Hotels, casinos eye overseas risk, rewards

By Deena Beasley

LOS ANGELES (Reuters) - U.S. hoteliers and casino operators have set their sights on expanding overseas, particularly in Asia, but opinions differ on which sectors present the least economic and political risk.

Hilton Hotels Corp. HLT.N is targeting India and China as it reaches further outside the United States, following the acquisition last year of its international namesake.

"The international business is better than we thought. It's the single best opportunity I've seen in my 25 years in the business," Matthew Hart, Hilton's chief operating officer, said at the Reuters Hotels and Casinos 2007 Summit in Los Angeles.

Beverly Hills, California-based Hilton has formed a venture -- in which it owns 26 percent -- with Indian property firm DLF Ltd. to develop 75 mid-tier hotels in India. The company also reached a deal in December to develop more than 20 hotels in China.

"In a lot of these markets there's a fairly well developed luxury market and a fairly well developed guest house market, and very little in between," Hart said.

Competitor Starwood Hotels & Resorts Worldwide Inc. (HOT.N: Quote, Profile, Research, Stock Buzz), however, sees the most overseas potential in luxury brands.

"Outside the U.S., clearly the near-term opportunities I believe remain in what I would call the high end," said Starwood Chief Financial Officer Vasant Prabhu.

Casinos, buoyed by the strong performance of luxury resorts in Las Vegas, are also betting they can recreate that success in Asian markets, including the Chinese gambling enclave of Macau.

Las Vegas Sands Inc. (LVS.N: Quote, Profile, Research, Stock Buzz) opened Macau's first Las Vegas-style casino in 2004, and will open its Venetian Macau resort late this year.

Sands COO William Weidner said China needs foreign investment, but money will not come if the government does something that scares investors away.

There is some question about whether the government would choose to apply its real estate tax to Sands' planned development of Hengqin Island, located off China's southern coast.

"All I can tell you is that we got a very good reception from them. They very much want our expertise," Weidner said.

Terrence Lanni, chief executive of MGM Mirage Inc. (MGM.N: Quote, Profile, Research, Stock Buzz), also said it is in China's interest to encourage investment.

"When you introduce a nation of 1.3 billion to capitalism ... it is very difficult to turn back," he said.

Lanni said he thinks that with its management of Hong Kong and Macau, China's Communist government has sent a message to the people of Taiwan.  Continued...