Q1 2023 Las Vegas Sands Corp Earnings Call
Twenty-three earnings conference call.
Speaker 1: It is now my pleasure to turn the floor over to Mr. Daniel Briggs, Senior Vice President of Investor Relations at SANS. Sir, the floor is yours.
Speaker 2: Thanks Paul. Thank you all for joining the call today. With me today are Rob Goldstein, our Chairman and Chief Executive Officer, Patrick Dumont, our President and Chief Operating Officer, Dr. Wilfred Wong, the President of Sanch China, and Grant Cheung, EDP of Asia Operations and COO of Sanch China.
Speaker 2: Today's conference call will contain forward-looking statements. We will be making those statements under the Safe Harbor Provision of Federal Securities laws. The company's actual results may differ materially from the results reflected in those forward-looking statements. In addition, we will discuss non-GAAP measures. Reconciliations to the most comparable GAAP financial measure are included in our press release.
Speaker 2: We have posted an earnings presentation on our website. We may refer to that presentation during the call. And finally, for the Q&A session, we ask those with interest to please pose one question and one follow-up question so we might allow everyone with interest the opportunity to participate.
Speaker 3: This presentation is being recorded. I'll now turn the call over to Rob. Thank you, Dan, and thank you for joining the call. The results speak for themselves. There's a powerful recovery underway in Macau in both gaming and in non-gaming segments. The future looks very good for both markets. Our commitment to investing in both Macau and in non-gaming is a great opportunity for us to continue to grow.
Speaker 3: Singapore has never wavered in Macau following the relaxation of travel restrictions. Increased visitation has driven gaming volumes, retail sales and hotel occupancy during the quarter. In other words, business is back. Sands China is in a unique position to capture the opportunity. Our diversified IR model.
Speaker 3: with continuous investment in non-gaming segments, mice, hotel suites, live entertainment, retail, food and beverage, positions us well to deliver strong growth in the years ahead.
Speaker 3: Our focus is on all segments in the Macau market, including international tourists. We're excited to have the opportunity to develop, to deploy more capital to expand our non-gaming offerings in Macau. The $3.8 billion commitment we've made as part of the concession tender is just the baseline. We will invest more in this extraordinary market.
Speaker 3: I look forward to everyone having the opportunity to see, to witness the London and the Four Seasons. The quality of our new product is exceptional.
Speaker 3: Maria Bay Sands delivered EBITDA of $394 million for the quarter. MassWin was an all-time property record of $549 million. Rolling volumes have nearly equaled the 2019 level. Our $1 billion dollar suite and casino renovation program is progressing.
Speaker 3: More suite inventory will continue to come online throughout the remainder of the year We'll have 400 suites available by the end of 2023 up from just 150 prior onto our renovation okay, let's take some questions and Please ask away
Speaker 1: 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 one on your telephone keypad now. If listening on speaker today, please pick up your handset to provide optimum sound quality.
Speaker 1: 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 1: And the first question today is coming from Joe Graf from JP Morgan.
Speaker 1: Joey, your line is live.
Speaker 2: Hey everybody, congratulations on these results. Thanks, Joe. Rob, Patrick, or Dan, whoever wants to take this first one. I mean, Mikel, presumably, March was better than February and February was better than January from an EBITDA and an EBITDA margin perspective.
Speaker 2: I was hoping you can maybe help us understand maybe the margin exit rate coming out of the quarter as we head here into the second quarter. If you reported 31% margins for the quarter, March was something much higher than that. I was hoping you can help us maybe understand the cadence of EBITDA generation by month end.
Speaker 2: maybe the same thing for margins by month, just so we're thinking about it the right way in terms of our projections going forward.
Speaker 3: I'll ask Patrick to take it, but before I do, I'll just say I think you have to realize, I think you do realize, that Macau is in this industry as far as a return to a more normal operating environment. It's not even, I think we're, it's so early days there, this first quarter is still not representational of what can happen and Macau will happen. So I wouldn't call it normal operating mode. As you referenced.
Speaker 3: the acceleration of revenues is clearly there, and that will accelerate margins. That's why we're going to have some more color. Thanks, Rob. You know, Joe, it's an interesting question. I think we've been very focused on margins for many years at SCL. Unfortunately, the operating environment during the pandemic made it very hard to see the benefit of some of the work that the team has done over the years to make the business itself.
Speaker 4: January was obviously impacted because on January 8th the opening occurred and then subsequent to that February is typically a very slow month post the lunar the lunar new year But March was a very exciting time a lot of things were going full steam ahead It was very exciting to see the recovery the increase in tourism and so margins did recover to a more normal level
Speaker 4: There is a lot of noise in the corridor because of the startup, but I think overall our long-term outlook for margins is quite strong. I think we've done a good job managing costs historically. I think the business itself was set up to be efficient. And I think in the long run, given the mix of business, we should see a favorable margin operating environment. Grant, I don't know if you have any comments you'd like to add to that?
