The Convention King
Billionaire Sheldon Adelson is bringing the Vegas Strip to Macau.
From the Print Edition:
Tiger Woods, May/June 2008
It's nice to be the man that Forbes magazine has dubbed the third richest in America. But it's also pretty good to be his friend. That point becomes abundantly clear on a recent afternoon in Sheldon Adelson's big football field of an office. Between sips of a freshly made cappuccino and bites of specially baked pound cake—only 30 calories per slice, he points out—Adelson, founder and chairman of Las Vegas Sands Corp., the parent company of The Venetian Resort Hotel Casino in Las Vegas and Macau, practically begs a friend to take his private jet on an impending trip from the East Coast to Vail, Colorado.
When the gentleman refuses, Adelson, via telephone, puts the pressure on him. "If you don't take it," he says, "I'll have the jet follow you. It'll be at the airport in Vail, waiting for you to use it."
Eventually the friend gives in. But that's not surprising. You don't become the third richest man in America without being extremely persuasive. I can't help but wonder who this lucky fellow is. Perhaps a high roller, poised to drop a cool million into Adelson's casino coffers? "He is one of the top terrorism experts in the world," says the 74-year-old Adelson, wearing a custom-tailored pink shirt and exuding the demeanor of a wise great-uncle. "He's done a lot for us. I felt that I could do this for him. He flies all the time and he's tired. We can't afford to lose him."
Adelson is something of an anomaly in the casino industry. Most successful practitioners usually range from steely-eyed hard-asses to charismatic impresarios. Adelson's tough, to be sure, competitive as anyone, and prickly enough that he continually stokes a long-standing feud with Steve Wynn (whose eponymous casino is literally across the street from both Adelson's Venetian and his recently opened Palazzo, casting a shadow that has to be irksome). But he's also surprisingly down-to-earth and approachable.
Adelson generally comes across as a mensch, albeit a cranky one. He's a bottom-line realist who clearly has a knack for offering what his customers want—whether it's Barneys New York in Vegas or Cirque du Soleil in Macau. His properties may not be as cool as some, or as stylishly sexy as others, but they do manage to hit a sweet spot. Affluent men in search of no-nonsense high quality (and high stakes) seem drawn to the Venetian properties. So much so that the Vegas operation boasts a 96 percent occupancy rate. Adelson's newest spot, the decidedly un-themed Palazzo, is expected to draw similar numbers. Big rooms, great restaurants and a willingness to tolerate swings from some of the highest-rolling gamblers in the world all serve as attractions. Beyond that, it's no coincidence that the casinos owned by the cigar-loving Adelson house Davidoff kiosks that boast the ritziest selections in Vegas. (Adelson himself hints that he's no stranger to Cuban Montecristos.) Add it up and his two connected properties in Vegas have 7,100 rooms, which combine to create the largest hotel in the world.
It doesn't end there. Now, with Asian beachheads in Macau and Singapore (set to open in 2009), Adelson is poised to continue expanding and attracting discerning players drawn to the oversized digs, top-shelf amenities and superstar chefs. This synergy makes clients in Asia want to check out facilities in America and vice versa. That, of course, is all part of the master plan.
But the biggest key to his success is a very unsexy end of the casino business that has nothing to do with fancy new games or exotic massages or exclusive cuts of beef. One way in which Adelson manages to keep his hotels booked and gaming tables full is by catering to convention business. Vegas ranks as America's top spot for conventions and, in that arena, Adelson is also No. 1. "Conventions keep us busy midweek," he says, of events that range from the mundane (American Academy of Anti-Aging Medicine) to the extravagant (Consumer Electronics Show). "We run the highest occupancy of any hotel in history and we bring in more money in one year than any hotel in history. We understand the need of the convention market better than anyone else," he says. "One thing doesn't go right, that is the end of the show. People have confidence working with us. In Asia, they have a term: MICE. That stands for meetings, incentives, conferences, exhibitions. We're called the MICE giants. And me? I am called the MICE rat." Adelson laughs self-consciously, then adds, "Just kidding."
The Vegas holdings are impressive and his fleet of private jets is nice, but what's really audacious about Adelson is his plan for the Far East. It clearly ranks among the most ambitious casino projects ever undertaken. After Adelson explains it to me, I suggest that it sounds as if he is creating something like the Las Vegas Strip in Macau. "Not like the Las Vegas Strip," he patiently corrects. "It will be the Las Vegas Strip in Macau and it will eventually be like the Vegas Strip versus downtown there." Left unspecified is that, in Adelson's mind, MGM Grand Macau and Wynn Macau will become the equivalents of backwater casinos on Fremont Street.
Situated on what had been a swamp, the Cotai Strip, as Adelson's innovation has come to be called, will comprise 14 glitzy renderings of 14 well-known hotel brands. "We own the real estate and gave management contracts to 13 other brands"—including Shangri-la, Traders, Sheraton and St. Regis. (An InterContinental, will open but it will not be owned by Adelson.) "Hotels are being built sequentially and will be up and running by 2010." Macau's Venetian outpost, which employs 5 percent of the island's workforce and is an enlarged version of The Venetian in Vegas, is already operating on Cotai. It opened with a flourish: nearly 4 million people visited the casino during its first 65 days of operation and they won a lot more than the statisticians predicted they would (or, as company president Bill Weidner told Wall Street analysts last November, "We got shellacked!"). For the near future? Expect loads of gambling, convention business and fine dining.
At least that's the plan. On the other, less optimistic end of things, beyond an unexpected fluctuation of luck, it's easy to wonder about the possibility that there may not be enough business to support so many properties in a relatively small space. This may have been what compelled Steve Wynn to describe the Cotai undertaking as "the most stupid idea I've ever heard of in my life" when Adelson suggested that they join forces there. Nevertheless, Adelson insists that there will be plenty of business since Asia is a big place with lots of people.
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