| Quarter | Q3 FY24 |
|---|---|
| Call date | 2024-10-23 |
| Results reported | 2024-10-23 |
| Length | 62 minutes |
| Speakers | Daniel Briggs, SVP, Investor Relations; Rob Goldstein, Chairman & CEO |
Results, guidance and Q&A analysis for this call
Daniel Briggs (SVP, Investor Relations)
Good day, ladies and gentlemen and welcome to the Sands Third Quarter 2024 Earnings Call. At this time, all participants have been placed on a listen only mode and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to Mr. Daniel Briggs, Senior Vice President of Investor Relations. Sir, the floor is yours. Thanks so much. Joining the call today are Rob Goldstein, our Chairman and CEO, Back of DuMont, our President and CEO, Doctor Wilfred Wong, Executive Vice Chairman of Sense China and Grant Chung, CEO and President of Sense China and EVP of Las Vegas Sands Asia Operation. Today's conference call will contain forward-looking statements. We will be making those statements under the Safe Harbor provision of federal security laws. The company's actual results may differ materially from the results reflected in those forward-looking statements. In addition, we will discuss them in GAAP measures. Reconciliations to the most comparable GAAP financial measure are included in our press release. We have posted an earnings presentation on our website. We'll refer to that presentation during the call. Finally, for the Q&A session, we ask those with interest to please pose one question and one follow up, so we might allow everyone with interest the opportunity to participate. The presentation is being recorded. I'll now turn the call over to Rob.
Rob Goldstein (Chairman & CEO)
Thanks, Dan. Thanks for joining us today. The Macau market continues to grow. Total gain in revenue for the market grew 13% in the third quarter of 2024 when compared to the third quarter of 2023. Masking revenue grew 14% in the quarter compared to one year ago. We believe the Chinese economy will grow and flourish the future. It remains steadfast. The Macau market will grow along with it. I believe the Macau market gross gaining revenues will exceed $30 billion in 2025 and growth from there. The scale and quality of the assets we have built are second to none. We believe our assets position us to grow faster than the market as growth expands beyond the premium customer setting. Our business strategy is predicated on investing in high quality assets that also have scale. We've designed our capital investment programs to ensure that we will continue to be the market leader in the years ahead. We lead our approach will enable us to grow faster in the long term, grow our share of EBITDA in the Macau market and generate industry leading returns on invested capital. Turning to our results in Macau, we delivered solid EBITDA for the quarter despite material disruption at the Londoner which peaked during the third quarter. We opened the London Grand Casino in the last week of September. We're also open 300 the 1st 300 Londoner Grand suites. We will introduce more Londoner suites throughout the next three quarters. The total 1300 London suites and rings in service by Lunar New Year 2025 with a full Coughman 1500 suites and 905 rooms in service by Golden League 2020. SEO continues to lead the market in gaming and non gaming revenue and in market share of EBITDA. Our objective is to capture a high value, high margin tourism over the long term. We have unique competitive advantage in terms of the scale, quality and diversity of product offerings. Upon completion of the second phase of the London in 2025, our product and management more pronounced than that. We delivered another strong Porter in Singapore despite poor home percentage. The results in radio based standards reflect the positive impact of our capital investment program and the growth of high valued ports. The going appeal of Singapore as a destination is enhanced by the robust entertainment and lifestyle event calendar. As we complete the balance of investment programs in the first half of 2025, there will be considerable runway for growth. Thank you for joining us. Let me turn on to Patrick.
Unknown (Executive (likely CFO or other senior exec))
Before you go to Q&A. Thanks, Rob. Macau EBITDA was 585,000,000. If we had held as expected in our rolling program, our EBITDA would have been higher by 2 million. When adjusted for lower than expected hold in the rolling segment, our EBITDA margin from Macau prop portfolio of properties excluding the lender would have been 35.1% or down 110 basis points compared to the third quarter of 2023. Our margins at the London were directly impacted by the disruption of the London Grand renovation. We closed the casino and had around 2500 keys out of inventory during the quarter. Margin at the Venetian was 38.6% and we expect margin improvement as the Venetian Cotai Arena comes back online in November and as visitations to the market and growth in unrated play both increase in the future. Margin at the Plaza and Four Seasons was 39.7% for the. As Rob mentioned, we continue to progress our Wonder Grand renovation program. As these products come online, our competitive position will be stronger than ever. We expect meaningful EBITDA growth and margin expansion in the future. Turning to Singapore, MBS EBITDA came in at 406,000,000. Assuming expected holder rolling play, our EBITDA would have been approximately 78,000,000 higher. The strong financial results reflect the impact of high quality tourism, investment and market leading product and growth and high value tourism. Overall. Had we held as expected in our rolling place segment, MBS EBITDA margin would have been 47.5%, Forty basis points higher than that of the third quarter of 2023, but we have made substantial progress on our 1.75 billion reversement program in MBS. We are still in the initial stages of realizing the benefits of these products including from our tower gaming offering which opened in September. The next phase of our capital investment program at Marina Bay Sands is scheduled to be completed during the second quarter of 2025. This will support further growth in 2025 and beyond. Also Please note on page 44 of our earnings presentation, we have provided estimated cost for our Marina Bay Sands IR 2 project. We couldn't be more enthusiastic about investing in the long term growth of high value leisure and business tourism in Singapore. The original concept was in effect an expansion of Marina Bay Sands including an arena. Our new program creates a full scale integrated resort development with a full suite of amenities including gaming capacity. We look forward to discussing that long term growth driver in the Q&A session. Turning our programs return capital to shareholders, we repurchase $450 million of LVS stock during the quarter and our Board increased our repurchase authorization to $2 billion for future repurchases. We paid our recurring quarterly dividend $0.20 per share in the quarter. In addition, our Board increased our annual dividend to $1.00 per share or $0.25 per quarter for the 2025 calendar year. We really look forward to continuing to utilize the company's capital return program to increase returns to shareholders in the future. Thanks again for joining the call today. Now let's take some questions.
Daniel Briggs (SVP, Investor Relations)
Thank you. The floor is now open for questions. If you would like to enter the queue to ask a question, please press *1 on your phone at this time. We ask that while posing your question you please pick up your handset if listening on speakerphone to provide optimum sound quality. Also, we ask each participant to limit yourself to one question and one follow up. Please hold while we pull for questions.