Speaker 5: Yeah, thanks Patrick. Maybe I can just give some color on the March trends. I think Joe, you're right, the market experienced strong recovery through the quarter. So pretty much across all operating metrics, March was better than January and February average.
Speaker 5: I mean just as a starting point the Macau overall visitations Citywide were up 22% in March versus the first two months of the year for our portfolio The gaming volume a non rolling drop and slot handle were both up 10% in March versus the first two months
Speaker 5: Rolling volumes accelerated a lot more than that during the month, not least because we're starting to get some traction on the foreign VIPs coming to Macau to our properties.
Speaker 5: Hotel occupancy improved, Occupy Room Night increased by 8% in the month versus the first two months as we were able to operate more hotel rooms with the additional manpower coming on board in the second half of the first quarter and that will significantly increase further high.
Speaker 5: into the second quarter. So overall yes, March was a very pleasing month in terms of evolving trends and as Patrick said, operating margin did recover and did recover more in March, but hopefully this is just the beginning.
Speaker 2: Great. Thank you for your comments there. You mentioned that 31% of your rooms in Macau are out of service related to labor constraints. Where does that stand now and can you talk about labor constraints now and how are you remedying that?
Speaker 3: So, Rob, should I take that? Yes, please. Yeah, you're closest to that. Sure.
Speaker 5: Hotel room inventory Joe, availability, the actual availability for the first quarter yeah what was around 7,700 rooms for SCL portfolio wide. So effectively we were accommodating as many rooms as we could given the manpower constraint during the quarter.
Speaker 5: As I just referenced, it did improve somewhat in March as the first additional hiring of the labor came on board and the Macau government and the labor bureau have been very supportive in helping us to bring on the labor that we need to operate, especially the hospitality.
Speaker 5: side of the business, the hotel and the restaurants. As we go into second quarter, we would expect that on average second quarter we can reach 10,700 rooms in terms of our operating capacity. So that's roughly 3,000 additional hotel rooms.
Speaker 5: that will be able to operate in the second quarter. And that obviously takes us up to much closer to our physical available inventory. And we will reach the 12,000 probably sometime in the third quarter in time for the summer peak season.
Speaker 5: as additional hiring and training completes through the second quarter.
Speaker 3: So Grant, is it safe to say the labor issues are not event for the entire market by summertime?
Speaker 3: issues are not event for the entire market by summertime.
Speaker 5: Yeah, Rob, I think for most of the market for the second quarter, it's effectively a non-issue from a hotel operating capacity. Obviously, the size of our inventories.
Speaker 5: It's the biggest, we'll take a little bit of time to get up to full capacity, but obviously it's a big difference already that we can see between operating 10,700 rooms versus 7,700.
Speaker 6: Thanks, Grant.
Speaker 3: Good job. Good job.
Speaker 3: Good job. Thank you.
Speaker 7: Thank you.
Speaker 1: The next question will be Carlo Santorelli from Deutsche Bank. Carlo, your line is live.
Speaker 2: Hey everybody, thank you. Rob, just as it pertains to MBS, obviously now, you know, Macau has gotten up and running and you're starting to see things normalize with obviously the comments there on March. Have you guys seen anything change behaviorally? I mean, you see the results, it doesn't look like...
Speaker 3: to ramp. The one thing I thought I understood and I think I was wrong in retrospect was the super high end premium customer in Asia. I thought we would dominate completely in Singapore. We're seeing is Singapore is doing very well. We will equal our 2019 rolling volume.
Speaker 3: But what surprised me to the upside is the international demand for Macau and a rolling volume Macau has been very pleasant
Speaker 3: Much more I thought that we could be rolling in that market foreign excess of 20 25 billion dollars Annually this keeps going so there's been a pleasant surprise It has not hurt us in Singapore if you look at the numbers But of course there's only so much you know money out there So it may have some impact Singapore as you see had record numbers on the the saw numbers are astounding to be a 900 plus Pretty you know I've never seen that
Speaker 3: in any market I've worked in, on especially the scale of machines in the market, plus our non-rolling wind. To exceed six million a day is pretty extraordinary. And that's what the impediments and the big headwinds of our rooms being down, our casino being torn up, and there's yet to be a recovery of the Chinese consumer into.
Speaker 3: Singapore at the level I think we'll get to. So the pleasant surprise is Macau is attracting a very strong international Asian high-end customer, and yet we're doing fine in Singapore. We may be sharing a very large rolling business between Singapore and Macau for a long time to come. I had that wrong pleasantly. I do think the stock business in Singapore ended on rolling.
