Q2 2020 Las Vegas Sands Corp Earnings Call
[music].
Good afternoon, My name is safe and that will be a conference operator today at this time I would like to welcome everyone to to Las Vegas Sands second quarter 2020 earnings Conference call. All lines have been placed on mute to prevent any background noise.
I'm not trying to go over to Mr. Daniel breaks.
Thank you joining me on the call today, our shell Madison, our chairman and Chief Executive Officer, Ragozzino, President and Chief operating Officer Dumont.
Our executive Vice President and Chief Financial Officer, before I turn the call over to Mr. Allison. Please let me remind you that today's conference call will contain forward looking statement, we're making under the safe Harbor provision of Federal Securities Law.
The company's actual results could differ materially from the anticipated results and as forward looking statements. In addition, we may discuss non-GAAP measures.
A definition and reconciliation of each of these measures the most comparable GAAP financial measures is included in the press release.
He doesn't mean supplementary slides on our Investor Relations website, we may refer to those last year in the June exports has a call. Finally, I just would like to participate Mcewen recession. We ask that you. Please respect our request that limit yourself to one question one follow up so we might allow everyone with interest the opportunity to participate. Please note that this presentation is being recorded.
With that let me please turn the call over to Mr. Allison.
[noise] [noise] [noise]. Thank you.
Dan Good afternoon, everyone and thank you for joining us today.
I hope that all of you were staying safe and healthy.
During these challenging times.
Well the company is facing over 19 challenges. We're excited that we're seeing the percentage of recovery.
That's what do we put the Marina Bay Sands in Singapore is now open and that since July 15 should visited your journey to Guangdong province from accounting.
This is a critical step towards the relaxation quarantine restrictions you province is outside of Guangdong, Israel's eventually something to do his vision issues to go.
Well the recovery in our local communities you know when it's early stages, we will remain steadfast in our commitments to the L.
Safety of their employees and customers had to providing assistance and a host of my kitchen.
We remain confident that travel and tourism spending in each of my my cuts will eventually fully recover.
Nice 79 over 70 years of business experience.
This is my bridled optimism that people travel again.
Shelf again it comes together again to a Julie entertainment as social interaction.
No change I guess, that's a good that business.
I loved wisdom about an eventual recovery, coupled with our financial strength and they should although capital investment programs. Both will go in Singapore.
We believe these investments will strengthen our leadership position in each of these luggage and will provide a logic lateral the future growth is travel and tourism spending winter than.
In Macau, we continue to make great well gosh is the execution of a 2.2 billion dollar you are still a capital investment program.
The London I'm going to go and the grain switch it was seasons.
As we complete these and other capital projects during the here and then 2021, we will be introducing a variety of world class integrated resorts to them. It's.
This includes three new all suite hotels.
More than a dozen new restaurants, additional retail and new lives you know to gaming facilities.
We're very confident that these new developments will go to recapture and over time increase it you're leaving business tourism.
And the rest of Asia.
We remain unwavering commitment to loved to investment in Macau.
The scale of the existing and ongoing investments enables us to play a part in supporting the local economy would go today, including the support of local employment as well so support the small and medium sized business just [laughter].
We remain steadfast in my believes the Macau has the potential to become one of the greatest business and leisure tourism destinations in the world and the mice capital of Asia.
You're welcome the opportunity to invest billions of additional investment dollars, an extended contributions to the girls the diversification and evolution into wages, leading leisure business tourism destination.
[noise] no turning to investment in the expansion the Marina Bay Sands in Singapore.
I remain excited to be but if Singapore's continued growth is a leading leisure business tourism destination.
We continue to make progress on D.N.B.S. extension.
We believe the delays in the timing of the budget the likely to occur.
These delays that principally related to the impact of the pandemic and we will provide additional updates in the future.
Excuse me is conditions are continuing to evolve.
In advance of the expansion. We will also continue to reinvest in Marina Bay Sands to enhance the custom name's fairs and the tourism appealed to me is doing.
Finally, turning to Las Vegas.
Eventual recovery could take more time here than in Asia.
Particularly because of I realize it's a good meeting business.
We remain confident that Las Vegas will remain the greatest leisure and business tourism destinations in the United States.
Regarding our balance sheet, maintaining a strong balance sheet makes great businesses, where we what does it still goes by this pandemic [laughter] just think.
Our balance sheet strength enables us to invest in promising future growth opportunities and positions the company to deliver industry, leading growth new user ahead.
We're deeply confident that the eventual recovery and travel and tourism spending.
And the strength of our business model will enable us to deliver both growth and the return of capital to shareholders in the future.
Thank you again for joining us on a go today and now we'll take questions.