Daniel Briggs (SVP, Investor Relations)
Our first question comes from Joe Greff with JP Morgan. Please proceed. Good afternoon, guys. Congratulations on the results. One question, two parts related to Macau in the three. Q If we look at Contra gaming revenues as a percentage of gross gaming revenues, that percentage went down almost 200 basis points. How much of that is you're managing the business differently, offering promotions differently than before? How much of that is just the market level of promotional activity is down? How much of that relates to, you know, mix between base mass and premium mass? And then I will follow up.
Unknown (Executive (likely CFO or other senior exec))
So Joe, it's, it's a great question and I think it's something we've been focused on for a long time. If you, if you realize what happened in the quarter and the quarter before and actually in, in the first quarter, we've been impacted by disruption. And so we haven't really been able to manage our business with all of our all of our capabilities. And So what we've been doing now is as things have been coming online and we've been focusing on manage the business for the future, we've been looking to become more efficient. So our we'll, we'll look to improve our margins to manage the business more closely. And what you're seeing is a direct result of that. I, I think one thing that did impact our margins this quarter and they would have looked better was the fact that we took so many rooms out of inventory. So the majority of our, our, let's call it our, our margin change and decline was related to the fact that that's a very high margin business and we still didn't have it because the rooms weren't there. So I think what you're seeing at the beginning of the cost discipline and the pricing power because of the assets we've invested in slowly coming into place. So I think it's a good signal for the future in the way that we're going to manage the business with discipline. I would like to turn over to Grant for any additional comments.
Daniel Briggs (SVP, Investor Relations)
Yeah. Thanks, Patrick. I think Joe, you know, it's more that last quarter I think we mentioned that as we, we're preparing for the full closure of the old Pacifica Casino. We, we did, we did deploy some tactical measures to manage the transition of of customers to the other properties. And we, we did that very carefully during, during second quarter. But for the third quarter we're, we're really back to our core strategy, which is we, we compete on the basis of of our products and the content that we bring. Despite the fact that obviously third quarter of disruption actually increase like like Patrick reference with many more rooms out of inventory. But we, we we stick to our to a core strategy and we had a a very strong quarter in in how we managed customer reinvestments and still maintain market share relative to the second quarter despite rising disruption during the quarter and despite the fact that the base mass did not recover as strongly as the summer months normally would indicate. So overall, it was a very strong margin performance and and obviously we're very pleased that we managed to actually grow EBITDA sequentially despite the fact that the market GTR is down marginally against second quarter. Thank you. And my follow up question related to Macau, obviously Golden Week was was pretty strong. October, you know for the most part has been you know better than expected. Can you talk about what you think the the drivers of that that better than expected performance? I'm assuming that probably better than expected for you guys as well. But you know, how much of that is, is driven by the increases in equity prices locally? How much of that is seasonally strong Events like Golden Week or or New Year's typically see a, a, a step change. It's a little bit stronger than maybe typical seasonality. Any kind of comments about how the typical Macau consumer is behaving since the quarter ended given all these generally more encouraging but not trends thus far in October? Thank you.
Unknown (Executive (likely CFO or other senior exec))
Yeah, Joe, I, I think we're not going to talk too much about the current quarter just because we have a policy not doing that. But I think directionally we're very pleased about the the quality of people we have coming into our buildings, both the Macau and in Singapore. And I think that there's some, there's some real opportunity going forward as our new product comes online and people continue to spend in our buildings. And I think even with the disruption that you're seeing, you're, you're finding that the consumer high frequent, high value tourist is coming to our properties and recognizing that there's a great experience to be had there. Entertainment definitely plays a big part of that. Entertainment has been super important for us in both markets. And we continue to look to schedule entertainment and take advantage of entertainment as it occurs in the markets, even if it's not scheduled by us. Thank you.
Daniel Briggs (SVP, Investor Relations)
OK. The next question comes from Stephen Grambling with Morgan Stanley. Please proceed. Hey, thank you. Maybe turning to Marina Bay Sands, it's been hovering from Anita da standpoint around 450 to 500 million for the past couple of quarters. Can you just remind us of the cadence of disruption, some of the work going on to add suites and how that might subside and then build into next?
Unknown (Executive (likely CFO or other senior exec))
Year, sure. So just to give you a sense, during the quarter, we had about 1600 rooms available versus about 2100 rooms available last year. So there's there's pretty substantial disruption going on just from a room count standpoint. We we also have some some casino floor work going on which is disruptive. We did just open up some additional salon capacity there. So you know, I think by the end of September we should have about 27 newly renovated salon. So there's just there's a lot of stuff happening. I think, you know, we did tower 1, tower two, we did what we call our paisa area. We interest introduced Sky gaming, which is something that we've ever had before, which is actually granted us as part of the, the development agreement for IR 2. Umm, we've redone some dining and updated some retail. I think the, uh, the biggest disruption is really tower three that's ongoing and uh, hopefully by the end of the quarter we'll add another 150 rooms. We'll see how that goes. But our biggest disruption right now is we have a, a, one of our casino floor areas is kind of mid flight. And so that's that's disrupting over the casino operation. But I would say that by middle of next year, hopefully we're going to stop talking about disruption. I think my dream, not talking about disruption at this point, you know?
Rob Goldstein (Chairman & CEO)
I think by point by many of 25, both London and Singapore pretty much your clear sailing when you stop telling you battle rooms or anything. All disruption, no difficulties, all comes to a head and no more excuses. We'll start seeing, I think, some stellar results that will reflect the end of disruption being of making more money both in Singapore and Macau. I think Singapore is, it's going to. It's amazing. I was done in spite of this, but London returned to that place. I can't wait to see it finished. Employee open because the casino core is very, very exciting with that.
