On March 3, LVS announced that Apollo Global Management will buy the operating company of The Venetian, which includes the Venetian Resort and the Sands Expo and Convention Center, for US$2.25 billion, and VICI Properties will buy the land and real estate assets of The Venetian for US$4.0 billion.
No thanks to the pandemic, LVS posted a net loss of US$1.69 billion for FY2020 ended Dec 31, 2020, a massive slump from FY2019’s earnings of US$2.7 billion.
To be sure, prior to the outbreak, revenue from the Las Vegas properties was already a pale shadow at 15% of the company’s total.
Even so, this move carries a poignant finality for the late tycoon, who had built his legacy on trade shows and entertainment on the strip. Covid-19 has changed many things, including many companies’ plans and strategies. LVS may still lead the pack with a market capitalisation of US$50.3 billion, but by selling its US properties, LVS is ceding ground to smaller rivals Marriott and MGM Resorts, which have market values of US$47.5 billion and US$19.22 billion, respectively.
Adelson had spent much time and effort staking his turf in Asia, where better growth prospects are. “This company is focused on growth, and we see meaningful opportunities on a variety of fronts,” says Sheldon’s successor as CEO, Robert Goldstein. “Asia remains the backbone of this company, and our developments in Macau and Singapore are the centre of our attention.”
For the most recent 4QFY2020, the Macau property, Sands China, which is majority-owned by LVS, reported losses of US$246 million, versus earnings of US$513 million in the year earlier. It ended the year US$1.52 billion in the red, compared to earnings of US$2.04 billion for FY2019.
In contrast, Marina Bay Sands (MBS), the iconic Singapore integrated resort, was the star performer, with reported earnings of US$144 million for 4QFY2020. While the figure was 68% lower y-o-y, it was double q-o-q from 3QFY2020’s US$70 million, thanks to wage support from the government and also a resumption in domestic spending.International visitors remained largely shut out.
MBS expansion delayed
When LVS moved into Macau and Singapore more than a decade ago, it did so in a high-profile fashion. Unfortunately, with the pandemic still very much affecting businesses, growth plans have been kept relatively low-key.
In April 2019, MBS, together with Resorts World Sentosa, announced a $4.5 billion commitment each to expand their respective properties. In return, they enjoy an extension of the exclusivity of their casino licences awarded by the government.
Specifically, MBS, which has been enjoying practically full occupancy for its rooms, will be building a fourth tower with another 1,000 suites, as well as more space for conventions and a 15,000- seat indoor arena. When this was announced back in April 2019 — before “Covid-19” entered daily lexicon — the completion date was indicated as “not yet available”.
Now, comparing LVS’ FY2019 and FY2020 earnings presentations, it is no surprise that the expansion has been delayed. Of the US$175 million set aside for MBS in FY2020, only some US$25 million was used.
From the group’s earlier forecasts of US$900 million and US$800 million in capital expenditure (capex) for MBS in 2022 and 2023, LVS has shunted its plans to 2024 instead. In its latest presentation, LVS is planning to ramp up MBS’ capex only from 2023, with US$700 million allocated for that year, another US$850 million for 2024 and US$325 million thereafter.
Of course, these are just projections. If the pandemic can be meaningfully curbed, the whole global travel industry will be back with a vengeance — and it will be clear who eventually holds the upper hand.
