Inside Asian Gaming

11 1. Visitation growth. The relaxation of visa restrictions for individual travelers from China has been the key driver of visitation. Since the Individual Visitor Scheme (IVS) was launched in 2003, coverage has been ex- panded to 49 cities (population net of 314m), accounting for 15-20% of the most affluent people in China. We estimate tourist arrivals to reach a 20% compound annual growth rate through 2007-10F. 2. Rising disposable income. We an- ticipate a strengthening wealth effect on the expanding middle class population in China given continued growth in the Chinese economy. This should translate into higher discretionary spending on leisure-related activities. 3. Quality new supply. The Septem- ber 2006 Wynn Macau opening reinforced our “quality supply drives demand” thesis, which was also seen following the unveiling of Sands two years earlier. The pipeline of new openings, including Crown (May 2007), Venetian (August 2007), MGM Grand (4Q 2007), Galaxy Mega Resort Cotai (late 2008), City of Dreams (2Q 2009), and Macau Studio City (early 2009), are designed to become destination resorts to attract leisure visitors. We believe these projects will collectively ex- pand the market. 4. Infrastructure improvement. While infrastructure could be a bottleneck, the gov- ernment is committed to addressing it. The Lotus Bridge connecting Cotai to neighbor- ing Zhuhai onmainland China opened inMay 2007 (in time for the Golden Week holiday). It has capacity for 26m visitors, compared to the 13m arrivals that came through the Pen- insula border last year. The full pipeline of projects over the next three years highlights government efforts to keep infrastructure development in pace with the launch of new Source: DSEC; Deutsche Bank Source: Deutsche Bank; CEIC Visitation forecast China GDP growth In addition to the Venetian, Las Vegas Sands Corp (LVS) is developing another six projects along the Cotai Strip, with casinos, hotels and retail amenities.