Las Vegas Sands Corp.
Las Vegas Sands, Corp. owns and operates the Venetian Casino Resort and the Sands Expo and Convention Center in Las Vegas, Nevada, and the Sands Macao Casino in Macau, China. We are also in the process of developing two additional casino resorts: the Palazzo Casino Resort, which will be adjacent to and connected with the Venetian Casino Resort, and the Macao Venetian Casino Resort in Macau. We have also entered into certain agreements to develop gaming properties in the United Kingdom and are exploring other gaming entertainment opportunities in Asia, Europe and the United States.
The Venetian Casino Resort is one of the most successful properties on the Strip based on revenues and one of the largest and most luxurious casino resorts in the world. It is a Renaissance Venice-themed casino resort situated at one of the premier locations on the Strip, across from the Mirage and the Treasure Island Hotel and Casino and next to the Wynn Las Vegas Resort, which is currently under construction. Since its opening, the Venetian Casino Resort has been a "must-see" destination that provides visitors with first-class accommodations, gaming, entertainment, dining and meeting facilities and shopping at the first all-suites hotel on the Strip. This unique combination of attributes has made the Venetian Casino Resort one of the most productive properties on the Strip, having an occupancy rate of 98.3% and an average daily room rate of $219 during the nine months ended September 30, 2004.
We opened the first phase of the Venetian Casino Resort in May 1999, which originally consisted of 3,036 suites though the number of suites was reduced over time to 3,014 based on renovations and remodeling. The Venezia tower, a 1,013 hotel suite expansion of the Venetian Casino Resort, was completed and opened for business on June 26, 2003. The Venetian Casino Resort now includes a total of 4,027 suites; a gaming facility of approximately 116,000 square feet consisting of approximately 2,000 slot machines and 139 table games; and the Congress Center, a meeting and conference facility with approximately 650,000 square feet. In addition, The Grand Canal Shoppes is located within the Venetian Casino Resort and offers approximately 440,000 square feet of shopping, dining and entertainment space directly accessible from the Strip. The Grand Canal Shoppes will also connect directly to the main shopping and dining complex of the Palazzo Casino Resort, which will in turn connect through a walk-over bridge to the Wynn Las Vegas Resort. In May 2004, we sold The Grand Canal Shoppes and leased certain restaurant and other retail assets of the Venetian Casino Resort to GGP for approximately $766.0 million in gross proceeds. We believe that The Grand Canal Shoppes generates significant foot traffic through our facilities as a result of its premium dining and retail offerings and other attractions and amenities, such as its Venice-themed streetscapes, costumed street performers and gondola rides along the canal with singing gondoliers. In 2003, there were over 35,000 visitors per day to The Grand Canal Shoppes. The Grand Canal Shoppes includes seven restaurants, eight food court outlets, three specialty food shops and approximately 60 high- and mid-end retail stores.
The Venetian Casino Resort is connected directly to the Sands Expo Center, a premier facility and, at approximately 1.15 million square feet, one of the largest convention and trade show destinations in the United States. This direct connection to the Sands Expo Center, combined with our ability to attract and accommodate trade show and convention business with our 4,027 suites and diverse amenities, has been a key contributor to our success and the cornerstone of our convention-driven business model. Management believes that the Venetian Casino Resort and the Sands Expo Center, with 4,027 suites and a combined 1.8 million square feet of meeting and convention space, together comprise one of the largest hotel and meeting complexes in the world. This complex benefits from its prime location in Las Vegas, which is one of the most visited convention and trade show destinations in the United States. During 2003, approximately 5.7 million visitors attended trade shows and conventions in Las Vegas, with approximately 16% of these visitors attending events at the Sands Expo Center. The demand for rooms generated by visitors at our convention facilities contributed to our 98.3% occupancy rate during the first nine months of 2004, including a mid-week occupancy rate of 97.2%, which compare favorably to the Las Vegas average overall occupancy rate of 89.6% and mid-week average occupancy rate of 86.9% during the same period.
In August 2004, we began construction of the Palazzo Casino Resort. Like the Venetian Casino Resort, the Palazzo Casino Resort will be situated at one of the premier locations on the Strip, on approximately 15 acres of land that we own adjacent to the Venetian Casino Resort and the Sands Expo Center, and across Sands Avenue from the Wynn Las Vegas Resort. The Palazzo Casino Resort will be a world-class luxury hotel, casino and resort and will have a design and ambience reminiscent of high-end locales such as Beverly Hills, Bel Air and Rodeo Drive. The Palazzo Casino Resort will consist of an all-suites 50-floor luxury hotel tower with approximately 3,025 rooms; a gaming facility of approximately 105,000 square feet, consisting of approximately 1,700 slot machines and 120 table games; an enclosed shopping, dining and entertainment complex of approximately 400,000 square feet, which is expected to include approximately 80 high- and mid-end retailers; and additional meeting and conference space of approximately 450,000 square feet (which will comprise an addition to the Congress Center). Upon completion of the Palazzo Casino Resort, our combined Las Vegas facilities will have approximately 2.25 million gross square feet of meeting and convention space. We expect to fund the construction of the Palazzo Casino Resort at its current budget of approximately $1.6 billion (exclusive of land and of certain incentive payments to executives made in July 2004) with proceeds from the sale of The Grand Canal Shoppes, operating cash flow, availability under the recently-completed $1.010 billion senior secured credit facility and $250.0 million Phase II mall construction loan, and under an FF&E credit facility for which Las Vegas Sands Opco has a commitment. The Palazzo Casino Resort is scheduled to open during the second quarter of 2007.
