Las Vegas Sands, capitalizing on the rebound in Macau gambling, plans to spend US$1.1 billion (8.8 billion patacas) on renovating its local properties, including turning the Sands Cotai Central into a London-themed resort by 2020.
Over the next three years, Sands Cotai Central will be rebranded as the Londoner Macau and feature attractions tied to some of the UK capital’s most recognizable landmarks, the US company said on Wednesday in a statement. The remodeling will add an additional 1.7 million square feet of space, and the resort will accommodate more overnight guests than the Venetian and the Parisian combined, the company’s founder and CEO Sheldon Adelson said.
Sands Cotai Central has been one of the company’s weakest properties, analysts told Reuters, due to its perceived lack of character and tourist appeal when compared with Sands’ gondola-filled Venetian or its Parisian property that features a replica Eiffel Tower.
The timing of the Cotai renovation comes as operators in Macau race to finish their planned resorts before casino licenses start to expire in 2020, Reuters pointed out.
The Four Seasons Macau will get 295 new suites in a separate tower.
“Having three iconic must-see European-themed destination resorts, with a broad range of amenities, will strengthen our marketing
and customer-service capabilities and position us to grow faster than the Macau market,” Adelson said on an analysts call on the third-quarter results.
The company’s other two European- themed resorts are the Parisian and the Venetian in Cotai.
According to Sands China, the Londoner Macau project will renovate Sands Cotai Central’s 6,000 hotel rooms and suits, 400,000 square-feet retail mall, 1,700-seat-theater, and over 300,000 square feet of developed space for MICE (meetings, incentives, conferences and exhibitions) activities, and developing another 1.7 million square feet of space.
Sands says it has already invested over US$13 billion in Macau since it was the first US company to open a casino here in 2002. Sands and its five rivals have been looking for vindication for their bets on expensive new properties after withstanding Beijing’s corruption crackdown that stalled casino revenue growth in Macau for three years. Macau’s overall gambling revenue rose 22 percent to 67 billion patacas in the third quarter, the fifth in a row of year-over-year growth.
Macau accounts more than half of Sands’ sales. The city is seeing a return of VIP players even as new resorts such as the Parisian lure more middle-class gamblers.
Sands’ investments underscore its bet that long-term growth will come from attracting mainstream visitors from mainland China.
“The company remains focused on a broad range of non gaming amenities, which is ultimately what will drive visitation and put the company in a better position to remain a strong operator in the dynamic market,” said analyst Chad Beynon at Macquarie Bank yesterday.
Sands’ appeal to casual gamblers, tourists and families continues to pay off as the company’s third-quarter results topped analysts’
forecasts. About 89 percent of the company’s Macau profit in the quarter was generated from mass gaming tables, slot machines and non-gaming offerings.
Visits from mainland Chinese visitors gained 15 percent from a year ago, the company said. The visitors increased the length of their stays, and the casinos’ winnings at the tables and slots generally frequented by casual gamblers increased 8.7 percent to US$512
million in the third quarter.
However, casino shares slumped in Hong Kong yesterday. Sands China slipped 2 percent for the second-biggest decline on the benchmark Hang Seng Index. Wynn Macau lost 0.7 percent, while MGM China Holdings fell 1.2 percent. Earlier in New York, Las Vegas Sands shares jumped 1.9 percent in after-hours trading.
Morgan Stanley analysts wrote in a note that Sands China’s mass and slot revenue growth was slower than the overall market expansion on a quarter-over-quarter basis.
Las Vegas Sands reported profit rose to 77 US cents share excluding some items, beating the 68-cent average of analysts’ forecasts. Sales grew 7.7 percent to US$3.2 billion, exceeding Wall Street projections of US$3.13 billion.
In Macau, Las Vegas Sands’ earnings before interest, taxes, depreciation and amortization (Ebitda) rose 3.8 percent to US$652 million, beating the US$641.3 million average of estimates compiled by researcher Consensus Metrix.
The Parisian, which opened in September 2016, continued to be a chief driver of results, with increased gaming wins from casual gamblers and betting volume, according to the company. The property’s adjusted Ebitda climbed 27 percent from the second quarter,
the company said.
Profit in Singapore, Sands’ second-largest market, climbed 13 percent to US$442 million. Ebitda in Las Vegas fell 12 percent to US$76 million.
This photo taken on Saturday shows construction going on at Sands Cotai Central which will be transformed into a London-themed resort by 2020. Photo: Monica Leong