[noise] they are they ready for questions.
Thank you.
A reminder to ask the question.
Our star one on your telecom.
[laughter].
Your first question is from Joe graph from JP Morgan Your line is open.
Good afternoon everybody.
My first question relates to Macau I was hoping you could give it some of the your anticipated benefit and what you had seen over the last week or so.
It's a guangdong warranty requirement.
A two part related question.
One do you think this travel easy.
Distillation. So we've got any other travel restrictions easing no news either issuing can get you to EBITDA breakeven in Macau and she is when you look bad part of this question. When you look at select you could 10 days, how similar was this period performance.
For me.
<unk> in February 20, when the casinos reopened and March 21, Guangdong initiated the quarantine requirement and I believe.
Yeah, Joe I, it's Rob I think that there's a big difference between the date you mentioned in the current period.
We believe Macau is our biggest upside potential, but I think it's critical to realize I think you know there without the ideas.
Individual visitation scheme being resurrected there's not much hope for.
The casinos to come back to you. This patients I think it to 3000 [laughter]. There's three stuff that we took the first thinks that for the corn T I'll be taking away. The second step will be the I'd guess resurrection hopefully that happens.
No we don't know when but that's critical of course, then finally beyond one dong, we just see the other problems open as well I, it's exactly the impactful financially or the income of Macau, the warranty disappearing without resurrection of the ideas.
And I think that subsequent to the Guangdong open be helpful. But as you know we need other provinces come back as well. So I don't think is much used to compare the.
The purity dimension in todays very different only left is non expired I V. S and those are dwindling sodium back is negligible Oh I think the victory Pyrrhic in terms of the financial result was very helpful. In terms of once the I guess comes down or what comes back and of course more importantly, the we get beyond Guandong's.
Since the callously provinces that contribute to.
It's a income so.
Okay. So we feel.
So very excited about the potential when does that we were still strong believers in the in the pent up demand theory, we're supposed to unbelievers, our business will come back quite well. The problem is I can't normally we don't give you a date certain could be next month it could be a in the fall could be late in the fall. So we have two main patients remain.
Instead test I believe the business will add backs.
And the way for that day.
There are those around the this is killed it.
It was as those who believe that.
That it'll take a couple weeks for each step.
The.
Are they going dawn.
Waiver the quality and upon return of Guangdong Province, My take two weeks until then then.
They will open up another province, they'll do it gradually until we get to most or all of the provinces.
They have yes came they know that Macau goes the knows that the heaviest scheme is important and that we need to.
Oh, so well so hopefully that will take place in the sooner rather than later.
There's no guarantee.
So hope.
Right.
Michael Sheldon Thank you and then.
Turning to Las Vegas question, So early in the queue here.
Rob can you give us a sense of grouping convention activity cancellation and attrition rates for the fall and the rest of 2020.
Like your dream for the first half of next year, then mini importantly, what what you're seeing with respect to Las Vegas Airlift capacity.
For the he ended this year for October to December. Thank you sure Joe.
As you know we're running three very different business is very distinct business, the Singapore Macau versus Las Vegas of all of them I view Las Vegas lease favorably and for reasons, you mentioned, a Las Vegas, especially our company, but the whole study is depended upon group and convention in banquet segment return.
I see nothing indicates 20 would return at all there's nothing that Horizon group here group, there, but nothing of consequence, and we cannot.
Las Vegas cannot perform without returns are these segments. It cannot make money with limited hotel occupancy negligible occupancy mid week or maybe just give us and get past weekend were in essence will run your regional casinos.
Okay to fund driving businesses, we have air lift from somewhere around 40% of what it was at about 40%. The occupancy is planes is much less than was previously so we're a world of heard here in terms of.
I guess is forward looking at I don't Crystal ball and the 21 I remain pessimistic about grouping convention and the reason I say that is if you believe in a warranty I do believe in a in a vaccine where you believe this thing will eventually just burn Ralph I don't wherever you believe.
I still think the longest or the slowest return of our business will be launched your group business because it tends to skew younger it's more tech driven in those people were reluctant to travel. So I think we have to take a zero my opinion for the rest of the year in terms of the.
The return of group business and banquet business any consequence, it could it be a one or two here or there yet, but nothing nothing material I don't want to predict 21, because I don't feel have enough insight into what might happen to the vaccine or the virus in no way to forecast that but I would be.
Left and honest, but didn't tell you the Las Vegas is a very difficult place.
Unlike Macau, where there's a real I'd real strong desire and believe that we'll see a things return much quicker Macau This fall.
