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Las Vegas Sands to Resume Work on 300-room Hotel;
CEO Sheldon Adelson Also Denies Reports of Bethlehem Casino Being for Sale

By Matt Assad and Nicole Radzievich, The Morning Call, Allentown, Pa.McClatchy-Tribune Regional News

Mar. 2, 2010--Las Vegas Sands plans to resume building its 300-room hotel in south Bethlehem and is not trying to sell its casino there, Sands executives said Monday.

In a statement, CEO Sheldon Adelson denied a published report that Sands is looking to sell the casino and stressed that he has already instructed crews to resume construction of the hotel as the casino prepares to add 89 table games.

Sands halted work on the nearby hotel, mall and events center in November 2008, citing a bad economy and unfavorable credit markets. Sands officials Monday offered no timetable for restarting the 200,000-square-foot mall or the 3,600-seat events center, part of Sands Casino Resort Bethlehem.

But the officials said the hotel will be under construction in the next several weeks, and they left no question about whether they are trying to sell the casino.

"Unequivocally, no," said Sands spokesman Ron Reese. "The company has no plans to sell that asset."

The announcement quells worries by the city, based on a story in The Express-Times of Easton, that Sands is bowing out of its investment in Bethlehem. It brought a sigh of relief from Bethlehem Mayor John Callahan, who said the hotel, which would take about a year to complete, will bring hundreds of construction and service jobs to the city.

"I'm encouraged to see the hotel project moving forward," Callahan said. "During these tough economic times, it's critical to have responsible corporate partners like Sands who are committed to creating over 1,000 good-paying jobs for folks here in the Lehigh Valley."

In conversations with Sands officials, Callahan said, he learned the company is "open to entertaining" a joint venture to complete the hotel. But he does not know if the idea went anywhere or is still an option. Sands has considered taking on partners for its mall and hotel projects in other cities, but has never taken on a partner with, or sold, any of the casinos it has built.

It's been a roller-coaster winter for the world's largest casino operator. Last month, during state Gaming Control Board hearings on whether to renew Sands' gaming license, Callahan stepped away from his past role as cheerleader and asked the state to pressure Sands into completing the mothballed portion of the project.

Then two weeks ago, during a quarterly financial report that showed a fourth-quarter corporate loss of $2.1 million, Sands officials acknowledged Bethlehem revenues were "disappointing."

Over the weekend The Express-Times, quoting an unnamed source, wrote on three consecutive days that Las Vegas Sands, Sands' corporate owner, is looking to sell the Bethlehem casino.

Adelson said Monday "recent rumors of the company's supposed interest in selling" Sands are "unfounded." His statement was uncharacteristic for a company that rarely responds to published reports.

"We are looking forward to reviewing our table games application with the Gaming Control Board, and at the same time we have undertaken efforts which will result in construction resuming on the hotel portion of the development in the very near future," Adelson said.

Joseph P. Owens, editor of The Express-Times, said he stands by the story. He said the Sands had an opportunity to comment, chose not to and did not debunk the story over the weekend.

Owens said Sands' statement on the hotel runs contrary to the company's position last month, when Owens said a company official suggested work would not resume until the end of the year.

"They've done an about-face," Owens said, referring to Sands' statements about the hotel.

Fact or not, analysts say selling its Bethlehem casino now would be a sure loss for Sands because it could not recover its investment while the casino is below revenue projections.

"They're probably not going to sell a property when it's underperforming," said Larry Klatzkin, a 25-year Wall Street gaming expert who is managing director of Chapdelaine Credit Partners, Manhattan.

"Could it be sold in the future? Who knows? But it makes no sense to do it before table games start this summer and the planned hotel is open," Klatzkin said. "That property needs a hotel to maximize the revenue potential of its soon-to-open table games."

Sands Bethlehem, consistently the state's third-busiest casino behind two near Philadelphia, nevertheless lags its pre-Great Recession projections.

Sands had estimated annual gross terminal revenues -- the money left after winners are paid -- of $465 million. Since opening in May, it's on pace to hit about $235 million its first year.

The poor economy has hurt revenues at Sands casinos in Bethlehem, Las Vegas and Macau, China.

Adelson said he's convinced Sands' fortunes will change with the arrival of a hotel and table games such as blackjack, roulette and craps in Bethlehem, in part because of its proximity to northern New Jersey and New York City customers.

At the very least, construction crews on the hotel site would go a long way toward winning back the trust of skeptical city officials.

"I hope the Sands maintains the commitment they made to the city years ago to build the hotel. It's a vital part for not only making the casino successful but also the projects on the other end of the project like [SteelStacks]," Bethlehem City Council President Robert Donchez said. "If they move forward with the hotel in the next several weeks, I think it is a sign of good faith."

Reese, the Sands spokesman, said the company will have more details later about how much it will cost to finish the hotel and how long it will take. Assuming it takes a year, table games could be running for nine months before the hotel is open.

State regulators will hold a hearing March 11 in Bethlehem Town Hall on Sands' plan to add table games to its offering of slot machines, restaurants and other amenities.

Tony Hanna, Bethlehem's director of community and economic development, said the casino has active permits and can start construction at any time.

matthew.assad@mcall.com

610-820-6691

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