Tuesday, November 11, 2008

Building sandcastles in the air?

Ever since talks began on building an integrated resort or Singapore’s excuse, I mean euphemism, for a casino resort - marketers have more than supportive of the venture, as they hope to see more tourism dollars fly in and that they will act as a catalyst for a more a robust local retail and entertainment landscape.

There were two awardees, Las Vegas Sands for the Marina Bay Sands and Genting International with Star Cruises, Universal Studios for the Resorts World at Sentosa. The latter recently announced its intentions to build a Transformers-themed ride, which has been met by a rousing response following the movie’s successful global run.

In fact as the structures become ‘more concrete’, many marketers will be setting their sights to be part of the development. Just yesterday in The Straits Times there was an article on the Sentosa resort’s plans to create 300 fairly senior positions. Marina Bay too held its hiring spree late last month, which saw more than 10,000 responses.

We can be sure marketing hires too would be part of the exercise. So dear HR departments other than drawing up retrenchment packages and handing out pink slips (it seems like a daily affair these days anyway), shouldn’t you be keeping a close eye on your lead marketers?… if not we might be meeting some of them for coffee in Sentosa or Marina in the near future.

Ahhh….with all these talk on investments, hiring and themed rides… Everything sounds all merry and happy in casino-land ain’t it?

But sorry my dears good things don’t come too easy. Las Vegas Sands seems to be in for some trouble. Sheldon Adelson, the billionaire owner who controls 65% of the company was in Singapore recently and was having tête-à-tête sessions with the Singapore government, as the company is suffering a severe cash-flow problem.

Las Vegas Sands, which is set to open next year, had committed the highest development investment of S$3.85 billion. Which means it is likely to exceed S$5 billion in total investment, making it one of the most expensive casinos in the world. Imagine the company’s market capitalization was $49 billion in October last year but as of October 23 this year its value was $3 billion! A value even lesser than what it was to put into Singapore!

So what is to happen now we aren’t sure. Adelson says the show will go on. Would this mean the Singapore Government digging deeper into its own pockets to finance the Sands? Or will the pitch in due time be reopened to find the next bigger better player to carry on the project? Perhaps, but it would be very unlikely that the project will be abandoned completely.

Senior Minister Goh Chok Tong has called for Singaporeans to spend if they can afford to as to stave off the recession, but if print headlines continue their daily runs as ‘bearer of bad news’ its unlikely we’ll see much improvement in consumer spend.

This serves as another chilling reminder to marketers out there that counting chickens before they are hatched isn’t the best business practice to have, while in this case it would mean…Building sandcastles in the air.

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