Q2 2022 Las Vegas Sands Corp Earnings Call
Speaker 1: on-line and further relaxation measures in the region are implemented.
Speaker 1: Our conviction, the long-term opportunity as Singapore market remains steadfast. Our one billion dollar US, our one US billion dollar capital investment is underway at Marina Bay Sands as introduced exceptional new suite product and premium segment focused amenities to the resort. More offerings will be added throughout the remainder of 2022 and 23, and this one hands the property's appeal to premium customers seeking the highest level of experiences.
Speaker 1: In addition, we look forward to substantially increasing our investment in the Singapore market as we execute our expansion plans and marine-based sands in the years ahead.
Speaker 1: Singapore remains in an outstanding market for additional investment. Let's turn to Macau. The operating environment there remains very difficult. In periods when restrictions have been lifted, the customer demand and spending in Macau have proven resilient at the premium mass level from both a gaming and a retail perspective. As the market eventually recovers, our $2.2 billion investment program at Four Seasons in London will provide outstanding growth opportunities in both the premium and mass customer segments. All agrees to the
Speaker 1: We appreciate the clarity of the revised gaming law in June . We look forward to participating in the concession retendering process as it proceeds. We continue to have the largest footprint in this incredible market. We retain great optimism at our ability to perform to pre-pandemic levels and beyond the Macau wants visitation returns. We would welcome the opportunity to invest billions of additional dollars in Macau. We continue to believe Macau is an outstanding market for additional investment.
Speaker 1: We consider our portfolio of resorts in Asia to be an ideal platform for growth in the years ahead and additionally to take pursue other opportunities in large land-based destination resorts in the U.S. in Asia. Let's go to Q&A.
Speaker 2: Thank you. Ladies and gentlemen, the floor is now open for questions. If you would like to enter the queue to ask a question, please press star 1 on your telephone keypad now. If listening on speakerphone today, please pick up your handset to provide optimum sound quality. Also, we ask each participant to limit yourself to one question and one follow-up. Please hold a moment while we poll for questions.
Speaker 2: And the first question is coming from Joe Graft from JP Morgan. Joe, your line is live. Joe, your line is live.
Speaker 3: Hello everybody. Hey Joe. Hello everybody.
Speaker 3: to start with Singapore here. When you look back at trends within the QQ, which were obviously encouraging, and you look at the premium mass and the VIP segments, was there anything notable in one segment versus the other throughout the quarter? How even was the recovery month to month in the segments throughout the quarter other than seasonality? You talked about source markets driving improvement. What geographies are driving that improvement? And then, lastly,
Speaker 3: with my multi-part question number one here. Can you talk about what you've seen so far in July and the first 20 days here? Thank you.
Speaker 1: A lot of questions there, Joe. We're not going to break out the quarter. I think it's a fight to say we're pleased to be back in a strong position in Singapore. And the fundamental growth there comes from obviously both base and premium mass. I don't think either one outside and the other is consistent movement in the right direction. I think the biggest thing we're seeing is the airlift is opening up, and that also remains to be the most challenging part of the Singapore recovery airlift is still a challenge.
Speaker 1: You were getting a lot of good business out of the region, especially out Indonesia and Malaysia. But I think there's a lot more opportunity as the airlift returns. And I think you see that in our deck, the Changi monthly visitation numbers are still relatively less than 50% of what they were pre-pandemic. So although we're delighted with Singapore, the numbers reflect that. We take those reasoning optimistic in the months ahead.
Speaker 1: And great to many follow up on that question, Joe. If you want to just keep, that's what I think I heard you say. Is there more to it?
Speaker 3: No, I mean I...
Speaker 1: Can you just talk about what you've seen so far in July ? Has that trend continued? I think you know we're not going to do that. You know we're not going to talk about July . I think the number is, again, our debt gives you a real good sense of what happens in Q2. And again I think the story in Marine Bay Sands is a regional story and a Singapore story. Has that, has that place gets more visitation? I think you look on page 16 of your slide presentation today. You're deck there.
