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\tBy HOWARD STUTZ
\n\tLAS VEGAS BUSINESS PRESS
\n\tThe Venetian and Palazzo on the Strip provided Las Vegas Sands Corp. with somewhat lackluster revenues in the third quarter.<\/p>\n
\tWall Street didn\u2019t give the results much attention.<\/p>\n
\tMacau is what drives Las Vegas Sands.<\/p>\n
\tIn the three months ended Sept. 30, the company\u2019s four major Macau gaming divisions produced a 43 percent increase in revenues and an 89 percent jump in profits compared with a year ago. The overall net revenues from Macau during the quarter \u2014 $2.34 billion \u2014 accounted for more than 65 percent of Las Vegas Sands\u2019 companywide total of $3.57 billion.<\/p>\n
\tAnd it will only continue to grow.<\/p>\n
\t\u201c(Las Vegas Sands) remains predominantly a China secular-driven story,\u201d Macquarie Securities gaming analyst Chad Beynon said. \u201cIn our view, Las Vegas Sands remains the best Asian gaming growth and cash flow investment story.\u201d<\/p>\n
\tBeynon wasn\u2019t alone in that thought.<\/p>\n
\tJP Morgan gaming analyst Joe Greff said the Macau market \u2014 which many analysts predict will surpass a single-month gaming revenue record when October concludes \u2014 shows no signs of slowing.<\/p>\n
\t\u201cWe continue to like the Macau gaming sector overall, driven by attractive marketwide revenue growth, particularly in the mass gaming segment,\u201d Greff said. \u201cLas Vegas Sands\u2019 hotel room base should allow (the company) to grow top line and (cash flows) in excess of the market participants.\u201d<\/p>\n
\tLas Vegas Sands is spending $2.7 billion to build a 3,000-room Parisian-themed hotel-casino on Macau\u2019s Cotai Strip region. The development is expected to open by the end of 2015.<\/p>\n
\tAnalysts said the property would complement the company\u2019s existing Venetian Macau, the multiple-hotel Sands Cotai Central development, the Four Seasons Macau and the Sands Macau, which is in the peninsula area.<\/p>\n
\tDuring an Oct. 17 conference call with analysts and investors, Rob Goldstein, Las Vegas Sands\u2019 president of global gaming operations, said visitation from mainland Chinese residents outside Macau\u2019s neighboring Guangdong province had increased, which provides additional revenues beyond the gaming tables.<\/p>\n
\t\u201cWith our room base, that\u2019s a very positive thing for us,\u201d Goldstein said. \u201cThey stay longer, come from further away and require sleeping rooms. So Sheldon\u2019s (Adelson) 9,000 sleeping rooms in Cotai turned out to be a pretty good idea.\u201d<\/p>\n
\tAdelson, Las Vegas Sands\u2019 80-year-old chairman and CEO, told investors the company will be the largest benefactor of infrastructure improvements that are bringing more visitors into Macau from both mainland China and through Hong Kong. The opening of the $10 billion Hong Kong-Macau-Zhuhai Bridge in 2016 will slice the drive time it takes for visitors to reach Macau by 40 minutes.<\/p>\n
\tSusquehanna International Group gaming analyst Rachael Rothman said the increases in visitation from several regions of mainland China is \u201can important inflection that underscores the importance of the infrastructure build-out in greater China that continues to increase Macau\u2019s reach.\u201d<\/p>\n
\tIn Las Vegas, The Venetian and Palazzo said casino revenues during the third quarter fell 2 percent, largely because of decreased baccarat play. The resorts\u2019 7,000 hotel rooms provided a 5 percent rise in revenues while food- and-beverage sales jumped more than 22 percent. Overall, revenues for the company\u2019s Strip market increased 2.9 percent.<\/p>\n
\tUnion Gaming Group Managing Director Bill Lerner said reliance on convention business from the Sands Expo and Convention Center during the quarter caused table game wagering to decrease in the casino.<\/p>\n
\t\u201cThe higher percentage of rooms to conventioneers versus casino players likely weighed on table games play,\u201d Lerner said. \u201cIn addition, there seems be less clarity on when large players come into town.\u201d<\/p>\n
\tThe company\u2019s success in Macau leads many analysts to believe Las Vegas Sands would be a leading candidate should Japan open up to gaming. The country was awarded the 2020 Summer Olympics and tax revenues from casinos could fund the building of Olympic venues.<\/p>\n
\tLas Vegas Sands President Michael Leven said estimates peg Japan as a $6 billion-a-year gaming market, which would equal annual revenues from the Strip. Macau produced an industry-high $38 billion in gaming revenues in 2012 and the market is up 17 percent through September.<\/p>\n
\t\u201cJapan would obviously be the most expensive investment we\u2019ve ever made from a single-property standpoint,\u201d Leven said.<\/p>\n
\tHow comfortable is Las Vegas Sands in its current financial position? The company hasn\u2019t had a permanent chief financial officer since Kenneth Kay departed at the end of July. When asked about a replacement, Leven said a formal search for a new CFO has not commenced and probably won\u2019t until early 2014.<\/p>\n
\t\u201cWe\u2019re moving along the same way we\u2019ve been organized for the last four months,\u201d Leven said.<\/p>\n