Operator News
China – Sands outlines $2bn investment in Macau despite looming licence renewals
By Phil - 26 October 2018
With the ongoing trade dispute between China and the US, some analysts remain concerned that the three American casino owners active in Macau could see their licences jeopardised when it comes to their renewal in just two years times.
Las Vegas Sands has no such concerns though and has pledged to invest upwards of US$2bn in its existing Macau operations in the time leading up to the renewal deadline, taking its total investment in the Macau casino sector passed the $15bn mark.
The majority of that spend will go on transforming Sands Cotai Central complex into The Londoner Macao, at a cost of $1.35bn with staggered openings over 2020 and 2021. Along with the other Macau concessionaires, Sands’ licence to run casinos will need to be renewed in 2022. The company plans on investing $400m on the 370-suite St. Regis Tower Suites Macao and a further $450m on a 290-suite Four Seasons Tower Suites Macao, which are expected to open in the first quarter of 2020.
Sands President and Chief Operating Officer Rob Goldstein said: “We are big fans of China. We’re big fans of Macau. We’ve been wildly successful and our $2bn statement to bring the Londoner to fruition is positive proof that actions speak louder than words. If there’s not a vote of confidence in that, I don’t know what is. We believe our concession is not at risk. We’re investing in our firm belief that we’ll be in Macau today, tomorrow and many years to come.”
The vote of confidence came as Sands reported earnings of $699m and revenues of $3.37bn for the quarter ending September 30. Earnings increased by 2.2 per cent compared to last year with revenue up 6.6 per cent.
In Macau the company delivered adjusted property EBITDA of $754m, an increase of 15.8 per cent compared to the third quarter of 2017 with revenues up 13.1 per cent to $2.15bn. The Venetian reported another strong quarter with revenue up 20 per cent to $857m. Sands Cotai Central also enjoyed an increase of 15 per cent to $537m but the Parisian dropped 5.4 per cent to $389m.
Sands President Sheldon Adelson said: “We experienced strong growth in both the VIP and mass gaming table segments enabling us to again outperform in the Macao market, while growing our market share of revenues. We also achieved record hotel occupancy of 96 per cent at our Macau portfolio. The Venetian Macao continues to be the iconic must-see destination for every segment of visitor to Macao. Gaming and non-gaming revenues both grew in excess of 20 per cent, while adjusted EBITDA was up by 30 per cent. The strong financial performance of The Venetian contributes to our unwavering confidence in the future of Macao, which will continue to benefit from enhanced transportation infrastructure and investments in the Greater Bay Area. We are steadfast in our conviction that Macau will realise its vision and evolve into Asia’s greatest leisure and business-touring destination. Given our confidence in Macau’s future, we have elected to meaningfully increase our planned investments in the Macau market.”
In Singapore, Marina Bay Sands fell 2.9 per cent to $766m whilst Las Vegas revenue dropped two per cent to $379m and Pennsylvania dropped by 4.2 per cent to $138m.
“Vegas had a tough third quarter, especially in MICE (meetings, incentives, conferencing and exhibitions) segments,” Mr. Goldstein explained. “The fourth quarter looks pretty good and we believe will go back to over 800,000 room nights dedicated to convention space in 2019. There was a blip in the third quarter. We don’t have the scale like some people, but we’re pretty confident the fourth quarter resurrects and next year looks more typical with solid MICE business and room business in 2019.”