I feel small single, we'll talk about shortly but I guess is dependent on air lift is depended on group in convention, it's not a casino driven market anymore.
So we're struggling here I think I speak for Las Vegas, Venetian lots, so, but I assume that may translate to other properties as well, it's amazing transition from we're making a half a billion dollars a year and we're hitting on all cylinders and and today, it's it's painful.
I think remains painful for the immediate future 21, Yeah. I think you have to look to that as the turning point and now it turns out that depends on how you view. This virus vaccines situation, but I also caution you that large scale businesses like we are big box business is maybe the most troubled in terms of the customers.
Consumer use to return to it so and older years I've been here in Las Vegas, I've never felt.
You know more gloomy I do say no what's happening in Las Vegas short term hope long term you see a better day.
Thanks, Rob Thanks Sheldon.
Your next question is from Robin Farley.
Your line is open.
Great. Thanks, very much for taking the questions.
On last quarter's call you had expressed some interest and potential M&A activity and I just wonder what your current thoughts on that thanks.
Hey, Rob.
Yeah sure fleets.
You know as we've said it consistency over the last quarters. We're very focused on returns. Our chairman is a very returns focused guy and I think his mandate has always been.
Very to maximize those returns and I think you heard him on the last earnings call and he's here today. So we'll probably have some additional commentary mentioned M&A, but I think that was done in the context before the benefit of the massive government stimulus programs were seen and there was a belief that there might be an opportunistic way to take advantage of the environment and capitalized.
Great assets, it could be purchased or perhaps below replacement cost or perhaps at a in a cyclical trough where are the acquisition could make our required returns work and I think in this environment.
Given where we are today there aren't a lot of those opportunities available that being said I think we'll continue to look I think we have an opportunity if something comes around and we'll continue to keep our eyes open but at this point, we're still very returns focused I think we're not going to be an M&A driven shop.
The same time, if something comes out that's incredibly compelling I think we'll be happy to take a look at it.
I know for sure.
I just as a follow up question.
Just given how disruptive.
Pandemic has been.
Expectation that that the concessions in Macau will be extended for a year that the whole sort of processes to rebid would be pushed out is that something that.
Do you think maybe likelier has been communicated in anyway.
Oh Robbins, Rob Nothing's been communicated by the government whatsoever, and will remain a waiting for their advice and counsel.
As of this time nothing else, we said about extension or timetables.
Okay, great. Thank you very much.
Yeah, I wonder if I want to bring up.
Something from two questions ago the.
The.
With holding to the goods well the nine eight non attendance at the groups.
It is both a state and federal requirement the state in the federal could say you can't have a a gathering of anymore than say 50 people you can ask offences and trade shows with gatherings prohibited of more than 15 people. So we got to wait till the state in the in the federal government.
Opens the door for that.
Okay.
Yes.
Okay.
Your next question is from Carlo Santarelli from Deutsche Bank. Your line is open.
Hey, guys. Thanks, very much Rob on the last call you talked a little bit about.
How provinces would come online.
Just wondering if anything has changed with respect to your about.
A staggered province by Province, Yes, really so to speak or if there's anything further beyond why don't I know you touched on it a little bit earlier, but is it still your expectation that it will be a staggered process.
Yes.
I have insight beyond what you know, it's all here say, let's be clear, we're not getting official word from the government, but the consensus among those who seem to understand how the government things about this is obviously is much more careful to we are here. The U.S. Other tolerance is much lower for the spring virus, but what were what we hear from various sources that yeah.
Yes, when it happens it stays limited to Guangdong and then the eventual move into other provinces. We gradually throughout the course of a before that's what would be told it won't be a green light nolting opens up one time I think they're going to I think they're doing very orderly nice to see that with the quarantine I think the I guess will be.
Next issue whenever that happens hopefully sooner than later, but yes, I believe its staggered throughout the fall, perhaps even beyond the full but.
I don't it's I'd never ever say this will be lights go on one day and boom, China opens up to Macau, we've never done from anybody we heard a lot of people.
I'm pleased that lesson, Rob I'll give it a try.
Yeah, well do going pretty slick it quickly shown [laughter] nearby flick all companies give you a Brazil could help flickered. So we're hopeful money now I think all of all the places you operate you know Singapore's them on the Middle Vegas isn't in the deep part of the pool, but macallan such potential we believe so we're so excited to see a light switch.
Often but we have to wait patiently wait for that day.
A pretty.
Actually we should all what's one thing we shouldn't I mean, I think I'd say the obvious you did you follow this space forever, but again. This is the world's greatest regional market is not air dependent we only airlift is 10% the customers come from air Resi see in land. So it's fascinating to me how people I mean mcallister accessible.
