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China – The Parisian will push Sands China back to growth

By - 27 July 2016

Having delivered disappointing GGR of US$1.48bn, down 16.4 per cent on last year’s second quarter, Sands China is convinced that the market has bottomed out and that its next resort The Parisian will see growth return to Sands’ Macau portfolio.

Sands Chairman and CEO Sheldon Adelson said on a conference call that increases in both mass market gambling volume and revenue in June showed that ‘stabilization appears to be here.’

Sands will lift the curtain on its $2.7bn Parisian resort on Macau’s Cotai Strip on September 13. Mr Adelson said there was not a ‘shadow of doubt’ that The Parisian would mirror the success of Sands’ Venetian in Macau and become ‘another themed, iconic and must-see integrated resort destination for Macau’s visitors.’

“Our preopening marketing efforts are progressing nicely, and videos and promotional pieces featuring The Parisian on social media have achieved well over 143m reach over the last month,” Mr. Adelson explained. “Our existing portfolio has clearly enabled us to hold our own amidst new competition. And I’m extremely confident that with the opening of The Parisian, we will see growth in Macao. The positioning of The Parisian Macao caters well to both the current Macao market conditions and the long term growth trends in Chinese outbound tourism. The Parisian will be a themed premium destination where the aspirational appeal of its public spaces, attractions and amenities, this combined with affordable hotel accommodation, providing a complimentary offering to the all-suite hotel at The Venetian Macao.”

Mr. Adelson added: “The operating environment in Macau remained challenging during the quarter; but we do see signs of stabilisation, particularly in the mass market. Our mass gaming revenues in the month of June 2016 increased versus the same month in 2015, the first year-on-year monthly mass gaming growth we have experienced in nearly two years. Our focus on the higher margin mass and non-gaming segments and the geographic diversification of our cash flows enabled us to deliver almost $400 million of net income and $955 million of consolidated adjusted property EBITDA during the quarter. We remain steadfast in our focus on the consistent execution of our proven global growth strategy, which leverages the power of our unique convention-based Integrated Resort business model.”

“Our convention-based Integrated Resort business model appeals to the broadest set of customers, generates the most diversified set of cash flows and delivers the industry’s highest revenue and profit from non-gaming segments, while bringing unsurpassed economic and diversification benefits to the regions in which we operate. We remain confident in our ability to further extend our global leadership position and deliver strong growth in the future.”
The claim came as Sands China’s parent company; Las Vegas Sands reported second-quarter revenues of $2.65bn, down 9.3 per cent from the second quarter last year.

Marina Bay Sands in Singapore continues to attract visitors from across the region to Singapore. While gaming volumes in Singapore were softer during the quarter, solid growth in slot revenues and the continued resilience of room rates and mall revenues, contributed to an adjusted property EBITDA figure of $357m, down 1.7 per cent compared to the same quarter last year.

Revenues at Marina Bay Sands fell by 0.4 per cent to $710m in the second quarter.

The Las Vegas market improved though for Sands with net revenue increasing three per cent to $356.5m in the second quarter despite a 5.2 per cent decline in casino revenue. Hotel revenue increased by 8.8 per cent while food and beverage increased by 5.8 per cent with revenues from conventions also increasing by 1.7 per cent.

Revenue and adjusted property EBITDA at The Venetian Las Vegas and The Palazzo, including the Sands Expo and Convention Center, were $356.5m and $72.5m, respectively, for the quarter. Property EBITDA in the quarter increased 14.4 per cent year-over-year to $97.6m. RevPAR increased 6.5 per cent year-over-year to $228 in the quarter, reflecting a 3.9 per cent increase in ADR to $240 and a 2.4 percentage point increase in occupancy to 95 per cent Table games drop decreased 19.7 per cent in the quarter to $374.8m, reflecting softer play in both Baccarat and non-Baccarat segments, while slot handle increased 18.6 per cent to $662m.

Sands said it would open a new 17,500-seat live music venue behind the Venetian ain conjunction with the Madison Square Garden.
Rob Goldstein, Sands’ President and CEO believes the venue would prove ‘very impactful’ to Sands in Las Vegas.

Meanwhile, revenue at Sands Bethlehem in Pennsylvania rose 6.5 per cent to $146.5m. Table games drop increased 0.6 per cent to $288.6m for the quarter, while table games win percentage was 18.6 per cent, above the 17.2 per cent realised in the second quarter of 2015. Slot handle increased 2.3 per cent year-over-year to$1.12bn for the quarter, with a slot hold percentage of seven per cent.

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