Why is Malaysian Group Rolling the Dice on Las Vegas?

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The Kuala Lumpur-based Genting Group has announced plans to spend $7 billion to build a new casino resort on the Las Vegas Strip, despite the sluggish market.

Several high-profile projects planned for the Strip have stalled in spectacular fashion in recent years, including the half-built 68-story Fontainebleau Las Vegas, which filed for bankruptcy protection in 2009. Genting is paying $350 million to take over an 87-acre site once intended for a project called Echelon, which was halted in 2008.

Genting's move counters conventional wisdom that the Strip is overbuilt and under-appreciated, in the wake of a building boom in the '90s. Hotel revenues and occupancy rates are still below peak levels, even though there has been an uptick in activity in the last year.

But Genting believes the Asia market will boost Las Vegas in the future.

"As China develops and grows their economy, there's a burgeoning middle class and they want to travel," senior vice president of development Christian Goode told the Associated Press. "We think Las Vegas is a natural destination."

By all accounts, Genting is also getting the property at a bargain price.

The price for the land--about $4 million an acre--is "among the lowest in a decade for Strip property," the Wall Street Journal reports. In 2007, a developer paid $34.7 million an acre for empty land on the glittery stretch.

Talking to reporters, Mr. Goode acknowledged that not all observers agreed with his company's assessment of the market.

"Analysts, they have their one opinion and we have another," he said.

There is universal agreement that the announcement is a good sign for Las Vegas property, which needed a spark.

"I think we've turned conventional wisdom on its head today," Gov. Brian Sandoval said at the ceremony announcing the new resort.

The project, which will be called Resorts World International, will not affect Genting's plans to build a casino in Miami, a company representative told the South Florida Business Journal.
"Not at all," the spokesman told the paper. "We are moving forward with our Miami project as a standalone project,"

The Kuala Lumpur-based company hopes to open the first phases of the project by 2015. Plans call for a pagoda-style design, with glass towers and various Asian-themed amenities to help attract visitors from China, Singapore and Malaysia. The complex, which will sit on a larger land parcel than City Center, will feature 3,500 hotel rooms, a convention center and a 4,000-deat theater.

"This is the real deal," Clark County Commission Chairman Steve Sisolak told reporters. "You hear a lot of stuff about projects coming in potentially to Las Vegas and Clark County, and they're more or less pie in the sky and they never get built. But this is real. When you see the substance behind this company and what they've done and what they're still doing worldwide, this is real and you're going to see a transformation on Las Vegas Boulevard."