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Phase IIA of the Sands Cotai Central development in Macao opened 20 September. |
LAS VEGAS—Las Vegas Sands Corporation is looking at several countries in Asia/Pacific for development, but there is no question Macao tops the list, the company’s CFO said recently.
During a presentation at the UBS and Deutsche Bank Gaming Investment Forum earlier this month, Kenneth J. Kay said “growth opportunities are greater in Macao” than in other Asia/Pacific regions.
“We think we’ve got great opportunities from an organic perspective,” he said during a company presentation, which was webcast. “We’re continuing the ramp up of our Sands Cotai Central.”
Phase IIA of the company’s $4.4-billion Sands Cotai Central development in Macao opened 20 September, and included approximately 2,000 Sheraton-branded hotel rooms. In April, Phase I of the project opened, which included 1,224 Holiday Inn-branded rooms and 636 Conrad-branded rooms.
Phase IIB began opening this month with an additional 2,000 Sheraton-branded rooms. Phase III is expected to include a fourth St. Regis hotel tower. Kay said the “vast majority” of the Sheraton openings would be complete in 2013. Most of the company’s spending in Macao will occur during 2013, he said.
With 9,324 rooms, Kay said the company holds 3% of the region’s 4- and 5-star hotel inventory.
“We will control the lion’s share of future growth opportunities in Macao,” he said. He added that construction of the company’s $3-billion, 3,000-room Parisian hotel, located adjacent to the Sands Cotai Central project in Macao, is expected to get underway in November.
Additionally, Kay said the company intends to develop 10,000-plus rooms on Hengqin Island, which is adjacent to Macao.
Macao performance
Macao has proved to be a lucrative venture thus far for LV Sands to date, Kay said. Adjusted property earnings before interest, taxes, depreciation and amortization were $429 million during the second quarter, up 9.6%.
Further, year-over-year mass gaming revenue growth for LV Sands was 36% during the second quarter, compared to 31% growth for the overall Macao market, which is six times the size of the Las Vegas market, Kay said.
Driving performance in the region is China’s enhanced transportation infrastructure, including the expected completion of inter-city rail to Macao in the first quarter of 2013, he said. Kay noted continued economic growth in China, including a growing middle class and a $5.9-trillion economy that grew by 9.2% a year ago.
Also helping the company’s standing, Kay said he does not foresee any competition in Macao until 2016 because of government regulations surrounding development. “That gives us a lot of runway, a lot of time to capture the mass market and the VIP market,” he said.
He added: “We intend to grow even beyond the 2016 time frame.”
Asia/Pacific development
While Macao is in LV Sands’ spotlight, there are other Asia/Pacific markets in which the company would like to see development take place, Kay said.
One of those markets is Singapore, Kay said. “We would like to do something in Singapore because of the occupancies there,” he said. Occupancy in Singapore during August was up 4% year over year to 85.9%, according to the most recent data available from STR Global, sister company of HotelNewsNow.com.
Other countries and regions pegged for development include: Japan, South Korea, Vietnam, Canada and Europe.
Kay said the speed of development in some of these countries, particularly the Asia/Pacific nations, will be dependent on the government regulations in place.
“In other countries, we have to move at the pace of the regulatory environment,” he said. “We’re interested in each one of these marketplaces.”
