Casinos take a bet on Macao
Just as homeowners are always on the look-out for good builders, so Bill Weidner, president of US casino operator Las Vegas Sands, found a feng shuimaster through a referral from a friend, Wing Chao, who is a head of design at Walt ÂDisney.
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Las Vegas Sands wanted advice on the layout of its $260m Sands Macao casino, the first foreign casino to open on Macao, the tiny island that is Asia’s gambling hub.
The master of feng shui, the Chinese design practice, warned against the angle of Sands Macao’s casino floor, which he said funnelled good luck out towards the water. Instead, he suggested a round beehive shape that would retain the casino’s “honey�.
The company duly complied. “We can’t make a guailo mistake,� said Mr Weidner, using a Cantonese term that translates roughly as “foreign devil�. “We can’t have people say that we don’t understand Chinese culture.�
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To meet projected demand in Macao, Las Vegas Sands is building a $2bn replica of its 3,000-room Venetian casino resort in Las Vegas, which is scheduled to open in 2007. And next month it will break ground on an expansion of the Sands Macao, opened last spring, that will add 65 per cent more capacity.
The feng shui master, whose name Mr Weidner declined to disclose for competitive reasons, was called on again to advise on the Venetian in Macao. This time, the expert suggested that canals for the replica of St Mark’s Square should be realigned in relation to the sea and vetoed the linear layout of the original plan.
Feng shui is just one example of Las Vegas Sands’ efforts to capture the Chinese market. It is Âbetting its future on China with massive investment in Macao, the former Portuguese colony that is the only place in China where casino gambling is legal.
The company this year announced plans for a $12bn-$15bn hotel, casino and retail development that it claims will transform Macao’s Cotai Strip into the Las Vegas of Asia within 10 years.
“There is pent-up demand for more international growth,� says Mr Weidner. “There are hundreds of millions of mainland Chinese who are looking for extraordinary experiences.�
Banc of America Securities estimates Macao’s gaming revenues will grow to $13bn-$16bn by 2010, eventually outstripping those of Las Vegas, which in 2004 stood at $6.8bn.
Yet competition is formidable in Macao. Stanley Ho, the Hong Kong gambling tycoon, held a 40-year monopoly over Macao’s gaming industry until the ÂChinese government agreed in 2001 to offer licences to international operators.
Other US gaming companies are preparing to enter the market. MGM Mirage and Wynn Resorts, headed by US casino icon Steve Wynn, are both slated to open casinos in Macao.
Before rivals open their doors, Las Vegas Sands is trying to deepen its foothold by catering to local customs and taste.
At Sands Macao, “tea boysâ€? have replaced cocktail waitresses on the casino floor because Asians tend not to drink alcohol while they are Âgambling. Also, because food is central to Chinese culture, the new Venetian will have extensive “noodle capabilityâ€? to feed hungry gamblers, says Mr Weidner. The casino will have a plethora of noodle bars and 25 sit-down restaurants serving 40-50 varieties of noodles.
Even the focus of gambling has changed in Macao. Slot machines, the main source of gambling revenue in US casinos, total 2,100 at the Venetian in Las Vegas while there are only 850 at Sands Macao.
Chinese have an aversion to slot machines, known as lofugei or “tiger machines� because they “eat your body and spit out the bones�, so Las Vegas Sands has created special slot machines with a tiger-slaying theme.
Sands Macao also offers 360 tables in contrast to 130 in Las Vegas because Asians favour table games, particularly high-stakes baccarat.
As well as developing the gambling market in Asia, Las Vegas Sands also caters to Asian customers on its home turf. Chefs from Asia are routinely flown to Las Vegas to prepare authentic Asian cuisine.
The most sumptuous room in the Venetian’s 3,600-room hotel in Las Vegas is reserved for gamblers with credit lines of at least $1m. These high-rollers typically hail from east Asia. The four-bedroom “chairman’s suite�, which boasts a fountain in the foyer, televisions in its marble showers and 24-hour butler service, has Asian décor, complete with silk bedspreads and Chinese screens.
Macao’s success as a gambling hub is also important to China. Las Vegas Sands pays a tax of 39 per cent of gross revenue to the Chinese Âgovernment.
But some analysts worry that heady expectations for Macao could be unsustainable. Preliminary reports indicate that Macao’s gaming revenue last month could be as much as 12 per cent lower than July last year. And tourism growth in Macao slowed from 40 per cent last year to 19 per cent in the first three months of 2005.
There is also the question of what kind of profits can be reaped from the influx of relatively low-paid workers from mainland China.
“Even if their gross income is lower, they have more disposable income,� insists Mr Weidner. “They have a higher propensity to play at different levels.�
So far, efforts in Macao appear to be paying off. Las Vegas Sands this month said earnings from Sands Macao offset weaker results at the Venetian in Las Vegas. But looking back at its design, Mr Weidner does have one regret.
“We didn’t make the Ânoodle bar big enough,â€? he laments.
That’s one thing even the feng shui master didn’t Âpredict.
2005-08-12
