Las Vegas Sands posts losses

Even Sin City is struggling throughout the US economic downturn as fewer tourists are visiting the world’s gambling capital. As a result, Las Vegas Sands, has gone into the red.

The hotel and casino company announced losses of $11.2mn (£5.6 million) in the first quarter of the year, compared with a $90.9m profit a year earlier.

A weak US economy, competition in the Chinese gambling centre of Macau and rising construction costs are to blame for the losses.

William Weidner, Las Vegas Sands’ president and chief operating officer, said hotel occupancy was lower as fewer tourists came to Las Vegas and first-quarter operating results reflect both an intensely competitive operating environment in Macau as well as a weaker environment here in the US.

The casino sector in Macau has thrived since a 2001 law stripped casino tycoon Stanley Ho’s SJM group of its monopoly.

However, competition increased when MGM Mirage opened in Grand Macau late last year, some of the island’s big gamblers went there instead.

Las Vegas Sands’ is proposing to increase the credit it offers the high rollers in an effort to win them back. Furthermore, it has announced its intention to invest between $12 billion and $14 billion to build 20,000 hotel rooms by 2010 in Macau.

In related news, a joint venture between Australia’s Crown, Texas developer Christopher Milam and private equity firm York Capital Management, have scrapped plans to build a $5 billion (£2.5 billion) casino complex in Las Vegas.

The complex was set to be one of the tallest towers in the US at 324m high and include a 5,000-room hotel.

Crown chief executive, Rowen Craigie, said the recent upheavals in world credit markets have made it increasingly difficult for Crown and its partners to develop a commercially viable project on what remains an attractive location on the Las Vegas strip.

According to Angus Gluskie of White Funds Management, it is indicative of the fact that in a slowing growth environment, the gaming sector does carry some short-term risk, given its exposure to discretionary spending.

The location on the former Wet ‘n’ Wild site, next to the Sahara Hotel at the northern end of the Las Vegas strip, was put up for sale in March.

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