CASINO

Sheldon Adelson says Macau rivals ill-equipped to compete with Las Vegas Sands

TAGs: las vegas sands, Macau, sheldon adelson

las-vegas-sands-sheldon-adelson-loserCasino operator Las Vegas Sands fell prey to Macau’s doldrums, reporting across the board declines in the second quarter of 2015.

Revenue in the three months ending June 30 fell 19.4% to $2.92b, while adjusted earnings fell 22.6% to $1.02b and net income fell 30.1% to $469.2m. Sands China remained the primary moneymaker, although its revenue fell 25.6% to $1.77b, adjusted earnings fell 29.5% to $564.5m and profit fell 37.3% to $388.7m.

VIP gambling turnover was down across the board in Macau, with Sands Cotai Central taking the biggest hit, falling a whopping 61.1% year-on-year. VIP turnover was also down double-digits at Venetian Macao (-38.1%), Four Seasons (-26%) and Sands Macao (-49.9%).

Mass market gaming was similarly sucky, with Sands Macao falling 28.9%, while Venetian Macao (-25%), Sands Cotai (-22.3%) and Four Seasons (-24.5%) were also sharply down.

Despite the downturn, Sands managed to outperform its Macau rivals in Q2. Company-wide, Sands China’s mass table win fell 21.9% but the company’s share of the overall market’s mass table win improved 1.3 points to 31.8%. The phenomenon was repeated on the VIP front, which saw win fall 42.6% year-on-year while VIP market share gained 2.1 points to 18.9%.

Things were slightly rosier in Singapore, where Marina Bay Sands reported total revenue down 11.4% to $713m and operating income down 10.2% to $277.2m. VIP table drop fell 9% while mass market tables were off 5.3%.

The situation was also brighter stateside, albeit on a smaller scale. Las Vegas operations saw revenue dip 2% to $346m but margins fell 3%, pushing operating income down 23.9% to $41.8m. Gaming revenue was off 17.1%, as table win fell seven points to 11.2%, erasing a 6% rise in overall table drop and a 28.7% rise in non-baccarat table spending. But Sands Bethlehem in Pennsylvania got the gold star, with revenue up 9% to $137.5m and operating income spiking 35.1% to $27.3m.

ADELSON WON’T REVEAL SECRETS TO HELP NON-COMPETITIVE LOSERS
The post-earnings analyst call was a little more subdued than usual, with Sands boss (and CIA sleeper agent) Sheldon Adelson (pictured) keeping his bon mots to a minimum. Adelson confirmed that the new $2.7b Parisian property will likely open by next August, adding a further 3k hotel rooms to Sands’ market-leading 9,300 rooms.

Adelson and company president Rob Goldstein said Macau’s market was currently a weekend phenomenon, with mass market revelers still flocking in droves to Macau once their work was done, but midweek activity remains soft. Adelson said all Macau operators were struggling midweek but Sands’ commitment to MICE (meetings, incentives, conferences and exhibitions) meant it was suffering less than its competitors.

Adelson couldn’t resist taking a few digs at his crosstown rivals, particularly Galaxy Entertainment Group, whose Phase 2 of its Galaxy Macau property recently opened to a tepid response.

Adelson claimed that Galaxy’s management had made “an enormous mistake” with their new property but he declined to specify what that mistake was, saying that “Houdini didn’t tell his secrets” and Sands didn’t want to stop its rivals “from making mistakes in the future.”

Adelson did share why he felt Galaxy management had made its mystery mistake, saying they had “little cumulative experience in their executive ranks to back up their strategic judgments.”

Adelson took a similar shot at Macau’s former casino monopoly SJM Holdings, which he said was “not used to living in a competitive environment.” Adelson said SJM boss Ambrose So was “a very nice guy” but “at some point, you’ve got to do something more than opening the doors.”

Adelson said the same phenomenon plagued Sands’ Singapore rival, Genting, whereas LVS had “never worked in anything but a competitive environment,” so future competitors should watch out for Sands’ sharp elbows, in addition to Adelson’s sharp tongue.

On the expansion front, Adelson said he’d been “feeling vibrations” that some new opportunity was about to open somewhere in Asia. Adelson didn’t specify where exactly that opportunity might arise, but Sands is known to be pursuing projects in Japan, Vietnam and South Korea. Regardless of which market rolls out the welcome mat, Adelson said “there isn’t anyone who doesn’t think [Sands] is in the pole position.”

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