Sands beats second-quarter estimates with recovery in Macau

July 19, 2023 9:03 PM
Photo: Shutterstock
  • Buck Wargo, CDC Gaming Reports
July 19, 2023 9:03 PM
  • Buck Wargo, CDC Gaming Reports

Aided by the recovery in Macau, the Las Vegas Sands Corp. beat second-quarter Wall Street estimates when it reported its earnings on Wednesday.

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Consolidated adjusted property EBITDA was $973 million
compared to $209 million in the prior-year quarter. Singapore’s Marina Bay Sands reported adjusted property EBITDA reached $432 million, while Macau’s EBITDA reached $541 million.

“The powerful recovery taking place in Macau and Singapore is evident in our results,” Sands Chairman and CEO Rob Goldstein said in his opening remarks to Wall Street analysts. “We believe it’s early days in both markets. We continue to invest in both markets for our future growth. We do have a structural advantage in Macau based on our scale and as the market accelerates, we will be a major beneficiary in the future.”

Goldstein said Singapore continues to do well despite such impediments as a $1 billion renovation. In addition, they haven’t seen the full return of the Chinese premium mass segment.

“We see a very stable and competitive environment,” said Grant Chum, COO and executive director of Sands China. “I think all of the operators in our industry continue to invest in non-gaming and diversification and bring about stellar programming into the market, which is helpful not just for growing the tourism economy, but also increasing the business volume for all of the operators. You’re seeing the positive results from that investment in non-gaming and events programming. That’s been a tremendous driver to the recovery so far.”

Patrick Dumont, president and chief operating officer, said they have a lot of opportunities for growth in Macau and Singapore, about which he spoke glowingly.

“We have very strong feelings about the future success of Singapore,” Dumont said. “Look at the visitation, the type of customer coming into the building, the fact that China isn’t fully recovered, and where Singapore sits today with the growing economies in Southeast Asia. We have a very strong view that the future of Singapore is positive. We’re very motivated to make an investment there and expand our capacity at Marina Bay Sands.”

Goldstein said Macau will continue to get stronger and June was just the beginning. They will see how July, August, and September hold up, but more visitation from China will yield higher gaming revenues.

“Six months ago, we weren’t sure we would be open,” Goldstein said. “We had to face a closed business. Here we are in the summer of 2023 with a $2.4 billion run-rate based on just June. We’re firm believers in Macau. That market is special. This summer will be a great indicator. I don’t know what the peak is, but it continues to accelerate. We’re in a good position to have assets to put to work in Macau. As the market grows, we should be the beneficiary of that new demand.”

One analyst questioned whether the strong June was aided by Jacky Cheung concerts in Macau at the Venetian Macau’s Cotai Arena between June 9 and July 2 that lured more than 100,000 visitors, according to published reports.

Dumont said Sands’s non-gaming program includes entertainment that was successful before the pandemic. They restarted those programs and acknowledged the concert was popular.

“The key is that our non-gaming programs are working,” Dumont said. “Driving customer visitation through social media is working and the visitation of high-value customers flowed through in our results in that month. Air traffic to Macau and Hong Kong is around 50% of where it was pre-pandemic. Our story is one of visitation. It was led by higher-value customers and premium mass, but now, as people can begin to travel to Macau more easily and frequently, they’re starting to return and consume all of our different amenities, not only the hotels, but the concerts, food and beverage, and retail. We’d like to believe as we activate our non-gaming activities that it will draw more customers to concerts and other events and continue to grow overall the desirability of visitation count.”

Cheung last played at the Venetian during the summer of 2018 and he played a record-breaking 12 shows over four weekends, never done before in Macau, making June special, according to Chum.

“Macau was the first tourist stop in Jacky Cheung’s entire global tour that just launched,” Chum said. “That he chose to launch at the Venetian Macau is testament to Macau’s rising of a destination and entertainment hub regionally. The month was strong, not just when the concert was on. It played a part, but was just one component of the ongoing lifestyle programming. It’s not being done just by us, but the whole industry, and will help Macau recover rapidly. It speaks volumes of the new direction the government is pursuing. It’s a great start to the new concession.”

Sands announced the resumption of its program to return capital to stockholders.

“We also think we’re going to be able to return a lot of capital in the future,” Dumont said. “We were a very shareholder-friendly company in the past and when you look at where we are and what we’re looking to do going forward, we will have more of a balance between share repurchases and dividends.”