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Lion City pride
In its first year of operation, Marina Bay Sands is already a roaring success for Singapore and Las Vegas Sands. But the casino resort still has hurdles to clear, including finishing construction and finding a new chief executive
In its first year of operation, Marina Bay Sands has become a Singapore landmark. Since opening last April 27, the casino resort, known as “MBS” has become Las Vegas Sands’ most profitable property, even though it has yet to be completed.
“They have had an amazing year. Marina Bay Sands has become one of the world’s truly iconic tourist attractions, and one of the most profitable,” says HSBC senior regional consumer and gaming analyst Sean Monaghan.
“The integrated resorts have also been great in terms of building Singapore’s tourist brand and ‘hip’ appeal globally,” he says.
“Over 11 million visitors from the region and around the world have walked through our doors,” says a Marina Bay Sands spokesperson. “Marina Bay Sands is also experiencing solid momentum on the meetings, incentives, conventions and exhibitions (MICE) front, with over 1,155 deals sealed so far which will bring around 670,000 participants till 2012 to Sands Expo and Convention Centre, the biggest MICE facility in Singapore.”
Marina Bay Sands is the most expensive stand-alone casino resort ever built, costing US$5.5 billion (MOP44 billion). It has 2,560 hotel rooms in three towers, a shopping mall, 122,000 square metres of convention facilities, and a three-tier casino with more than 600 tables and 1,500 machines.
Fulfilling hopes
Genting’s US$4.7 billion Resorts World Sentosa opened in February last year, and features a Universal Studios theme park along with a casino, plus (eventually) 1,800 rooms in six hotels, and retail outlets. The new casino resorts helped Singapore attract a record 11.6 million visitors in 2010.
“The integrated resorts appear to be doing exactly what the Singapore government hoped they would when the plans for launching two integrated resorts and casino licenses were made,” says hospitality consultant Horwath HTL-Asia Pacific’s managing director, Robert Hecker.
“Both properties complement each other,” says the dean of the University of Nevada Las Vegas’ Singapore campus, Andy Nazarechuk. “Marina Bay Sands seeks the MICE market and professional-type customers, and Resorts World Sentosa has captured the family and leisure market. As both properties mature, they will both grow their various revenue streams.”
VIP hiccup
Las Vegas Sands reported that Marina Bay Sands made US$305.8 million in adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) in the fourth quarter of last year, with an EBITDA margin of 54.6 percent - both figures are company records. Over the eight months it was in operation last year, EBITDA was US$641.9 million and EBITDA margin 50.8 percent.
Casino revenue was US$1.1 billion. In the fourth quarter alone, it was US$457.1 million, 10.3 percent more than in the third quarter. However, VIP volume was 20.6 percent lower in the fourth quarter than in the third – possibly a factor in the sudden departure of Marina Bay Sands chief executive Thomas Arasi in February, after barely 18 months in the job (See story in these pages).
Genting reported that Resorts World Sentosa’s adjusted EBITDA was S$1.4 billion (MOP8.9 billion) last year, or US$1.1 billion. The company does not give a breakdown of gaming revenue (See story on these pages).
“Marina Bay Sands is viewed as the up-market property, and I think it has a larger share of the local market,” Mr Monaghan says. Its superior situation and striking architecture heighten its appeal.
Growing pains
“The [MBS] property capitalised on its location in the CBD [central business district]. It is part of – actually a focal point of – the bay, and has utilised its location as an opportunity not only to take advantage of the views from the site, but also to show itself off as a unique piece of architecture,” says Mike Stewart, Asia director of architecture and design firm YWS.
However some have questioned whether the architecture is conducive to the creation of a resort personality for the place. The lack of a chief executive will not help.
Las Vegas Sands’ bid to build a casino resort in Singapore was successful in part because of its development of Las Vegas as a MICE destination, and Marina Bay Sands has won CEI Asia’s Best MICE Hotel award. But its hotel and MICE operations have experienced some growing pains, including public mudslinging and duelling lawsuits with its first convention client before reaching a settlement.
“Singapore’s largest hotel prior to Marina Bay Sands was around 1,200 rooms,” Mr Nazarechuk says. “It has taken some time for the staff to understand the magnitude of running a property of this size and scope. While there have been some operational and service issues this past year, they are slowly being corrected and heading in the right direction.”
Throughout its first year Marina Bay Sands has been adding features. The SkyPark, the 57-storey platform connecting the three towers, with the hotel swimming pool and observation deck, opened in June.
Coming attractions
Space in the shopping mall above the casino has been filling up. The mall has room for 300 stores. “It’s simply the best retail in Singapore – great use of natural light,” Mr Monaghan says. “It could do with some more restaurants, but then again it’s not complete.”
The advantage of all the construction is that it provides new attractions to keep visitors coming back. An indoor skating rink opened in December and the Art and Science Museum, with its lotus-inspired design, in February. Last month the permanent production of “The Lion King” opened in one of the two theatres, where concerts and other performances began in November. Two crystal pavilions for a Louis Vuitton flagship store and a nightspot, plus a 55th-floor spa are among features still in the works.
The disadvantage is that Marina Bay Sands feels like a building site. “It opened while it was still heavily in the construction phase,” Mr Monaghan says, “and I think that never really gives the visitor the best first experience.”
As the amount of work in progress diminishes, most experts expect revenue to grow in a year or two and beyond. “Local demand will only improve again as the property becomes complete,” Mr Monaghan says. “The MRT [subway] line needs to open. That will bring massive amounts of people to Marina Bay Sands.”
The subway line is due to open in 2013. By then the resort should be complete and should have established a definitive personality for itself.