By land in my and by sea not their dependent it asses, what used to regional markets, which is a quicker recovery a mix I think you'll see in Macau. The moved those those those barriers come down I think you'll see a lot of people coming in they don't need airplane.
And well need to social distance on airplanes. It it's a huge advantage much out specially when the government's feel comfortable opening the borders.
Your next spring I'm sorry.
Sorry, just as a person they science, obviously you guys.
Really what everything's clicking on that just it's just the cash flow machine and right now given some of the limitation.
Okay.
Specs, obviously, the airlift into Singapore, and that being somewhat compromise dri steel the property right now is able to with kind of the patronage that you presumably will get before things change more broadly is able to kind to get to a breakeven I think the operating loss or something like 65 million to markets. What you guys had slide deck.
Well, maybe what you expect to see bouts of element for that.
Matt Roberts back towards the breakeven level in the near term.
Yes, it is very much so I mean.
So we're hoping he just be clear you may I know this plus because he was over you know that now were handicap the sense. There's only 300 live table games at 15 on slide eight.
EEG, but are we were claim all but it's always on on the 27. This month, obviously were that's a market hampered by air lift because you know its indeed, it's kind of Oh, it's a hybrid market. It's got as local business because of all the a fluid foreigners resides in Singapore and what's your many unfortunately.
If we were being just extraordinary country to the living and conducted business, we're very fortunate a strong.
Foreign clientele that as PR status inside the Super borders reside there permanently having said that we'd love to have more air lift and loves you, Malaysia woken up but yes. The answer your question, we feel very very lucky very fortunate what's happening in Singapore as we speak it's you're seeing customers.
Occupancy was driven by mostly by Casino next Monday August we have very strong just feel occupancy month and they'll be some cash demand is welcome staycations. The Singapore is the border still close to Malaysia, except for a limited.
Hi visibility business books.
So Singapore is handicap it can make money and it will make money, it's gonna be a nice turnaround we're really feel very fortunate the Singapore is coming back on line you know it's a it's as are most are best prospect as we speak today, a much better position we are in Las Vegas, So yeah, but obviously the maximum potential that property to get back the billion.
In six to seven days will need to see the airlift return, we need to see the accuracy of fully operational but we feel.
The about what's happening soup, we feel very fortunate that we've come out of this it was broken and operational we're seeing customers and we feel good about.
Thank you very much guys.
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Your next question is from Shaun Kelley from Bank of America, You line is open.
Hi, everyone.
Let me just a follow up on on Singapore, I mean, I think it's a little harder for us to.
Track or just some of the local policies in that market. It out on the <unk> the reopening in what needs to be done in the airlift side, you know anything you could point too as it relates to.
Either agreements on creating a local travel bubbles be it Malaysia, or China and could you just remind us of what are the source markets that you really need to to see open up tonight to make that property look a little bit more like normal.
Yeah, well, we need the first thing obviously is going to deal with which I don't have any color any insight to help you if I.
I hope it opens up I don't I don't see I look the a real help.
Super property, probably for the balance this year it remains pretty much a a market within the borders the Singapore. There is a chance Malaysia opens up they have cobot under control and it because it is very similar measures to Singapore, given the relationship between the JV boredom issue countries. There's a possibility of some limited leisure business travel opening up.
Probably in Q4 to Malaysia, I don't see Indonesia. There is talk a there is hope that they can open some a business lanes up to.
China, but that's not happening today, but I remind you were fortunate again have a very affluent clientele a foreign people live in Singapore, I think we'll be well, we'll be pleased the results as they aboard the fall, but I don't see Swanton 2020, being a lot of the air traffic in Singapore foreign visitation it doesn't.
And to me to be in the cards for the foreseeable four five months.
Great. Thank you and just.
As my follow up.
You know relates to Las Vegas, obviously.
One of the biggest question do we get it on the corporate and convention side across just the whole global hotel business and I was curious.
As you talk to some of the bigger convention in groups are you break down our own business.
Just any thoughts about.
Some sort of structural change as it relates to any of that activity I mean, there's so many barriers that it's really hard for people to probably extrapolate too much right now, but any thoughts you have about.
Just demand levels more permanently changing do two conference calls and activity levels or just how do you think about that.
No I was the first.
Shelved than that.
Thank you.
Sheldon.
Not having been in that business in the conference and the potential vis actuation business.
40 years.
I can tell you that the there are different.
Constituencies the associations that when the events there private entities that when the events and the thereof. The.
Companies that run their own events.
One of our biggest customers is a company that brings several conferences to all properties in Las Vegas still of course, India.
They can't get they can't give up on that the fact that people Oh.