Speaker 1: You'll see that we've now reached 50% capacity in the Chinese, like 46% what it was, May of 19. So we're doing these numbers with still very, very distressed airlift. And I think you know, unlike the US where there's unfettered ability to get to regional markets, airlift is back, transportation is still a place you need to apply to. And so the airlift story can just a hamper the recovery. So I think the $300 million plus quarter is a pleasant upside.
Speaker 1: to what we thought we'd do, but there's a lot more room to run as this market opens up into places like Japan, Korea, and more travel. We're really more dependent right now on the closer in foreign markets.
Speaker 4: So
Speaker 4: One other thing is Patrick, one thing to note when you look at Maria Bay Sands is that we're not a capacity and what I mean by that is...
Speaker 4: to Rob's point, if you look at the amount of airlifts coming into Singapore, it's not where it can be, but we're at levels that are very strong relative to 2019. If you look at our non-rolling volumes, which are really speaking to the premium mass segment from the catchment area, this is only gonna grow. And the good news is, we have our team together. One of the things that's been slowing some of the growth coming out of the pandemic and really capturing some of the pen up demand and the return to normalcy is the fact that many operators in luxury segments.
Speaker 4: didn't necessarily keep their team together throughout the penalty of the pandemic. We were fortunate enough to do that, and so now our team is ready to respond, so we have plenty of capacity to absorb the growth as it comes in. So our view is that this is a good start that we have more room to run.
Speaker 1: The Patrick's point, Joe, one more thing is to make sure you're aware. We were there, I guess, a month or so ago. One thing is disturbing is the hotel business, even the luxury brands haven't been able to get open to 100%, some running at 40%, 50% capacity, because they don't have adequate personnel. And that obviously feeds into Marine Bay's sand. So as they get open fully this year, as that market returns, as the employment grows, I think we'll grow with that. There's a lot of room to run here if we get that place fully open.
Speaker 1: and airlift returns to pre-pandemic numbers.
Speaker 3: Great, thank you for your thoughts there. Switching over to Michal, can you just talk about what your average daily operating expense?
Speaker 3: Average cash burn rate has been during this most recent casino closure there and are you awake?
Speaker 5: Grant.
Speaker 6: Yep, we're here.
Speaker 7: Good morning, sorry, just, momentarily lost you. Yeah, Joe, I think, you know, obviously, the second quarter we were running at this 100 million EBITDA loss.
Speaker 7: So we'll basically just over a million a day. Now as we went into second half of June , we have a local outbreak of COVID in Macau. Therefore into the third quarter, clearly the revenue environment is lower than it has been in the second quarter.
Speaker 7: especially with the last week's closure of the casinos as well. So I think you can look back to
Speaker 7: where we were in 2020, in a very, very low tourism environment in the middle of that year, and take it from that in terms of the actual daily cash burn rate, although I think our operating expenses have moderated a little bit since then, but that's the four-part region. Now we're currently having an issue here, and are seeing in Report the short group financial resources for the current Devices, we stopped at 14k velly Heroes toes and supported by Department of region.
Speaker 8: Thanks, guys.
Speaker 1: Thanks, Joe.
Speaker 2: Thank you and the next question is coming from Sean Kelly from Bank of America. Sean, your line of life.
Speaker 3: Hi, good afternoon, everybody. Rob, just sort of going back to Singapore for a moment. The Changi numbers are really interesting. Is that a pretty good guide for, you know, I guess, visitation levels at the property and sort of where I'm going is, you know, thinking about spend per visitor, right? We've obviously seen, you know, the pent up demand and that those numbers rise across, you know, US regional gaming, Las Vegas strip. And I think we're all struggling a little bit to know exactly what, you know, Asia's going to do, but...
