China's Big Import: Vegas

To the south, on 500 acres of reclaimed land between the islands of Coloane and Taipa, Sands is making the biggest bet of all -- a $4.5 billion complex of casino resorts and meeting space known as the Cotai Strip. It is anchored by the 3,000-room, all-suite Macau Venetian Casino Resort -- a copy of the Las Vegas property, with faux canals and gondoliers -- including a 2,000-seat theater, 850,000 square feet of retail and a 1.4 million-square-foot exhibition center.

The first phase alone will add 12,000 hotel rooms by 2009, more than doubling all of Macau's hotel capacity. Some 3,000 workers, 30 cranes and 50-plus dump trucks are erecting the new Venetian, slated to open the middle of next year. A six-star, 400-room Four Seasons hotel is going up alongside. The Shangri-La chain has pledged to build two hotels on the strip.

Underlying these investments is the rise of the Chinese leisure class. Macau sits on the doorstep of mainland China. Three years ago, as outbreaks of severe acute respiratory syndrome, or SARS, decimated tourism in Hong Kong and Macau, the Chinese government eased travel restrictions, freeing people to visit independently. The number of visitors to Macau rose from 11.9 million in 2003 to 18.7 million last year. About 30,000 people waited in line to visit the Sands on opening day two years ago. During the recent Chinese New Year holiday, roughly 69,000 people passed through the doors.

Where visitors to Las Vegas stay an average of more than three days, most people who come here don't even spend the night, returning to Hong Kong by ferry or by road to the cities of the southern Chinese province of Guangdong. The projects underway are aimed at keeping them here.

Already, though, some are warning that a gold rush mentality is erecting more resorts than even China can fill. Macau had 1,388 gambling tables at the end of last year but is on track to have more than 4,000 by 2009, according to Andes Cheng, an analyst at South China Research Ltd. in Hong Kong. After surging by more than 40 percent in 2004, gaming revenue grew by only about 10 percent last year, according to local government figures.

"It's a bubble," Cheng said. "There will be lots of supply."

The foreign investors acknowledge this but say that they will be the ones positioned to capture new customers, while older, poorly maintained properties disappear.

The Cotai Strip is the dream child of Sands Chairman Sheldon Adelson, who is widely credited with turning Las Vegas into a convention town. Some suggest he is being too aggressive in Macau, building a trade show center for a China that has yet to create many trade associations.

"Sheldon may be overreaching in terms of the convention business," said Lanni, the MGM Mirage chief executive. "It's going to take longer than he might think."

According to China's state statistics, only about 20 million Chinese have household incomes of at least $7,500. But economists note that much of China's wealth is derived from its so-called gray economy -- kickbacks paid in real estate deals, housing and cars furnished by companies to executives, unlicensed private businesses. Casino operators say China is home to 130 million people who could be counted on to fill their tables.

For the outsiders, the biggest challenge is the enduring legacy of Stanley Ho. Although he lost his gambling monopoly after Macau reverted to China's rule and allowed foreign companies to bid on gaming concessions, Ho maintains considerable resources.

He controls most of the VIP business -- historically as much as 70 percent of Macau's revenue -- using a network of travel agents and financiers who arrange junkets for high rollers occupying his private gambling suites. They bet as much as $1 million per visit using credit supplied by the network.

Ho's family controls the ferry system linking Macau to Hong Kong, providing opportunities for promotion. They own huge tracts of land, making it easier for them to expand.

"Stanley has been very Medici-like," said McFadden, the Venetian executive. "The legacy of the family obviously has byzantine relationships with government and bureaucracy here, and that could be useful in facilitating things."

Still, Ho and his family clearly understand the challenge. They are building a luxury hotel, the Grand Lisboa, next to the old casino to compete with the new entrants.

The newcomers are counting on freshness to carry the day. On a recent evening, Wang Cuiping, 34, a restaurateur from the Chinese city of Shenzhen, sat at the Sands bar while her friend gambled. It was her first trip to Macau, and the tables did not interest her. Rather, she sat mesmerized by the sight of a blond-haired Russian dancer in a skintight bodysuit dancing the Macarena.

"It has cultural flavor," she said. "Chinese people don't really dance that well."

Special correspondent Eva Woo contributed to this report.