Sands China is in the process of reconfiguring its Parisian Macao offerings in order to meet customer demand, while a comprehensive refurbishment of nearby Sands Cotai Central is also in the works, according to the company’s Chief Operating Officer Rob Goldstein.
Mr Goldstein revealed Sands China’s Macau property plans during a 2017 Strategic Decisions Conference last week hosted by brokerage Sanford C Bernstein, who published some of its takeaways in a Friday note.
The conference included a comprehensive look at Sands China’s performance across its different properties and player segments, with Mr Goldstein pointing to a lack of sufficient accommodation for the premium mass segment at the Parisian as having impacted its margins since opening last September. He said the property lacked enough quality suites for its premium mass customers, where weekend demand was strong, with the room inventory currently being reconfigured to create more suite space to help improve premium mass play.
Mr Goldstein added that the Parisian needed more fast and affordable food offerings to meet demand and was planning to add more of this restaurant offering to allow visitors to stay longer. His comments are in line with Sands China’s long-term view that growth will be driven by the mass market, albeit with premium mass having grown faster than base mass during the first three months of 2017.
Mr Goldstein observed that Sands China was hoping to see stronger base mass growth in the future but joined Galaxy Entertainment Group Vice Chairman Francis Lui in highlighting a lack of hotel room inventory as potentially holding Macau’s mass ambitions back. Mr Lui noted in his recent keynote speech at G2E Asia that Macau’s 38,000 hotel rooms represented just one-third of the number of rooms found in most major tourist hubs.
Future mass growth – including premium mass – will come from the non-Guangdong provinces in China which will be largely overnight visitation, Mr Goldstein said, noting that most premium mass customers stay overnight. Sands China currently has around 13,000 hotel rooms, the most of any Macau operator, providing it with a “long-term strategic advantage.”
However, Mr Goldstein also noted that Sands Cotai Central – located directly across the road from the Parisian and Venetian – needed some refurbishment. He said the company was working on plans to create interest in the property.
Nevertheless, it was Sands China’s diversity of offerings that gave it an edge, including its original Peninsula property, Sands Macao, which Mr Goldstein said continued to perform well due to a “loyal contingent” of day trippers from Hong Kong and Guangdong who are conditioned to go there due to familiarity, dining options and proximity. He said Macau’s Peninsula would not wither away like Downtown Las Vegas had before its recent rejuvenation.
In their summary, Bernstein analysts Vitaly Umansky, Zhen Gong and Yang Xie said mass would continue to drive Macau’s long-term recovery despite recent strength in the VIP segment.
“Although it is likely to continue to show strength over the next few months, in the longer run, the VIP model will continue to face structural headwinds from a tightening regulatory environment in Macau and continued focus on capital outflows in China,” they said. “Due to improvements in transportation infrastructure and the continued opening and ramping up of new integrated casino resorts in Macau, the mass market will be the key driver of sustainable growth in 2017 and through the rest of the decade – the execution of a supply driven market.”
