The US$2.7-billion Parisian Macao (pictured) is “probably going to have an opening in about 12 months,” said a senior executive of the developer’s parent Las Vegas Sands Corp during its second quarter earnings call on Wednesday.
“We think more than ever in this environment the Parisian’s European theme is exactly right focused for the mass visitation, and just like the Venetian is the most visited hotel in Macau, we think the Parisian is just situated perfectly in terms of the consumer in today’s Macao,” added Rob Goldstein, president and chief operating officer of Las Vegas Sands. He was referring to the current downturn in the Macau casino gambling market.
Mr Goldstein, who is also a non-executive director of the local unit Sands China Ltd, added the Macau market was becoming “a lot more like it used to be in Las Vegas” with high demand for hotel rooms and gaming at weekends, and lower demand on weekdays.
Sheldon Adelson, chairman and chief executive of both Las Vegas Sands and Sands China, said on the same call that the group’s ability in Macau to cater for meetings, incentives, conferencing and exhibitions (MICE) tourism was unmatched by its market rivals, and that this helped support weekday trade.
“We’re struggling less than our competitors are struggling because we have a unique tool. It’s called MICE. They can’t fill up with MICE, we can. So that’s why our occupancy is higher, our rates – our cash rates are higher, and we have more of a mass market in the casino,” Mr Adelson said.
City wide, gross gaming revenue (GGR) from VIP gambling fell by 42.1 percent year-on-year in the second quarter, while mass-market gambling – including slots and live multi-game machines – fell by 30.2 percent.
During the same period at the Venetian Macao, rolling chip volume, another measure of VIP market performance, fell 38.1 percent year-on-year, the group said in its quarterly earnings published on Wednesday. Non-rolling chip drop at that property was down 25.0 percent, while slot machine handle in that period for the Venetian Macao was down 27.7 percent.
Junket trade wanes
Karen Tang of Deutsche Bank AG said in a note on Thursday: “Interestingly, Sands’ [China's] second quarter base mass revenue fell sequentially more than premium mass revenue (-4 percent quarter-on-quarter versus -2 percent quarter-on-quarter; -18 percent year-on-year versus -27 percent year-on-year). Management explained that, since [VIP] junket business had shrunk, they reallocated a nice gaming area in Plaza casino (and more Four Seasons rooms) from junkets to premium mass and direct VIPs.”
Analysts Anthony Wong and Angus Chan of UBS Securities Asia Ltd, stated in a note on Thursday, referring to Sands China’s second quarter operations: “We estimate operating costs were down both quarter-on-quarter and year-on-year despite inflationary pressure on unit labour costs. Management commented that cost cutting was achieved ‘across the board’ and not tied to one specific area.”
Mr Goldstein had said during the call: “There’s always an opportunity to cut more costs, but we have to balance that with our employees and their development and our long-term plans to excel in Macau. We don’t want to throw the baby out with the bathwater. So a lot of the costs that relate to marketing space, costs against customer space and then general costs, as it relates to labour, non-Macanese [sic] labour [are the costs controlled]…”
“While we don’t think a corner has turned in terms of the GGR story (yet), it is more likely that the margin compression story is in the rearview [mirror],” said a Thursday note from Grant Govertsen of Union Gaming Securities Asia Ltd, offering some commentary on Sands China’s second quarter earnings.
Mr Adelson said in prepared remarks at the beginning of the second quarter call that with the completion of the St Regis hotel tower at Sands Cotai Central – mentioned in a statement by Sands China on December 1 as likely to be the third quarter of this year – and the completion of the Parisian, Sands China would have “13,000 hotel rooms and four interconnected resorts with 840 stores across four shopping malls, with the potential to add several hundred more stores”.
Mr Adelson had stated on Las Vegas Sands’ fourth quarter earnings call in late January that the Parisian was likely to open “some time” in 2016, which had been a shift of language from the “late 2015, early 2016” mentioned in previous calls.
“We assume end-2016 opening of Parisian in our forecasts,” said UBS in its Thursday note.
Deutsche Bank’s Ms Tang had referred in a report on April 23 to “worrisome” aspects to the timetable for all new Cotai projects, including their dependence on labour approvals and permit approvals from the territory’s government.
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"I am not going to speculate on what the [casino licence refreshment] tender requirements would be. I have full confidence and faith in the Macau government to treat everyone fairly"
Wilfred Wong Ying Wai
President and chief operating officer of Macau-based casino operator Sands China