Las Vegas Sands Corp.: A High-Risk, High-Return Strategy?

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Case Details:

Case Code : BSTR273
Case Length : 15 pages
Period : 1988-2007
Pub Date : 2008
Teaching Note :Not Available
Organization : -
Industry : Entertainment
Countries : USA, Macau SAR

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"I'm not building a resort. I'm building a city - Asia's Las Vegas."¹

- Sheldon Adelson, Chairman and Chief Executive Officer, LVSC.

"Never have so many recognizable brands assembled in one place at one time to create a new international tourism destination almost overnight. It took 75 years for Las Vegas to emerge as an international destination. Our intention is to replicate that feat in less than three years, and Las Vegas Sands is working closely with all of the hotel companies and investors to conclude their arrangements and realize this vision."²

- William P. Weidner, President and Chief Operating Officer, LVSC, in 2005.

Introduction

On August 28, 2007, Venetian Macau Ltd. (VML), a subsidiary of Las Vegas Sands Corp. (LVSC), a hotel, gaming and resort development company headquartered in Las Vegas, inaugurated the first phase of The Venetian Macau, claimed to be the world's largest casino-resort, in Macau (also known as Macao), a special administrative region (SAR) in the People's Republic of China (PRC). The casino at the resort had 870 gaming tables and 3,400 slot machines. Apart from the casino, the US$ 2.4 billion resort, built on The Cotai Strip, a reclaimed portion of land that connected Macau's islands of Taipa and Coloane, housed 3,000 hotel rooms, a theater, a 15,000-seat sport stadium, and 350 shops.

The second phase of the project was to include a 6,000 seat banquet hall, and was scheduled to be completed by 2008. Sheldon Adelson (Adelson), Chairman and Chief Executive Officer of Sands, said at the inauguration that it had been his dream to "reproduce the capital of entertainment [Las Vegas] in Asia for Asians."³ According to newspaper reports, The Venetian Macau attracted more than 500,000 visitors in its first week.

By 2007, LVSC, incorporated in 2003, had grown to become one of the world's largest casino developer-cum-operators. It was one of the most successful casino-resort operators on the Las Vegas Strip⁴ and now with the inauguration of The Venetian Macau, its second casino-resort in Macau, it had strengthened its position in what the company believed was the future entertainment capital of the world. The company had committed more than US$ 12 billion toward projects in Macau, with most of them scheduled to be complete by 2009-2010.

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1] John Arlidge, "The £6bn wager on China's Gamblers,"http://business.timesonline.co.uk, September 09, 2007.

2] "Cotai Strip Draws "Dream Team"of International Hotel Brands, Leading Investors,"Press Release, www.sands.com, March 18, 2005.

3] "In Pictures: Macau Casino Opens,"www.news.bbc.co.uk, August 28, 2007.

4] The Las Vegas Strip or The Strip refers to the 6.7 km section of Las Vegas Boulevard South, a main road in the city of Las Vegas. The Strip is home to some of the world's largest casino, hotel, and resort properties.