Unknown (Executive (likely CFO or other senior exec))
You know, I would like to just point out, if you look at our earnings deck, you'd see some of the results or innovation on page 40, Page 41, you can kind of see the quality of work there. I'd like to give a big shout out to our design team. We've never really produced anything like this in our company's history. Our customers are taking notice. You can see that by the high quality of customer we have coming in, the ADR that we have, the demand we have, the reviews we have for these rooms, the customer feedback. Very proud of what we've done in Marina Bay stands. And if this is what we're able to do with this level of disruption, we're very excited about the future and the trajectory of the business. It's, it's really amazing how strong the market is, how quality of how quality of a tourist is coming into Singapore and the fact that they are really interested in coming to Marine Bay Sands. And so I think the investment is has been very positive and we're very happy about it. But unfortunately, we're still talking about disruption.
Rob Goldstein (Chairman & CEO)
And and and maybe as a.
Daniel Briggs (SVP, Investor Relations)
Follow up just on Marina Bay Sands, realizing that you put out the, the number, the updated numbers in terms of capital spend on IR 2, I guess as the scope changed at all. Are there any updated thoughts on how you think about the returns on that project potentially versus other projects, realizing that you'll you'll probably get into this both later this year and next?
Rob Goldstein (Chairman & CEO)
Obviously the biggest change that you made you aware of is that is a full casino amenities this building no longer just a hotel supporting IR 1. And so that's the obviously the biggest change is that and I think you'll see from the the designing there's it is, there's laser focus on the premium mass segment. Do we believe there's a market that has grown to what 6 1/2 billion dollars of GGR probably in 24? We believe we easily get to tell them a billion dollars by quarter end. So this project reflects a lot of capital being directed at a very, very strong customer segment and a unique asset and some unique market that is stellar and it's unique. There's barriers to entry. There's a proven market. Guess who the customer is. We've been there for 14 years. So we feel very, very confident that these results are going to be terrific by we've told you before we expect higher one to get to 2.5 billion and we believe this new building can make an excess of billion dollars on top of that. So we're very confident that we've built the right thing in the market and it's unique location, destination, our business like the other tested market, you know the competition, you know the government, you know the infrastructure barriers to entry. So the biggest single change obviously is there's a full blown casino as opposed to just a hotel.
Daniel Briggs (SVP, Investor Relations)
It makes sense that that's it for me. Look forward to seeing it in November, yeah. Up next, we have Robin Farley with UBS. Please proceed.
Rob Goldstein (Chairman & CEO)
Great. Thanks.
Daniel Briggs (SVP, Investor Relations)
Last week and investors heard a bit about some, you know, pressure on luxury spend from the Chinese consumer. I wonder if you could talk about what you might be seeing there and how much do you think how much overlap is that with, you know your premium mass consumer?
Rob Goldstein (Chairman & CEO)
Robin, we'll just talk about that for a second. I think we're, I think everyone should be impressed the the resilience of Macau. We all know what's happening in China and and very confident it will turn to a stronger place in the near future. But the fact is MCAL is performing, showing growth and strong growth. I think despite the economic environment there. Hopefully we'll see more insight to the government's perspective on the economy in the near future. But unlike retailers, you're right has struggled and we struggled as well as our top end retail, retail in general and Asia's. There's no disputing. So the LV makes numbers, Rechmont numbers carrying numbers, but it has not been a similar path for gaming in the Cal Macau is showing growth, double digit growth in the quarter. It's very, it's very exciting. If this continues, I think it will, I think will exceed 30 plus billion dollars next year. We're waiting the day when the base mass returns. And so our current assets speak very well to the, I mean, the Londoner completion and the Venetians will be talking to each other and I think creates 2 impressive assets in the market by far making billions the dollars in the future for us. But the real kicker comes when the basement does return because as you know, our assets are, are built for scale and built, you know, a huge throughput. I think when that happens, the world turns very, very sunny for us. But in the interim, unlike retail, unlike other consumer spending businesses, Macau has proved to be very resilient and very powerful and we're grateful for it. And you saw the numbers coming out of the market numbers for October looked awfully good for the industry where we saw the first weeks of October. So you know, it's, it's a very positive story relative to other businesses operating in the town in the China.
Daniel Briggs (SVP, Investor Relations)
Great. That's really helpful. Thank you. And maybe just one quick follow up is with some of the.
Rob Goldstein (Chairman & CEO)
Stimulus that was announced a few weeks ago, did that change your?
Daniel Briggs (SVP, Investor Relations)
You know, expectation for timing of recovery in the in the base mass or you know, in other words, where should investors maybe look to see that show up if you in fact if you think you know it will show up? Thanks.
Rob Goldstein (Chairman & CEO)
I think it's I was in Beijing two weeks ago and I think first of all, it was very well received by everyone to see the government stepping in and he's wonderful and hopefully continues. But I think it's too early to predict where and when and how and how quickly. Again, I think it was great to see is that before the stimulus Macau continues to show you know strong growth and and our product offering they will will participate in that when the stimulus shows up how it impacts the customers hope it would be. Soon later you'll be all segments, but in time will tell we have, I don't think we have any insights. Grant or Watford, do you feel differently about that?
Daniel Briggs (SVP, Investor Relations)
Yeah, Rob, I think the, the main point here which you which you referenced just now is you know, the Macau TGR remains very resilient before any of these stimulus measures have the chance to take impact. And, and I think that's that's very clear in the premium segments. And I think any economic tailwind we, we get as a market from the stimulus measures over time obviously will help the other segments in particular I think base mass and and retail which are two very, you know important segments for us. So overall, we should acknowledge, you know, this Macau, GGR, Macau gaming is a very big out performer in the whole consumer universe in the region right now. And that's powered by the premium segment where we are in extremely well placed with the great products that we bring online. But of course, as, as the economy gets better, as some of these measures have positive impact over time, we obviously expect the other segments which are also important to us will, will follow through and and give us give us a further boost to, to, to what these assets can actually deliver into 2025 and beyond.
Rob Goldstein (Chairman & CEO)
OK, great. Thank you very much. OK.
Daniel Briggs (SVP, Investor Relations)
The point the first thing is that the economic stimulus measures introduced by China are still unfolding, but the directional development is welcoming. We have confidence in the Chinese mainland's economic future and would continue to invest in Macau's future. The second point is that in 2024, Macau has been rated by the Chinese tourist as the most desired destination out of the Chinese market. So we we see that Macau will stand to benefit once economic activities return to normal.
