Despite pandemic-related travel restrictions that have hindered the company’s financial performance amid looming changes to Macau’s casino laws, the Las Vegas Sands Corp. remains bullish on Macau and continued investment there.
Sands Chairman and CEO Rob Goldstein said he and his fellow executives remain confident in the eventual recovery of travel and tourism spending across all of its markets, including Macau and Singapore, and that demand from those who’ve been able to visit remains strong. Sands’ Singapore gaming operations were closed for a portion of the third quarter.
“We have great optimism about our ability to perform at pre-pandemic levels once visitation returns,” Goldstein said. “Las Vegas is the blueprint for the recovery of Asia. People said there wouldn’t be normal returns of revenue in Las Vegas until 2024 and 2025. Here we are in the fall of 2021 and the market has grown wide open. The path is pent-up demand and vaccination. Vaccination in Asia is booming and above the percentage in the U.S. The government in Singapore wants to open the doors. I think there will be a big recovery in 2022. It’s great to walk through and see the numbers picking up in the entire city (of Las Vegas). Why wouldn’t that happen in Asia? The same will happen in Macau when the government decides to open their doors back up.”
Macau’s licenses are up for rebidding in 2022. Authorities have proposed daily government supervision of casinos and other regulations, including a crackdown on capital flight and money transfers from players. Other proposals involve an increase in ownership of local directors and a reduction in the distribution of dividends.
But Goldstein doubled down on continued investment in Macau and isn’t concerned about proposed revisions to its 20-year casino law that spooked investors in September.
“I’ve been involved in Macau for more than two decades and we’ve been through everything,” Goldstein said. “Starting 20 years ago, people said you can’t do business in Macau. Then, Cotai wouldn’t be successful. It’s always worked out and we’re very proud of what we’ve done in Macau. Our activities and investments speak for themselves. I have faith in the process. They have always treated us fairly. We responded with the largest investment in any gaming market in the world. We are believers.”
Goldstein said they’ve found the government in Macau to be thoughtful and reasonable. He said they don’t have any “concerns, trepidations, or fears. We’re eager to invest in Macau. We’re assuming the process will be fair and equal. The government there wants to see growth.”
Sands continues to be aggressive in its capital expenditures, spending $116 million in Macau during the third quarter and $52 million at Marina Bay Sands in Singapore. The money was spent for construction, development, and maintenance.
“Macau is the best market in the world,” President and COO Patrick Dumont added. “We continue to invest, we’re very excited for the long term, and we’ll wait to see how things go.”
In March 2021, Las Vegas Sands entered into an agreement to sell its Las Vegas properties for $6.25 billion, a transaction now expected to close in the first quarter of 2022. Vici Properties will acquire the Venetian, Palazzo, Sands Expo, and the land associated with the MSG Sphere. With 7,100 hotel rooms, 225,000 square feet of casinos, and 2.3 million in convention space, the properties will be leased to Apollo Global Management.
“The sale of our Las Vegas assets creates liquidity and optionality as we pursue large-scale destination resorts in both the U.S. and Asia,” Goldstein said. “We’re exploring multiple opportunities.”
Dumont said Las Vegas Sands has a history of making investments with a high level of future returns. He said they have a lot of opportunities and their best use of capital is the development of new projects. They’re looking at deploying capital to different jurisdictions to grow the business.
“We would love to invest more,” Dumont said. “We’re very eager to deploy capital into these markets. We think they’re very high quality and we believe in the future. There’s a lot of commentary about what may occur. I don’t think anyone knows. I think the only thing we’re confident about is our ability to invest and innovate from the tourism side and drive support of the initiatives asked of us. We’re ready to do it, but until we get clear direction, there’s not that much more we can say.”
They also continue to look at building out their digital presence, Dumont said.
“We think there’s a great opportunity in digital in a variety of areas. It’s very compelling, especially for the long term. Now, we’re moving along slowly, and when we have more things to report, we will.”
While Sands is exiting the market, Goldstein said the future of Las Vegas remains bright. So far, the recovery has been gaming-based, but once the pandemic eases, the convention business will return in the numbers that it enjoyed pre-COVID.
