October 25, 2010 / 10:33 PM / 9 years ago

Sands partners Vegas resorts with InterContinental

* Sands expects room rates, group business to benefit

* Sands sees Macau sites 5 and 6 opening late 2011

* Palazzo condo site may be finished at 5 stories

By Deena Beasley

LOS ANGELES, Oct 25 (Reuters) - Las Vegas Sands Corp’s (LVS.N) Strip resorts, the Venetian and Palazzo, are joining the portfolio of InterContinental Hotels Group (IHG.L), the world’s top hotel company by number of rooms.

Under the 10-year licensing deal, the Las Vegas hotels, with more than 7,000 luxury rooms, will gain access to IHG’s global operating system, sales force and Priority Club loyalty program, which has 52 million members.

“By connecting to IHG’s Priority Club and 180 million visitors we are opening up new channels to Las Vegas,” Michael Leven, chief operating officer at Sands, told Reuters in a telephone interview. “That will mean an increase in demand for our facilities both on weekends and during the week.”

The names of the casino resorts, which have 330 meeting rooms, will be unchanged and they will still be operated by Sands, which is headquartered in Las Vegas but now makes most of its profit at casino properties in China’s Macau and in Singapore.

InterContinental, best known for its ubiquitous Holiday Inns, also operates brands like Crowne Plaza and Hotel Indigo.

“This is a highly sought-after destination for IHG,” said Jim Abrahamson, president of the company’s Americas division. “It allows us to immediately turn on the switch and drive more incremental business,” including group meetings.

InterContinental has several lodging properties in Las Vegas, but none on the Strip, where operators have struggled over the past couple of years as new resorts, like MGM Resorts International’s (MGM.N) CityCenter, have opened at the same time the financial downturn led consumers and businesses to cut back on travel spending.

“Before 2008, the only way was up in Las Vegas,” Leven said. “Now people are looking for assistance.”

In late August, the $3.9 billion Cosmopolitan of Las Vegas, which plans to open 2,000 of its Strip hotel rooms in mid-December, linked up with hotelier Marriott International. MAR.N The Cosmopolitan was acquired by Deutsche Bank AG (DBKGn.DE) in a 2008 foreclosure.

“Logically speaking the major hotel companies can’t get on the Strip because the cost of entry is too high,” said Leven, a hotel industry veteran — and former president of Holiday Inn Worldwide — who joined Sands in March 2009. “Vegas has had a certain amount of arrogance about being connected to the traditional hospitality industry over the years, but I think that is changing.”

Average daily room rates in Las Vegas were up 4 percent at $87.40 year-over-year through August, but were down nearly 34 percent from 2007’s average of $132, according to the Las Vegas Convention and Visitors Authority.

Sands, run by billionaire Sheldon Adelson, and IHG also have a deal in Macau for an InterContinental and a Holiday Inn. But construction will not begin until Sands’ current Macau project — known as sites 5 and 6 — is up and running, Leven said.

The first phase of those sites is still expected to open in late 2011, “but progress is slow because we are still short 3,000 workers,” he said, noting that more clarity on the construction worker issue is expected in the next month or so.

Macau government regulations require that one local construction worker be employed for every worker from outside Macau. A labor shortage had earlier prompted developers to import construction workers, especially from mainland China.

Leven said Sands’ agreement with Starwood Hotels & Resorts Worldwide HOT.N to build St. Regis-branded condominiums at the Palazzo is close to expiring and there are no plans to renew it given the continued slump in the Las Vegas housing market.

The site was mothballed after being built to five stories. “We might finish it off there to get rid of the eyesore,” Leven said, adding that the work might be done so that condos could be added later if the market improves. (Reporting by Deena Beasley, editing by Matthew Lewis)

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