Rob Goldstein (Chairman & CEO)
OK. Thank you.
Daniel Briggs (SVP, Investor Relations)
The next question comes from Sean Kelly with Bank of America. Your line is live. Hi, good afternoon everyone. Thanks for taking my questions. Wanted to go back to to IR 2 to start. Thank you for the additional just numbers and disclosure there. You know Robert or whoever's right, obviously the, you know, an increase in the casino scope and capacity and and what's always been a supply constrained markets pretty interesting. Any details that we you can provide there in terms of, you know, how many positions or what form some of the gaming expansion may take or imagine if, if it's too early, when might we look forward to, to hearing some additional details like that?
Unknown (Executive (likely CFO or other senior exec))
We're going to publish the final details over the next coming months, but the idea is that it has casino gaming in the podium and sky gaming, sky gaming in the tower. Look, our goal with this tower is to make it something very different. This is going to be the most important gaming and hospitality building in the world. It's going to be the best hotel in the world. That's our goal. The best service, the best experience, the best F&B. Our, our goal is to create something that is really extraordinary and helps address the Singapore market, which we know quite well now and has been consuming some of our highest end products over the last 14 years. And so we're very aware of the market segments that we're addressing. And so we feel like this is a project that will be very accretive to our overall portfolio and create substantial value to us in the long term. What I, what I can tell you is that it's a very robust program. So it will have great food and beverage, great other amenities. It will have a, a public access component. It will have a, a sky park as you can see its own version of the sky park. It will have my space. So it's going to be a very important globally, globally significant asset for tourism, but it's going to be very specific to a very high end segment that we're dealing with today. And so hence the hence the investment.
Daniel Briggs (SVP, Investor Relations)
Great, Thanks Patrick. And then as my follow up, if I could just turn to Macau, obviously was encouraging to see a bit of the the market wide recovery in in visitation. And I was just wondering if you know somebody could provide a little bit more color on how sort of visitation played out through the quarter. I think as we look back second quarter things were, were were light and a kind of little soft relative to kind of where we sit in 2019. Clearly sequentially that improves. So just what was behavior like, you know, as things improved and and what were you seeing from sort of the customer patterns, the visitation front? Thank you man.
Rob Goldstein (Chairman & CEO)
Do you want to take that?
Daniel Briggs (SVP, Investor Relations)
I'll take that. Yeah, thanks for the question, Sean. Yeah, as you rightly pointed out, visitation improved in terms of the recovery rate in third quarter as relative to second quarter. So we're up to about 93% of recovery versus 2019 third quarter. And actually August the visitations exceeded 2019 levels this quarter. It was primarily especially when you look at it on a year on year basis primarily driven by day trip visitor increase and probably as a resolve that. But probably I think as a general macro conditions didn't translate as much as you would have expected into the actual spending, especially in the base mass and retail. So what we saw in the third quarter is actually continuation of the strength in the premium segments. We had better visitations, yes, but that didn't necessarily translate into the into the base mass business or or help the retail business to any great extent. But it's encouraging to see the interest and desirability of consumers to to come to Macau. Clearly the Sheraton Keys being, you know, 2400 fewer rooms available versus the prior summer didn't help us, but also, you know, frankly didn't help the market as a whole because that's a very large amount of inventory to be out of the market. So overnights as it is that that obviously Hanford that that segment and overnight visitors typically spend multiple times what a day trip has spent. But like I think Wilfred mentioned, Macau remains very desirable as a tourist destination for the region and and I think it's encouraging to see that come through just in the volume of visitations for the quarter. Thank you everyone. Thank.
Rob Goldstein (Chairman & CEO)
You, Sean. Thanks, Sean.
Daniel Briggs (SVP, Investor Relations)
The next question comes from Carlos Santarelli with Deutsche. Please proceed. Hey, hey guys, basically just one question, but but maybe 2 parts to it. I don't know if Grant wants to take this, but but just thinking about the the cadence of of rooms coming back online in, in Macau relative from from where we are today, what the the total room count will be acknowledging, you know, some regular rooms got compressed, the suites, you know, come golden week of next year. And then kind of bucketing the rooms out of service and, and thinking about the impact they've had on, you know, a good slide. Do you guys have in your deck that kind of shows EBITDA share in 2019 of about 34% and and that trending at roughly 30% kind of this year. How much that that 400 basis point delta do you think returns with the with the rooms coming back online so?
Rob Goldstein (Chairman & CEO)
Should I take it? Yeah, please. Yeah.
Daniel Briggs (SVP, Investor Relations)
Yeah. I think on the construction and the delivery of the new rooms, I mean, first of all, I think that the team's done a fantastic job in delivering the assets back the way they have by the end of September where we opened a new casino, London, a Grand casino as well as the get licensed for 300, the 1st 300 suites in London a grand. I think it's important to to understand that in the fourth quarter, we actually go down further in the total number of keys available during the quarter versus third quarter because we will be losing the rest of the Sheraton rooms and we will be staying in terms of licensed new suites at this 300 number for pretty much the whole quarter. So we'll actually reduce further in terms of key count by about 6 to 700 rooms in the fourth quarter relative to to the third quarter. So it's really only until January that we we start to get a significant uplift in the critical mass of new suites and we hope to be above 1000 new suites by by January or by at least by Chinese New Year in January. And then it just wraps up from there until May or middle of the second quarter to the full inventory of 2400 keys. And by then we'll be back up to, to to over, you know 10,600 keys or just under 11,000 of their thereabouts by by the second quarter. Obviously the room inventory being out by so much does impact our our EBITDA and EBITDA share. And to your question on, on, on the, on the prospect for the EBITDA share recovery, I think we're we're very confident that London the grand and the whole London and Macau will deliver as as we roll out the what is really I think top, top product at unprecedented scale. This London and Macau will be 4400 suite hotel with, with about you know, over 60% of of the keys being suites. There's really no building like it in our industry in terms of that scale of, of quality and the offerings it has between the F&B, the arena inside the actual building. So we, we're, we're very positive about how, how this will help to drive our EBITDA and ultimately our share of EBITDA as, as it ramps up and, and 2025 unfolds and hopefully with some of these tailwinds that we just referenced earlier in the call. So yeah, we, we are very excited about how, how this asset will deliver for us. And to Rob's point, you know, between Indonesian and London, Macau, I think you've got 2 amazing assets that that's really going to deliver for us, but also deliver for our customers. I appreciate that. Thank you. The next question comes from Brett Mator with.
