Las Vegas is coming back from an extended slump, with Asians providing a big boost on both sides of the gaming table. Asian players have made baccarat the biggest game in Vegas, and Asian investors are behind new projects.
One key indicator of the comeback is the late August opening of SLS Las Vegas, the first new resort on the Strip sine Cosmopolitan debuted in 2010. Owner SBE Entertainment, known for its hip clubs, hotels and eateries, has brought its act to the former Sahara Hotel, a happening place back in the Rat Pack days, at the north end of the Strip. SBE bought the Sahara at the top of the market in 2007 and watched as plans for neighboring new resorts were abandoned. When SBE closed Sahara in 2011, the northern end of the Strip was bleak. But now Asian investors are leading it back.
The $415 million transformation of Sahara into SLS Las Vegas includes 1,600 rooms, several of SBE’s signature clubs and restaurants, and retailing by Fred Segal. It’s aimed squarely at free-spending millennials who’d rather put $500 down on a bottle of champagne than a roll of the dice. The 3,600 SLS employees and resort guests chowing down at The Griddle or grooving to the likes of Lenny Kravitz at Sayers Club, both Los Angeles favorites making their first appearances beyond the Southland, owe thanks to Asia and Uncle Sam’s EB-5 investment visa program for making it happen. “Without EB-5, SLS may never have come to fruition,” Global Market Advisors partner Steve Gallaway says.
A $500,000 investment in an economically depressed area – Las Vegas has qualified since 2008 – can grant residency to the investor under the EB-5 program. Chinese and Thai investors put $150 million into SLS, Global Market Advisors says. The Downtown Grand casino hotel project received $100 million from Chinese EB-5 investors, the Las Vegas based gaming consultants add. Developers of Dynasty, a $300 million resort project aimed at Chinese visitors, claims to have 300 EB-5 applicants that want to invest in it.
Chinese visitors are playing a bigger role in Las Vegas, growing 39% to 263,000 arrivals in 2012, according to the Las Vegas Convention and Visitors Authority, which has an office in Shanghai as well as Hong Kong. Even though Macau has gaming revenue seven times that of the Strip, is closer to home and more culturally attuned to Chinese visitors, Las Vegas retains a unique allure.
“At the end of the day, Las Vegas is still the big show,” Gallaway says. “Macau might have larger casino floors, but Vegas has better entertainment, better restaurants and the same shopping for less money. In addition, the United States is a high priority travel destination for Chinese, and the annual demand continues to grow at strong rates. Regardless of the first destination a Chinese traveler chooses in the US, it is likely that Las Vegas will be an important stopover during their visit.”
“One visible change is that baccarat has become a popular game in Las Vegas,” Desmond Lam, author of Chopsticks and Gambling that revealed Chinese cultural links to gambling says. Baccarat has overtaken blackjack as the most popular table game, with revenue of $1.6 billion, accounting for nearly one in four dollars won at tables on the Strip.
Casino properties are expressing their gratitude with more Chinese and Asian themes in their shows, including mainland China produced Panda! at Palazzo, Lam, an associate professor of marketing at the University of Macau, notes. They also put on special events and decorations for Chinese New Year.
“Las Vegas operators have had an appreciation of the Chinese gambler for decades, and have continued to add rooms, amenities and other items to attract them as their relative wealth has grown,” Gallaway says, “Many casinos have Asian language speaking dealers and hosts, giving Asian guests the royal treatment that their gaming dollars deserve.”
He believes, “The next logical step is a purely Asian focused casino.” Two of them are in the works, close to SLS at the north end of the Strip, financed by profits from Asian gaming.
Last year, Genting bought the 87 acre rusting Echelon ELON +% project site from Boyd Gaming for $350 million. The Malaysian group, which operates casino properties in Singapore and the Philippines, its flagship Resorts World Genting outside Kuala Lumpur, the most profitable US slot parlor at New York’s Aqueduct race track, plus casinos in the UK and Bahamas and Star Cruises, making it the first truly global gaming company. Genting plans to build Resorts World Las Vegas, a Chinese themed property with pagodas, a replica of the Great Wall and, Beijing willing, pandas. The first phase of the $4 billion resort is scheduled to open in 2017.
In early August, Australia’s Crown Resorts paid $285 million for a majority stake in the 34.5 acre site next to Genting’s. Controlled by James Packer, the son of legendary media mogul and gambler Kerry Packer, Crown is a partner in Melco Crown Entertainment that owns City of Dreams in Macau and is opening its third resort there plus its first in Manila. Crown also runs its own casinos in Australia, which have been that country’s most successful in attracting Asian high rollers.
“Genting and James Packer should bring new Chinese gamers to Las Vegas,” Gallaway says. “With the interest from China and the significant Chinese and Asian populations in California, there is an opportunity to grow this rich demand segment. If one or both of these entities builds a properly Asian-centric resort, it will grow Strip revenue and help feed the overall Las Vegas economy.”
- New York
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