Inside Asian Gaming

ited on the hotel casino operators given the low share of non-gaming revenue (around 20%) in the Macau model. Hengqin Island—A complement, not threat The day LVS announced its plans on Hengqin Island, its share price jumped 10%. While demonstrating how exciting the con- cept could be, it has also led to some con- cerns about whether the hospitality market in Macau might be cannibalised. Our view is that it should not. Hengqin Island has a lot of potential to be developed into a vast resort, entertainment and conven- tion area. Only 200 metres away from Cotai and under the jurisdiction of the Zhuhai mu- nicipality in Guangdong province, Henqgin has a total land area of 86 sq. km, three times the size of Macau. But Macau will remain as the only region in China legalized for gaming. As gaming in the context of the Chinese mar- ket will account for the bulk of the revenue stream, Hengqin Island will be a complimen- tary extension of Macau for non-gaming ac- tivities, given the scarcity of land in Cotai and the Macau SAR in general. One of the criticisms about Macau’s transformation to the Las Vegas model is that it lacks the attractions to keep people for a multi-day itinerary. Hengqin will help address that. Other than presenting HK with all its attractions within an hour’s ferry ride, Macau will then also be able to offer visitors a wide variety of recreational and resort fa- cilities, such as golf courses and spas, built on this large island just minutes away. The announcement fromLasVegas Sands stated that the Zhuhai Government has es- tablished a Project Coordination Committee specifically related to the Hengqin project in Zhuhai. The formation of a Project Coordina- tion Committee is a positive step forward, though the project remains subject to gov- ernmental approvals customary for projects of this scale in China. The Macau press also quoted a positive comment from the Zhuhai government, stat- ing it would give its full support to make this US$2 billion-plus convention and resort-fo- cused project happen as soon as possible.The inclusion of the Hengqin development in the agenda of the General Meeting of the Guang- dong Province last November also signalled the consent from the provincial government. Although LVS has taken the lead in an- nouncing plans on Hengqin, we understand Room stock and hotel occupancy in Las Vegas Source: Las Vegas Visitors and Convention Authority Delegates and economic impacts from covention Source: Las Vegas Visitors and Convention Authority New hotel room supply from 2007 Source: CLSA Asia-Pacific Markets 9