Unknown (Executive (likely CFO or other senior exec))
Barclays, please proceed.
Daniel Briggs (SVP, Investor Relations)
Hey, good evening, Afternoon, everybody. So first question in Singapore, the ADR.
Unknown (Executive (likely CFO or other senior exec))
Reported Rev Par, but ADR specifically of $900 was was staggering. Just curious, I know there was a lot of rooms out. It was sort of the through it seems like in terms of rooms out of service.
Daniel Briggs (SVP, Investor Relations)
When we look at that ADR, you know, I'm trying to figure out it, it was, it is there compression happening in that ADR because there are rooms out or, or is that number sort of illustrative of, of the, the quality and, and the, and the sort of higher level product that that you know that you're coming out with for that for that asset?
Unknown (Executive (likely CFO or other senior exec))
The answer is yes. So the first thing is you can see the pictures. Hopefully you have a chance to go actually see the rooms in person. The rooms are extraordinary. The design is fantastic, the service levels are incredible, and we get that feedback from our customers. And so the ADR is a direct result of the market's view of the quality of the rooms after the renovation. And hopefully the entire building will be like that by the middle of next year. We're very proud about it. We've made a lot of strides. We've done a lot of work. The team there has been phenomenal. It's been our goal to make that the number one hotel in Asia and the world. And so we've been working towards that, been doing a lot of benchmarking work to try to figure out how to get there, which is unusual for a property of this size. I think actually one of the things that will help grow that ADR further is when IR 2 is open and we have an arena. That arena is going to be an incredibly powerful tourism driver for the overall complex. Having a 15,000 seat live performance venue with great technology, great viewing lines and a great experience is going to very unique things. And so the ability to schedule that asset to program it will drive a lot of visitation not only to Singapore but to Marina Bay Sands and will help us drive ADR further. So we feel very strongly that this ADR is a reflection of some compression. Very fair. We took rooms out of out of our keys out of the building. But more importantly, it's it's really something that points to the quality and the service levels of this newly renovated building. And we think it will grow over time as more amenities are putting around it.
Rob Goldstein (Chairman & CEO)
I think to be fair to us, I don't think fresh is that big a deal. In every market there is the extraordinary product. People are sad gamers and non gamers. This is that product. What's happening? Everybody's saying this isn't just a compression. Sure, a few more or less rooms help you, but I believe the man is going to continue to soar once they experience the product. There's just nothing like it anywhere in terms of the room quality, the food and beverage product heading about this hotel, the architecture, public spaces. It's the place people want to stay. We have to get 2003 thousand, 5000 keys. You can sell them all easily at that price. It will team grow. I think it's really a testament to the quality of product and the strong leisure demand and gamer demand in the market. And it's just going to get better and better because Singapore is that desirable infrastructure, government accessibility, it's a very special place. So we've built a building that's going to be for many years ahead, the most desirable place for everyone to stay at. So rates should continue to just go up and up and gaming capacity will, yeah, obviously grow more gaming demand, but it's a very different place than put anything else in Singapore.
Daniel Briggs (SVP, Investor Relations)
OK. Thank you for that. That's helpful. And then a question on Macau, on the arena, you know we don't.
Unknown (Executive (likely CFO or other senior exec))
Talk about the arena as much as we hear about the the casino floor and the Londoners suites and I and I wanted to hear, you know, your level of excitement about about that.
Daniel Briggs (SVP, Investor Relations)
Arena re renovation and specifically, you know, when we think about 25, is there a calendar?
Unknown (Executive (likely CFO or other senior exec))
Associated with that where where we would expect periods where you can look out now and say, OK, well this quarter, this quarter has you know a, a great slate of events and where it'll be a needle mover or if there's a lag associated with sort of getting it, you know up to the the place that you'd want it to be. So the, the great thing about entertainment in Macau is that it's a very important part of our premium mass business and, and we use it and we have used it successfully to drive premium mass visitation and we have programs that help sort of leverage that asset. It's been very successful for us all over Asia in terms of scheduling live entertainment. But you know, the, the venue there is, is really an incredible 1 great visionary move by Sheldon early on to build that arena. And you know, the updating is going to make it more powerful. And so I think we're very excited about the types of programs that we can run using it. And there will be a schedule and it will be within our control. And it will allow us to, to, to create more visitation and better spend at the Venetian and the rest of the property portfolio. But you know, Grant or Wilfred, I don't know if you have any additional comments you'd like to add.
Daniel Briggs (SVP, Investor Relations)
Yeah. I, I think we, we have referenced it in the deck, but we, we are progressing very well on the construction of the upgrade for for the Venetian Arena and it will relaunch actually towards the end of November into December. And we already have the 1st events lined up in terms of entertainment but also sports. So, so that would, that would get start getting, getting some traction actually even at the end of this year. But you know, we also should note, like Patrick referenced on, on the entertainment offer in general with the London Arena, with the 6000 seat London Arena, we, we have been programming very actively even during the, the, the downtime of the Venetian Arena or especially I should say. And you know, we, we did around 17 shows in the London Arena during third quarter. And many of these shows actually did, did help us in, in driving the, the traffic and, and, and the spend. So we're very excited to have the Venetian Arena for the upgraded. I think it's going to be great for entertainment sports mice events. So it's, it's really you know, serving multiple segments and and boosting the diversification drive in Macau. I think with a great set up there with the VIP boxes with with the backstage, the locker rooms and obviously the state-of-the-art technology, I think is is going to be basically like a new arena launching. So we are very excited about that. But another point to to note is we will be programming both arenas and you know, sometimes they'll be shows concurrently in, in both venues on both sides of the strip. So we're excited to, to see how that could help our, our business too. So yes, you, you will, you will, you will continuously see us showcasing new events in the calendar. There's already 33 events selling, selling tickets now towards the end of of of the quarter and we are looking forward to do some announcements on, on, you know some more major events before before the end of the year as well. Great, Thanks everyone. The next question comes from Dan Pulitzer with Wells Fargo. Please proceed.
