Sands China COO Wong Sees Vibrant Casino Mass Market Softening Sluggish VIP Blow

Las Vegas Sands (LVS), like many of its rivals, has recently been crimped by lethargy in Macau, as the US/China trade spat and the geopolitical upheaval in Hong Kong have pinched revenue in the world’s richest gaming center.

As some competitors struggle in Macau due to slack VIP revenue, Sands China believes it can stem some of the weakness seen among high-end gamblers with strength in the mass market.

Sands China COO and President Wilfred Wong Ying Wai is projecting balance sheet stability over the next several quarters due to the operator’s enviable position among non-VIP gamblers.

We are probably more insulated to many of the VIP segment impacts” in the Macau gaming market,” said Wong, speaking in a recent round of press interviews in Macau.

Still, there’s no getting around the fact that high-end bettors are integral to the success of casinos on the peninsula, including the five operated by Sands. A recent report by Bernstein analysts indicates that just 300,000 to 400,000 of the 35.8 million visitors to the Chinese Special Administrative Region (SAR) last year accounted for about 70 percent of gross gaming revenue (GGR).

Fortunately for LVS, it’s one of the dominant operators there. Sands China and Galaxy Entertainment combine to control 45.5 percent of the Macau market.

Macau Issues

Last month, the Gaming Inspection and Coordination Bureau (DICJ) said GGR on the peninsula dipped 8.6 percent to $3.01 billion, down from $3.28 billion a year earlier, marking SAR’s third-worst month of 2019.

Even with those headwinds, Macau’s mass market revenue experienced modest growth last month, and Wall Street has largely defended LVS shares, citing the company’s ability to lure non-premium gamblers to its five Macau casinos and boasting one of the gaming industry’s strongest balance sheets. At least two analysts have upgraded LVS stock just this month. The shares are higher by about 12% since Sept. 1.

Not Depending On VIPs

Some Macau operators, such as Wynn Resorts, depend heavily on affluent gamblers as primary revenue drivers. But on the peninsula, Sands has taken a different approach. The company has long emphasized the advantages of a mass market focus.

Over the years, “We’ve developed quite a mature mass market,” said Wong, while adding VIP has “always been traditionally a very small factor” for Sands China.

When LVS reported second-quarter results in July, the owner of the Parisian Macao, Sands Cotai Central, and Venetian Macao said revenue and earnings before interest, taxes, depreciation and amortization there dipped due to a decline in premium revenue. But some of those drops were offset by increases in mass market table wins.

“I think Macau’s tourism industry is much more diversified right now … I think the way we are developing the market is towards a more healthy structure for the city’s gaming business,” said Wong.