Speaker 3: is just the beginning of a trend, a very strong trend. Once we get these rumors back in the casino, and who knows where it goes to? Could we make 2.5 billion, 3 billion out of those segments in the years to come? Maybe. But clearly, we're very happy with the results. For Singapore to do this well this early in the day without a full-blown China recovery. We'll hit Washington again in the third quarter by qualifying
Speaker 3: It's pretty impressive. I think we can believe we can make 500 million bucks a quarter in the near future when things get back to a stronger place. So, you know, we're very pleased in both markets for different reasons.
Speaker 1: Great, that's helpful. And then just as a follow up, I guess my question is more along the lines of are you surprised by
Speaker 2: When you look at the deck, obviously your premium mass business looks like, you know, it's recovering or I should say your base mass business is recovering relative to the first quarter of 19 very similarly to the premium mass business. And given where visitation is today relative to 19, is that dynamic surprising to you guys at all?
Speaker 3: It is to me, I think we know page 14 of our deck to see the visitation be like 40% and yet see a recovery where it's at. It's very encouraging for future. The trajectory of the Cal feels very good to us. And as Joe alluded to, the growth between January , February , March, it looks very, Cal cannot be encouraged when you see.
Speaker 3: We made $400 million dollars without visitation really coming back very much. Without hotel rooms being fully occupied, without a lot of impediments, a lot of headwinds, and yet, here we are. So, yeah, it's very encouraging for us and for the market. Of course, we're the biggest beneficiary of the recovery of base mass since that's our dominant position.
Speaker 3: But I want to also allude to the fact that we believe with our new Londoner and Four Seasons suite and physical product, we're gonna compete very favorably, not just the basements, not just retail. We're going for the very top end of the market as well to dominate that. And we believe we can do it in both the rolling and non-rolling segments. We have both.
Speaker 3: Scale, it was a sweet product, but also a great aesthetic. When you see we've done, we were there, and you see the new Londoner, you see the new Four Seasons, I promise you, you'll be overwhelmed with the product, the quality. What that team has done is exceptional work. So for us, we see no segment in the cow to our competitors. We wanna be first in every category. I believe it's possible with our new products. I just wanna take a moment and let everyone know that every product is a feature and sport. I just wanna say it's been a success for magnets, their sidesh and have done and looked after several
Speaker 5: Great, thanks very much. Maybe I can just jump in on the... Yes, please jump in Greg.
Speaker 5: Sorry, can I just add something to the comments on the premium masks?edLLL
Speaker 5: off the question. Yes, it looks like from the deck that we recovered at a similar rate on the premium mass and the mass win versus first quarter of 2019. But overall, in terms of volumes and headcount, it was definitely a premium mass-led recovery and quality of customer has been increasing and has spent ahead.
Speaker 5: The win comparison with 2019 is more a hold-related issue on the premium mass segment for both 2019 and 2023. But overall, premium mass gaming, volume gaming drop and headcount recovery is faster than base mass. But I think to Ralph's point, it's faster than the previous one.
Speaker 5: We've been essentially out competing in premium segments in both VIP and premium mass, as you can see from a market share in the first quarter. Our non-rolling drop recovered to two-thirds of the first quarter of 2019 level, that's in line with the overall market recovery in mass. Footage was named due ingap by company to the frolic' at the grocery store sporting when it opened, saying selling it again and again.
Speaker 5: despite our much bigger dependence on base mass. So as the base mass, which has been lagging in the recovery, starts to ramp up, especially as more hotel rooms come online for the whole city and for our portfolio, and also that visitations pick up and transportation logistics improve.
Speaker 5: We should obviously be the biggest beneficiary of that base mass recovery. And some of that you can already see in the way we've outperformed in a slot electronic gaming market. A slot handle recovering to over 73% of 2019. And that has a lot more exposure. I mean, Hong Kong base mass is a much bigger part of slot.
Speaker 5: Then tables and obviously Hong Kong, Bixmaz has recovered faster as you can see from the visitations where Hong Kong visitations are already 75% of where they were in 2019. And you can see that our performance in electronic gaming has been strong both in absolute terms and relative to the market.
Speaker 1: Thank you very much for the additional context. I appreciate it. Thanks, Carlo. Thank you.
Speaker 1: Thank you. And the next question is coming from Robin Farley from UBS. Robin, your line is live.
Speaker 8: Great, thank you. Grant, following on your comments about the strength of the recovery being led by the premium math side, I'm curious if you're seeing any impact at all from a visa policy that is sometimes turning down kind of frequent visitors or you know multiple visits in a period.
Speaker 8: Sounds like it's not impacting the recovery in your view, but I'm just curious if you're seeing any impact from that.
Speaker 5: Grant, should I take that? Please, yes.
Speaker 5: Grant Rob, should I take that please? Yes.