Unknown (Executive (likely CFO or other senior exec))
Hey, good afternoon, everyone. First question on Singapore on IR.
Daniel Briggs (SVP, Investor Relations)
Two, can you talk us?
Unknown (Executive (likely CFO or other senior exec))
A bit about the regulatory landscape and outlook. I, you know, remind us maybe in terms of when the licensing goes through as it currently stands and I assume you expect this to remain a duopoly market or or maybe even better, but is there any expectation for how you think about gaming tax rates as you underwrite the returns on the on this building? Yeah. So I, I think for us that we modeled this is that we have a we basically have a moratorium on the changes in gaming tax until the early twenty 30s. And I think for us, I think, you know, we view this investment with as a very long term thing. And we'd like to believe that we'll continue to add value to Singapore and that will continue to be a a good partner of the government and and accomplish the goals and tourism that are necessary. So I think from that standpoint, we feel like it's a very stable operating environment. It's a it's a wonderful place to deploy capital. So it has been a wonderful place like capital. We feel as Rob referenced earlier that there's a stability there and you know a very strong trajectory forward for us. So I think as we look at under underwriting this, it's a very long dated investment, right. It doesn't open for six years, hopefully sooner, but we'll see. And that's obviously pending government approval along with the, you know the final approvals that we need to begin by the summer of next year. But we think about this as a very long term thing and we feel very excited about what we, we can build there. The gaming is, is a nice ad, but there's also a lot of things that are going to drive tourism that are going to be very, very beneficial to us as well, like the arena, like the hospitality, like the food and beverage to enhance the overall appeal of the entire complex. So I, I think for us look at this in a very long term way, we feel like there's very high barriers to entry there. I think right now it seems like the, the, the feeling is that we're, it's a duopoly market for the foreseeable future and we certainly hope it stays that way. But from our stand point forward, it's the opportunity to invest in scale and that's what we're doing. Got it. And then just turning to Macau, the promotions obviously came down quarter over quarter. I mean, as we think about getting back to those, you know, mid to high 30% type margins in Macau, you know, is this really a function of recapturing shares, seeing more of the visit visitation come back or, or at least kind of gaming, gaming oriented visitation? Or you know, is this really kind of you need the market to grow to get back to those levels? Well, I I think the first thing is for us to get to high, you know, to get to the the high 30s, low 40s margin, we need revenue growth and we need all the segments to return. You know, right now some of our segments have not returned, particularly the base mass segment to where they were pre pandemic and we are built for that. Our investment is 1 for scale, but we have the ability to service the premium mass segment very well. The Londoners an incredible product. You know the rest of our portfolio has incredible products as well. But if you look at the scale and the amenities that we have, everything from food and beverage to the bus terminals to the, the grand, the grand entry ways to the theming, we're very much able to accommodate leisure tourists. And so for us, you know that that missing visitation, if you will, from 2019 and also, you know, the lack of the base mass play is impactful to us. So the, the way, the way we would get to the higher margins is the revenue growth. That being said, I have to hand it to the team there. They've been wonderful in terms of cost discipline and and being disciplined in the way that they they spend money to ensure that we maintain our margins up against the current revenue that we have. But I think as we look forward, our investments will ultimately Dr. higher value visitation in the long run. And we firmly believe that we see that historically and we've experienced it in other markets and in this market particularly when we do high value renovations. So I think for us, you know, as visitation continues to improve, hopefully you know, as the base mass market continues to improve and as we continue to get our premium mass segment assets back online, you'll start to see a normalization of revenue and then a normalization of margins. Grant, do you have any additional comments?
Daniel Briggs (SVP, Investor Relations)
I think you covered it, hopefully. Thanks. Got it. Thanks so much, Ben. Hello, Operator, do we have any additional questions? Yes, The next question is from Chad Bannon with Macquarie. Please proceed. Afternoon. Thanks for taking my question. You've been asked a lot about Macau, but I'm going to add one more to the stack here. So obviously you and the other concessionaires went through the whole retendering process two years ago and we've gone through the the the checklist of.
Rob Goldstein (Chairman & CEO)
Items including, you know, your industry leading employment and other, other items, but with the new chief executive coming into his position in Macau.
Daniel Briggs (SVP, Investor Relations)
And I believe a month or so, is there anything that we should expect in terms?
Unknown (Executive (likely CFO or other senior exec))
Of market focus, concessionaire focus or is it kind of business as usual as they transition through that? Thanks.
Rob Goldstein (Chairman & CEO)
Let me say we're always very focused on making sure we're doing our job with the government and hearing to the things we we were asked to do. I don't believe the new chief exec will change that, but we will stay focused and listen very carefully to make sure doing our part. We always do that historically in Macau and we've always been, I think a leading company as far as investing Macau and hearing Macau's principle. But I don't expect to see radical change at all. I think it's going to be the business as usual for the most part. Welford opinion on that?
Daniel Briggs (SVP, Investor Relations)
Yeah, I I think the concession commitment, it maps out a long term development focus. So all six of us have thought very carefully and comprehensively what we want to do under the guidance of the Macau SAR government. And I think you know the change of.
Rob Goldstein (Chairman & CEO)
The at the at the top will not have material changes to the directional change.
Daniel Briggs (SVP, Investor Relations)
Because what has been emphasized so far is that Macau really aims to diversify. We should invest in non gaming. I think these directions will remain. We, we just feel that as, as Rob pointed out, that as long as we conduct our business as usual and listen very carefully to what the government has to say, depending on what happens in the next few years, we we should be able to continue to operate favorably in Macau.
Unknown (Executive (likely CFO or other senior exec))
OK. That's helpful.
Rob Goldstein (Chairman & CEO)
Thank you for that. And then separately, one of your global competitors was recently granted a license in the Middle East.
Unknown (Executive (likely CFO or other senior exec))
They presented some pretty favorable investment returns to investors in the past couple weeks. They also mentioned that they expect competition in that region from others.
Rob Goldstein (Chairman & CEO)
So is this a region?
