Momentum is building in Macau for Las Vegas Sands.
Eight months into its post-COVID reopening, Sands reported Wednesday that Macau had $631 million in adjusted earnings for the third quarter. That builds off $400 million in the first quarter and $540 million in the second quarter, according to Las Vegas Sands Chairman and CEO Rob Goldstein.
“Our future growth in Macau is tethered to (our) powerful assets,” Goldstein told Wall Street analysts. Whether it’s room, gaming capacity, retail, entertainment, or food and beverage, we have stellar assets. The only question is whether the market can grow to $30 million, $35 million, and $40 million of GGR and beyond. We’re firm believers that it will and may occur in a much shorter timetable than anyone realizes. This underscores our confidence in the returns that will be generated by the capital-investment programs in our portfolio.”
LVS has invested $15 billion in Macau, which Goldstein called the most important land-based market in the world. The retail market has exceeded pre-COVID numbers, he added. “I expect the gaming portion of our business to follow the same trajectory as Singapore and accelerate in 2024.”
Six quarters into its reopening, Marina Bay Sands in Singapore posted a $490 million quarter, Goldstein said. That’s happening despite the disruptions caused by their $1.75 billion renovation. “Disruption notwithstanding, MBS is hitting on all cylinders from a gaming, lodging, and retail perspective.”
Not only is gaming thriving, but the average daily room rates are escalating and the retail components are far beyond pre-COVID numbers, Goldstein said.
“MBS is a testament that quality assets prevail. MBS has it all – an iconic building and service levels that attract the most desirable customers in every sector.”
When the work is done, MBS will feature 770 suites. Eventually, Goldstein expected adjusted earnings of $2 billion and higher per year.
Patrick Dumont, president and COO, said that as the revenue in Macau continues to recover, LVS’s margins will benefit. Its 35.3% margin in the third quarter was an increase of 210 basis points compared to the second quarter of 2023.
“As revenues continue to grow, we expect our margins to exceed the 36% of our Macau business in 2010,” Dumont said. “This quarter, the Venetian Macau grew EBITDA to $290 million with margins reaching 40.1%. This is an example of a property achieving strong revenue recovery with financial performance and margin that reflects the improved business.”
Dumont said the Londoner Macau grew EBITDA to $167 million during the quarter, with the margin expanding 660 basis from the second quarter to reach 32.2%. “The transformation to Londoner has created a world-class product.”
Dumont also highlighted plans to return shares to stockholders, with a $2 billion repurchase of shares through 2025. From 2012 to 2020, LVS returned more than $22 billion in capital to LVS shareholders in the form of dividends and repurchases, of which 80% was dividends.
“As we consider our future capital returns, we expect share repurchases will be more heavily weighted than dividends,” Dumont said. “We believe repurchases will be more accretive than dividends over time.”
In Macau, room occupancy was 96% during the third quarter versus 95% in the third quarter of 2019.
“What’s interesting is we’re driving more casino nights at higher yields per room,” Dumont said. “In the premium-mass segment, we’re seeing that recovery, but the base-mass segment is starting to recover strongly. The businesses that used to support Macau mass tourism have come back online after a three-year hiatus. This increased visitation will drive base-mass revenue growth and we’ll start to see margins return to a more normal mix.”
As for LVS’s plans in the U.S., Goldstein briefly touched on the company’s bid for a New York gaming license at the Nassau Coliseum in Long Island. He cited strong local support for the project.
“The resort will cost in excess of $5 billion, which enables us to have a five-star resort with unlimited appeal,” Goldstein said. “This is an extraordinary opportunity. Our bid is compelling and if we’re awarded the license, we will be in the ground as quickly as possible.”
