GGRAsia – MBS en route to US$500mln quarterly EBITDA: LVS boss

MBS en route to US$500mln quarterly EBITDA: LVS boss

Jun 01, 2023 Newsdesk Latest News, Macau, Singapore, Top of the deck

Casino operator Las Vegas Sands Corp expects its Marina Bay Sands (MBS) property in Singapore to soon hit the US$500-million mark in terms of quarterly earnings before interest, taxation, depreciation, and amortisation (EBITDA). That is according to Robert Goldstein, the firm’s chairman and chief executive.

“In Singapore, the EBITDA levels have recovered to 2019 levels. I am hoping one of these quarters we will post a US$500-million EBITDA quarter,” he said.

His comments were made on Wednesday during the Bernstein 39th Annual Strategic Decisions Conference, in New York, the United States.

The U.S.-based company is the promoter of Marina Bay Sands (pictured), one half of the casino duopoly in Singapore, as well as being the parent of Macau casino operator Sands China Ltd. The other part of the Singapore casino duopoly is run by Genting Singapore Ltd, via its Resorts World Sentosa property.

Marina Bay Sands’ quarterly adjusted property EBITDA reached US$394 million in the first quarter of 2023, circa 93 percent of first-quarter 2019 level. The EBITDA result was up from US$121 million in first-quarter 2022.

“I believe [Marina Bay Sands] has the ability to get to a US$2 billion annualised EBITDA,” Mr Goldstein stated. “How do we get there? We get there with more Chinese visitation and by better, improved product, both in the lodging and the gaming.”

Mr Goldstein admitted there were two caveats in achieving that EBITDA target: Marina Bay Sands is currently undergoing a US$1-billion renovation project that will only end next year; and the property has yet to see a significant post-Covid-19 uptick in terms of its Chinese VIP clientele.

“We haven’t seen the return of the super high-end mainland Chinese customer into Singapore,” the executive said.

US$5bln annual EBITDA goal

The boss of Las Vegas Sands highlighted that the firm wanted to return as soon as possible to producing around US$5-billion EBITDA per year. That meant Sands China improving its results in Macau.

“Our goal is to get back to US$5-billion EBITDA in the near future,” said Mr Goldstein. “We want to go back to being the leading EBITDA producer in this [business] space.”

Commenting on the bottlenecks impacting recovery in the Macau market, the CEO said the lack of labour was “a non-event”: he added that all Sands China properties would be operating “at full capacity” by the summer.

What was an issue, he added, was “getting more non-Guangdong and more non-Hong Kong” visitors to Macau, and accelerating the return of base mass segment customers. According to Mr Goldstein, Macau recovery so far had been led by premium clients.

“Because of our scale in Macau – we have the largest capacity in gaming and lodging – for our business to get back to US$3 billion-plus [annual EBITDA], we need base mass to recover as well, because the margins are fat in that segment,” the executive said. “It’s more important to us than to most [operators] there; [they] don’t have the amount of [gaming] tables, slots, sleeping rooms and retail scale we do.”

Grant Chum, Sands China’s chief operating officer, said in April the firm should have up to 89 percent of its hotel rooms available by the end of the current quarter, as staffing constraints ease, compared to circa 70 percent in the first quarter.

Asked if there were any potential markets that could replicate the type of growth seen in Macau since the city’s gaming liberalisation in 2002, Mr Goldstein was clear: “There will never be another Macau.”

He pointed to the amount of capital that had been poured into the city over the last two decades, and the diversity of product now available, not only in terms of gaming, but also non-gaming.

“I would love to find a third place in Asia that looks like Singapore and Macau; I don’t see it today,” he said.

MICE, hotel brands, China-U.S. tensions

Mr Goldstein also discussed the role of meetings, incentives, conferences, and exhibitions (MICE) in the product mix offered by Las Vegas Sands in Asia. He recalled that MICE events played an important role in Las Vegas, the main gaming hub in the U.S., in ensuring high property occupancy levels during weekdays. In Macau and Singapore, such importance was less significant, he said.

“In Asia, it is not quite the same because while MICE plays a role, the FIT [free independent travellers] demand is so great that it has pushed the MICE demand to the side.”

The executive also discussed the original strategy behind bringing international hotel chains to manage some of Las Vegas Sands’ hotels in Macau, and how that was changing.

In The Londoner Macao – a rebranding and major reconfiguring of a Cotai venue that used to be known as Sands Cotai Central –, the company dropped the Holiday Inn brand from the casino complex. It also changed the name of a St. Regis-branded tower of suites to the Londoner Tower Suites. Las Vegas Sands kept other existing hotel brands at the property – including St. Regis, Sheraton and Conrad.

“We thought, in the early days of Macau, that the St. Regis or the Four Seasons would add credibility to the market,” said Mr Goldstein. He noted that the situation had now changed, helped by the firm’s strong investment in the quality of its self-managed hotels.

He explained that the promise of the resort brands managed by the firm – such as The Venetian Macao or The Londoner Macao – also did not fit with the branding of a typical hotel chain. And, because occupancy rates in Macau were already so high, Las Vegas Sands did not need the additional customers that could come its way via the loyalty programme of an international hotel chain.

“Fortunately, the business is so good in Asia that we don’t need that branding anymore. We have created our own brands,” stated Mr Goldstein.

He also dismissed concerns that, amid growing political tension between China and the United States, Las Vegas Sands – being a U.S.-based company – could face sanctions from the Chinese authorities.

“I don’t sense that we have a problem in China. We just got a 10-year licence renewal, and we are very comfortable. We spend a lot of time with government relations and we do our best,” he said.