Inside Asian Gaming

INSIDE ASIAN GAMING | November 2009 compared to 5.6% in Q3 ‘08. Capitalised interest was US$16.9 million during Q3 ‘09, compared to US$38.4 million during Q3 ‘08. Sheldon Adelson, the company’s Chairman and Chief Executive, said overall results were held back not only by the generally sluggish performance of the US market, but also by an unlucky streak for the Las Vegas operation. An unusually low table games hold reduced the company’s revenues there by approximately US$40 million. The operational trend in Macau is much brighter, suggested Michael Leven, LVS’s Chief Operating Officer. He said the Venetian Macao delivered a quarterly record US$150.4 million in adjusted property EBITDAR (earnings before interest, taxation, depreciation, amortisation and rent) for the third quarter. The company said the number of visitors to the property continued to lead the market, with more than 17.7 million in 2009, an increase of 4.5% over the first nine months of 2008. EBITDAR margin at The Venetian Macao was 30.5%, compared to 26.0% in the prior year quarter. EBITDAR margin at Sands Macao was 27.5%, compared to 17.1% during the third quarter of last year, said the company. LVS stated that slot handle at the Venetian Macao increased 10.9% compared to the equivalent quarter one year ago. Mass table volumes at The Venetian Macao continued to lead the market, said the operator, at nearly US$835 million during the quarter. VIP rolling volume in table games was US$9.06 billion, with the portion of that volume representing direct play increasing to a record 19.3% in the third quarter of 2009, compared to 14.9% in the third quarter of 2008. “The increase in direct play is an important development for this business segment, given its meaningfully higher margin structure in comparison to rolling volume play that involves the services of a gaming promoter,” said Mr Leven. He added LVS was 90% of the way toward its target of US$300 million in annual cost savings in Macau. Most of those savings were achieved in the first half of the year, with US$45 million-worth recorded in Q3 2009, and a further US$15 million expected in the fourth quarter. “We have now implemented cost savings of approximately US$270 million on an annualized basis across our Macau operations, or approximately 90% of our US$300 million target. We realized approximately US$45 million in cost savings across our Macau operations in the quarter, while approximately US$60 million of these savings will be realized in the year ended December 31, 2010.” A n indication of just how keen Las Vegas Sands Corp (LVS) is to finish the work it started on Macau’s Cotai strip came late last month. Bloomberg in New York reported Las Vegas Sands Corp (LVS) is willing to pay 400 basis points (i.e., 4%) above the London interbank offered rate (LIBOR) for credit to help complete the now famous plots five and six on Cotai. If LVS is going out into the credit markets to finish Cotai, it raises the interesting question of just how the company intends to spend the estimated US$2 billion equity it hopes to raise from its initial public offering on the Hong Kong stock market, expected in November. Michael Leven, LVS’s Chief Operating Officer, told Bloomberg the company was willing to contribute additional equity to the Cotai project, but didn’t specify how much. Mr Leven was quoted as estimating the total cost of completing the four hotels on plots five and six as US$3.6 billion (i.e., an additional US$2 billion from what LVS has already spent on the plots). Mr Leven said subject to the financing deal, five and six could be finished by June 2011. Will LVS take a similar approach to Wynn Resorts and use the Hong Kong IPO cash firstly to improve its balance sheet at home Sheldon Adelson The Venetian Macao Credit where it’s due LVS Results 46