Speaker 5: Yeah, Robin, I think for, if you look at the visitation, overall we're seeing a much faster recovery from Guangdong than from the non-Guangdong provinces. I think that's for obvious reasons the proximity, the ease with which the visitors from the neighboring province can get to Macau.
Speaker 5: From my point of view, I think the biggest impediment to a higher rate of recovery in non-Guangdong visitation is actually the amount of hotel room inventory that was unavailable in the first quarter. I mean, we're the biggest repository of hotel rooms and with where it went.
Speaker 5: with offline got 36%. And for the city as a whole, obviously the percentage of out of rooms availability was also very significant.
Speaker 5: So, I think people have high propensity to think about coming to Macau. I think the hotel room inventory issue has been a big impediment, but that's obviously easing dramatically as we get into second quarter.
Speaker 5: And then transportation is still only a fraction of what it was, especially in routes like from Hong Kong to Macau, our ferries are only at 20% of where they were in 2019 during the first quarter.
Speaker 5: And yet obviously the visitation from Hong Kong has been so strong So I think overall
Speaker 5: you know, the visitation recovery is progressing very well, but you've got to bear in mind a couple of those pain points that are both, I think, I would say, easing quite significantly, and that's the hotel room inventory and the transportation.
Speaker 8: Great. That's helpful. Thanks. Then just as my follow-up, if I could, understanding it's going to take a couple of quarters for all your hotel rooms to be up and running, at that point, when you think about the run rate where you are for operating expense, how would you compare that to 2019? Is there any...
Speaker 5: I think clearly as we add headcount to man, to operate all of our inventory on the hospitality side, our payroll costs will start to go up. Obviously we expect the revenue to be rebounding a lot more. However, there was plenty of some optical
Speaker 5: I think this is just the ordinary course of ramping up the capacity we achieved. We achieved multiple rounds of cost savings over the years. After the 2014 downturn, we achieved some sustainable savings from that round.
Speaker 5: We made some additional structural cost savings on our expenses during the pandemic, and we hope to hold on to some of those savings. But in terms of the labour portion, absolutely we have to invest in the manpower.
Speaker 5: and to get our assets back up to full operating capacity. And obviously the cost will grow in line with that. But clearly we wanna be operating 12,000 rooms, not 7,700. So this is something we're trying to do as quickly as we can.
Speaker 5: and to get our assets back up to full operating capacity. And obviously the cost will grow in line with that. But clearly we wanna be operating 12,000 rooms, not 7,700. So this is something we're trying to do as quickly as we can. Great, thanks very much.
Speaker 1: Thank you. The next question is coming from Sean Kelly from Bank of America. Sean, your line is live.
Speaker 2: Hi, great. Thanks. Just maybe to start, if we could go back to a couple of your comments, Rob, on the base mass versus some of the premium mass mix and the surprise there. Is a healthy way to think about the mix that we're seeing in the market today, this low double-digit increase in...
Speaker 2: spend per visit. Is that, you know, if I look at the 62% in base pass versus we call it 48% overall visitation growth, is that reflective of market conditions or is there some subtext or some difference that we should be thinking about or did that change throughout the quarter at all? Just trying to get a sense of...
Speaker 3: what's pent up demand and how much is this is just getting the bodies back into the property? I think one thing we'd be careful of where again we're in early innings here in fact we haven't I would say if you're playing golf we're still in the driving range I mean we haven't even gotten the first tee yet this this market you know 100 days ago Grant reminded me we were kidding about the market hoping to see a profitable quarter
Speaker 3: We now just gave you a $400 million number. I think my point is it's evolving so quickly. And the movement, if you look at the – I don't think it's easy to spot trends. I think clearly the base mass to Grant's comments has been somewhat confusing, and his thoughts were covered much better than base mass tables. But again, I think it's very difficult to assign certainty to where the trends are going. I just think when you look at the page 516 or 14 –
Speaker 3: You see the non-Guandong visitation, which is pretty weak, and there's so much more room to run here. I think when this is all said and done, we'll make a lot more money with a very healthy margin and all this will be left behind in the dust. I just don't think we can take what really is effectively half of January in two months.
Speaker 5: subsequent and assign real value to it. Yeah, it's just too early to figure it out. Grant, please jump in. No, not a lot more to add to that, Rob. Yeah, I think you covered it well. Someone else you got? Great, I mean, the other question would be the follow up and maybe a little bit indulgent, but I'll try. Just trying to get a sense of kind of. Indulge us.
Speaker 2: Just trying to get us into market share as we, let's call it exited the quarter, you know, be it March or some amount of run rate. You know, as we looked at it, you know, some of the checks suggested that it was, you know, accelerating and you get did very well. It probably depended a little bit of the timing on some of that base mass recovery. But you know, for the quarter we calculated you at around 27%.