People are working from home and communicating promo that is never going to give up on me when do you pay on the the is the Tradeshow business.
I mean people to do research do we could meant.
Two.
Announced to make announcements have brought up introductions, there won't be sensitive for that.
Thank you.
Your next question is from Felicia Hendrix of Barclays. Your line is open.
Hi, Thanks, So much first just wanted to touch on your on Capex. It looks like spend on the London or seems to have been pushed out. So I was wondering if you take walk us through that.
Yet from the timing or for the financials I, but what do you want to hear the ask your take you through the financial side.
The timing we are moving quickly on the on getting a completed Felicia it'll be pretty much done foresees is done. This fall lunder done interior wise Q1 of 2020, but lot more worth your next year Wise news all the pieces to be done we're going as best we can with the constraints of coated.
Not pull back in terms of trying to get done we're holding back we just have some constraints construction wise, but perhaps pasties exercise.
So there's a couple there's a couple of things here.
It is related to.
Permitting but I think the key thing is we've completed the grand seeds. The four seasons, so that Don the longer hotels is 580 suites, excluding some high and suites is done and then between now and ended the year, we're going to complete the London, our core which is 368 suites together with gaming and restaurants cylinder casino will be.
Donadoni gaming for level.
Hi, the gaming will be done.
I will finish the rest of the highest Swedes or the logged in our and we're at the critical power space, which is like the whilst based contracts and then how many restaurants.
So we'll also throughout the rest is one part of 21, which is what you see in the Capex schedule. That's in the presentation deck on page eight is really external worse in the portico share Big Bang.
Some retail areas and some other public spaces.
And then sorry, I think that's really to shifting to the Capex that you see was related to permitting.
But the project from the customer standpoint, aside from the exterior work still continues to be on the schedule that we expect.
[laughter], Okay. So that their hundred million shipped from 21, and then a reference 700 nature from 22 that you say most of that permitting and maybe some cold winter related delays.
That's right.
Okay.
Hello, and that just on on Vegas, and full disclosure, we may have completely model this wrong, but.
Because you've given us the cash burn for property, but even like knowing that you still get better than we expected in Vegas in terms of cost I mean, we're all looking at it negative number. So you know either take that but I'm. Just wondering was there anything like surprising in Vegas that you, where you were able to mitigate the lower revenues or anything that.
You know kind of came up in the quarter that you may not have thought about.
So Rob looked at every aspect.
Okay. Thank you got it that I'll turn it over here.
So you know they kind of look at page five it's really a serious zero revenue scenario.
Right. So when we're making revenue we're actually able to dedicate all of it. So thats what you saw in Las Vegas.
And so we were able to take some costs out of the business as we continue to focus on costs.
As a team was very focused on trying to do is cross reduce costs across all of our jurisdiction. During this time.
We will that makes on headway in Vegas, but as a practical matter. It's really just based on the revenue we achieved during the quarter.
Okay sounds like we just didn't ramp up that right ramp down the cost as much. So thank you.
Yeah.
Your next question is from Stephen Grambling from Goldman Sachs. Your line is open.
Hi, Thanks for taking the questions I guess on I was hoping you could give a little more color on margins in Macau and giving you expect some pent up demand in the market, how you generally evaluating marketing and or lending to coax the customer back and where would you say the health of the junkets junkets ours, we prepped for an eventual recovery.
I think the this.
A question what was your market the building and use open the doors.
And once the customers coming I feel very confident that pent up demand will cover all of our marketing we don't plan to incentive to do much more you've ever done.
Macau is a.
Frothy market when you're on the values come down so don't see that need to incent door or do things differently is open the doors love it when it come as far as a junkets remains a question Mark what does happen there there's been all kinds of things you know there's the issues that you read about in the press the you've covered in your discussions Steven I think remain.
You see what what's the strength of junket. So what the demand is I know this is not the common thinking but I want to lead the average customer. The masters is in pretty mass will come back strong and heavy from day, one and as the junkets or just let the market shows where there has been what the cost of demand isn't how much the junkets will dissipate.
I think that remains a a question mark in my mind.
But we feel.
We are really confident that this is a market that does either lift just these opened the doors and wants people come back in we came away that day.
That's great and as we did you learn from ramping down I guess for the change in.
Demand are the things that you maybe we'll keep you know holding back as it relates to cost that could influence margins versus where they used to beyond the recovery.
[laughter] doors open.
Please open the door rather see what is it like I think once you see a demand you can make those existing senior in the blind that they visibility as to how strong comes back I wouldn't do anything too I see a demand and what it looks like in Macau because again.
