February 9, 2005
US gaming groups with an eye on the East prepare for the annual Chinese pilgrimage
A 10-foot tall animatronic rooster sits inside the glass-domed conservatory of the Bellagio, one of the swankiest casinos in Las Vegas. “Hello, happy new year!” it squawks in Mandarin. The Venetian, just down the strip, has wrapped a red and gold banner with Chinese characters around its 315-foot tower. Other casinos’ lobbies are filled with orange trees festooned with lucky red envelopes.
Today is the start of the Chinese new year – the year of the rooster – and Las Vegas, capital of the US gaming industry, is gearing up for one of its busiest periods. Tens of thousands of Chinese tourists from North America, Hong Kong, Taiwan, Singapore and mainland China are expected to flock to Nevada to eat, shop and gamble. Chefs from Asia have been drafted in to provide special menus. Slightly unfashionable Cantonese pop stars, such as Maria Cordero, and actors including Amanda Lee and Yat-Kit Choi have been flown in from Hong Kong to perform.
The annual pilgrimage to Las Vegas is a growing phenomenon. As China’s middle class prospers and travel restrictions loosen, the World Tourism Organisation estimates the country will become the fourth largest source of outbound tourists, with 100m travellers by 2020. By comparison, 12m tourists came from China in 2001.
The holiday takes on added importance this year because it gives US gaming companies a chance to market their brands as they vie for a foothold in Asia, where they are planning casino developments in Macao, Singapore and beyond. The tiny enclave of Macao, near Hong Kong, took Dollars 3.6bn (Pounds 1.9bn) in gambling revenue in 2003 – more than half the amount generated by Las Vegas – and is fast becoming a global gaming hub.
Macao, which returned to Beijing’s rule in 1999, is the only place in China where gambling is permitted. In 2001, the city ended Stanley Ho’s 40-year gambling monopoly and opened the licence to international tender. Sheldon Adelson of the Las Vegas Sands group opened the Dollars 240m Sands Macao last spring and plans another resort. MGM Mirage expects to open a casino through a joint venture with Pansy Ho, the Hong Kong business mogul, in 2006, and casino icon Steve Wynn plans to open a Dollars 700m casino-resort in Macao next year.
“This is our first opportunity at cross-marketing,” says William Weidner, chief operating officer of Las Vegas Sands, which owns the Venetian resort. “We’ve taken what we’ve learned in Macao and have redesigned some of the things here in Las Vegas.”
Those modifications include developing private gaming rooms and beefing up high-end baccarat offerings, favoured by Chinese players. The Chinese new year is far longer than any other holiday of the year, leading to a spike in gambling revenues and hotel room rates for about 10 days. Mr Weidner says well over half the Venetian’s 4,000 rooms are dedicated to Chinese New Year celebrants.
Outside the holiday, Chinese gamblers account for fewer than 5 per cent of visitors. The evolution of Las Vegas as a more varied tourist destination helps draw overseas Chinese to the city. The Nevada Commission on Tourism and the Las Vegas Convention and Visitors Authority last June launched an office in Beijing to encourage tourism, but it cannot promote gambling, which is prohibited by the Chinese government.
Instead, the office emphasises the plethora of dining, shopping and entertainment options that helped Las Vegas rake in Dollars 6.5bn in non- gaming revenue in 2003, exceeding gambling intake, according to the LVCVA. “A significant number (of Chinese) can now afford to travel and have the desire to travel,” said Chris Chrystal, spokesman for the Nevada Commission on Tourism. “The market has enormous potential for us.”
The NCT is working with airlines to add more flights to Nevada, as well as with the US government to ease visa restrictions imposed after September 11 2001. The industry is already looking beyond Macao for other opportunities in Asia.
Harrah’s has submitted proposals to the Singapore government to build casino-resorts, as has MGM Mirage, owner of the Bellagio in Las Vegas. Thailand and Japan are among other countries where US gaming companies would like to expand.
Executives will be taking heart from one new year greeting. “It will be a prosperous year,” squawks the Bellagio rooster.