Thursday, October 30, 2008

Marina IR Not Likely To Open Fully In End-'09

Source : The Strait Times, Oct 30, 2008

THE integrated resort (IR) at Marina Bay is unlikely to be fully open for business at the end of next year, sources have said.

An old British-built sea wall on its site, which stands on reclaimed land, is among the problems. It delayed foundation works by three to four months, and then a shortage of labour and the rising cost of building materials also created setbacks.

When the Marina Bay project was awarded to Las Vegas Sands in 2006, its top executives announced that the entire resort would be ready by end-2009 - a departure from the industry practice of opening such mega projects in stages.

But sources now confirm that it is 'several months' behind schedule and that, even if the physical structure can be ready by then, it will be 'impossible' for all its facilities to be fully operational.

The 2,600-room resort with a gross floor area bigger than 70 football fields is supposed to be the new hub for the meetings, incentives, conventions and exhibitions business with its 200 meeting rooms, exhibition hall for 2,000 booths and ballroom for 6,600 diners.

Asked about the delay, Marina Bay Sands general manager George Tanasijevich maintained: 'As previously announced, we are scheduled to launch at the end of 2009.'

But show organisers and wedding couples hoping to book the venue at the end of next year have been turned away.

Bride-to-be Rachel Law, 27, called the resort in August to ask about holding her wedding dinner there next November and was turned down despite having begged for her booking to be taken.

An event organiser, who said the earliest booking available was for an April 2010 event, asked: 'If they are opening next year, why are they turning away business until 2010?'

Construction woes aside, the free-fall in the stock value of the resort's parent company Las Vegas Sands Corp - from US$178 13 months ago to under US$5 now - has also raised questions about the fate of the US$4.5 billion (S$6.7 billion) project here.

CIMB-GK economist Song Seng Wun, predicting that the gaming sector will be hit by the global recession, said the operators' vulnerability is on everyone's mind.

The collapse of banks like Lehman Brothers Finance Asia and Merrill Lynch International Banks has also put a question mark on the $5.25 billion loan secured by Marina Bay Sands. The two American banks were among the lead arrangers for the loan, along with local banks like DBS Bank, United Overseas Bank and OCBC Bank.

Mr Tanasijevich did not reply to questions on the status of the Singapore loan, nor those on whether the IR will open in phases and when it would accept bookings for events.

Singapore Tourism Board (STB) director of integrated resorts Margaret Teo told The Straits Times the board is monitoring the situation, but did not respond to other queries on penalties or whether the resorts will open in phases.

She said, however, that the STB was working with key agencies and the resorts to resolve potential delays and to enable the resorts' completion.

Analysts note that the two resorts have up to eight years to finish construction, but delays are bound to hurt the Singapore economy because of the 60,000 new jobs and $5.4 billion in revenue that they are expected to generate.

Tourism and gaming consultant Jonathan Galaviz, reckoning the losses to run into millions of dollars every month, said: 'It brings into question the true economic value each bidder promised the Singapore Government in the formal proposal.'

The rules of the awards of the two projects given in 2006 stated that both companies must start construction within three years and complete them in eight years.

They stand to lose their deposits of $200 million each and the Government could repossess the land as a penalty.

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