You have one advantage there's no one talks about but the Chinese customers not doesn't have optionality and here is becoming the U.S. are going to Europe. So.
Leaving to go to Singapore, So I think in Macau is becomes even more.
Desirable in terms of the Chinese visitation I wouldn't I wouldn't try to figure out the marketing choice use them inside the customers once that happens that will make decisions.
So just one comment to the margin structure. If you think about the run rate business prior to coated.
More than 60% in Macau of our expenses were really variable gaming taxes, and and sort of things related to the activity the business and so when you think about our controllable operating expenses, we have taken cost out of the business.
But the margin structure, you should expect is going to be related to that makes a business more than it is an incremental cost we take out. So if we can start achieving the premium mass business.
What we think we can achieve with the opening of the London or and the four seasons and grow that business with this new product that is incredibly compelling the margin structure will improve I.
Just because it's it will overweight towards this this high value customer so I think I'd like to believe in the long run that.
The base mass business comes back and the premium mass business comes back and we get this volume that takes advantage of some of the benefits that we've had the margin structure, but the long run run rate margins should look similar to what we've done the past assuming the business returns as normal.
That's super helpful. Thanks, so much.
Your next question is from Thomas Allen from Morgan Stanley. Your line is open.
Hi, Thank you. So you obviously have wanted a leading mall portfolios in the World can you just update us on your conversations with a tenant.
Both in terms of rent payment then renewal.
And then there's probably thinking about that for the future.
I think you're right when you wonder.
Why do you start and I'm happy to add if there's anything that's helpful.
I think we've worked very well with our Thomas who to your point our retail portfolio is a very important part of a mixed for business.
We remain believe you believers in that will come back or big way in Asia, but mds to start to ramp already.
Obviously Macau is not a we've been very we've worked very hard to foster strong relationships with attendance in both jurisdictions, we didnt rent reduction et cetera, we'll take away. The CRC. Once again the tenants into worked hard to do you work with us and not try we will try to work in say manner affair open dialogue.
What about how we see a future I assume that business will mimic the casino hotel demand as Singapore gets stronger day by day. The tenants are coming back we've had a lot less business. We want that it's a bit Orchard road, that's sort of change the mix is going back to US now the hotel. It's an open so I think it's very soon.
Before we had 200 plus tendencies in in Singapore, I think 810 season, Macau, we take them one by one based on how we see the market treating them there'll be some casualties. There's been some casualties are ready in some of these places because obviously the shutdown, but I just like we want the game side hotel side I'd like to.
Wait and see what demand looks like in that so we we knew those relationships so base rents percentage rents, but somebody tells me that in both markets, we'll see return to normalcy rather quickly.
I I think it limits again, what we're going to Sealy gaming sites and is also told is still up it will take time, especially I think in Singapore, because without the airlift, it's a local retail market.
I think Macau will come back much quicker because I feel that issue once the borders open up a lighting Macau should return to normalcy rather quickly.
And just one other one other thought.
The.
I spent a lot of time with our tenants in order to help get them through this time.
Which is unprecedented out with the goal of having to be able to trade again.
When the recovery that Robert just discussing our cost too.
Fruition.
So from our standpoint, you know we view the malls are very important assets.
Very important for our customers experience.
We have relationships with some a leading brands in the world and in Asia, and we want to ensure the continuity of those relationships and we've been working with them to ensure they continue to trade in the recovery.
Helpful. Thank you and then yeah respecting that your Asian properties aren't as Mike's intensive and your Vegas properties. It does seem like there. There is some signs of recovery in group business in Asia are you seeing that in the bookings heading into 2000.
Anyone here in Singapore, Macau property will.
No. We're seeing there's still things have gone extra it's easy to Singapore as a starting point, we are seeing demand in Singapore, but I think people are very tend to Vac committee people or call. There is there is inquiries or there's definitely bookings, but do caveat being that they can taken a a battle out within 90 days, there's plenty of room to to quit.
So they don't see demand. So I mean group is different corporate stuff is different than obviously didn't large deal groups that.
Require attendees and I think what we're seeing is people dependably, putting a foot in the water, but even Singapore since you can't get there how do you really make real commitment. So you did you want to come to Singapore large groups you can't fly into Singapore. So he is just as the Singapore driven market only this point I think is tool to Merck each one clear because of a 21 in Singapore.
And same applies to Macau mcalpin be shorter booking window as you know the challenge in Macau is the beginning piece goes back strong I anticipate or will it negate the need for much mice business. They think it's an impediment to mice because gaming demand. So strong. It takes a majority the rules you can't put large scale groups in Macau because.
