In 1999, Las Vegas sought to attract new visitors by building the Paris Las Vegas, a 50-storey replica of the Eiffel Tower. It proved popular, especially an observation deck atop the 165-metre structure.
Not to be outdone, Macau now wants to bring Paris to its own casino drag, the Cotai Strip. Last week Sheldon Adelson announced plans to invest up to $3 billion in the Chinese gambling enclave on a Paris-themed resort featuring a 160-metre replica Eiffel Tower.
The Las Vegas Sands owner spoke publicly for the first time about the new development as he opened the 1,829-room Sheraton hotel in Macau, part of the second phase of his latest $4.4 billion resort, the Sands Cotai Central, which is itself only five months old.
The Parisian, as it will be known, will add hundreds more gambling tables and at least 3,000 more hotel rooms to Macau at a time when revenue from high-rolling gamblers is slowing.
But no matter: The Parisian in Macau is to be grander and larger than its US equivalent.
“The one in Vegas is kind of tacky,” Michael Leven, Las Vegas Sands president and chief operating officer told The Business Times. “We have a French design person doing the interiors. It’s going to be spectacular… It will be another Venetian-style project… People in China will not have to go to Paris. They’ll be able to see it right here (in Macau).”
Whether it can recreate Paris or not, you can’t argue with Macau’s success. It overtook Las Vegas as the world’s gaming capital by revenue long ago – a remarkable feat given the gaming sector was only opened to foreign investors in 2002. This year’s gaming revenue is expected to hit $39 billion, almost seven times more than its US rival.
Sands owns one of only six casino-operating licences issued by the territory. But is Adelson not worried about oversupply by putting in so many more rooms and tables?
“We would not be expanding if we did not think there was a future here,” he told the Financial Times. “I have always believed this industry is supply-driven.”
So build it and they will come? According to Adelson, only 2% of the China’s population has visited Macau, compared with the 13% of Americans that have gone to Vegas. Longer term, the casino boss expects Macau to host 200 million visitors from China annually (Macau currently receives less than 30 million visitors per year).
But Macau’s betting industry is not completely recession proof, says Southern Metropolis Daily. Gaming revenues have slowed in the last two months and the VIP segment – which contributes about 70% of Macau’s gaming take – has slowed sharpest. Its annual revenue growth dropped to 5.5% in August, a serious slide on 2010 when quarterly VIP revenue growth was more than 50%.
Adelson says he’s unconcerned. Asked at an investor conference about his Chinese business, he described gambling as a “lynchpin” of Chinese culture. “In my second life, I’m coming back as Chinese,” he joked (although if reincarnation has a sense of humour, he’ll be reborn as a Florida Democrat).
But in spite of his cocksure tone, Adelson will be paying close attention to the upcoming National Holiday week in China, which begins on October 1. Industry onlookers expect millions of mainland tourists to flood into Macau during the holiday. If records are broken again, Adelson’s bet on The Parisian might look like the no-brainer he seems to think it is.
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