The ongoing pandemic decimated the third quarter operating results for Las Vegas Sands, whose primary holdings are in two of the hardest-hit gaming markets, Las Vegas and Macau.
Still, Chairman and CEO Sheldon Adelson on Wednesday attempted to paint an upbeat picture, especially regarding Macau, where the region’s overall gaming revenues have suffered through five straight months of better than 90% gaming revenue declines.
“I remain steadfast in my belief that Macau has the potential to become one of the greatest business and leisure tourism destinations in the world,” Adelson said in prepared remarks during the company quarterly conference call.
The 87-year-old billionaire added that the company balance sheet – $2.38 billion in cash, $3.95 billion in available credit, and $13.89 billion in debt as of Sept. 20 – enables the company to continue its $5.5 billion in planned development projects in Macau and Singapore.
“We are as confident as ever in the strength of our business model, and the eventual recovery in travel and tourism spending in our markets,” Adelson said.
However, when the strained relations between the U.S. and Mainland China were raised by an analyst during the question and answer session, Adelson and Las Vegas Sands President Rob Goldstein held their opinions.
“We don’t answer political questions,” Adelson said when Stifel Financial analyst Steven Wieczynski sought an opinion on the political environment in China after the presidential election, depending on who wins, President Donald Trump or former Vice President Joe Biden.
Adelson and his wife, Miriam, donated $75 million in August to a pro-Trump super PAC.
In August, Wynn Resorts, in a filing with both the Hong Kong Stock Exchange and the U.S. Securities and Exchange Commission, warned that U.S.-China trade disputes and the tensions between the two superpowers have continued to escalate in 2020, resulting in “contentious punitive or retaliatory measures being imposed on businesses and individuals.”
Las Vegas Sands CEO Sheldon Adelson
It marked the first time a U.S.-based gaming company openly discussed the pressures between the two nations. Sands, Wynn, and MGM Resorts International all operate casinos in Macau. All of those licenses expire in 2022.
During the quarter, Las Vegas Sands’ overall net revenues were $586 million, a decline of 82%, from $3.25 billion in the 2019 third quarter. The total included a 92% year-over-year drop in Macau to $167 million and a 62.6% drop in Las Vegas to $152 million.
Cash flow was a loss of $250 million compared to $1.21 billion, a 120.7% decline, while Las Vegas Sands’ overall net loss $565 million.
The company was the first in the gaming sector to release official third quarter numbers. Shares of Las Vegas Sands fell 26 cents or 0.56% Wednesday to close at $45.94 on the New York Stock Exchange. The company’s shares were up more than 4% in after-hours trading.
Much of the attention during the call was focused on Macau, which, pre-COVID-19, provided Las Vegas Sands more than 65% of its annual and quarterly revenues.
Las Vegas Sands is in the process of spending $2.2 billion on renovations and expansions to Macau properties, including the transformation of Sands Cotai Central into the Londoner Macau, a London-themed resort.
Adelson said the company’s operating results in Macau “are not representative of our current business trajectory, as the resumption of visa issuance across all provinces in China only commenced towards the end of September. The initial stages of recovery since then have been very encouraging.”
Goldstein told analysts Macau is rebounding slower than had been anticipated. Still, he expects the Chinese gaming market to recover faster than Las Vegas.
“The COVID obstacles are real,” Goldstein said. “The demand for Macau is there, but the visa and testing issues are limiting access.”
In addressing questions about Las Vegas, Goldstein said there has been a renewed demand for convention and meetings business for the first part of 2021, but much of it is dependent on airline volume into Las Vegas. Goldstein said capacity restrictions for large meetings, and the fear of large group gatherings, remain the challenges the market will have to overcome
“We’re getting more calls every day for the group markets,” Goldstein said. “People are itching to come back and be here.”
For now, he said, Las Vegas is a weekend market.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