Booming capacity, our competitors will just but anyway. So I think it's unfair to teach this far out to say what happens in Singapore without airlift being determined I still think it's too early to call that situation. Yes. There's inquiries is people talking to us, but everyone's scratch their heads and what does happen.
How do we get there when do we get there. So I think it's too early in the game to call.
Thank you.
Your next.
Your next question is from Jared show Giant from Wolfe Research Sir Your line is open.
Hi, good afternoon, everyone. Thanks for taking my question.
Can you just talk about whats changed over the last few months in terms of your thinking on Japan, and then I guess going back to the M&A topic. I mean have you had any inbound calls any substantive discussions with anyone and in in your slide deck, you listen Macau, Singapore in South Korea is areas of potential development interest.
Are you kind of agnostic to location are you more focused on the return I mean, how are you sort of thinking about that.
I think Japan, we no one wanted to be in Japan more than shelving and the team here, we were very bullish in Japan. We spent a lot of time and money and we're very hopeful but the environment. There just wasn't suitable to make investments at this company demands.
And does returns it didnt make we couldn't make it work we should try we spent enlist time in this dollars pursuing Japan, we wish we could have state we wish to construct was more welcoming to the investor, but it wasn't and I feel comfortable we made right choice or these shell was extremely easy this is a separate decades.
What was the biggest proponent, we're all disappointed with top in Japan, and but it didn't make economic sense. So we're keen to invest we obviously will give us all.
Works out things get better, especially in Asia were keen to be back looking for opportunities via Korea or other countries, we'd like to be investing but has the right environment. That's their country wants us to invest it wants to do the modeling Sheldon as well. He is authored as unique model do you need a huge kathleen tens model.
It calls for a cooperative government understands scale these investments and the need to release return. So we continue to look at everything in Asia and were keen to do it John you want to comment.
[laughter] the regulations that where.
They were promulgated by the.
The the regulations that were.
We're promulgated by the Japanese government.
Went to the diet.
We're not conducive to attracting the kind of investment.
That requires the class the construction than the cost of land in Japan is very high and.
It didn't justify if it was down is like another this is another jurisdiction if it went down to.
24 billion.
Well I'm not sure that would have.
That would have made much of a definition because some of the rules the talking about withholding income tax from foreign winners. So play it comes in from another country. He wins they want us they government wants the airplane so with all the taxes to pay the Japanese government.
That all that will never tract, one phenomena, so and the text the Texas, where.
70% gaming to.
Good evening sent the income taxes.
And there was no assurance that they will raise the Texas.
From there so there was just too many.
It was too many negative.
Regulations that we can do it.
Okay.
Listen if they tangent.
Mine is open to go back.
Okay. Thank you very helpful.
And then just going back to Las Vegas, Realizing it said, obviously much smaller piece your business, but can you talk about what type of customer you're seeing initially would you say, it's primarily a lower yielding drive to customers in anything you can share there and is there a.
Of revenue percentage, you need in order to to get the breakeven.
Now, we need more more customers and we need lots more of the truth is the hotels are running it is down you know mid week 2025, 30% weekends 50, 60% that doesn't work, they're only coming mostly from driving market. So [laughter] markets, such as international but throughout the U.S.
Yes, actually we had a very high yielding very strong customer because our marketing team has incented, we brought some great business in using our airplanes and our marketing our or lists we see actually very strong high end play in those slots and table is extraordinary amount to play is going to hear the problem is as you know.
So it takes a lot different segments to make this company make half a billion dollars in Las Vegas, We did last year, we aren't any convention business. So there's no yield on the week of mid week from the from the Lucite you are seeing stronger fight T. demand weekend, but there's nothing else in there, but up I D strong high end consumer demand work.
Our numbers might surprising to see how good they are in terms of the slot machines. The table yields were not yes, there's things and driving business, which is not a very high I demand gaming side, but again Vegas has morphed into a hospitality driven market and I think a lot of people its confuse even people operate here.
Surprise, you sometimes that their surprised sell so it is the without the hotel the full without the convention driving the rates mid week without the bankruptcies, we did here almost $200 million in banquet sales massive margins. It's just very hard for our model to work and I assume that's true in the entire marketplace you wanting a large scale.
Building like most these buildings are you're not getting violin gaming when no matter. How good is you're not getting buying 30, 40% occupancy it or making money weekend, which we can you give back mid week, which we all do and I don't think that picture different from most just this company has been such an incredible success stories in the convention.
In banquet segments, we've driven so much business through here I mean last year again, I think we broke a half a billion of EBITDA, but to do that you camera hotel. These kind of occupancy is you can't run a no banquet facility you can't rely on high rolls. It just doesn't work and those 819 67 left and so this is a new business in Las Vegas.