Speaker 1: where I think your struggle a bit is to factor in when the rest of the market recovers. That's why I referenced the other high-end luxury hotels. There are lots of sleeping rooms who we benefit from. They come to shop, eat with us, gamble with us. We're not getting that lift. I think that's the – could be a very impactful down the road. We're very happy with spend levels we're seeing, and we're happy with the occupancy we're getting, but we're not getting that extra. People don't sleep in our hotel necessarily coming over to gamble, shop, et cetera. I think that's where we're pointing out the –
Speaker 1: Visitation levels I also think it will be helpful in driving better levels of play and and spend as these other markets So you can't lose 3 million people in a month like May and not have some impact in numbers the question he raises how high is up and I don't I'm not prepared to answer I don't know but you can't ignore the fact that you're losing you know tens of millions of people versus pre-pandemic the point is just to make it clear how different is over there versus in the US
Speaker 1: where visitation levels are back and access these properties is back here in Las Vegas and regionals. It's not the case yet, Nasia. And I think we'll benefit as that rises. Ben will get better. There are retail numbers that you might look at on page 31 as some indication of how powerful the recovery is happening. Even without full visitation, you can see the sales per square foot at MBS and the power what's happening over there. So the good news is we're getting profitable, we're seeing growth.
Speaker 1: the better news is there might be a lot more ahead of us if we can access more people in the Changi, Zouab Mohu Hotel is around our hotel and see a full visitation. It's not there yet.
Speaker 3: Great. Maybe just as my follow-up, thinking about margins in Singapore, without the revenues being back online, it's been hard to analyze. Can you just talk a little bit about puts and takes there now as we get back to very recovered levels on the revenue side, about some of the, on a stabilized basis as different segments come online? Because I think there was a tax change there that impacted the market and some other things. Can you just help us think about pros and cons or segments of business that...
Speaker 4: utility costs that have gone up. There's other costs to operate in the market that have gone up. Inflation that you've seen in other markets are impacting some of the things that we buy. There's also some wage inflation because there's scarcity of labor in the marketplace in Singapore. It's a high quality environment to work in. It's just a high demand as our economy continues to grow for high quality labor. So we've seen some labor increase. So there's some things that from a cost basis side are impacting our margins. The flip side of this is we're not at full revenue yet.
Speaker 4: So as we grow revenue and as we make investment in these higher value suite products and as we grow some of the services that we offer to our patrons in the long run we'd like to believe our margins return back towards where they were before we just need to be operating under a normal environment. So we still have some startup, let's call the fits and starts related to some expenses and I think our goal is to get our margins back to where they were but it's going to take some revenue growth for us to get there. for us to get there.
Speaker 3: Great, that's very clear. Thank you both.
Speaker 2: Thank you, and the next question is coming from Carlos Santa Reilly from Doja Bank. Carlos, your line is live. Thank you. Hey guys, thanks for taking my question. Thank you, Carlos.
Speaker 2: Rob, maybe you could help here. Just in terms of the at Marina Bay Sands, obviously I think the IP recovered to close to 75% of PQ19 levels. As you think about that kind of moving forward are clearly some channels, as you mentioned, Korea, Japan, and I would assume to some extent mainland China is...
Speaker 9: curtail to say release, but when you think about like the stability of that in the current environment does it feel as though that's a number that that's kind of a new baseline thereabouts at least as we move forward.
Speaker 9: You mean this turn quarters results in a baseline? I'm referring more to the IP rolling chip volume and kind of the stability of that segment of the market.
Speaker 1: I think there's room to run. I think there's room in there. I mean, look at what's happening in Singapore. Let's begin with we glossed though. I glossed over the beginning, but we're putting a billion dollars in that product. It'll be very blunt about it. It's always been a very appealing building, but it's never had the FF&E component in the suite and room product I think it deserved. It now has that over the next 18 months, go finish. We were there and the product we're putting together is as good as any place we've ever operated. I think that's gonna be very helpful.
Speaker 1: to let's be clear that Singapore is more desirable than ever as a destination. It's growing in appeal to a lot of people for a lot of reasons. It's growing in appeal to a lot of people for a lot of reasons.
Speaker 1: We referenced the airlift. You referenced China, you're absolutely right. China is obviously not there. But I think you add these things together. The Zaurability of Singapore is a destination. The rethinking of the FF&E in that building, the return of a lot more airlift than there was, hopefully in 2019.
