Sands has no Vegas regrets

March 15, 2023 4:35 PM
Photo: Shutterstock
  • David McKee, CDC Gaming Reports
March 15, 2023 4:35 PM
  • David McKee, CDC Gaming Reports
  • Macau
  • New York
  • Singapore
  • Texas

Las Vegas Sands delegated Senior Vice President for Investor Relations Daniel Briggs to attend the J.P. Morgan Gaming & Lodging Forum and he brought positive dispatches from overseas.

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Domestically, Briggs didn’t elaborate on Sands’s status in Texas and New York state (where it has proposed Sands Nassau on Long Island), other than to tell lead J.P. Morgan analyst Joseph Greff what he already knew: Sands “is pursuing a New York casino and management is pushing for projects in Texas.”

Shaking the dust of the Las Vegas Strip off its boots, Sands informed Greff that the stateside expansion opportunities, coupled with Singapore and Macau, “offer greater return potential than what would have been generated in Las Vegas.” Investors, meanwhile, will have to wait until 2025 to reap dividends.

In Macau, Greff reported, “Management feels the product it is bringing to market today is significantly better than what exists, which should support a recovery, especially on the premium-mass front.” As for Macanese market trends themselves, the long-term view still looks “strong … supported by pent-up demand since the removal of travel restrictions in early January.”

The Macau recovery encompasses all sectors, not just Sands’s base-mass constituency. Premium-mass and direct-VIP play are reported to be coming back in force (junket VIP play is largely out of the picture, due to governmental crackdowns).

“Out of the gate, the first leg of the recovery was from the highest-value wealthiest Chinese consumer, which has supported premium-mass revenues,” Greff wrote. He added that bread-and-butter players (base-mass) will be back “as airline capacity to Macau improves.”

The all-important VIP play is expected to be “bigger than ever” where directly recruited players are concerned, although never the same size as the now-verboten junkets. Already, due to incremental direct-VIP play and premium-mass traffic, Sands thinks 2023 will exceed pre-pandemic 2019 in terms of cash flow, especially with margins improved by the removal of the low-margin junket business. Sands has committed $4.5 billion to new construction and property enhancements in Macau, which it has 10 years to complete.

Briggs also bore good news from Singapore, where premium-mass business is leading the bounce-back from the pandemic. The executive, Greff wrote, “thinks this [recovery] still has legs, as China visitation continues to inflect and airline capacity to the market improves, especially from mainland China.”

How important is Chinese business to Marina Bay Sands in Singapore? In 2019, it represented fully one-third of the company’s profitability. Now, however, “The local business is bigger than it’s ever been, aided by population migration to Singapore over the past few years, which is driving very strong results on the slot side,” altering the Singaporean status quo.