Las Vegas Sands Corp

HK gains by shunning race towards exhibition sinkhole

PUBLISHED : Monday, 01 October, 2007, 12:00am
UPDATED : Monday, 01 October, 2007, 12:00am

'In the development of Hong Kong's exhibition industry, we need to continue moving ahead and consolidating. Otherwise we will be facing very, very big challenges.'

Chief Secretary Henry Tang Ying-yen

September 24

'If you are not able to join the one million sq ft club you will probably be out of the competition.'

Peter Woo Kwong-ching, chairman (still),

Trade Development Council,

September 27

At long last, we have recognition in government that there exists such a thing as the Pearl River Delta, that it has a great deal of land and that the inhabitants are bent on impoverishing themselves by misusing this land for enormous exhibition complexes that will stand empty most of the year round.

Mr Woo has it wrong. The key to this business just now is not having a million square feet of exhibition floor area. That helps but the real key is a willingness to lose a great deal of money in building and managing those million square feet.

Of course this is not necessarily true of all competitors. Las Vegas Sands Corp can probably make a profitable go of it with its Venetian in Macau.

However, it has some big pluses on its side - for instance, an overly generous Macau government that, aside from making plenty of land available, gave the company a casino licence free.

It was done in the expectation of a big boost for the Macau economy, which did in fact materialise. Unfortunately, the Macau economy and the Macau population seem to inhabit different planets. Who could have foreseen that? Oh well, it can't be helped now.

But back to my theme. The Venetian has the casinos, the big and glitzy new hotel rooms, the ahem ... entertainment options ... ahem, and the themed retail complex. When you put that together with lots of convention and exhibition space run by a management that defines expertise in this business, you probably have a winner.

What do we have in contrast? Well, I suppose we needn't really consider ourselves short of land when we can just fill in what's left of the harbour. Granted that this would destroy one of our great beauties, but think of the benefits. We could have as much land available for exhibition floor space as any site in the Pearl River Delta.

Okay, no go. No go for casinos, too. It may be an unwritten law that we leave them to Macau, but it seems a pretty tight law nonetheless. Same thing for the big and glitzy new hotel rooms. We have one decently glitzy hotel near our Exhibition Centre, but take a closer look at the ones directly behind it. Does the phrase 'not in the running' come to mind?

And then management. Arrayed against the Las Vegas Sands masters in running exhibitions, we have a department of government, the Trade Development Council, which is increasingly at a loss on what to do with itself and has so far come up with nothing better than hosting talk shops on finance, which its people don't understand.

Heading the TDC at present, we have a commercial landlord, or sort of landlord, as the property is actually more his wife's by way of inheritance.

To replace him in the near future, we will have a government man who is at present in charge of subsidising movies and has past experience in stockbroking, urban railways and telecommunications. We really know how to pick 'em, don't we?

And that's just for competition against Macau. Once we start considering the exhibition mega-palaces already put up in Guangzhou and planned all the way up and down the Pearl River estuary, we're looking at something altogether different.

Las Vegas Sands is still in it to make money, but the boys further up the estuary aren't constrained by such pretty considerations. They do it for the greater glory of China, for the relative standing of the home town against neighbouring upstarts who should know their places and, of course, for the construction contracts.

You cannot compete with people like that. You simply cannot. The word has no meaning in that context. To go up against them is simply to join them in diving into a big black sinkhole. If they want in, you want out. You can come back in a few years time when they have eliminated themselves but, until then, it's no go territory.

This is not to say there is no place for Hong Kong in the exhibition business. At present, the TDC still runs some very big trade shows and that business will not vanish overnight.

But we need to remember on whom it relies. It is based on the foreign commercial buyer who is not here for fun and games. His retail chain relies on him to stock its shelves with the best merchandise available and he is a very busy man, constantly on and off airplanes.

What he wants is convenience of travel to trade exhibitions with a full range of goods under one specialty theme and at night he is mostly busy working up his notes or order books and catching up on email with his colleagues.

Hong Kong still suits that sort of person just fine. We won't build a huge growth business on him but he'll keep us in the competition if we remember what he needs. I hope we are not in the process of forgetting it with this talk of the one million square foot club.