In addition to our Las Vegas operations, we currently are the sole subconcessionaire under one of only three government-granted concessions to operate casinos in Macau. Macau is a special administrative region of China and the only location in China that permits casino gaming. The three gaming concessionaires in Macau are the Macau casino operator SJM, the Galaxy consortium and Las Vegas casino operator Wynn Resorts, Ltd. China currently has a population of 1.29 billion and approximately 1.0 billion people live within a three-hour flight of Macau. One of the world's largest gaming markets with approximately $3.7 billion in gaming revenue in 2003, Macau is located in a highly-populated region of the world that we believe is currently underserved by its regional gaming facilities. The government of Macau has expressed its goal of transforming Macau into the tourism destination of choice in Asia. The Chinese government has recently removed certain internal travel restrictions, allowing mainland Chinese from certain urban centers and economically developed regions to visit Macau without joining a tour group, and has also recently increased the amount of renminbi that Chinese citizens are permitted to bring into Macau. We expect tourism in Macau to continue to grow as the Chinese government continues to implement its policy of liberalizing historical restrictions on travel and currency movements. In the month of October 2004, there were approximately 1.5 million visitors to Macau according to the Macau Statistics and Census Service. We expect that these high visitation levels will drive the growth of Macau tourism and its casino market in the future.
On May 18, 2004, we opened a portion of the Sands Macao, the first Las Vegas-style casino to open in Macau, located at the heart of Macau's gaming district. In October 2004, the Sands Macao had 825,651 visits. We opened the remainder of the Sands Macao during late August 2004 and the property now offers approximately 328 table games, such as baccarat, Pai Gow, Pai Gow Poker, blackjack and roulette, and approximately 670 slot machines or similar electronic gaming devices. We are currently transforming unfinished space adjacent to the casino floor into approximately 13,346 square feet of additional casino space that is expected to include approximately 40 additional tables and 180 additional slot machines. The Sands Macao also includes numerous restaurants, a spacious Paiza Club offering services and amenities to premium customers, luxurious VIP suites and spa facilities, private VIP gaming room facilities and other high-end services and amenities. The dining venues emphasize the most popular regional cuisine and include a Cantonese restaurant, a Shanghai-style restaurant, a Macanese restaurant and a Las Vegas-style steakhouse. Management believes that the Sands Macao is the premier facility in the region, with a quality of construction, first-class accommodations and high-end amenities not available at competing facilities. For the three month period ended September 30, 2004, the Sands Macao had table drop of $972.3 million, EBITDA of $68.5 million and net income of $60.7 million.
We also intend to build, own and operate under our subconcession the Macao Venetian Casino Resort, an all-suites hotel, casino and convention center complex with a Venetian- style theme similar to that of our Las Vegas property, in Cotai (an area of reclaimed land between the islands of Taipa and Coloane in Macau). In connection with this development, we are sponsoring a plan for the development of a "Cotai Strip" designed to meet the demand generated by the rapidly-growing Asian gaming market. We have submitted to the Macau government a development plan that comprises six other hotel developments in addition to the Macao Venetian Casino Resort, constructed on an area of about 80 hectares in Cotai. The proposed development is expected to include hotels, exhibition and conference facilities, casinos (which we plan to operate), showrooms, shopping malls, spas, world-class restaurants and entertainment facilities and other attractions. As the anchor property at the corner of entry to the Cotai Strip, the Macao Venetian Casino Resort is expected to include approximately 3,000 suites (with 1,500 suites fully completed at opening and another 1,500 suites to be completed at a future date depending upon market conditions and demand), 546,000 square feet of gaming facilities, 1.0 million square feet of gross retail space and 1.8 million square feet of meeting and convention facilities with the goal to develop in Macau a convention and tradeshow business similar to the one we have developed in Las Vegas. The Macau Venetian Casino Resort meeting and convention facilities will include a convention center of approximately 1,073,000 square feet, a congress center area of approximately 316,000 square feet and an event center area of approximately 430,000 square feet. The completion of the Macao Venetian Casino Resort is not dependent upon governmental approval for the Cotai development plan and development has begun with a scheduled opening date in the first quarter of 2007. The cost to us of construction of the Macao Venetian Casino Resort is expected to satisfy our remaining investment obligations under our subconcession. The other six hotel developments on the Cotai Strip will be developed, constructed and financed by independent lodging companies and investor groups. We have entered into six non-binding letters of intent for these hotel developments. After development, subject to Macau government approval, we plan to lease and operate the casinos and showroom portions of these facilities under our gaming subconcession while these third parties will operate the hotel, retail and meeting space portions together with associated amenities.
Our operations in Las Vegas and Macau provide us with a platform for worldwide growth during what we believe to be the beginning of a period of domestic and international gaming expansion. As the first Las Vegas operator to open a casino in Macau, we believe we have a "first-mover" advantage to capitalize on the growing demand for casino gaming in China and throughout Asia. We are currently exploring the possibility of operating casino resorts in certain additional Asian jurisdictions, including Singapore, Japan and Thailand. We are also well-positioned to capitalize on the expansion, and are currently pursuing the operation of, casino gaming in other domestic and international jurisdictions, such as the United Kingdom, which is currently in the process of enacting legislation for the expansion of casino gaming. We have entered into agreements to develop and lease gaming entertainment facilities with two prominent football clubs in the United Kingdom and are in discussions with several others to build entertainment and gaming facilities in major cities. We are also pursuing the possibility of developing and operating an Internet gaming site. During March 2003, we obtained an interactive gaming license and an electronic betting center license from the Alderney Gambling Control Commission in the Channel Islands although we have not yet established any operations under those licenses.