Speaker 1: Yeah, I think that segment can run, yes, I do. I think we can, we also have less competition in the region. Obviously, Macau is not operating at this point. But I think this Singapore business is going to continue to grow because the region, the city-state of Singapore is very desirable, and more and more people are going to come to us. So we add our better building with a more desirable Singapore.
Speaker 1: with the air lift, with the opening of China, with the opening of Japan, Korea, at all. I think the cumulative impact here is every segment can grow. At a lot of belief that we can drive, we have to drive it because, you know, there's going to clear costs as it was referenced by Sean and Patrick and the previous call. So we will drive revenue at all segments and we'll be very attuned to it. But I think we're in a very, very privileged position, seeing right now, of what's happened there, both of our building.
Speaker 9: and with the destination itself. Great, that's how for them. Just as it pertains to the expansion that the thousand new rooms. The thousand new rooms.
Speaker 9: I believe you guys had the construction start kind of, I guess it was an extension on when you had to begin construction in the 2Q of next year if I'm not mistaken. Is there...
Speaker 9: Is there anything firmer that you guys have around cost and or plan there that you'd be able to share?
Speaker 1: Yeah Patrick, do you wanna...
Speaker 4: Sure, absolutely. So, you know, Rob referenced our visit to Singapore. It was a great visit on a lot of fronts. I think we spent time in the building and we had the opportunity to continue our dialogue around the IR2 expansion. We're very excited to begin. I think one of the things that the pandemic did unfortunately was slow down that process. There's just a lot of things that have to be considered to fit it in to this very complex and very busy environment to make it sort of fit all the requirements that are necessary to get the approvals to begin. So I think we're working on that now.
Speaker 4: and it's something that we hope in the coming months that we'll be able to get more firm about a start date, but we're excited about it and working with the government currently and hopefully we'll get a chance to begin soon. watched
Speaker 9: Great. Thank you, Patrick. Thanks, guys.
Speaker 10: Thank you, and the next question is coming from Chad Bannon from Macquarie. Chad, you're a Linus Live. Good afternoon. Thanks for taking my question. I wanted to ask about M&A in this environment. I know that's not a normal question for you guys, but given your strong cash flow position, your balance sheet, and just compress multiples kind of across the gaming lodging leisure space, how are you thinking about maybe considering some opportunistic looks across the world? Thanks.
Speaker 11: Patrick?
Speaker 4: So, you know, I think one of the things as a company that, you know, all through the pandemic and part of the pandemic we've always focused on is how we allocate capital.
Speaker 4: and how we drive the highest returns for shareholders. And you may have heard in the past say that our highest and best use of capital do new development from the ground up. And that's really what we're focused on. If you look at the history of the company and success and the way it's delivered outside shareholder returns, is exploiting a strategy of building large scale integrated resorts and new jurisdictions. And that's what we're focused on. And so for us, I think we have opportunities unique to who we are. We have a long track record with Rob and is decades of experience. The rest of the team's decades of experience.
Speaker 4: to look to do. So I understand that there's variability particularly at the digital side. There's a lot of things that have valuations now that meet people see them as compelling for the long-term. There's perhaps some land-based opportunities that may come over time. But it's a practical matter like everyone else will look at it, see if it makes any sense for us. But we're really going to be focused on round-up development. That's who we are.
Speaker 10: Thank you. And then on MBS, again, just on margins, you kind of touched about, you know, some of the different pieces of that. Has the promotional environment between you and your competitor in the market changed versus pre-pandemic or does it feel as rational as it was at that time? And do you expect anything to change from a promotional environment once Macau opens back up?
Speaker 1: We've always been lucky that that environment's not promotion driven, I don't think it will be in the future either. And I have to wait until it happens in the count of my senses, the count when it opens will not be a challenge either. It will be plenty of demand and usually promotional activities get out of control in this lack of revenue. I don't think it will be a lack of revenue in the count worsening up for it. So I feel pretty good about it.
