Las Vegas Sands Q2 profit falls 32%, but posts first mass gain in two years

las-vegas-sands-parisian-macao-casinoCasino operator Las Vegas Sands had a mixed Q2, as its profit fell nearly one-third while posting its first Macau mass market gains in nearly two years.

Figures released Monday showed revenue falling 9.3% to $2.65b, operating income off 25% to $518.7m and net income slumping 32.2% to $394.4m in the three months ending June 30.

Sands China revenue was down 16.4% to $1.48b while profit plunged 39% to $237m. But Sands president Rob Goldstein chose to focus on the bright side, reporting that June’s mass market revenue was up year-on-year for the first time since Macau’s revenue slide began two years ago.

Goldstein couldn’t say whether June’s mass revenue gain was the result of increased visitation or increased spend per player. Whatever the cause, Goldstein hopes to see this phenomenon persist “for the rest of the summer.”

While June may have been good for the mass market, the VIP tables sucked for the entire quarter. VIP turnover was down 10% at the Venetian Macao, down 36% at Sands Cotai Central, down 55% at the Four Seasons and down 16% at Sands Macao. Compounding matters, VIP win rate also fell at all four properties.

Things were slightly rosier on the mass market front, with mass table drop down in the mid-teens at Sands Macao and the Four Seasons, down 1% at the Venetian while Sands Cotai saw a 3.2% gain.

In Singapore, revenue was flat at the Marina Bay Sands resort. A 29% fall in VIP turnover was offset by a 0.7-point rise in VIP win, while even Goldstein expressed mild surprise at the property’s 6% rise in slots handle.

Stateside, the Las Vegas operations’ revenue rose 3% to $356.5m despite a 5% fall in gaming revenue. But Vegas isn’t about gaming anymore, and room revenue and food & beverage were up 8.8% and 5.8% respectively while occupancy rose 2.4 points to 95%. In Pennsylvania, Sands Bethlehem revenue gained 6.5% to $146.5m.

Sands’ newest Macau property, the $2.9b Parisian Macao, is scheduled to open on September 13, three weeks after rival Wynn Resorts will open its new $4b Wynn Palace. Goldstein said Parisian would not undergo a “staggered” opening but would be “fully represented” when the public is invited in.

Some analysts have suggested that the launch of two new major Macau resorts – with MGM Resorts’ new property following early in 2017 – will create an excess of supply at a time Macau is already customer-thin.

Goldstein begged to differ, suggesting the opening of two major “must see” properties so close together could be the “magic elixir” that proves the catalyst for boosting Macau visitation. However, Goldstein said the older casinos on Macau’s peninsula would take a hit as tourists were drawn like moths to the shiny new Cotai properties.

When the Parisian opens, Sands will have 13k interconnected hotel rooms in Macau, a concentration Goldstein says is unparalleled anywhere in the world. Sands believes this market-leading capacity will allow it to capitalize on mass market travel peaks and thus outperform their rivals.

In the day’s other Sands news, the Nevada Supreme Court reversed a $70m judgment awarded to Richard Suen, the second time the Supremes have tossed a District Court judgment in Suen’s favor.

If you’re just joining us, Suen filed suit against Sands years ago based on his claim that he’d been promised $5m and 2% of Sands China’s profits if he helped the company win a Macau casino license. But Sands claimed it hadn’t needed Suen’s help and notoriously stubborn chairman Sheldon Adelson dug in his heels (see Jacobs, Steven).

In the most recent rejection, the Supremes said there was “insufficient evidence” to justify the size of the $70m award, while acknowledging that Sands’ lowball $1m offer was also inappropriate. The Supremes ordered the case sent back to the District Court for yet another hearing.