Las Vegas Sands Corp., capitalizing on the rebound in Macau gambling, will spend USD1.1 billion renovating its properties there, including turning the Sands Cotai Central into a London-themed resort.
The property will be rebranded as the Londoner Macao and feature attractions tied to some of the English capital’s most recognizable landmarks, the company said in a statement. The remodeling will add an additional 1.7 million square feet of space, and the resort will accommodate more overnight guests than the Venetian and the Parisian combined, said billionaire founder and CEO Sheldon Adelson. The Four Seasons Macao will get 295 new suites in a separate tower.
“Having three iconic must-see European-themed destination resorts, with a broad range of amenities, will strengthen our marketing and customer-service capabilities and position us to grow faster than the Macau market,” Adelson said on an analysts call on the results.
Sands has already invested over USD13 billion in the region since it was the first U.S. company to open a casino there in 2002. Sands and its rivals have been looking for vindication for their bets on expensive new properties after withstanding a Beijing-led corruption crackdown that stalled growth in Macau for three years. Overall gambling revenue in the region rose 22 percent to MOP67 billion ($8.34 billion) in the third quarter, the fifth in a row of year-over-year growth.
Macau, the only place in China where casino gambling is legal, accounts more than half of Sands’ sales. The city is seeing a return of VIP players even as new resorts such as Sands’ Parisian lure more middle-class gamblers.
Sands’ investments underscore its bet that long-term growth will come from attracting mainstream Chinese visitors.
“The company remains focused on a broad range of non-gaming amenities, which is ultimately what will drive visitation and put the company in a better position to remain a strong operator in the dynamic market,” said analyst Chad Beynon at Macquarie Bank Ltd.
Sands’ appeal to casual gamblers, tourists and families continue to pay off as the company’s third-quarter results topped analysts estimates. About 89 percent of Macau profit in the quarter was generated from mass gaming tables, slot machines and non-gaming offerings.
Visits from mainland Chinese visitors gained 15 percent from a year ago, the company said. The visitors increased the length of their stays, and the casinos’ winnings at the tables and slots generally frequented by casual gamblers increased 8.7 percent to $512 million.
However, casino shares slumped in Hong Kong yesterday. Sands China Ltd. slipped 2 percent for the second-biggest decline on the benchmark Hang Seng Index. Wynn Macau Ltd. lost 0.7 percent, while MGM China Holdings Ltd. fell 1.2 percent. Earlier in New York, Las Vegas Sands shares jumped 1.9 percent in after-hours trading.
Morgan Stanley analysts wrote in a note that Sands China’s mass and slot revenue growth was slower than the overall market expansion on a quarter- over-quarter basis.
Las Vegas Sands reported profit rose to 77 cents share excluding some items, beating the 68-cent average of analysts’ forecasts. Sales grew 7.7 percent to $3.2 billion, exceeding Wall Street projections of $3.13 billion.
In Macau, earnings before interest, taxes, depreciation and amortization rose 3.8 percent to $652 million, beating the $641.3 million average of estimates compiled by researcher Consensus Metrix.
The Parisian Macao, which opened in September 2016, continued to be a chief driver of results, with increased gaming wins from casual gamblers and betting volume, according to the company. The property’s adjusted Ebitda climbed 27 percent from the second quarter, the company said.
Profit in Singapore, Sands’ second-largest market, climbed 13 percent to $442 million. Ebitda in Las Vegas fell 12 percent to $76 million.
Sands is the first of the major Macau casino operators to report third-quarter results. Christopher Palmeri, Bloomberg
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