Speaker 10: Appreciate it. Thank you. Thanks, Jack.
Speaker 2: Thank you and the next question is coming from Brandt Montor.
Speaker 2: From Barclays branch your line is live
Speaker 4: Hey everyone, thanks for taking my question. The first one was on Singapore a follow up on that last question, but more just for the Singapore market specifically. And we've heard a bunch of chatter out there in terms of potential interest in your main competitor in the Singapore market. Is there any scenario in which a different operator could come in and take that over and that would change the way you look at that competitive landscape?
Speaker 1: We don't have any opinion of it. That's up to the government make that decision, but it's a it's a do-offly market and
Speaker 1: I don't see it having impact either way.
Speaker 4: Yeah, I think one thing that's important to note is that we view Maria Bay-Sans as the best building in the world. And in our mind, it's an unbelievable opportunity to continue investing and operate the building and grow it over time. So I don't think we viewed any differently. We think the market opportunity in Singapore is absolutely unique. And we're very committed to long-term investment there. So for us, I'm not sure it matters who operates it. That's up to the Singapore government to the owners of that business.
Speaker 1: But for us, we're just focused on continuing to develop our property and grow the market as best we can. The one thing we would say about Singapore, we said it before, but we'll just reiterate is that that place has evolved even better than it was we started years ago and it keeps getting better. And you look at Changi running it such a, you know, still 40-50% capacity. Look at the design ability at market. The things we're doing, I'm sure, getting things as well to improve the product. It just feels like that market has a lot of room to run.
Speaker 1: and to grow for us and for our competitor. The offerings get better. Our phase two will be even stronger. So to me that's a market just beginning to feel its muscle.
Speaker 4: Okay, great, thanks. That's helpful. And then just as a follow up on that, as we sort of think about how to think about the constraints for how fast that MBS property can recover, the Singapore Tourism Board recently put out a number for 2022 international visitation that are something along the line, well, four to six million for 22, that it doesn't seem like that would incorporate a ton of ramp from here. And I know that's not necessarily exactly what...
Speaker 1: I'd be surprised if Singapore wouldn't welcome more access, more flights. It's a question of getting the requisite employees in these airlines to get the lift going and open up these countries in a major way. I think it's hard to forecast where the world has changed every day is different. And I'd like to think there's a lot more opportunity than that, but remains to be seen if the governments want to engage in it, the airlines can get the employees and they get happy. I think demand, undying demand is absolutely there. Just gave me what you get there.
Speaker 5: Great, thanks so much, guys.
Speaker 2: Thank you, and the next question is coming from Robin Farley from UBS, Robin, Your Line of Life.
Speaker 12: Great, thanks. Just a quick one on, I don't know if I'm missing your introductory comments, any comments on what you've talked about in the past related to online gaming and sports betting and kind of looking at B2B investments. I didn't get to see you had an update there, thanks.
Speaker 1: We didn't have enough there. We didn't mention it. We didn't focus right now on what's happened. We remained committed to our digital investments and looking at that market. Right now, the story for us is this land-based recovery which we're filling in Singapore. And you know, we made some major strides in this company in terms of liquidity. The reopening of Singapore and we think the upside potential Singapore, the licensing process and the camera focused on that. And of course, most importantly, the return to a normalized operating environment in Macau is paramount.
Speaker 1: We've just been so busy with that, your focus wasn't on Digiory now. We continue to look at that opportunity. We continue to invest. We've made a few investments, as you know, in the past. So just simply a focus right now on land-based.
Speaker 12: Okay, great. And then also, has there been a change in what you expect for timing and spend that a potential New York project and some class quarter?
Speaker 1: Oh timing is spent. No, I think we remain a believer in that market and the process is taking longer than I thought it would, but hopefully this year or really next we'll know what's happening there. No, still the density of population and ethnicity and the access in New York makes it very appealing and lack of capacity still remains a premier market in my mind if we can get there. A lot of competition, we're one of many in the hunt there. So nothing new to report, we...
