|By Rod Smith, Las Vegas Review-Journal|
Knight Ridder/Tribune Business News
Sep. 14, 2004 - With no ground-breaking ceremony and no public fanfare, Las Vegas Sands Corp. has started laying the foundation for the $1.6 billion Palazzo casino resort, company documents filed with the Securities and Exchange Commission said.
In SEC documents filed for its planned $350 million stock offering, Las Vegas Sands officials unveiled previously undisclosed details about the company's Palazzo project, which it described as "a world-class luxury hotel, casino and resort with a design and ambience reminiscent of high-end locales such as Beverly Hills, Bel Air and Rodeo Drive."
Eric Hausler, gaming analyst for Susquehanna Financial Group, said Las Vegas Sands owner Sheldon Adelson is taking his concept of creating a Rodeo Drive East combined with a Beverly Wilshire quality hotel to create a new leisure destination that complements the allure of The Venetian and demand for the Sands Expo and Convention Center.
"Without a doubt, Adelson has a vision for this company. He's determined to use the combined concepts to grow it out of a one-property operation," he said.
In the SEC filing, the company said it plans to export the combined Palazzo-Venetian-convention center concept to other gaming jurisdictions and use the model as a platform for its worldwide growth ambitions.
In addition to complementing The Venetian, the Palazzo's upscale design and 15-acre prime Strip location, where the ramshackle Tam O'Shanter Motel once stood, are intended to lure new visitors. The new resort is adjacent to The Venetian and the Sands Expo and Convention Center, and across Sands Avenue from Steve Wynn's new Wynn Las Vegas development.
Guests arriving from the street will enter the 60-foot-glass-domed entry lobby featuring two-story fountains. Those approaching from The Venetian will make the transition through a towering octagonal structure, itself topped by a glass and iron dome.
The new resort will include an all-suites 50-floor luxury hotel tower with 3,025 rooms, including 375 concierge-level suites and six villas with up to 11,000 square feet each; a 105,000-square-foot casino with 1,900 slot machines and 80 table games. There will also be a 375,000-square-foot enclosed shopping, dining and entertainment complex, which is expected to include 80 high- and mid-end retailers, and 450,000 square feet of added meeting and conference space.
The Palazzo is designed to attract walk-in players from Wynn Las Vegas and The Venetian and will emphasize Asian games such as pai gow and pai gow poker, and other tables games such as Caribbean Stud and Let It Ride.
Also, when the new project is completed the hotel-casinos will own 2.25 million square feet of meeting and convention space in the Congress Center, which will include existing convention space and new space in the Palazzo, and the Sands Expo and Convention Center.
In addition, The Venetian's recently renovated baccarat pit and its soon-to-be-opened Asian-themed Paiza Club and presidential suites are being tailored for high-budget Asian customers, which the company expects to become more significant as the Asian market grows and its Macau operations expand.
"We believe our unmatched combination of Asian-focused offerings and amenities provides us with a competitive advantage in the market for premium Asian gaming customers by allowing us to offer and attract them to a unique Las Vegas experience," the Sept. 3 SEC filing said.
When finished, the combined Palazzo, Venetian and Sands Expo and Convention Center will be the largest resort and hotel complex in the world, with more than 7,000 hotel rooms and suites.
Deutsche Bank analyst Marc Falcone also praised Adelson's strategy to create a unique, world-class, "must-see" resort complex in Las Vegas that caters to premium customers and leverages its convention-driven business model.
"The Palazzo will be a new and innovative concept that will create another leg up for the company's growth story," he said, describing Adelson as a "visionary."
The Palazzo is also expected to help the company capture a larger share of the conventioneers who come to events held at the Sands Expo and Convention Center and the recently expanded Congress Center but must stay at other properties because there aren't enough rooms at The Venetian.
The Venetian had a midweek average occupancy rate of 97.9 percent in the first six months of 2004, compared with 86.5 percent for Las Vegas as a whole, due largely to the company's trade show and convention-driven business model.
Moreover, the added convention visitors staying at Adelson's hotels will generate significant nonhotel foot traffic, which increases casino, food and beverage and other revenues.
University of Nevada, Las Vegas professor Bill Thompson, who specializes in gaming studies, expects the Palazzo and Wynn Las Vegas to add substantial numbers of visitors and interest in Las Vegas once they open.
"Adelson and Wynn are so creative visitors just keep pouring in here -- new visitors and repeat visitors alike. It's a fantastic idea. And it's the essence of the creative thinking that keeps people coming to Las Vegas," he said.
The Palazzo is scheduled to open during the first quarter of 2007.
The construction project is being funded mainly with proceeds from the $766 million sale of The Grand Canal Shoppes to General Growth Properties as well as operating cash flow, a new $1 billion line of credit and bank financing.
Las Vegas Sands plans to raise $350 million with the stock offering and to use the proceeds to fund developments in Asia and the United Kingdom, as working capital and for general corporate purposes.
Las Vegas Sands is in a "quiet period" while its stock registration statement is pending before the SEC, and company officials declined to comment.
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