Casino operator Las Vegas Sands Corp has confirmed that 2,500 to 3,000 rooms of The Londoner Macao gaming resort (pictured) in Macau are currently out of commission because of the complex’s ongoing renovation, according to a Tuesday note from JP Morgan.
Las Vegas Sands, the parent of Sands China Ltd, expects a “more meaningful renovation impact” in the second quarter this year compared to the preceding three months, wrote JP Morgan analysts Joseph Greff, Ryan Lambert and Samuel Nielsen.
The memo followed an investor gathering in the United States. The institution hosted Daniel Briggs, senior vice president of investor relations at Las Vegas Sands, and Alistair Scobie, the group’s vice president of investor relations.
“Las Vegas Sands expects a more meaningful renovation impact in the second quarter … as it currently has circa 2,500 to 3,000 rooms out and the entire casino under renovation,” stated the JP Morgan team.
Phase 2 of the transformation of the Londoner Macao has a price tag of US$1.2 billion, according to the casino firm. It includes the renovation of the Sheraton and Conrad hotels, as well as the revamp of the Pacifica casino space. The two Sheraton towers at the complex offer about 4,000 rooms.
The casino group “was down about 500 to 600 rooms” in the first quarter this year due to the renovation of the first Sheraton hotel tower at the Londoner Macao, according to previous guidance by the company’s management.
The firm is also renovating the Cotai Arena, a performance and events venue at the Venetian Macao casino resort.
The renovation projects for the Cotai Arena and the Pacifica casino are on track to be completed by the fourth quarter, said on Tuesday the executive vice chairman of Sands China Ltd, Wilfred Wong Ying Wai.
According to JP Morgan, Las Vegas Sands is “managing margins by redistributing table demand to other properties” in its Macau portfolio.
“Las Vegas Sands noted its reinvestment rates are circa 500 basis points above 2019 levels, and it is seeing a competitive promotional environment [in Macau], though not more so in the second quarter of 2024 versus the first quarter, which is really at the high end of the premium-mass market,” said the analysts.
There is an ongoing investor discussion regarding increasing player reinvestment rates in Macau, as operators vie for patrons in the premium-mass segment, which has led the recovery in the city’s gaming market.
The JP Morgan team added: “Las Vegas Sands doesn’t see a scenario or need to increase its reinvestment rate once the new casino, arena, and an additional 1,000 suites at the Sheraton are back on line in fourth-quarter 2024.”
“While we expect its near-term Macau results to lag its peers in terms of sequential growth – because of casino floor construction/room renovation –, we think its positioning in that market will improve” starting late this autumn,” it added.
