Las Vegas Business Press :: News : Las Vegas Sands eyes island resorts

Las Vegas Sands eyes island resorts

Hengqin, Shangchuan off coast of Macau are likely sites

BY DAVID MCKEE

As travel to and within China increases, Las Vegas Sands is preparing to capitalize on this trend with a pair of non-casino resort projects in the archipelago around Macau. One, planned for Hengqin Island, directly across the river from Macau's Cotai Strip, is in the latter stages of the governmental approval process, according to Sands officials. The other, proposed for Shangchuan Island, to the southwest, is in a considerably more embryonic stage.

As part of a $2 billion deal signed Oct. 14, 2005, Sands will create a 1,600 acre "convention hotel and holiday resort," one that will include several million feet of convention space, a marina, golf courses, tennis courts and possibly an open-air opera house. Sands is still sifting through six design proposals and negotiating with three governmental entities, "so who knows if the opera house makes the cut," said company spokesman Ron Reese. Negotiations for Shangchuan Island have not advanced nearly so far yet, and company officials are uncomfortable discussing that project.

Hengqin Island, three times the size of Macau, is a pair of islands connected via land reclamation -- not unlike the Cotai Strip on which Sands is building its Venetian Macao. It is 10 minutes' drive from Macau's airport and will eventually be connected to Cotai via a bridge. Formerly Portuguese territory, it is now one of four economic-development zones in Guandong Province.

Las Vegas Sands is building the Venetion Macao on the Cotai Strip and is exploring other sites for resorts on coastal islands.

MILLIONS INVESTED

This island is also part of Macau's neighbor city, Zuhai. As Chinese private savings near the $2 trillion mark, a billion Macau patacas ($131 million) have been invested in buying residential property in Zuhai. "Think of it as a housing expansion of the Cotai Strip, a Cotai West, if you will," President William Weidner told investors earlier this year.

According to the July 18 Macau Post Daily, a Peking-to-Zuhai highway eventually will run into Macau by way of Hengqin Island. "It certainly adds to the amenity value of a visit to the region," Weidner said of Sands' Hengqin Island project, which would also be positioned, he told The China Business Review, as a convention destination "for meetings that would rather have a PRC (People's Republic of China) address than a Macao address."

"The waters around Macau are not particularly swimmable, shall we say," Weidner said recently of the Pearl River Delta, which Sands officials characterize as brown and silt-laden.

"The thought is to create resort water activities," elaborated Reese, who said that the clarity of Shangchuan's waters, an hour away by hydrofoil, was more conducive to snorkeling and scuba diving. One of China's Tourism Open Integrated Experimental Zones, the island is already a popular vacation spot, thanks to its beaches, in addition to being the final resting place of St. Francis Xavier.

Access to Shangchuan Island will be further expedited if the company follows through on internal discussions about whether to launch its own ferry fleet in the greater Macau area. In a recent conference call with investors, Sands CEO Sheldon Adelson maintained, contrary to reports, that the Cotai ferry terminal is on schedule, and that Sands will being running its own ferries both on current routes and ones yet to be announced. Reese later emphasized that no firm plans to that effect had yet been made. "That's premature to talk about," he said.

Meanwhile, one of Sands' Cotai Strip partners, Fairmont Raffles Holdings, is grappling with liquidity problems. Slated to operate a hotel at Site Eight on the strip, Fairmont Raffles is in the process of selling off much of its hotel portfolio in order to pay down $2.5 billion in debt from a leveraged buyout.

Sands is unruffled by the situation. "You've got to consider those are management agreements," Reese noted of the hotelier's Cotai participation. "Those aren't financial investments. So I would say (Sands is) confident" that Fairmont Raffles will come through as a Cotai Strip participant.

dmckee@lvbusinesspress.com | 702-871-6780 x318

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