* Fosun to fund $1.6 bln project construction
* Atlantis Sanya hotel to be Kerzner's first in China
* Hainan seen as place where China could allow casinos
By Farah Master
HONG KONG, Oct 10 (Reuters) - Chinese conglomerate FosunInternational Ltd and South Africa's Sun City casinoking plan to build a $1.6 billion resort on China's Hainanholiday island, joining a pack of players betting on a surge inupscale tourism in the country.
Long touted as a place where China could liberalise casinogambling, the balmy island off the country's southern coast hasattracted scores of international developers in the past twoyears, including InterContinental, Starwood, andcasino operators MGM Resorts and Caesars Entertainment.
The latest Hainan project, an Atlantis brand hotel insouthern coastal city Sanya that Fosun will jointly develop withtycoon Sol Kerzner's company, will not include a casino, Kerznerchief executive Alan Leibman told Reuters in an interview.
"We have been very successful with and without gaming withinour business. It is nothing we have anticipated in why we arebuilding Atlantis" in Hainan, Leibman said.
The executive put the cost of the project at "about $1.5billion" in the interview, while Fosun and Kerzner said in ajoint statement that Fosun will invest "over 10 billion yuan($1.63 billion)" in the project.
Casino gambling is illegal in China outside of the formerPortuguese colony Macau, an hour's flight from Hainan by plane.Earlier this year, the local government shut down a casino barthat had been operating illegally in Hainan after a Reutersreport drew attention to it. The bar hasreopened now, according to a hotel employee.
While Chinese authorities have maintained an official ban ongambling in Sanya, tourists continue to flock to the southernisland. Over 22 million overnight stays were registered inHainan in the first eight months of the year, most of them bydomestic travelers.
Kerzner, which operates the Atlantis casino resort in theBahamas and Atlantis hotel on Dubai's artificial Palm Island,said the 62-hectare resort in Sanya, close to half the size ofLondon's Hyde Park, will feature a luxury 1,300-room hotel.
Developed by South African tycoon Sol Kerzner, who built the Sun City empire in 1979, the Atlantis brand is known forextravagant attractions, including a six-storey water slidethrough a shark aquarium and underwater hotel suites.
The Atlantis Sanya, scheduled to open in 2016, comes at atime when Sanya already has more than 200 hotels and anaggressive pipeline for future developments as local authoritiesseek to tap into the growing upmarket tourism business in China.
The Atlantis Sanya will be Kerzner's first in China andtargeted mainly at local clientele. Designed as a sleekdorsal-shaped building, surrounded by lush greenery, lagoons andmarine attractions beside the ocean, the resort will employ morethan 3,500 staff.
Haitang Bay, a 22 kilometre strip of white sand whereAtlantis will be located, will see the development of 30five-star hotels in the next five years.
The expansion of lavish resorts targeting affluent travelersfrom Asia including China is taking place at a rapid pace aroundthe region.
Macau has more than seven mega casino resorts underconstruction. Neighbouring countries such as the Philippines andVietnam are developing large-scale integrated resorts, whileChina's Hengqin Island in southern Zhuhai province across thewater from Macau is preparing to open the first phase of a $5billion marine-themed hotel resort in November.
The total construction cost is expected to be around $1.5billion, the same as Kerzner's Dubai property and will befinanced by Shanghai-based Fosun, Leibman said.
Kerzner, which signed a $145 million loan refinancing inMarch this year to help reduce costs and extend its debtmaturity profile to five years, will take on a management role.
Fosun, headed by Chinese billionaire Guo Guangchang whostarted the conglomerate with friends from university, has morefinancial power and is in the process of finalizing a takeoverof French company Club Med, pending regulatoryapproval. The company has said it is keen to invest inbusinesses that give the group exposure to the Chinese consumer.
Partners with U.S. buyout giant Carlyle Group onChina investments through a 50-50 joint venture, Fosun'sdivisions also include property, pharmaceutical, insurance andmining.
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