Unknown (Executive (likely CFO or other senior exec))
That you continue to study or their reasons why this would be a, you know, pencils down investment opportunity as you think about it. Thanks. I think we're always looking at new investment opportunities for Las Vegas Sands. I think it's a market that we'll continue to study and look at and we'll see how it goes.
Daniel Briggs (SVP, Investor Relations)
OK. Thanks, Patrick. The next question comes from Vitali Umansky with Seaport. Please proceed. Hey, guys. How's it going? Look, I think I have two questions. The first one, first one for Patrick. When we look at Sands China and kind of cash flows coming in, how are you guys thinking about distribution of that cash going forward? Obviously there's there's future CapEx requirements under, under the the return ring process. There's other expenditures that take place, but there's also in a company note that's still outstanding between LDS and Sands China. There's also I think investors looking at Sands China and thinking about, you know, 10 China 10 times trying to get back to being a higher dividend paying stock the way it used to be in the past. So maybe for Sands China, how he's thinking about capital flows? And then I think for for LDS as a whole with the announcement and kind of the the CapEx layout now for Marina Bay Sands, how are you thinking about #1 financing for MBS phase two? And also what does that mean for return of capital to investors of LDS? And then maybe the second question is around, wait, that was one question. Sorry, sorry guys.
Unknown (Executive (likely CFO or other senior exec))
Keep going, keep going. Vital. You're good. Keep going.
Daniel Briggs (SVP, Investor Relations)
Yeah, just like questions around New York, what your current thinking and thought processes around the New York licensing process?
Unknown (Executive (likely CFO or other senior exec))
So really appreciate the questions. A couple of thoughts. So First off, in terms of SCL, you know, I think SCL is performing incredibly well given the disruptions there. And I think we'd like to believe that EBITDA will go meaningfully over time, umm, you know, as will, uh, as will our cash flow. And so you know, in, in years past part of the pandemic, SCL was very shareholder friendly in terms of dividends. And as you can see that LVS is actually buying SCL stock as we can in the market, because we have a lot of conviction about the value of SCL equity as well as LVS equity, as you can see by the buybacks at the LVS level as well. And I and I think as we think about SCL, we're very hopeful that it will be a dividend payer in the upcoming year. We think that that's a possibility and we like to believe that it's it's going to occur. But again, that's up to the board there. And I think the in terms of the node, I'd like to believe that's also something that could be repaid to the parent level at some point. And I'll provide some additional capital allocation flexibility for the parent Co and we'll see how that goes to be able to hopefully maybe buy some stock with it, if that's possible. So we'll see. But I think it's a long term, we'd like to believe that SCL becomes a dividend payer. Again, we think that makes sense for the shareholders there at the LVS level. We'd like to learn more of it and you'll probably see us do a little bit more of that. But in the long run, we think there's going to be a very high quality return to capital program coming out of SCL assuming the trajectory, the business given the investment we've made and our belief long term in the market. I think at the LVS level, there's a couple of things that you you've raised there. I think first and foremost, I think when we think about capital allocation, we think about growth. You know, our highest and best use of capital is new ground up development. So you see us doing that both in Macau as part of some of our concessional work as well as in Singapore along with this IR 2 development that has just a panoply of great amenities, including which is going to be what we believe the best hotel in the world and an unbelievable arena. So you know, we think these are great investments help create a lot of growth and growth and cash flow for our company. So that leads to your next question, which is how do we finance this? And our goal is actually to follow what we've always said, which is raise some cost efficient debt capital. It's one of the reasons why we like being an investment great name. It makes our cost of financing efficient for new growth developments. And we'll we'll look to do that. And you know, if you think about the proportion of debt to equity, I think it's pretty consistent what we've talked about, you know, let's call it in the, you know, 35% context of equity and the rest will be financed given the debt capacity that we have at the, at the NBS balance sheet. And you know, the great news is that we've we've run over the leverage of level, low leverage level there with the anticipation of funding an IR to development. And so now that's, that's coming to be. So we're we're prepared for it and we look forward to the opportunity to work with our lenders to create that that financing facility to allow look for it to be built. So I think as we move forward, you'll see a delayed draw term loan at the MBS level to fund the construction with equity checks going in as well over time over the construction schedule. We actually have construction schedule will be provided. Again, it's, it's kind of illustrative, it's something that is a is a rough estimate today that's designed to give people a sense of timing of cash flows. And that's actually on page 46 of the deck. If you want to get a sense of kind of what we're thinking, it may not exactly be this, but this is context, you know, from what we can understand and see today. And so our our goal is to in effect create the flexibility to continue to invest in high growth opportunities, continue to pay a dividend and continue to repurchase shares at both levels. And, you know, hopefully we'll be able to do that, but that's our plan. And then I'll turn over to Rob for New York.
Rob Goldstein (Chairman & CEO)
What was it? I'm sorry, it was a long the question was on New York was the issue itself.
Unknown (Executive (likely CFO or other senior exec))
Yeah, Rob.
Rob Goldstein (Chairman & CEO)
Just kind of what the yeah, New York just refreshed my memories. What's the gap allocation was the question about New York in what regard? I I didn't hear the whole question. Rob, are you there? It's.
Daniel Briggs (SVP, Investor Relations)
Just about what the is from your end in terms of what the new process is and what, what, where do you expect it to go from here? Because there's been delays and yeah, yeah.
Rob Goldstein (Chairman & CEO)
Yeah. So the thingy right now is that the license will be submitted sometime and I mean applications for licensures sometime in spring of 25 with a decision this morning. I was told probably in the first quarter of 26 before that's making a decision. It will remain interested in the process. One fine right now I've always been the biggest advocate for New York and other jurisdictions. The only concern of these days is the ongoing strength of online gambling which you can't ignore what's happening in New Jersey and Pennsylvania and Michigan. And I think it's for the markets. But you know, we built capital intense buildings that require a long term perspective. And I must admit that there's got to be some kind of way of thinking about how the online impact would be, not where you are in the US. It's just a concern and it's something I've been looking at closely. I'd love to be in New York with the right capital structure and the right licensure process. But that's the newest wrinkle in the as far as the process, New York itself hasn't really changed. They're still talking late 25, early 26 for decision. I just my personal thinking has been influenced somewhat by the last six months as I see the growth of online gambling. So there's something to think about as we move forward in any market where online gambling is is possible. You know, I think sometime in next year or two you're going to see online exceed land based revenues in New Jersey, which is pretty exceptional.