Speaker 2: share and just kind of curious if that was level across the quarter? Did you kind of it was your exit rate, you know, meaningfully higher than that? Just kind of trying to again probably extract a little too much from where we are in the recovery, but we want to try anyway. Patrick's going to take a look at that. Yeah, it's an interesting question. I think when we look at Macau, it's a story of investment.
Speaker 4: So, you know, if you think about the growth in Macau and the asset base that we have and while we're able to get the visitation and the productivity out of the assets, it's because of our scale of investment in our gaming. It's the rooms, it's the retail, it's the entertainment, it's the food and beverage, it's all the things that drive tourism value. And so we invested $2.2 billion across the pandemic.
Speaker 4: So from our standpoint, it's a new day. And we have probably one of the most important assets we ever created in the London, which was Sam's Quiz-i Central. There's a lot of productivity that's available there. We have 650 new suites that we didn't have pre-pandemic. There's a lot of volume that we're gonna be getting that we never had access to now that the pandemic recovery is underway. And I think the other thing that's important to note is we've done this other times.
Speaker 4: So we were in the Las Vegas market during the recovery and we saw the schedule and let's call it the slope of recovery related to kind of demand in the marketplace and recovery of tourism. We went through that. We saw it in Singapore and the different stages of tourism access that occurred in a very controlled market in that recovery. And now we're seeing unfettered access.
Speaker 4: what is probably the best cluster of tourism assets in all of Macau globally. And they've been continued to be invested in. There's a lot of depths of the market and it is the beginning innings, it's early. So to call a market share now is a little tough because it's not really comparable to pre-pandemic because of the amount of investment in some of the dynamic changes that have happened to the market in the last three years. If you don't learn it, you can work get it.
Speaker 4: So from our standpoint, I think we put up a good quarter. I think we're positioned well. As Grant mentioned, we're very excited about the additional inventory coming online as we get manpower into the buildings. And I think we're in a good place to continue to grow. So we're not really looking at market share right now as much as we're looking at investment, visitation, access, customer service, and then margin and outcome.
Speaker 4: and you saw the results of that in the quarter that we just had. So March was really good, we're really excited about it, we're in a great trend and we're going to keep pushing.
Speaker 1: Congratulations. Thanks very much. Thank you. Thank you. The next question is coming from David Katz from Jefferies. David, your line is live. Hi. Afternoon. Thanks for taking my questions. I wanted to just go back to the...
Speaker 9: the direct VIP business in both markets. And I know you made some commentary about sort of where Singapore is coming from and where some of that extra business is coming from. But can you help us understand the direct VIP opportunity in Macau? And are there any insights that we can learn from?
Speaker 9: about where that could evolve to over time, relative to what we saw in the past, understanding that it's a completely different business today.
Speaker 3: Yeah, I think we're all in the same boat here as far as not really knowing how, I think the first quarter is indicative that there's a VIP market. Our rolling volumes indicate that. We wonder if it can increase, keep going. One surprise to me has been the acceptance of foreign visitation from non-China countries into Macau. It makes sense to me the quality of product there, the diversity of product.
Speaker 3: The experience there is very exciting place to visit, easy to access, getting easier especially for foreigners. So I think that's going to continue to build. Also the people there, it's obviously because the structure of junk is disappearing, it's a much different approach. These are people you have to know who they are, credit-wise, etc.
Speaker 3: to be in business with them. But I don't think it slows down. My sense is Macau has such a compelling product and such diversity of compelling product and has such great food, retail. It's just an exceptional place for a visitor internationally. And I think you'll see more and more of that trend. I don't think it'll cost this business in Singapore in terms of I think people still obviously get to Singapore for the same reasons.
Speaker 3: Macau, I think, has a better future on the direct rolling business that I anticipated. I think it's driven by, again, access, quality of product, and people want to go there. It's evident here in the first place. It's the impact of our retail sales as well. You can see the quality of our retail business.
Speaker 3: in Macau, which is a direct relationship with the super high end to come to visit. That's our, again, early innings, non-junket, liquidity issues, a lot of unknowns at this point. I don't think we should pretend to know what the future looks like, but I think there's a very positive trend in the right direction. Grant, do you want to comment?
Speaker 5: Sure, yeah I think Rob's absolutely right, the attraction of Macau to the foreign VIP is immense and I think that the pleasant surprise although we were obviously...
Speaker 5: redoubling our efforts post the concession tender in bringing international visitation to Macau and the VIP gaming was the first natural place to start given that the general airlift commercial air flights are still a fraction of where they were in 2019. So I think this direct VIP performance that you referenced it was
Speaker 5: It was very healthy during the quarter and kept growing and we don't know where it grows too, but there's no reason to believe that it wouldn't continue to grow given the quality of the product. You can see not just the strong product appeal for the premium customer that we provide, but we provide such a diversity of it, such a clustering effect.
