Parisian hits the ground running in Macau

Parisian hits the ground running in Macau

Monday, November 7, 2016
Las Vegas Sands celebrates strong opening

Las Vegas Sands cemented its position at the “dominant player” in the Macau market as it rides the changing tide of sentiment in the gambling enclave in the third quarter.

This was the view of analysts at Stifel which noted that Las Vegas Sands’ Macau unit Sands China was now the leader in operating profit generation across the entire market.

The company saw the benefit of the opening of the new Parisian property on the Cotai strip at the very end of the quarter, making a debit contribution in a matter of less than two weeks of $68.3m in net revenues and $19.2m in adjusted EBITDA.

Adjusted property EBITDA for the entire Sands operation in Macau rose 15% to $628.5m while on a hold normalised basis, the property EBITDA figures rose 5% to $564.5m.

Sheldon Adelson, the chairman and chief executive, said the company was pleased with the results in Macau and felt confident the operation would continue to contribute to the enclave’s “diversification” and help attract greater numbers of leisure travellers.

Over at Morgan Stanley, the analysts suggested the Parisian was “one of the strongest openings we have seen” in Macau. “This was done without cannibalising other properties,” they added. “This is in contrast with openings of Galaxy Macau phase 2 in the second quarter 2015, Studio City in the fourth quarter 2015 and Wynn Palace in the third quarter 2016. We attribute this to the iconic thematic property along with focus on mass segment and cost optimisation.”

Sands China outpaced the rest of the market with growth of 2% in the third quarter, compared with a minus 1% growth rate overall, noted the Union Gaming team. The mass market was the driver of the growth for Sands, up 7% over the period compared with a 7% decline in the VIP segment.

Union Gaming noted that going forward the outlook for the Parisian and the company existing portfolio were positive.

“While it is still early days, the trends are suggesting that LVS could successfully ramp the Parisian without cannibalizing its existing operations,” they wrote. “Digging deeper into the results, the occupancy at the Parisian was 87.5% in the quarter. In addition, we would note that occupancy at the Venetian Macau increased 8.7 percentage points year-on-year to 93.2% - the property's highest level since the third quarter 2014.

The October figures form the Macau gaming authority showed that Macau was now almost certainly undergoing a turnaround in terms of revenues with gross gaming revenues for the month up 9 percent compared with the same month last year.

Total revenues for LVS rose 2.6% over the third quarter to $2.97bn while net income was up 2.1% to $605.5m. The Marina Bay Sands property in Singapore enjoyed a 1.6% rise in net revenues to $762.6m with property EBITDA up very slightly to $390.7m. In Las Vegas, meanwhile, the Venetian and the Palazzo saw net revenues fall slightly to $383.2m but property EBITDA rise nearly 7% to $85.3m. The company was hurt by a 29% fall in table game revenue, caused mainly by “softer play” at the baccarat tables, but slots handle rose nearly 7%.

Totally Gaming says: As the market leader in Macau, it is no surprise that Las Vegas Sands should be doing well now that it appears the market overall has turned a corner. As Adelson noted in his comments accompanying the results, the company has now invested a total of $13bn in Macau indicating not only its commitment but also a faith that will have been severely tested in the past two years.

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