CASINO

The sun sets on the Sahara, rises on the Galaxy Macau

TAGs: Galaxy Entertainment Group, Las Vegas, Macau, Sahara

sahara-galaxy-macauThe Sahara, a Las Vegas Strip landmark since 1952, closes its doors forever this Monday (16). Built on 20 acres for a cost of $5m, the Sahara was only the sixth hotel to take up residence on the Strip. Once a prime spot to glimpse celebrities in the flesh, the Sahara featured prominently in the original Rat Pack Ocean’s 11 movie. Its acquisition by Del Webb Corp. in 1961 for $100m made the Sahara the first Las Vegas gaming operation to be owned by a publicly traded corporation. Former Sahara exec VP Ed Nigro told the Las Vegas Sun this acquisition “triggered the public companies’ interest in casinos,’ allowing the establishments to raise the funds required to fuel the rampant expansion of later years.

The Sahara pioneered marketing via mail-outs to their customers, regularly alerting them of upcoming promotions and deals. Its 50,000-square-foot Sahara Space Center was at one time the largest convention hall in the country. But by the time Caesars Palace opened at the opposite end of the Strip in 1966, the Sahara had peaked. It changed hands a few times, and the last owner had the misfortune to take charge mere months before the economy tanked in 2008. In March, the Sahara was officially put on death watch, and here we are.

As the sun sets on the Sahara, it rises on the $1.9b Galaxy Macau. The credit crunch delayed its launch by two years, but the 450-table, 2,200-room resort casino is open for business on Macau’s Cotai Strip. As the biggest new casino Macau has seen since June 2009 – and the only gaming establishment opening in Macau this year – it will garner a lot of look-ins in a market that’s expected to grow 35% in 2011. Galaxy Entertainment deputy chairman Francis Lui claims the new facility may boost company revenue by as much as 20% this year. But Galaxy Macau hopes to change the way Macau does business.

Galaxy CFO Robert Drake claims the company is “very excited about the infrastructure development in mainland China which will make Macau more accessible to the burgeoning middle class of China.” A Hong Kong-based analyst told Bloomberg that as much as 90% of Galaxy’s StarWorld casino revenue came from bettors risking up to $250k a hand. Galaxy Macau is aimed at a more mass-market crowd, in the hopes that this influx of minnows will ease the volatility associated with dependence on the whales. Mass-market, middle class… Is this a past-is-prologue moment for Macau? Are they about to go all Disney on us, like the Vegas Strip casinos did in the ‘80s and ‘90s? Is Celine Dion boning up on her Mandarin, Cantonese and (just for fun) Portuguese as we speak?

Not likely. The Korean singing/acting superstar Rain was just in Macau to play a show at the Venetian Macao, and he told a press conference the future of entertainment belongs to Asia. “Now America is no longer dominant. Now many Asian movies and songs are very popular. The two regions have the same status now.” Yes, for now. But the two are on very different trajectories.

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