Speaker 1: We have a plan in place, we're executing to it. It's a way for the RPDA unfold.
Speaker 1: So we're nothing new in New York.
Speaker 13: Okay, great. Thank you. Thanks, Robin.
Speaker 2: Thank you. And the next question is coming from Steve Lachinski, Steve from Steve Lachinski, Steve Rilinas, life.
Speaker 9: Yeah, you guys, good afternoon. So this will probably be for Grant, and it's probably gonna be a difficult question to even answer, but Grant, I guess for us, non-Chinese citizens, it's extremely tough for us to understand that where China is with respect to the reopening process. But I don't know if you can help us understand maybe what you're hearing around the zero-case policy, which...
Speaker 9: I mean, I think the rest of the world probably fully knows at this point is never really going to work. And if some of these harsher stances toward the virus could start to get relaxed before, maybe is there a timeframe you guys are watching or is there anything you've heard? Maybe is it the October election? I guess anything around that would be very, very helpful. Thanks.
Speaker 7: Yeah, thanks for the question. I think as you alluded, there's not much that we can help with in terms of any speculation on timelines or changes. I think what we're focused on is what's happening in Macau. So I think that the things that we can effect is to make sure that...
Speaker 7: we do help the prevailing government policy so that we can actually get Macau reopen back with Juha that the neighboring city in mainland but as quickly as possible. And that means I think aligning ourselves fully and safely with the overall COVID policy. And that's what's happening right now. And so hopefully.
Speaker 7: over the coming weeks, we will be progressively reopening all of the facilities that we've had to close in the past week. That's what we're really focused on and it's really not our place to speculate on future changes on the overall health policy. I don't know if Wilfred has more to add on that.
Speaker 7: No, I think, Grand You're right. At this stage, I think the whole country is also employed in this COVID situation. And obviously policies will evolve and we in Macau is trying our best to support the local government in order that Macau can return to normalcy.
Speaker 9: Okay, great. Thanks for that, guys. And then Rob, obviously, there's been some movement with regards to the new Macau gaming laws, regulations, whatever way you want to think about it, which actually seemed pretty favorable. But wondering how you guys are viewing those regulation changes and maybe any of the pros or cons that you see emerging from those.
Speaker 1: Well, we're grateful for the clarity from the government. I think the process is moving very well, and I think a lot of the concerns some people have have been eliminated. So we're just...
Speaker 1: going through the process and hoping to complete this thing in due course, but obviously we're all pleased. I think all the operators are pleased how this is playing out and we're hoping for a positive conclusion. I think a lot of their fears have been erased. Grant to Wilford's comment, that's as far as I can take it.
Speaker 6: I think that's right, Rob. Absolutely will.
Speaker 6: Greg, go ahead.
Speaker 6: I was just going to add that, you know, obviously we're, we're, we're very appreciative to, um, that during this difficult time on the COVID front that, um, the government and the legislature, uh, were able to move forward, uh, to, to complete the passing of the revised gaming law, um, in towards the end of June and that we were able to, uh, also, uh, execute the, uh, the six month extension.
Speaker 6: That takes us to the end of this year, so I think the whole process is moving forward expeditiously. And as Rob said, we look forward to participating in the tendering process.
Speaker 1: Steve, one thing I would say our company, as you know, has been through, it's been an awfully difficult couple of years, more than most because we're Asia-focused, but we've now completed the sale in Las Vegas, gives us more than ample liquidity, no matter what happens. Singapore is up and making money and there's more to come. It's a very, we're very grateful for what's happening in Singapore. We see a lot of better days ahead. The Macau licensing process is the same way. It feels like we've survived what was a lot of people are concerned, but in the end it's worked out for everybody.
Speaker 1: and positive matter thus far hope that continues and we're just waiting for the thing you referenced initially which is when does the cow when does the government rethink the zero-cover how does that play out we don't know don't pretend to know but that's the last thing we're going for together coming back to a much better place but three of the four been achieved so will continue pressed on the license and wait patiently for the government to advise us on the reopening of mccalf
Speaker 9: Okay, great. Thanks, Rob. Really appreciate it. Thank you.
