per day.
Adelson hopes to leverage this phenomenal success toward launching a Macau version of The Venetian on the Cotai Strip, about 10 minutes from the downtown area where the Sands Macau is located. But where the latter is centered on gaming (the property contains only 51 rooms, all suites), The Venetian Macau, like its Vegas namesake, will cater to the multi-day traveler seeking a complete resort experience, says Sands spokesman Ron Reese. Slated to open mid-2007, The Venetian Macau is the planned linchpin of Adelson's recreation of the Strip in Macau, a $10-billion-plus master development project involving a series of joint ventures, in which six other international hotel brands will build casinos that Sands will operate, explains Reese.
And just as meetings and exhibitions figure prominently in the success of The Venetian in Las Vegas (where only 30 percent of revenues are derived from gaming), they will also play a key role in Macau, notes Reese's boss Bill Weidner, president and COO of Las Vegas Sands Corporation. The Venetian Macau (which will eventually boast 3,000 suites) will also feature a 1.2-million-square-foot exhibition center that Adelson expects to be the anchor of his gambit to transform Macau's clientele into a mature, multifaceted market.
"It took 70 years for Vegas to discover the strength of the convention and trade-show business," says Weidner, "and we're going to help Macau discover that in a couple of years." Weidner adds that "at least half a dozen" major trade shows in the United States and Europe, along with several more in China, have been in active discussions with his company about the possibility of moving their exhibitions to The Venetian Macau.
THE JOKER'S WILD
Las Vegas Sands' competitor Wynn Resorts, meanwhile, is tight-lipped about its own project in Macau. Steve Wynn refused repeated requests for commentary on his Wynn Macau venture, other than to have a spokesperson reveal that the $704-million development (which will not be located on the Cotai Strip) will open in late 2006 and is expected to include approximately 600 hotel rooms, 100,000 square feet of gaming space, seven restaurants, a spa, a salon, and entertainment facilities, including 28,000 square feet of retail space.
Singapore is similarly reticent. At presstime, the city-state was rumored to be reviewing requests for concept from Wynn and Adelson as well as Harrah's Entertainment and MGM Mirage.
Despite all these behind-the-scenes negotiations, Justin Chew, who heads up the Singapore Tourist Board's North American office, insists that there are no definite plans to introduce gaming in Singapore, where religious groups have strenuously objected to the idea. Should the government move forward with the concept, adds Chew, a casino would merely be part of an "integrated entertainment complex" in which gaming would play a minor role and which could well include a new conference facility, whereby the Singapore government hopes to expand its role as an Asian meetings hub. Business travelers currently comprise 30 to 35 percent of Singapore's total visitors, but that could easily rise further if travelers attracted by Vegas-style entertainment options, including gaming, decide to increase their length of stay.
THE PRICE IS RIGHT
Singapore has already suggested that the tax rate on any casino would be 15 percent, a figure clearly intended to give Singapore an edge over Macau, where the tax rate is 39 percent. Given that Singaporeans now spend $720 million annually at casinos in neighboring Malaysia and Indonesia, even such low tariffs could easily reap a windfall of more than $100 million a year for the government. Singapore has even floated the idea of a tax incentive for high rollers: It recently stated that "premium players" (anyone bringing in $100,000 Singaporean, or $60,885 American, for gambling) would be taxed at just five percent. That's less than Vegas' seven-percent rate, which is already one of the lowest in the world.
Whatever form Vegas-style gaming takes in Macau, Singapore, and Malaysia—not to mention Japan, Thailand, Taiwan, and South Korea, which are also said to be looking into legalized casinos—the Asian option is sure to change the global face of casino gaming. "Macau is poised to overtake Las Vegas as the premier gaming destination worldwide in terms of revenue," predicts Philippines-based Asian-gaming consultant Kelvin Tan.
Indeed, Asian-gaming specialist Jonathan Galaviz even wagers that the development of Asian gaming resorts could turn the tables, so to speak, on the flow of traffic between Asia and Vegas. Until now, the idea of the Vegas operators has been that building Sin City-style casinos in Asia will attract more Asian high rollers to Vegas, says Galaviz, "but with the amount of capital being committed in the region right now, they're creating new tourist destinations that Americans might like to visit. In 10 years, you could even see Americans visiting casino destinations in Asia."
Lucky . . . 8?
No matter how Wynn, Harrah's, or other Vegas tycoons decide to proceed in Asia, they won't successfully compete with local gaming companies if they don't adapt to Asian culture, warns Asian-gaming consultant Ted Loh. As such, they'd do well to mimic Sheldon Adelson's example. While Las Vegas Sands Corporation was building the Sands Macau, it consulted closely with a feng shui expert to ensure that the design was appropriate to this ancient Chinese art of creating harmonious, auspicious spaces.
"Shapes, colors, the orientation of tables and chairs and entrances and exits—all were reviewed," says Bill Weidner, president and COO of the Sands. "I'd fly over to Macau every few weeks and in the back streets of Kowloon [in Hong Kong], I'd show the feng shui master a DVD that contained a three-dimensional rendering of our design. He'd comment on it and we'd make changes as appropriate." For instance, the original design for the northeast corner of the Sands building featured a pointed element that the feng shui master said would deflect chi, or positive energy. Sands replaced it with a rounded element shaped like a beehive, which is believed to enhance chi. The project's completed design also emphasized feng-shui-friendly curving lines and bright, airy interiors.
Similarly, in Chinese culture the number eight symbolizes good luck, just as the number seven does in Western culture. Thus in casinos catering to Asian gamblers, eights usually appear everywhere—from "Lucky 8" slot machines to eighth-floor suites for high rollers.