Speaker 5: of so many world class resorts and we already have four of them in our portfolio but together with all of the other colleagues in the industry it's an amazing clustering of world class premium gaming destinations.
Speaker 5: that should appeal to the Asian regional players over time. And then I think the other point that is, I think, specifically for us, we've been doing this for a long, long time in terms of our international direct VIP around the Asia region.
Speaker 5: Las Vegas, Macau, Singapore, this is not a new structure to us. We've just got enormous ability to...
Speaker 5: promote Macau now to the foreign countries because we have the capacity and to Patrick's point we have we have the new product that we've never had before the availability of the top quality suites the top quality salons so we're going to be
Speaker 5: we have been and we're going to continue to use our international sales network that we have the biggest infrastructure across Asia in the industry and that's where we're going to combine the benefit of this premium product and Macau as a destination for these Asian gamers with our sales infrastructure that will be
Speaker 9: which, you know, any color on sort of, you know, which countries, you know, and where this is sort of coming from and, you know, any sensibility about sort of the sustainability, obviously, you feel like you can continue to grow them. But the non-Chinese, other countries and the degree to which extending credit may cost.
Speaker 3: a little bit more along the way. Any color there would be helpful too. We won't be, David, country specific. We'll do that. But we'll just say to you, demand is in a number of countries. And I think Grant's last point was very interesting. I was chuckling because he's absolutely right. We've been doing this for decades in Asia. We have a very strong sales force. A lot of the same people have been doing this for 20 years.
Speaker 3: and represents in Las Vegas and of course Singapore Macau. So we are the beneficiaries of that sales system, but I think the high-end product we build now in Singapore Macau is going to drive that customer. Is this sustainable? Does it grow? I don't want to predict the future. I just don't know. But if it does, I think we'll be the biggest beneficiary of it because again, we have the biggest network and we have all these different places that we can take people within Macau and of course to Singapore.
Speaker 3: So it's hard to predict because it gets early innings here. But I think if there's a strong rolling business in the cow, I think we'll get a big chunk of that. And time will tell how big it is, liquidity issues, but the demise of the junket business clearly is a new day there. But if we could roll $20, $30 billion, it would feel like a good place to be if that's possible.
Speaker 3: Thank you very much. Londoner looks great. Thank you. You saw it? Yeah, we're we love people seeing it because it's only halfway there. But what we've built so far is we're just very proud of it. Thank you.
Speaker 9: Thank you. The next question is coming from Brandt Montour from Barclays. Brandt, your line is live. Hey everybody, thanks for taking my questions. And Grant laid out a pretty good case.
Speaker 9: based on the transportation impediments and the hotel room inventory impediments, that premium mass visitation could very well outgrow base mass visitation from here. I'm not putting words in anybody's mouth. But could you give us some insights into what you're seeing in terms of premium mass win per visitor?
Speaker 9: And compare that to other markets that you saw reopening post-COVID and sort of an index to 2019. Just trying to get a sense for the pent up demand on a per person basis is really trending.
Speaker 4: I'll just make a few comments and I'll pass on to Grant. I think the key thing here is having seen this as we said before in several other markets, this is an impressive recovery. It's very strong. The people that can get there are consuming meaningfully in all segments, retail, food and beverage.
Speaker 4: on the gaming side, on the hospitality side. So it's great to see, it's very exciting. I don't know that in any of our markets we had a quarter with this amount of EBITDA recovery this quickly after opening, so that's a good indicator. And so I think we're very excited about that. I think it's hard to call. These things are, I wish we had a crystal ball, but I think at this point, we're going to have to,
Speaker 5: We look at the recovery and it's very encouraging. I will turn over to Grant to see if there's any additional remarks. I would say the points that we're making on the hotel room inventory and transportation is more reflection of what happened in the first quarter. I think if anything, those factors obviously...
Speaker 5: improve, have been improving dramatically into March and into second quarter. So we obviously hope that the base masks will catch up, seeing as we're the biggest beneficiary of that segment.
Speaker 5: And then I think spent per head for the entire market is clearly up. The quality of customers is very high. And I think it really applies to all segments. You only have to walk through the different properties. You're right here, you can see.
Speaker 5: the level of our spending power not least in our retail more. You know, we're up 18% in overall retail sales versus 2019, but clearly the luxury segment is up a lot more. And that's with obviously only.
Speaker 5: 40-something percent of visitations that we had in 2019. So, you know, not just in gaming, but also in the non-gaming. In retail, you can see those trends were consistent in the first quarter, but hopefully we can start to see the base mass visitation growing and the hotel room occupancy growing for the entire market.
Speaker 9: Thanks for that. Switching gears maybe to New York, just curious if you're willing to give an updated thought on the RFP process there if you think the timeline has shifted.
