Singapore and $1 billion investment there focus of Las Vegas Sands Q2 earnings call

July 21, 2022 12:04 AM
  • Buck Wargo, CDC Gaming Reports
July 21, 2022 12:04 AM
  • Buck Wargo, CDC Gaming Reports
  • Asia
  • United States
  • Singapore

With Macau set to come out of a two-week COVID lockdown on Saturday, attention during the Las Vegas Sands second-quarter earnings call focused on Singapore carrying the load for the company, with opportunities for growth and an expanded and renovated Marina Bay Sands.

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LVS’ net revenues are down and operating losses are up, but an accelerated recovery in Singapore during the second quarter delivered $319 million in adjusted property EBITDA at Marina Bay Sands (MBS). It was $112 million during the second quarter of 2021.

“The relaxation of pandemic-related restrictions in Singapore and many of the source markets has enabled this encouraging improvement in financial performance at MBS,” said Robert Goldstein, LVS’ chairman and CEO.

“We expect a more robust recovery over time, as additional airlift for Singapore comes online and further relaxation measures in the region are implemented.”

Goldstein said their conviction in the long-term opportunities in Singapore remain steadfast, as evidenced by a $1 billion capital investment underway at Marina Bay Sands, along with the introduction of new suites and premium-segment amenities at the resort. More offerings will be added during the remainder of 2022 and throughout 2023, which will enhance the property’s appeal to premium customers seeking the highest level of experiences, he said.

“Singapore remains an outstanding market for additional investment,” Goldstein said.

The operating environment in Macau, in comparison, “remains very difficult,” Goldstein said. However, in periods when restrictions have been lifted, customer demand and spending have “proven resilient at the premium-mass level at the gaming and retail perspective.”

Goldstein said that as the market recovers, its $2.2 billion investment at Four Seasons and Londoner in Macau will provide “outstanding growth opportunities in both the premium- and mass-customer segments.”

Goldstein said they appreciate the clarity in Macau’s revised gaming laws expressed in June and look forward to participating in the concession and retendering process as it proceeds. LVS has the largest footprint in the market.

“We retain great optimism about our ability to perform at pre-pandemic levels in Macau once visitation returns,” Goldstein said. “We would love the opportunity to invest billions of additional dollars in Macau and we continue to believe Macau is an outstanding market for additional investment.”

Goldstein said they “survived” the Macau licensing process after “a lot of people were concerned. In the end, it’s worked out for everybody in a positive manner thus far and we hope that continues. When does the government rethink zero-COVID and how does that play out? We don’t know, nor do we pretend to know. That’s the last thing we’re waiting for to get our company back to a much better place.”

Overall, Goldstein said they consider their portfolio of resorts in Asia to be “an ideal platform” for growth in the years ahead. They continue to pursue other opportunities in large land-based destination resorts in the U.S. and Asia. LVS sold its Strip properties earlier this year.

In Singapore, Goldstein said they’re getting a lot of business from Indonesians and Malaysians, but there’s more opportunity as the airlift returns.

“Our company has been through an awfully difficult couple of years – more than most because we’re Asia focused,” Goldstein said. “We completed our sale in Las Vegas and that gives us more than ample liquidity no matter what happens. Singapore is making money and there’s more to come.”

Goldstein said he visited Singapore about a month ago. In terms of the hotel industry, including luxury brands, some are running at 40% to 50% capacity, which he found “disturbing.” LVS will grow as those other properties increase capacity, he said.

“Although we’re delighted with Singapore and the numbers reflect that, we’re optimistic in the months ahead,” Goldstein said. “The $300-million-plus quarter is a pleasant upside to what we thought we would do, but there’s a lot more room to run as it opens up to Japan, Korea, and more travel. We’re really dependent right now on the closer-in foreign markets.”

Goldstein said MBS is an appealing building, but it’s never had the fixtures, furniture, and equipment components in the suites and rooms that it deserves. That will be finished over the next 18 months.

“The product we’re putting together is as good as any place that we’ve operated,” Goldstein said. “Singapore is more desirable than ever as a destination and it’s growing in appeal to a lot of people for a lot of reasons. That place has evolved to be better than what we started years ago and it keeps getting better. It’s a market just beginning to feel its muscle.”

Patrick Dumont, president and chief operating officer, said the $1 billion investment in Singapore will boost the average daily room rates when completed in 2023. There will be 400 new suites, the highest-quality LVS has ever done as a company, Dumont said.

“It’s going to be a fundamentally different experience for our guests and we hope and believe they will play a lot more for it because it will attract a higher-value tourist,” Dumont. “That’s our goal.”