Las Vegas Sun

March 29, 2024

Despite loss, Las Vegas Sands optimistic about Las Vegas

Sands reports higher overall revenue, but says Venetian and Palazzo declined

Venetian/Palazzo illustration

Sun file photos

The Venetian, left, and Palazzo hotel-casinos on the Las Vegas Strip.

Updated Thursday, Oct. 29, 2009 | 3:44 p.m.

Las Vegas Sands Corp. Financial Information

  3Q 2009 3Q 2008 % Change 2Q 2009
Revenue $1.14 billion $1.11 billion 3.2% $1.059 billion
Net income ($123 million) ($32.2 million) N/A ($222.3 million)
Net income per share (19 cents) (9 cents) N/A (34 cents)

Las Vegas Sands Corp. on Thursday offered an optimistic outlook for Las Vegas, despite reporting a quarterly loss.

The company reported higher revenue for the third quarter and indicated revenue will be stronger ahead as its Macau business remains strong and conventioneers return to Las Vegas, but said its loss widened -- in part because of higher taxes and weaker results on the Las Vegas Strip.

The company lost $123 million or 19 cents per share in the quarter ending Sept. 30 vs. a loss in the year-ago quarter of $32.2 million or 9 cents per share. Revenue rose 3.2 percent to $1.114 billion.

Operating income of $62.4 million was up from $28.2 million in the year-ago quarter thanks to strong results from Macau, where the company said it hasn't seen any effect from reported restrictions on travel to the Chinese gaming district, and a companywide program to slash annual costs by $500 million.

Much of the loss in the 2009 quarter was attributed to an increase in income tax expense of $73.7 million.

The company also said revenue at its big Venetian and Palazzo resorts on the Las Vegas Strip, with a combined 7,100 suites, fell 26 percent to $228 million as the recession continued to hurt the U.S. gaming capital.

Las Vegas Sands executives, however, said they're seeing a turnaround in their important convention business as U.S. companies in certain industries appear more willing to spend money on travel and meetings.

Executives said the company during the quarter and in October booked 348,000 room nights at the Las Vegas properties for conventions and meetings in 2010 -- more than it expects to realize for all of 2009. That will help those convention-oriented properties withstand the December opening of MGM Mirage's CityCenter and openings of additional properties around town, the executives said.

Rob Goldstein, president of the Venetian and Palazzo, said his goal is to book 800,000 room nights for 2010. That helps the company generate extra revenue from high-yielding banquets, he said.

But room rates for those convention bookings, typically in the $200s, aren't yet as strong as during the boom years in Las Vegas in the mid 2000s through 2007.

"We do see strong bookings in 2010 and 2011 and we see demand returning,'' Goldstein said. "We believe Las Vegas is far from finished as a business destination. To the contrary, we believe Las Vegas means business.''

"We're seeing a return of demand, which is the predecessor to hopefully rate movement,'' he said.

"There is no doubt the economy is returning,'' Chairman and Chief Executive Sheldon Adelson said. "Most industries cannot operate without the need to get together to share information and do all the things that you do at conventions.''

The weak third-quarter numbers for Las Vegas were in line with results reported Tuesday by competitors Wynn Resorts Ltd. and Harrah's Entertainment Inc. MGM Mirage, another big competitor on the Strip, has not yet reported results.

Harrah's said quarterly revenue in Las Vegas was down 17.5 percent during the quarter ended Sept. 30 to $657.2 million.

Wynn Resorts reported revenue per available room of $176, down 32.6 percent from last year's quarter.

For Las Vegas Sands, casino win in Las Vegas was down 12.5 percent to $99 million in the quarter as the casinos played unlucky.

Room revenue fell 24.4 percent to $98.6 million as revenue per available room fell from $191 to $152 at the Venetian and from $218 to $153 at the Palazzo. Occupancy fell from 92 percent or greater at the properties to 89 percent at the Venetian and 88 percent at the Palazzo.

Food and beverage revenue slumped 32.1 percent to $41.8 million.

Overall, the Las Vegas operations posted a $28.9 million operating loss vs. a profit of $6.1 million in the year-ago quarter.

Elsewhere:

Net revenue at the Venetian Macao fell 5.5 percent to $493.6 million, but rose 13 percent to $280.8 million at Sands Macao and was up 37.8 percent to $67.1 million at the Four Seasons Macao and Plaza Casino.

Sands Bethlehem in Pennsylvania, which opened in May with 3,000 slot machines, posted net revenue of $63 million.

Interest expense on the company's $11.76 billion of debt was $88.5 million, down from $90.5 million in the year-ago quarter.

The company had little to say about its planned initial public stock offering of certain Asian assets on the Hong Kong Stock Market -- which may help finance further development in Macau -- and said it's on track for a first quarter 2010 opening of its $5.4 billion resort in Singapore.

Adelson reiterated the company's strategy of profiting by developing and selling noncore assets such as malls and indicated that will happen once Asian capital markets improve.

Highlighting improvements in China, he said in a statement, "We are pleased to report that our properties in Macau delivered a record performance in adjusted property EBITDAR (a profitability measure), led by healthy gaming volumes in combination with the consistent execution of our right-sizing and cost savings programs.''

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