Las Vegas Sands Corp.’s president and chief operating officer said Wednesday that operating a big resort on the Strip is, for the time being, an exercise in futility.
“Without the hotel being full, without the convention driving the rates midweek, without the banquet fees, it’s very hard for our model to work (in Las Vegas),” said Rob Goldstein during a company earnings call Wednesday afternoon. “I assume that’s true in the entire marketplace. If you’re running a large-scale building, like most of these buildings are, you’re not getting by on gaming win, no matter how good it is. You’re not getting by on 30-40% occupancy. If you’re making money on the weekend, which we can, you’re losing it back midweek, which we all do.”
With visitation volume to Las Vegas continuing to be light due to the COVID-19 pandemic, the comments from Sands executives — billionaire CEO Sheldon Adelson was also on the call — painted a dim near-term picture for the Las Vegas economy, which relies heavily on tourism.
For the quarter that ended June 30, Sands recorded a net revenue total of $98 million, which represented a 97% drop from the second quarter of 2019.
Plagued by a prolonged drop in business, as casino operators around the world have been, Sands reported an operating loss of $922 million last quarter.
During the second quarter of 2019, Sands listed operating income as $894 million.
In Las Vegas — Sands operates the Venetian and Palazzo — combined net operating revenues for the second quarter were about $36 million. That’s compared to a total of $466 million during the same quarter in 2019.
Goldstein said the remedy for the company’s second-quarter woes in Las Vegas is simple: It needs more customers.
“We need lots more,” Goldstein said. “The truth is that hotels in this town, midweek, are running at 20-30% (occupancy). On the weekends, it’s 50-60%, and that doesn’t work. They’re basically only coming in from drive-in markets. You can’t just rely on high-rollers. Those days, 1967, left. It’s a new business in Las Vegas. This town has moved away from being gaming-dependent to a very diversified plan.”
While Goldstein and Adelson expressed confidence that the markets the company does business in will eventually recover, they know it won’t be overnight.
As worry about COVID-19 safety abounds, it’s not likely that air travel to Las Vegas will see a significant spike until Americans — and international visitors — feel safer traveling.
“I don’t know how you fix it until you get air lift,” Goldstein said. “Until you get groups feeling comfortable about coming back here, and banquets coming back here. That’s just a fact of life. We remain hopeful, but the Las Vegas here in July 2020 is in a very difficult place. That’s the truth of the market today.”
Sands was the first of the major Las Vegas-based resort companies to report second-quarter earnings.