Hong Kong-based Harilela Hotels has abandoned plans to invest in a Cotai Strip casino resort, according to executive director Aron Harilela.

Top officials of Las Vegas Sands, the United States-based casino operator which is directing the huge Cotai Strip project, announced in March that Harilela Hotels would underwrite a casino resort that would include hotels under the Sheraton and W brand names owned by Starwood Hotels & Resorts.

"Our deal fell through,'' Harilela said. "We just couldn't come to agreement [with Las Vegas Sands] on certain terms.''

Las Vegas Sands quietly disclosed early this month it might jump in to provide financing for most of the first seven Cotai Strip resorts.

The firm was already footing the bill for its flagship US$1.8 billion (HK$14 billion) Venetian Macau resort, and has now taken over the US$200 million tab for a 400-room Four Seasons luxury hotel from Singapore-based Hotel Properties.

Chairman and chief executive Sheldon Adelson put the cost of two additional resorts that his company may finance at US$400 million each, in a recent interview with Bloomberg.

One of those resorts stands to be managed by Starwood, according to a person familiar with the hotelier's plans. The resort, like the Venetian Macau itself, would open in 2007 with about 1,500 rooms.

Harilela Hotels holds a 10 percent stake in the Westin Macau resort, also managed by Starwood, as well as interests in nine other hotels in Hong Kong and six foreign countries.

Aron Harilela said Harilela and its sister companies are looking for other investment opportunities in Macau, perhaps in other areas in which the Harilela group is active, such as restaurants and spas. ``We're quite bullish on Macau,'' Harilela said.

He did not elaborate on the areas of disagreement with Las Vegas Sands, but some interested hotel investors have clashed with the company over a basic element of its Cotai Strip plan: its desire to run casinos within independently owned Cotai Strip resorts, while keeping the proceeds for itself.

Sharing casino revenue could help address investor nervousness that too many hotel rooms may be coming on line in Macau too fast.

The first seven Cotai Strip resorts would together contain as many hotel rooms as now exist in all of Macau.

Harilela said he believes it will take some time for Macau to absorb the new hotel capacity.

Macau hotel room rates rose 26 percent in the first four months of the year compared with the same period of 2003, but still trail well behind those of Hong Kong, according to the monthly Deloitte HotelBenchmark survey.

Meanwhile, with several new hotels opening, occupancy rates fell 6 percentage points in that period to 66 percent, according to government figures.

zach.coleman@singtaonewscorp.com