The IR Bids - Compare and Contrast

By Donn Richard
April 2008
Singapore

How does one go about choosing between various corporations; particularly in between IRs noted for their expertise and all-around classiness? The Singapore government, wisely noting that such resorts, if well-chosen, lead to enormous job creation (30,000 at the IR’s themselves with at least another 30,000 in support industries) was faced with just that choice in 2005. As with decisions impacting on economic success, the process was taken very seriously.

The bidders were assessed based on the following criteria:
- development and investment
- tourism appeal and contribution
- architectural concept and design
- strength of the consortium and partners

In May 2006, US based Las Vegas Sands beat US rivals MGM Mirage, Harrah’s Entertainment and Malaysia’s Genting International and Star Cruises Ltd for the right to build the first Integrated Resort.

The Sands bid was one of the tried and true winners. A focus which in fact has been gaining ground since the 1980’s. Simply put, they pushed their global expertise in MICE (Meetings, Incentives, Conventions and Exhibitions.) Expertise in MICE is just about guaranteed to increase incoming business travel and tourism. And expertise is what they have. Las Vegas Sands Corporation is a hotel, gaming and development company headquartered in Las Vegas, Nevada, and one of the leading international developers of multi-use integrated resorts in the world.

The US gaming giant plans to spend more than SG $5 billion (US $3.2 billion) on the project. With rising construction costs, the casino complex may well become the world’s most expensive. The floor area alone of the Marina Bay Sands stands at 570,000 square meters.

Las Vegas Sands has spent SG $1.2 billion as payment for the 20.6-hectare plot of land at Marina Bay waterfront. This is all the more interesting when we note that the Marina Bay Sands (MBS) will be built entirely on reclaimed land. In fact, the old sea wall had to be removed in order for construction work to begin.

Let’s now turn our attention to the other successful bidder. Resorts World at Sentosa and its parent company, Malaysia’s Genting Corporation beat Kerzner-Capitaland and Eight Wonder and partners; Hong Kong’s Melco International, Isle of Capri Casinos from America and Australia’s Publishing and Broadcasting Limited.

In contrast to the Sands, Genting’s focus during the bid was as a large-scale family resort. For this reason, the topics of ‘casino?and ‘gambling?are regarded as just slightly taboo by current staff members of RWS. This is understandable. Market differentiation is very important and RWS is marketing the IR as the perfect destination for family fun. Be that as it may, the main source of Resorts World’s income will be from its casino. Genting has touted the Sentosa casino project as being able to pull in 10 million visitors by 2015.

Resorts World at Sentosa Integrated resorts will be built and run by Genting International Corporation. Genting Bhd. Is one of Malaysia’s most powerful and respected corporate conglomerates and serves as a holding company for a variety of domestic and international businesses.

The Genting-Star Cruises partnership spent SG $605 as payment for the 49-hectare plot of land at Sentosa. However, Star Cruises has since pulled out of the project.

Only around 15% of RWS is being built on reclaimed land; the Xperiential Museum, ESPA and parts of the Festive Walk and the Marine Life Park. Floor area for Resorts World is somewhat smaller than that of the Sands, coming in at 343,000 square meters.

Taking all relevant criteria into consideration, the selection panel estimated that Genting’s Resorts World at Sentosa would complement the Marina Bay IR, awarded to Las Vegas Sands in May 2006.

Both corporations have vast experience running casinos and hotels and both companies have been awarded a 30-year concession by the Singapore government to run the Integrated Resorts. Also, both companies had to borrow money from several banks to finance the construction of the projects; with MBS borrowing SG $5.4 billion and Genting, the parent company of RWS borrowing SG $4.2 billion.

The Marina Bay Sands (MBS) is expected to open its doors in the fourth quarter of 2009 whereas Resorts World at Sentosa (RWS) is expected to open to the public in the first quarter of 2010.