LVS To Plow $2 Billion into Macau Ops as License Renewal Looms
Posted on: October 25, 2018, 07:10h.
Last updated on: October 25, 2018, 11:44h.
LVS Corp believes its investments in Macau over the last 14 years have been enough to persuade officials that it deserves license renewal in 2022 when all existing gaming concessions are set to expire — but it will invest a further $2 billion over the next few years, just in case.
At the company’s Q3 earnings call on Wednesday, LVS President and COO Rob Goldstein said the lion’s share of the money will go into the redevelopment and rebranding of the Sands Cotai into a $1.35 billion UK-themed resort, The Londoner Macao.
The project will begin next year and will be constructed in phases in an effort to bring as little disruption to the property as possible. Completions will be expected throughout 2020 and 2021, Goldstein said.
In addition, LVS will spend $400 million renovating and expanding the St. Regis Tower Suites Macao and $450 million on the Four Seasons Tower Suites Macao. This will bring the company’s total investment since 2004 to around $15 billion.
Trade War Fears
Some analysts have expressed concern that the ongoing trade war between the US and China could adversely affect American companies in Macau and possibly even jeopardize gambling licensing.
It has been suggested that LVS could be most at risk of Chinese economic retaliation because its chairman and CEO, the Republican megadonor Sheldon Adelson, is perceived as a Trump crony.
But Goldstein said he believes the company is safe in China and has proved its worth to the region’s economy by building 13,000 hotel rooms and hundreds of thousands of square feet of convention space. As the first international operator to build in Macau, it has been more instrumental than others in transforming the region.
Concession ‘Not at Risk’
“We built an arena when people thought that was a crazy idea,” said Goldstein. “I just don’t know what else you can do, but do what you’re told to do and we have done that. We are big fans of China, we’re big fans of Macau, we’ve been wildly successful and our $2 billion statement in the call to bring The Londoner to fruition … is proof positive that actions speak louder than words.
“If there’s not a vote of confidence in that, I don’t know what is. We believe our concession is not at risk,” he added.
LVS reported earnings of $699 million in Q3, up 2.2 percent on the corresponding period last year. But it fell short of analysts’ expectations of 9 percent climb in earnings. The comoany’s shares fell 2.6 percent on the news before recovering slightly.
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