Speaker 3: Since we've talked about it since we talked about it three months ago And any other comments on the factors for winning that their license. Thank you Yeah, New York work in progress waiting the response from the government obviously has pushed back We're here. We don't know for a fact. Let's begin there, but we've been told it could be early of first quarter of 2024
Speaker 3: But again, we have no definitive date this time. We do believe we have a very compelling bid that projects in sync with our historical approach to development. It's a large scale resort with enormous non-gaming amenities, hotel, convention space, entertainment, spa, et cetera. Very beautiful design. Very much the LVS spirit. The Hui Hotel should be designed as a real resort, a real destination.
Speaker 3: We have close to 80 acres, so I think we have a very special bid, a very compelling bid, and I hope the market sees it that way. Timing will remain with New York State's government, and again, we hope it's the first part of 24. No more to say about that this time.
Speaker 3: have close to 80 acres. So I think we have a very special bid, a very compelling bid, and I hope the market sees it that way. Timing will remain with New York State's government. And I again, we hope it's the first part of 24. No more to say about that at this time. Thanks, Brian . Great. Thanks again.
Speaker 10: Thank you. The next question is coming from Steve Wychinski from Steveo. Steve, your line is live. Hey, guys. Good afternoon. So, Rob or whoever wants to take this, I mean, if we look at visitation into Macau over the last, you know, it's called month or so, it seems like there might have been or there might has been a change in the makeup of the pandemic.
Speaker 10: customer today versus what that typical customer looked like previously. I'm not sure I asked that question really the right way. So if I didn't, let me know. I think you answered perfectly. You asked a good question. Grant, do you want to tackle that first?
Speaker 5: Sure, I think we're trying to get recovery in all segments of the market, as a tourism market is multifaceted in terms of the different segments. And the two groups were the last segment to really be...
Speaker 5: So that's only been taking place in the second half of the first quarter. So yes, the first visitors to come back have been more at the premium and over time you're going to get all the other segments.
Speaker 5: recovering in good time. And I don't think there's any difference fundamentally in terms of how these different segments behave or perform versus 2019. I think in general, it's
Speaker 5: of the people who've been coming back, I think you've seen a higher propensity to spend, but over time, as the other segments come back, I don't think we should necessarily expect a fundamentally different mix or fundamentally different profile within each of those segments.
Speaker 5: So the only different point to make at this juncture is that yes, across all segments the spending power is higher than what it was and the propensity to spend is higher and we see where that evolves over time.
Speaker 3: Stephen, I think we all agree that, what Grant just said, we have full confidence that this market will look a lot like it did before. The only difference structurally is the junket situation, but maybe the more affluent have gotten better access earlier, but I'm a staunch believer that that market will come roaring back in the base mass. If you walk around the peninsula, you'll see already the base mass is booming down there, although it's a lower quality spend.
Speaker 3: than previous base masks. But I think the base mask market will come back as much to how quick it does come back, but this market will look fundamentally the same in 2023-24 as it did in 1890. I'm completely confident of that.
Speaker 10: Okay, thanks for that, guys. I appreciate that. And then Rob, I think the slide number 23 is pretty interesting in terms of how you laid out your Macau capital commitments for the next 10 years or so. I don't know if you answered this, but you know,
Speaker 10: If you think about that potential all in, the four and a half billion that you might have to spend over the next 10 years, is there any way you can help us think about what you guys are kind of targeting for a potential return on that commitment?
Speaker 4: Patrick? Yeah, I think we've always said publicly that we look towards a 20% return on invested capital there. But I have to tell you, Macau has been a fantastic market to invest in over the last 20 years. We're very excited to follow through this commitment and we look forward to the opportunity to actually invest more. And thank you for joining me today, And thank you for being with us, it's absolutely amazing
Speaker 4: If you look at the growth of our company, it's because of the investments we've made in Macau in non-gaming. It's an extraordinary tourism market, the consumer responds very well, and we're very excited about the opportunity in this new concession to invest more than what we have on this page. So it's something that we're very focused on and we look forward to the opportunity to do it. There's going to be raging bulls on Macau investing in the future.
Speaker 3: And the further you look back to our past, the further you can see our future, which is going to be, we believe non-gaming assets are wildly profitable, but they also drive gaming assets. It's all in sync. So when we build more hotels or we build more retail or anything, it drives the gaming wind. We've got plenty of positions to fill and to grow those numbers. When you look at the slot numbers coming out of Singapore and the win per unit and tables, you realize just how far Macau can get to. So I wouldn'tMJ
Speaker 3: We never saw the investment in the concession being an ending point, we saw it as a beginning point. We much believe that Macalbix 10 years will make a lot of money for us. We're very bullish on the market and we're thrilled to be there. Okay, great. Thanks guys, appreciate it. Sure, thank you.
