Sands gaming group to stake US$2.5 billion more on Macau

Gaming group plans further multibillion-dollar outlay to expand casino empire, following the opening of a new phase in Cotai Central project

PUBLISHED : Friday, 21 September, 2012, 12:00am
UPDATED : Friday, 21 September, 2012, 2:46am

Gaming mogul Sheldon Adelson's Las Vegas Sands plans to stake US$2.5 billion in new investment to expand its growing gambling empire in Macau.

The new project, to be called The Parisian, will be located on Cotai and developed by Sands China - the Macau unit of Las Vegas Sands.

"We will finance the project with about a billion dollars of equity and will raise the rest of the funding from international banks," group president and chief operating officer Michael Leven said. No further details were available.

Leven revealed the plans during the launch on Wednesday of the second phase of the group's US$4.4 billion Sands Cotai Central project. The first phase, which incorporates a Conrad hotel and Holiday Inn hotel, opened in April.

The second phase featured the opening of the 1,829-room Sheraton Macao Hotel.

Sands China operates four projects in Macau, including the popular integrated resort, The Venetian.

Sands China chief executive Edward Tracy said the Macau government approved 400 new gaming tables for the Cotai Central project several years ago. But the company has to wait until January - when a cap on the number of gaming tables in Macau is lifted - to add 200 of them. In the interim 165 tables have been moved from Sands Macau and The Venetian to Cotai Central.

Chelsey Tam, an analyst at financial services firm Emperor Securities, said the opening of new facilities would attract visitors, but the venues opened in the first phase had not generated strong results.

"Sands Cotai Central generated only US$52 million in earnings before interest and tax in the first 81 days of operation, compared to Galaxy's first 42 days of US$48 million," Tam said.

But Tracy said he was happy with the performance of Cotai Central so far.

"You have to remember we only have one third of a major development," he said.

Revenue growth of the gaming industry in Macau, the world's biggest gaming hub by revenue, has slowed this year amid a growth slowdown in the mainland economy which has affected the numbers of visitors.

But Tam said that in the long run gaming operators were not concerned by the present slowdown and were confident that visitor numbers and revenue would rise.

"Visits as a percentage of the population in China are still way too low compared to that of Las Vegas. And don't forget the central government has not opened all cities to travel to Macau," she said.

Grant Govertsen, lead analyst at Macau-based Union Gaming Research, expected tourism to Macau to continue to grow this year, "which is important in the context of even more new supply in Macau".