Speaker 2: Thank you. The next question is coming from David Katz from Jeffries. David, your line of life. Hi, afternoon. Thanks for taking my questions.
Speaker 10: Number one, I wanted to ask about just the physical plant in Macau. And we're calling that those are, I have a significant number of private rooms that we're historically used for VIP. How do we think about that spatial layout and planning going forward? And I have a follow-up in another direction.
Speaker 1: Grant, you want to take that because I have my own views, but I think you should. Yep.
Speaker 6: Sure. I think we've been watching as the market has been evolving and also planning for the future. I think a lot of the salons...
Speaker 6: certainly that applies to the new salons that we've developed as part of the Grand Suites of Four Seasons and the London and Macau projects. I think that they're really premium salons, premium gaming salons that could be applicable and used by the different segments whether that's
Speaker 6: whether that's the VIP rolling or the premium mass.
Speaker 6: So clearly, I think Macau overall may be re-looking at how they each operator redeploys the assets, but as far as we're concerned, especially the new products that we've developed over the past two years, we feel pretty positive about redeploying a lot of those gaming spaces.
Speaker 6: for the premium mass segment, but also over time as we look towards the future, also the the premium direct segment and attracting the overseas.
Speaker 6: markets in the rest of Asia into those products. So we've been currently going through a planning exercise on the future deployment of those areas. But as the market evolves and as things normalize, we'll be able to get more definition around that. But even as of the past 12 months, we've been redeploying.
Speaker 6: some of those rooms that were assigned to the role of segment to the non-rolling segments.
Speaker 1: Hey David, no one ever thought additional gaming space in the cow was a bad thing as we focused more on face masks and premium masks. I think it actually expands our ability to make more money. The junket business we always know is a margin challenge business. I feel grateful we have all this new space coming back to us that we can redeploy. And what is still going to be the world's biggest gaming market, the land-based, and why the biggest footprint. So as this, as Grant and Will for the team, rethink that space. I think it adds all kinds of premium opportunities for base masks, premium masks, and direct premium as well. So.
Speaker 1: To me, it's a very valuable transition to a higher focused margin business that enables us to, again, Singapore, I mean, Macau, the penetration in China is still, I think, sub-3% for the China population. It's going to be a growth market. Capacity will be an issue down the road because there are new casinos opening. So I think that space may prove very valuable as we get back to work in Macau. Hopefully this will be our next.
Speaker 1: But I think we're lucky to have all that extra space. We can redeploy in a more profitable way down the road. So happy to have it back.
Speaker 9: Understood. And as my follow up, you've done obviously the Singapore MBS did a lot better than what we had. But just looking at the ADR of, I think, 330, and I'm not sure that you cover this directly so far. When we look back to 2019, there's still some headroom there. It was about $90 ADR higher. How do you sort of see that evolving as we roll forward? That's right, so you want to take that?
Speaker 4: Yeah, sure, happy to. I think some of it has to do with sort of start up across the quarter. I think one of the other things to note is that it's not fully recovered with all the different segments because there is sort of not as much FIT and my demand as we had across 2019. So you're gonna see some ADR spread from that. But I think the most important thing to note is we're making as Rob referenced, a billion dollar investment in our product there. Over time, our ADR will be higher.
Speaker 4: So across the next six quarters, and let's sort of focus on, at the end of 23 in time for Chinese New Year of 24, we're gonna have 400 new suites that we never had before. And we're gonna have 400 new suites that we never had before.
Speaker 4: and they're the highest quality suites we've ever done as a company and we're going to drive different ADRs. So while we're out a couple hundred suites now with that Rooms out of inventory, we've had a lot of things going on through the building, it started a period. I wouldn't look at this ADR as representative.
Speaker 4: And so, over the next couple of quarters, as we have rooms out of inventory, there's going to be some choppiness.
