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August 31, 2016

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Sin City, Asian capital eye Chinese tourism

SIN City and Asian investors are going all in on Chinese tourism, as some of Las Vegas’ latest developments on and off the Strip target Chinese nationals and Chinese-Americans.

The Chinese have been regulars along the resort corridor for decades. Now officials and developers, intent on capitalizing on burgeoning Chinese wealth and Asian-American population growth, are courting them in a major way.

Nonstop flights from China’s mainland are planned for the first time, and two Asian-themed casinos will be among the first post-recession additions to Sin City’s glittering skyline.

The new hotel-casinos boast of plans to feature what some other resorts such as the MGM Grand, Wynn and Venetian have quietly offered for years. Guests will be treated to familiar foods, Chinese-speaking service employees and the table game of choice, baccarat.

“The Chinese do quite enjoy a very Chinese experience. They do gravitate toward Asian amenities. At Wynn Macau, it’s mostly Chinese restaurants and menus in Chinese,” said Alex Bumazhny, gambling analyst with Fitch Ratings.

The Lucky Dragon Hotel and Casino is expected to open this fall, and Resorts World Las Vegas is set to begin construction in earnest by the end of the year.

By Las Vegas’ standards, Lucky Dragon is a modestly-sized property set on 1.2 hectares just off the Strip. It will have 200 hotel rooms and a casino floor spanning 2,508 square meters.

Lucky Dragon executives said the new casino will focus on domestic Chinese gamblers, calling them an underserved niche market made up of Chinese-Americans and Chinese people who live in America’s ethnic enclaves, including local Las Vegans, the reliable weekend hordes from California, and tourists from the Pacific Northwest and East Coast.

The mega resorts catering to Chinese gamblers target “ultra-high-end players,” while the more casual Chinese bettors are left with more generic amenities designed for “American white people,” said Dave Jacoby, Lucky Dragon’s chief operating officer.

“We’re playing on the existing market that isn’t served well,” Jacoby said.

The developer is a privately held entity known as the Las Vegas Economic Impact Regional Center. The casino is financed with money from Chinese investors through the EB-5 visa program, which grants green cards to foreigners in return for investments of at least US$500,000 on job-creating projects. Jacoby said Lucky Dragon was an easy sell given Las Vegas’ appeal in China.

For the years-delayed Resorts World on the Strip’s northern end, the blossoming Chinese tourism business will be a bonus by the time it opens, now projected for March 2019.

The US$4 billion casino resort property has been in the works since 2013, with an original opening date of 2016. It is planned to have 3,100 rooms and 9,290 square meters of gambling space, along with restaurants and shops spread across its 36-hectare site. Plans for a convention center, panda habitat and 4,000-seat theater are on hold for the initial construction phase.

Resorts World marks the latest entry into the US market for the Malaysia-based Genting Group, which owns resort and casino properties around the world.

Gerald Gardner, the casino’s general counsel and senior vice president of government affairs, said Resorts World expects to build its Las Vegas business through its existing branding among Chinese already familiar with its Asian properties. In Sin City, the primary target will be domestic visitors because no other Asian-themed properties exist on the Strip. On the radar, though, is a plan to capture Chinese tourists as they begin to visit in greater numbers.

“The real spikes in Las Vegas revenue occur when several things happen in a short period of time,” Gardner said.

Hainan Airlines announced on August 4 that it was seeking final US approval to start nonstop flights between Las Vegas and Beijing. The service is expected to begin in December with flights three days a week at McCarran International Airport. The only other direct flights to or from Asia are offered on Korean Air out of Seoul.

Just 16 percent of Las Vegas’ record 42 million tourists in 2015 came from other countries, according to the city’s tourism board. The most recent figures from 2014 also show that while the Chinese account for a large share, travelers from Canada, Mexico and the UK make up the bulk of international visitors.

Officials said Chinese tourists largely have been undercounted because of the lack of nonstop flight service. Those travelers come to Las Vegas after entering the US through other hubs, such as Los Angeles, Seattle or Chicago, according to Joel Chusid, Hainan Airlines’ executive director in the US.

“The market is there,” Chusid said. “It just hasn’t fully been touched.”


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