Betting on Las Vegas Sands

If you thought Sheldon Adelson would be content with the success of the Marina Bay Sands in Singapore and the Macau resorts, you are wrong, my friend. The eighth-richest person in America and chairman and CEO of Las Vegas Sands (NYSE: LVS  ) is now interested in building his casino playground in Europe -- and Spain has become his likely choice.

After fruitless talks with Spanish authorities spanning a few years, the recent change in Spain's political environment and the dire need for an economic upturn seem to have made it easier for Las Vegas Sands to foray into the country.

Adelson's hunger for growth
Las Vegas Sands is focusing on investing a massive $22 billion earmarked for the "Eurovegas" construction in either tourist-centric Barcelona or business-centric Madrid. The company plans to build a total of six casinos, 12 hotels comprising 36,000 rooms, as many as three golf courses, and much more in terms of malls and restaurants in this area.

Although how much exactly Las Vegas Sands aims to generate out of this venture is still unknown, it cannot be compared to the company's resorts at Macau or Las Vegas. That leaves one of the company's most profitable ventures to date -- the Marina Bay Sands -- as a possible benchmark for comparison. And the results raise my hopes for the true potential of the upcoming Spanish property. Marina Bay Sands has earned $1.53 billion in earnings before interests, taxes, depreciation, and amortization over the last 12 months and is significantly smaller than what is planned for Eurovegas. Moreover, Spain has been consistently ranked as one of the top three most-visited countries in the world, while Singapore is somewhere far behind.

This may be the best time to invest in Spain, given the country's woeful economic condition. Any new investment plans made now stand a good chance of securing government support.

Why Spain?
Spain has a high unemployment rate of about 23%, and to make things worse, the economy is expected to shrink by 1.7% in the current year. The very fact that Las Vegas Sands' investments made in Spain could possibly generate over 260,000 direct and indirect jobs should be reason enough for the government to offer major concessions. And that's not all, as the lack of major competition in the region could be a big win.

Spain is still unclaimed territory, free from industry rivals such as Melco Crown Entertainment and Wynn Resorts. Although newly listed peer Caesars Entertainment (Nasdaq: CZR  ) tried to make inroads into Spain a few years back, the project failed to materialize.

The Foolish takeaway
Las Vegas Sands is expected to take a call on this investment within the next two months. But if you ask me, the Spanish venture has all the ingredients to become a sure winner.

Las Vegas Sands sure looks good for the long run, but it's not the only one. Perhaps you would be interested to know more about three smart long-term stock plays in the Fool's latest special report. It's yours for the taking and is absolutely free, so don't miss out -- click here and read it today.

Click here to add Las Vegas Sands to your watchlist and keep a tab on this company's Spanish sojourn. It's free!

Navjot Kaur does not own shares of any of the companies mentioned in this article. The Motley Fool has a disclosure policy.
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  • Report this Comment On April 05, 2012, at 1:20 PM, cp757 wrote:

    Naviot Kaur , you say you cannot compared the company's resorts in Macau or Las Vegas and that leaves one of the company's most profitable ventures to date -- the Marina Bay Sands to look for a comparison. As a primary comparison before we look at Singapore I think its important to look at Macau first. They get 34 million tourists per year and they will do 40 billion in revenue. Singapore gets 14 million tourists a year and they will do 8 to 10 billion this year. France, Spain, and Italy have a total of 172.11 million visitors a year. That's 5 times the tourists Macau gets and Las Vegas Sands will draw on those tourists. The thing I find humorous about our thinking is we have no problem thinking of someone getting on a plane in Florida of New York and going to Las Vegas but for some reason we can't see 1.3 billion people in China wanting to go to a casino in Spain. Its a shorter trip for them to fly to Spain than to fly to Vegas and they already do that now. Adelson is building Iconic Integrated Resorts that will be hard to compete against and they are not just gambling. These resorts have convention centers that are booked in advance for years by powerful company's that want to have conventions to promote business. The 36,000 hotel rooms in Spain would take up an area 4.5 miles by 4.5 miles if it was on one floor and that's a big hotel. With three golf course they will diversify even more. The numbers are staggering now with all the revenue coming in but how much will be coming, 5 years from now.

    Sheldon Adelson was interviewed at the end of 2011, and he said Spain received 56.6 million foreign visitors, who spent an average of nine days and spent $1,230 dollars average per person.

    "If you look at the market of luxury in Spain, there are Russian, Chinese, tourists from Arab countries, which spend a lot of money," ... "There are people coming to Spain with lots of money and it is suitable for a project country."

    Adelson went further, "Eurovegas will be a pole of attraction for fifty countries in Europe, North Africa and Asia, which are within a maximum of five hours of flight with respect to Spain. A radius of almost 1 billion customers."

    "If we take into account the number of potential markets, we are talking about 980 million people." "That's more than three times the size of the United States," Adelson told investors. "When (Eurovegas) is fully operational, we will have the capacity to penetrate only between 80 and 85% of demand that exists today".

    Read more here: http://207.46.192.232/proxy.ashx?a=http%...

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