Speaker 11: Thank you. And the last question today is coming from Dan Pulitzer from Wells Fargo. Dan, your line is live. Hey, good afternoon, everyone and congrats on the quarter. Dan. First, I wanted to touch on Macau. Can you talk a little bit about the recovery level across the properties there and which have been most impacted by room and labor constraints versus, you know, mass versus premium.
Speaker 5: Hello? Hello. Grant, please take that. Grant, please take that. Yeah, sure. I think between the properties, London clearly is most impacted by the hotel room availability. So you can see that.
Speaker 5: reported fiscal inventory occupancy is only 46-47 percent for the property as a whole and that's the biggest repository of hotel rooms in our portfolio so clearly the impact for that property was the greatest but at the same time it kind of flips into your second part of your question the portion that we were operating
Speaker 5: Especially the new product on the north side of the building and the new suites. We've really had an exceptional customer response to the product. I think not just the excellence of the design and the hardware, but also combined with the day of the incident were certainly as important to the of other
Speaker 5: you know, the actual programming of the hospitality and just the levels of service and the bespoke hospitality that we're offering, but doing so at scale. So in terms of those return questions that you asked, we see that the early signs are very, very positive.
Speaker 5: from the new product including the new suites at Londoner Hotel and also the brand new London Accord with which offering very different kinds of bespoke luxury hotel experiences for the customer.
Speaker 5: Overall for the property is a big property. We're hampered by the lack of hotel room availability during the quarter for sure, but of the new product that we're actually operating, the initial results have been very, very pleasing. Got it, thanks. And just turning to Singapore.
Speaker 11: Maybe if you could talk a little bit about the puts and takes of the reopening of China, and I know inbound travel from China has been a little bit slower to recover, but I guess how do you think about that recovering over the course of the year? And then similarly, of your China customer base that had been in Singapore, are you still seeing that customer or have those, you know, has that base gone back to China? Patrick?
Speaker 4: Thanks. You know, it's a very interesting question. I think with the opening of China on January 8, there hasn't been a huge influx of Chinese visitation in the early part of the quarter. But there is an ongoing ramp of outbound tourism from China that would be the beneficiaries from.
Speaker 4: And that's something that we've been anticipating a long time. There is not the normal level of flights. There is not the, let's call it the normal airlift capacity that you would expect during a normal runway period, which they're going to slowly ramp into. So across the year, our expectation is that that visitation will recover. It's such a strong market for Singapore, has been historically, and yet we're able to execute these levels without that market really contributing. So we're very bullish. The Arnett
Speaker 4: on the opportunity of outbound tourism from China to support marine evae sands and its ultimate growth to where Rob has mentioned it in the call and beyond. There is one other comment that I do want to make. We had a very interesting question from Steve just prior to yours about the level of investment that we were willing to make in Macau. I think we're very optimistic about our investments there. It's a high return environment. We're very focused on continued investment there.
Speaker 4: not only through the fulfillment of our concession rule, but also in general to grow our non-gaming asset base. But the same thing was true in Singapore. I think we're very focused on growing Singapore as a market. The opportunity there is very unique. It's a really high value tourism market that has a different cashman area than Macau. We're very excited about the Marina Bay Sands expansion, although just to sort of comment on it, kind of going down that vein, we have very high expectations for return on invested capital.
Speaker 4: in both these markets. But when we first went into the Marina Bay Sands expansion in 2019, and we entered into the development agreement in April of 2019, a lot of things have changed. So, you know, it's probably going to be a lot more expensive. The pandemic brought, you know, brought additional costs. There's been material labor and material cost increases. There's been significant inflation.
Speaker 4: it is.
Speaker 4: But I think it's really important to note that there's been significant inflation since we began discussions a year ago. So the cost of the Maria Bay Sands expansion is going to be a lot higher. The good news is the market is so good, we think the opportunity is going to be a lot stronger and we're going to do a lot better. So, you know, I think to set expectations the investments that we make both in Macau are going to be very strong return. We're very excited about them.
Speaker 4: long-term success in these markets. We sort of have a very long-term thesis and both of them are going to play capital into both in scale. And we're going to look for high returns and we feel very strongly about the opportunity in both of these markets. But I did want to say that it's going to be expensive and it's going to be worth it. We are fortunate to be in two markets. One are expensive, the two reward the money you spend. And I think we're very fortunate to be a market that can grow and grow.
Speaker 3: and we will continue to invest heavily because we believe we'll get back to much bigger numbers in both markets. So stay tuned.
Speaker 1: We appreciate your time today. Thank you very much. Got it. Thanks so much. Thank you. Ladies and gentlemen, this does conclude today's conference call. You may disconnect your lines at this time and have a wonderful day. Thank you for your participation.