Casino operator Las Vegas Sands reported essentially flat revenue in both its fourth quarter and full year 2019 results as Macau’s overall market slowdown took its toll.
Figures released Wednesday showed Sands generated revenue of $3.5b in the three months ending December 31, 2019, a modest 1% gain from the same period last year. Operating income rose 6.8% to $934m while net income came in at $783m versus a $40m net loss in Q4 2018, which was weighed down by a one-off tax bill.
Sands China’s Q4 revenue slipped less than 1% to $2.24b but adjusted property earnings in Macau managed to rise less than 1% to $811m. Things were brighter in Singapore, where Marina Bay Sands’ revenue shot up 17.5% to $853m and earnings rose more than one-quarter to $457m. Ditto for Las Vegas, where revenue was up 12% to $475m and earnings rose one-fifth to $120m.
For the year as a whole, company-wide revenue was flat at $13.74b and operating income dipped 1.4% to $3.7b. But net income rose nearly 12% to $2.41b, again, thanks in part to the lack of a nine-figure tax bill.
Sands’ Macau casinos all reported double-digit declines in VIP gambling turnover in Q4, led by Sands Cotai Central’s 63.8% decline – although the property is currently a construction mess as it converts to The Londoner – while Sands China’s flagship Venetian property was down 37.4%.
Offsetting these declines were gains in VIP win at the Venetian and the Plaza Macao, both of which posted win rates over 4%, a full point higher than the top end of the theoretical range, while the Parisian Macao and Sands Cotai Central were at the top end of that range.
Sands loves to brag about its mass market gaming strength but the Plaza Macao was the only property to post a year-on-year gain in Q4 mass market table drop. Fortunately, base mass table win rate was up across the board, although the premium mass segment took a dip.
Marina Bay Sands was Q4’s golden child, with gaming revenue up more than one-fifth as VIP turnover spiked 16% and VIP win rate grew by 1.14 points. The property enjoyed a 97.3% occupancy rate, up 1.8 points, despite the average daily rate rising 6.4% to $450.
Hotel rooms in Las Vegas were also harder to come by in Q4, while gaming revenue enjoyed double-digit gains despite decreased visitation from Asian gambling whales.
CORONAVIRUS CRISIS V. OPPORTUNITY
Sands supremo Sheldon Adelson told analysts that Macau’s struggles were “no big surprise,” given the December visit by Chinese President Xi Jinping and the temporary restrictions on transit visas to mainland gamblers. Adelson described Q4 as a downward progression: “October extraordinary, November strong and December was soft.”
As for Sands’ response to the coronavirus crisis, all Sands China staff are now wearing masks at the government’s request, leading Adelson (pictured) to comment that the casino floor looks like “an operating room.”
Sands President Rob Goldstein said the company didn’t anticipate any slowdown in its Macau construction projects due to the virus. Adelson added that he’d asked his team if the current dramatic decline in Macau visitation might offer “a chance to accelerate construction” and thereby minimize disruption when the crowds return.
And Sands expects those crowds to return. Goldstein expects the current restrictions on Macau visitation will create “pent-up demand.” When the situation does resolve, Macau’s going to be very, very, very busy, because … these folks like to gamble … They will come back in force.”
