Major expansion for Bethlehem's Sands Casino

Propelled by a thriving gambling market in Macau and Singapore, the parent company of Sands Casino Resort in Bethlehem is embarking on a major expansion in Pennsylvania.

Las Vegas Sands Corp. said the Bethlehem casino's 300-room hotel, which resumed construction last year, was on pace to open Memorial Day weekend.

Soon to follow: a 200,000-square-foot retail mall with 35 to 40 stores, many of them name-brand retailers, and a 2,500-seat entertainment center in keeping with the original master plan for the sprawling site - once occupied by Bethlehem Steel Corp.

Both projects, halted by the company in October 2008 because of economic difficulties, began seeking bids from contractors last month and are close to naming the winners, casino president Robert DeSalvio said.

"We have made some very substantial progress in moving those two projects forward," DeSalvio said Wednesday. "The company will be making an announcement soon that will lay out the details," including lease agreements signed.

Resumption of work on the hotel (which will employ 100 when it opens), the mall, and the events venue in the Lehigh Valley - where unemployment stands at 9.4 percent - "is remarkable," said Michael Stershic, president of Discover Lehigh Valley, the local destination-marketing organization.

"This gives us the opportunity to market the Lehigh Valley for meetings and conventions that we would normally not be able to accommodate because we did not have the facilities of the appropriate size and flexibility," Stershic said. "This investment has been a long time coming. They're confident the economy will improve, and this will be a positive for the region."

Robust international business, especially in Macau, exceeded expectations, DeSalvio said, allowing Las Vegas Sands Corp. the financial resources to move forward on the Bethlehem expansion. The company has three casinos in Macau, the former Portuguese enclave that is now the world's largest gambling market in terms of revenue.

Las Vegas Sands also has two casino hotels on the Vegas Strip. In April, it opened a $5.6 billion integrated casino resort (the company's signature) in Singapore, with a 2,600-room hotel, a massive convention hall, and a 55-story SkyPark that includes the resort's pool and other amenities.

Just two years ago, Las Vegas Sands was saddled with debt and shrinking revenue. But in an earnings conference call last week, CEO Sheldon Adelson described 2010 as "the most successful year in our history." Net revenue last year was $6.85 billion, a 50 percent increase from $4.56 billion in 2009.

In Pennsylvania, Adelson said, Sands Bethlehem "set records" for both EBITDA (income before interest, taxes, depreciation, and amortization have been subtracted, an indicator of a company's profitability watched by investors) and EBITDA margin.

"We look forward to additional opportunities to grow our business there, starting with the opening of our 300-room hotel in May," he said.

Tilting the odds in favor of the casino's mall, DeSalvio said, were signs of improvement in the retail world: "Even in a difficult market, the outlet side of the business has held up fairly well."

But there was one other game-changer.

"The introduction of table games last July really helped to propel our business and move it forward," DeSalvio said. "Right after that, we announced we were building the hotel."

The casino made its debut in May 2009 with 3,000 slot machines at a cost of $743 million. It has since added 100 table games and a poker room, pushing the investment to $800 million.

Slowly, Sands Bethlehem has been moving up in the table-games revenue rankings. In September, it was fourth in the state, behind Parx in Bensalem, Chester's Harrah's, and Rivers in Pittsburgh. In December, it was first among the state's 10 casinos in gross table-games revenue, generating more than $6.8 million.

Las Vegas Sands petitioned the Pennsylvania Gaming Control Board last month to add 29 table games in Bethlehem. The casino now has 3,024 slots machines.

Half the casino's business comes from within a 25-mile radius, DeSalvio said; the other half comes primarily from North Jersey and New York, within a 75-mile radius. Interstate 78 brings out-of-state gamblers directly to the casino's parking garage.

"We've always believed in the demographics of this marketplace," he said. "That's why Las Vegas Sands elected to do business in the commonwealth.

"The economy shook everyone, but we're starting to see light at the end of the tunnel."

Restarting construction on the hotel, mall, and events venue represents a reversal of fortunes for the Bethlehem casino: In April, less than a year after a grand opening that featured entertainers from Las Vegas, it announced it was laying off 80 employees across the board.

But before construction was indefinitely delayed, the exterior shell of the mall had been built, and steel had been put up for the events center.

"There's not much to finish," DeSalvio said.

Even less work remains on the 300-room hotel, which was enclosed late last year, leaving only interiors to be completed. The hotel will include 5,000 square feet of meeting space, a pool, and a small fitness center.

DeSalvio said the casino would now be able to target tour and incentive groups, corporate meetings, and transient corporate travelers to fill rooms midweek and to offer casino guests a new amenity for weekend stays.

Gaming analysts say the hotel will give the Bethlehem casino an advantage and will begin the conversion of Pennsylvania's gaming halls to full-service casinos like those in Atlantic City and Las Vegas.

"Sands Bethlehem now has the ability to cater to overnight guests . . . which makes it a regular destination market," said Andrew Zarnett of Deutsche Bank AG. "With every new restaurant, hotel room, and store, or every new square foot of convention space, the Pennsylvania casinos become more competitive to Atlantic City."

Up to now, Zarnett said, the only comps that gamblers couldn't get were rooms. "Now, Pennsylvania casinos can offer room comps, too."