What allows me to build these multibillion dollar buildings is the is it you IR nature of what Joe Morford 20 years ago I mean this town has.
Moved away from the gaming dependent to a very diversified plan and I don't know how you fix it until you get airlift enables you and groups to feel comfortable coming back here in banquets coming back here and and that's just the fact of life. When I don't think were alone is thinking.
So we remain we remain.
Hopeful that things will turn but the Las Vegas, you enjoy 20 is a very difficult place and I hope it gets better but that's the truth of the market today.
Okay. Thank you very much.
Oh.
We're now down to our last question no. Good day from David Katz from Jefferies. Your line is open.
Hi, good morning.
Good afternoon, I should say look.
We all may have our own instead of beliefs as to why the demand.
We'll be there we weren't once the access.
It's available can you talk about what discussions or any data you've collected what why youre convinced that the demand will be there.
As as many of our chart.
Yes, I don't give David Macau.
Oh, yes, and they demand okay agnostic important given the Gaga yeah, I look I mean, you're talking to you guys didn't want to Macau for almost 40 years and I don't think anybody's going there and see what I see could have any other rational belief.
There's there's a number of factors one is the propensity gamble remains among the highest in the world to Macau is a very seductive place does all the things you want it's got high quality retail high quality restaurants high quality lodging has to go enormous casinos are plentiful in diverse it's very excessive.
And they can't go anywhere else I mean, frankly, they're locked down just like we are no one's going to Europe noise on the U.S.. So if you're a flu in Chinese person and Macau, such a it's become such a compelling place to visit I mean, when I went there in the eighties. It was it was all different world in 2019.
The starting world of of Opulence food Entertainment retail it has all in all the things that are seductive to tour. So I have no doubt my mind not not Oh.
I notice that the Macau news doors open up we'll see a lot of trainees towards come back. The only point do you believe the economy has weakened the consumers' ability to gamble.
That's not to calling all you can make individually I believe that will come back strong.
Again convinced Macau resurrect quickly also you should be advised the big you know this but this virus for the U.S. is very difficult a year old time Americans worry a mask you'll have your temperature. So so far until people in the U.S. so confusing.
Is there a story of the way you got magazine mid upper mass the kids go to Walgreens footwear in Massachusetts freely about our first amendment rights. It was a bizarre situation not the case in Asia people are very comfortably mass and attempt you take its normal part of life. There. So you have that factor, which is there more comfortable with this is.
This virus environment is lived through it they understand it they were master complying walk around Hong Kong today, So I think that bodes well as well, but again I would like to count. So it's such a a wonderful place to the Chinese tourists who offer so many wonderful amenities I I have no concern at all.
So with that walk comes down that border wall comes down in terms of ideas and they allow probably says open back up I remain completely convinced that the business come back very quickly and I'll come back and multiple segments of the two caveats I think would be one higher due the junket business is a bit confusing right now and to do you believe the consumer.
Adequate is spending money.
Pocket two to four take I think they do so I feel very as good as I feel about Macau.
Just wait for that data happened to be validated, but that's one person's opinion.
But I believe I just shared sentiment among those who have been to Macau, many many times and watch that place reaction.
As as I have and I would agree that Macau is far more exciting or Walgreens, if I can just follow that up.
You know if there are ways in which you're discussing what normal but look like.
Or any aspects of the business that may occur.
Right.
You know have an impact or benefit on your ability to operate warranted Gaga open now that may incurred costs are long or maybe not.
Sure.
I think it looked like all things here you have looked at different will you will see you're wearing masks, you're going to see irrs you temperature checks you see extreme cleaning, but by the way it happened pretty much it's happening for years in Asia with the since the Sars times, it's a much different one of the most fascinating cybersource Macau was.
The smoking rooms, when I first went there everything was worried smoky would estimate the market do you can smoke, they're not going to calm and that was coming as well well it'll areas to be was they all stood in the smoking rooms smoking, making investments multi room dictate your guide bet. This that that it didnt the term Macau people can gambling it didnt each other Chinese consumer.
The coated virus they'll except the fact is restored the massive very compliant and no new the right thing as far as being respectful social does [laughter] impactful in terms of the table accounts table occupancy so that'll be an issue. We're fortunate here you know 15, 16 or table games there and.
Sales in thousands slot machine, so do I think as many hurtful Megan weekends when were full capacity in the places jammed, yes, possibly but I look forward to adjust those problems when they happen.
Alright, Thank you for taking my question.
Thank you appreciate it.
Huh.
Ladies and gentlemen, today's conference call. Thank you for participation you may now disconnect.
Great.
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