Daniel Briggs (SVP, Investor Relations)
Rob, sorry, does that mean? Does that mean if?
Unknown (Executive (likely CFO or other senior exec))
If if New York.
Daniel Briggs (SVP, Investor Relations)
For instance, were to legalize online gaming that you would have to re evaluate what your proposal would be for New York.
Rob Goldstein (Chairman & CEO)
It goes beyond that. My, my concern is we don't know what you know. Our buildings take a long time. As you see the Singapore, they take years to finish. I need some understanding of how the market, any market thinks about online gambling. Anywhere you go, if you're going to spend 5, if Singapore legalized online gambling make you stop and think about IR 2. If any market does legalize you to think, what does it mean to me, my capital investment? And I think whether it's New York or Michigan or Florida, any place that's online, it makes you stop and scratch your head. There's going to be some resolution of the issue. I'm not saying they'll tell you definitively, but you can't ignore that possibility. If you see see the impact of online in New Jersey, Pennsylvania, Michigan and probably the other four states are coming online. You can't ignore the the impact on land based revenue.
Daniel Briggs (SVP, Investor Relations)
Yeah, that makes sense. Thanks. Thanks for the for the update.
Rob Goldstein (Chairman & CEO)
Thank you.
Daniel Briggs (SVP, Investor Relations)
OK. The next question comes from George Choi with Citigroup. George, your line is live. Thank you very much. So we were at the London Grand a few weeks ago and noticed that the min bets at the background tables there were noticeably lower versus the London Casino. I just wondered if that is temporary or does that signal any difference in marketing market positioning between the two phases?
Rob Goldstein (Chairman & CEO)
I think it signals you more rooms above that. I was there I guess 10 days ago or so. I think what you're going to see George over time is the Londoner like the niche will become the most dominant player and players in the market. No questions asked about no change in marketing. Just need to complete the product, get the rooms done on top. There's a lot of people in the building, but you need to get the right premium asked customer to achieve the new and best you want to achieve. I I stand by we've done this now for we saw London, I think 567 years ago we had with Sheldon the London process. It fine completes the spring OF25I remain completely steadfast in my belief it's going to dominate that no under and then each will dominate the market. No concern whatsoever and the minimum that's when you count them. You'll be very happy with them as getting more rules above the building above the casino in any building in the world that is gambling is always a complete. I mean having the rooms connected to the casino, having easy access is always an essential element of success. The London walls open. It's not going to achieve the same goals as niche, the London one, to have the rooms open.
Daniel Briggs (SVP, Investor Relations)
That's very good color. And as a follow up, when the London is fully open next year, how should we think about the EBITDA trajectory going forward at the labouring at the neighboring properties decoration Macau there?
Rob Goldstein (Chairman & CEO)
Was a question how it effect are the businesses?
Daniel Briggs (SVP, Investor Relations)
Yeah, that's right.
Rob Goldstein (Chairman & CEO)
Yeah, from my perspective and the team, Grant may have a different take on it. I've always said that I think London and Niche will will be the one and two players or two and one players each making a billion dollars. My goal is a billion dollars plus for each of those buildings and the rest of the portfolio will be, you know another billion plus dollars. That's my goal for our company long term over the next few years. And but again as Patrick referenced and Brandon, everybody in this call, we need to see return to more base mass gaming. You saw the differential between visitation and gaming. The past visitation was a complete predictor of gaining revenue. That growth ranked recently we're seeing Austin visitation but not the gaming to accompany it. And that's a negative. I mean, there's no hiding from the fact that it's disappointing a bigger base mass tail. I have full faith in China will figure out its economy. It's so important to the world not to and as China recovers and base mass recovers that our company SCLLVS will be the biggest recipient of revenue margin and growth in Macau. It's going to happen for sure. You know Sheldon used to say day follows night, night, night follows day. Shriner will get back to a better place. It will recover base, the conference will recover Macau. Can you grow in the 30s and beyond and someday we'll get back to three plus billion dollars EBITDA and those two buildings will stand very, very tall. Does it negatively impact The Four Seasons? Not really. It's it's stellar small product, the Parisian as well. I think we have a lot of confidence that in the aggregate that portfolio is unique and it and they all speak to each other. We have the the ability to market within the portfolio. So again, as laundry gets stronger, it doesn't mean others get weaker, it just means there's more strength to market. But I would tell you that the real upside of this company will be the day when, yes, we'll do very well premium mask, but not based mask recovers. That tail will drive us to a whole new level of opportunity and that day is coming.
Daniel Briggs (SVP, Investor Relations)
That's very clear. Thank you very much.
Rob Goldstein (Chairman & CEO)
Thank you, enjoy your.
Daniel Briggs (SVP, Investor Relations)
Reports George. The next question comes from David Katz with Jeffries. Please proceed.
Rob Goldstein (Chairman & CEO)
Hi, evening. Thanks.
Unknown (Executive (likely CFO or other senior exec))
For.
Rob Goldstein (Chairman & CEO)
Taking my question, I wanted to go back to Golden Week for a moment, if I may. You know, I would say that, you know, we the street collectively had a set of expectations going into Golden Week.
Unknown (Executive (likely CFO or other senior exec))
And you know the?
Rob Goldstein (Chairman & CEO)
Result turned out to be, you know, quite a bit stronger than that and.
Unknown (Executive (likely CFO or other senior exec))
For better or.
Rob Goldstein (Chairman & CEO)
Worse to where we get our information, how those expectations are set. I'm curious where yours were and you know, whether Golden Week turned out to be materially better than you know, what you were looking for and exactly what the drivers of that were, Please.
Unknown (Executive (likely CFO or other senior exec))
So as typical, we'll talk about this in 92 days. We don't talk about current quarter on the earnings call, but appreciate the question. OK. Thanks very much.
Daniel Briggs (SVP, Investor Relations)
Thank you. This does conclude today's conference call. You may disconnect your phone lines at this time. And have a wonderful day. Thank you for your participation.
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