The last Friday in August was a particularly humid evening and the women among the socialites bound for Macau shimmered in strappy dresses, while the men wore their shirts tieless and open-collared beneath designer suits. A flotilla of ferries embarked on the quick jaunt from Hong Kong one after another, from early evening until well after the lights were out on the city's trading desks and its high-end stores had closed for the night.

 

In Macau, limousines and buses delivered the glitterati from the Cotai Strip ferry terminal to the party. It was a lavish affair to celebrate the opening of the 110,000-square-foot DFS Galleria Macau, a flagship "all-luxury" mall in the Four Seasons Hotel next to the Venetian, the third-largest building on the planet and surely one of the most spectacular. The evening had all the glitz of a London premiere or Hollywood award ceremony: red carpets, paparazzi, dancers bathed head-to-toe in gold paint, not to mention models wearing borrowed diamonds, magicians performing tricks for the guests, cocktails and canapes, and the opening of the world's only Moet Champagne bar.

 

"It was a very glamorous party," said an event planner who made the cut. "My friends all wanted me to get tickets for them."
Barely 10 weeks later, the fizz has gone from the Macau party.

 

After new regulations and a slowdown in Southern China's economy, visitor numbers and gaming revenues have started to slide.

 

Retail sales, too, are missing targets.

 

The run of bad luck culminated last week when Las Vegas Sands Corp., in trouble with its bankers and struggling to come to terms with the global financial crisis, halted building on the next stage of the Cotai development.

 

Las Vegas Sands, one of the biggest investors in Macau's development, mothballed a half-built 6,400-room resort, leaving 11,000 construction workers out of a job and placing the future of the island's economy in doubt.

 

Steve Wynn, of Wynn Resorts Ltd., points an accusatory finger at Sands' executives.

 

"If someone tries to build six hotels at once and finds the market can't accommodate it, there's a problem with the planning,"Wynn said recently.

 

Not surprisingly, William Weidner, Sands' chief operating officer, has a different view.

 

Macau, because of what has happened, has"kindofcreatedforitselfunfinishedor semi-finished projects,"Weidner said.

 

"I don't think we're alone in not completing developments," the Sands' executive added.

 

For a while, it seemed like everything the casino developers touched turned to gold.

 

Mainland visitors flooded across the border from neighbouring Guangdong province, where they had grown rich on the backs of factories producing cheap Chinese exports for the West.

 

By 2006,Macau's gaming revenues had surpassed those of the mighty Vegas and the number of casinos had more than doubled in just two years, to 31. With dozens more casinos coming on line, the American operators and the local economy looked set for a windfall.

 

Today, visitors to the Cotai Strip are confronted by a different future.

 

Sands' executives, forced to focus on maximizing cash flow to meet loan covenants, conceded they must suspend construction on the Cotai sites.

 

A syndicate of Western banks had once backed Sands' plans in Macau -- including Canada's Bank of Nova Scotia -- but some among the banks apparently threatened to pull the plug on the entire corporation.Weidner, the group's COO, said work will begin again, "at an appropriate time in the future, to the extent capital becomes available on acceptable terms."

 

Fornow, theVenetianandFourSeasons are surrounded by half-finished buildings, empty concrete shells flagged by bamboo scaffolding and encircled by a 2.5-metre-high fence. Cranes stand idle, workers have been sent home and everyone connected with the Cotai Strip is counting the cost.

 

Even before last week's sour news from the money men in Vegas, there was trouble in the cards for Macau. An October report from S&PRatingsanalyst Ben Bubeck warned "current economic weakness across several global markets, includingthelocalHongKongandShanghai exchanges, could lead consumers to pull back on discretionary spending, including gambling in Macau."

 

In fact, gaming revenues that had grown by a compound annual growth rate of 26 per cent between 2004 and 2007 fell 10 per cent in three months this year.

 

Beijing is taking much of the blame for the slump. In an effort to stop mainlanders from frittering away their savings on card tables, Chinese authorities began clamping down on granting Macau visas in June. Visitor arrival growth slowed to two per cent in September, down from 17 per cent for the first eight months of 2008.

 

Profits have also fallen as casinos fight each other with costly incentives to at-tract high rollers responsible for the biggest proportion of gaming revenues.

 

The non-gaming side of Macau--the retail, restaurants and shows--are also a concern.

 

Thereare legendarystories ofbusloads of gamblers from Guangdong province staying in the resort for 36 hours without ever checking into a hotel or even leaving the gaming tables, while a quick stroll around the Venetian's massive mall is enough to see that lots of staff are twiddling their thumbs in stores empty of customers.

 

Longer term, there are some compelling demographics to support Macau's development. One hundred million people live within a three-hour drive and one billion more can get there in three hours by plane, noted Bubeck.

 

"Gaming,"he added, "is an extremely popular form of entertainment in the Asian markets."Tapping the mass-market will also help Macau's profitability, "because, unlike high rollers, these customers are likely to make longer visits and take advantage of the non-gaming amenities at the newer resorts."

 

Meanwhile, Sands' auditors now say the company has no going-concern issues after raising $2.1 billion US of new capital earlier this week.

 

The Macau government has responded to recent problems by insisting the future of the Macanese people is its top priority. But with so much committed to the gaming industry, the stakes are very high.

 

"We will not allow any casinos to shut down," said Edmund Ho, the territory's chief executive, last week. If necessary, he admitted, the government could even backstop a bankrupt casino until a suitable buyer could be found.

 

"We were looking forward to working on these upcoming portions (of the Cotai Strip development) which are now on hold," said Meier, who at any one time had employed between five and 30 highly-qualified artists on the intricate design at the Venetian. "That is the construction business, and these delays happen."

 

Retail and hotel workers are also going to have to look elsewhere, and at least one international event planning organization is exiting Macau, where there seems little chance of a big-budget store debut or hotel launch in the near future.

 

Cirque du soleil has also postponed production of its second show, scheduled for one of the unfinished hotels. The Quebec company is considering other options for the production.

 

"We do not know how long the construction hold will last," said Cirque spokeswoman Chantal Cote. "The work onthissecondshowiswellunderwayand the creative material is of very high quality. Other partners are showing interest for the production outside Asia. We are confident that we will soon find a venue to host the creative contents."