Hotels, Casinos and Travel Bank on Asia
Sheldon Adelson, head of Las Vegas Sands Corp., predicted $4.5 to $5 billion in sales in 2010 for Sands China Ltd. its Macau-based company. Adelson made the announcement at the construction site of his latest casino in Singapore, scheduled to open in April. Harrah's Entertainment CEO Gary Loveman is also discussing plans about bringing Caesar's Palace to Macao, the former Portuguese colony now seen as China's Las Vegas. Harrah's will be latecomer, joining Wynn Resorts and MGM Mirage.
Only last year Adelson looked like a lone wolf as he tried to finish building his resort-casino when credit markets dried up, making tough decisions and trying to keep is dream of another casino in Singapore. Earlier this year, Las Vegas Sands needed about $2 billion to finish the casino resort or face losing all of its assets completely. A recent IPO raised a desperately needed $2.5 billion in cash. (If Adelson and Las Vegas Sands don't develop all parcels by 2011, their land concessions could be revoked by the Chinese and they will lose everything.)
Expedia is also expanding its online travel agency territory to China, hoping to cash in before Travelocity or Priceline start finding inroads into the foreign market. Travelocity has expanded markets in South America, but so far doesn't appear to have the acquiring bug that Expedia has. So far, Expedia has Kuxun.cn and is the third-largest OTA in the country and has created a Chinese TripAdvisor called Daodao.com.
In India, MGM Mirage, Starwood and Hyatt are opening several hotels to cater to the growing interest in tourism there and the growing middle and upper class. Unlike, Macao however, MGM won't be building casinos there.
Starwood chief executive Frits Van Paasschen stated that he and his company were looking directly at Asia for future profits. "More than 50% of our revenues are outside the US now, and more than 70% of our new openings," he told the The Times (U.K.)
China and India show great opportunities for growth, something that makes corporations and their shareholders feel comfortable and safe. But the truth is that in such developing powerhouses many things can go wrong, including political unrest, lack of infrastructure and unwanted government intervention. In a recession, companies relearn the importance of diversifying their holdings, the but it's still unclear whether ot not Asia will be the lining every foreign investor's pockets with gold. Still, what is business without some risk?
In five years time we will be able to see which companies expanded wisely and profitably and others that risked too much, too soon.