Speaker 4: But by the time we're done getting into 23 and getting across 23 when the project is completed, then you'll have a good look at what ADR can really be under the value of the full investment, which is substantial. It's basically a complete redo of towers one, towers two, and some of the common spaces and amenity spaces that we have. It's gonna be a fundamentally different experience for our guests, and we hope and believe very strongly that they'll pay a lot more for it, because it will attract a higher value tourist. And that's really our goal. And that's really our goal.
Speaker 1: Our biggest problem the days ahead in MBS is as that Changi recovery continues and pastures come back as our game our biggest problem won't be ADR's can be putting have enough rooms to accommodate all the demand. ADR will climb either through casino direct or through cash customers or through convention. There'll be no problem getting back that's not the issue. The issue I has always been anywhere capacity constrained at MBS we need more sleeping rooms and we'll get the ADR that markets in the empty recovery you're seeing here is in its infancy it's just beginning.
Speaker 1: And be sure that we can get the EAR back to pre-COVID levels and above. In fact, I hope we can do much better with Casino demand and drive the Casino EAR as well. And be sure that we can get the EAR back to pre-COVID levels
Speaker 11: Perfect. Thank you so much. Sure. Thank you. Thank you. Thanks, Tim.
Speaker 2: Thank you and the last question is coming from Dan Pollitzer from Wells Fargo. Dan, your line is live.
Speaker 14: Hey, thanks for taking my question. So, you know, given the momentum you're seeing in Singapore and recovery is still in its infancy, how do you think about the long term path, you know, to getting back to pre-COVID, you know, the 1.7 billion of EBITDA in the event China doesn't open? Do you need China to reopen to kind of get back or?
Speaker 14: or get close to that level, or given what you're saying now, do you have a line of sight to getting near there in the absence of a China reopening? in the absence of a China reopening?
Speaker 1: It's a good question and we're watching like you are. I think let's not ever dismiss the importance of China in any of our businesses. China is still a powerhouse as a consumer market and we should never dismiss it as powerful. Can we get to 400 million a quarter without China? Mostly we think not but then again I would have thought we wouldn't have done this well with Changi still having underperforming in terms of visitation. So it depends like the US I think you have to question where will the over index.
business, our hotel business, our casino business. China is very, very critical to everybody in Asia. And you can see that in any market you participate in. But how high is up without China returning? I didn't want to wait and see together. There's a lot of good drivers here that make us feel good. The visitation makes us feel like there's an opportunity there. Our renovation feels like it's going to be very impactful as it comes online. The over-indexing of non-China markets feels like it's coming on strong. For more information, visit www.fema.gov
But I think we'll revisit that in a better answer for your next quarter. We print our numbers. Yeah, and then this is followed by no. COVID cases in Singapore actually have been rising lately. You know, given your experience working with the government and your your perception, I guess, on their stance of living with COVID in the stage of reopening, or any, do you see any risk with additional restrictions coming back or being put in place?
Patrick, can I grab that? Yeah, sure, happy to. I think at this point, all we can do is be optimistic about the public health posture that Singapore has shown. They've shown a lot of leadership. They have a significant history of investment in their hospital system and their public health infrastructure, and I think they're proceeding, as they've said. I think they broadcast it all along, and they follow what they've laid out. So as we sit here right now, I think they're moving in the way they said they're gonna do, which is, can you do a visitation, and continue to be involved in the growth in their economy, and move forward with.
You know, this this is an endemic situation, but we don't know and I think this is something where you know, we've obviously shown flexibility to respond as needed to support the government and their initiatives. But at this time it seems like we're heading in the right direction, but could that change in the future? Yeah, thank you and good afternoon.
This is an endemic situation, but we don't know. And I think this is something where we've obviously shown flexibility to respond as needed to support the government and their initiatives, but at this time, it seems like we're heading in the right direction. But could that change the future? We don't know. Thank you.
Thank you. And thank you, ladies and gentlemen, this does conclude today's conference call. You made this Connecture Fallen 9th at the time and have a wonderful day. We thank you for your participation.
Yeah.