Sands China says it is already seeing much higher margins in its Macau business, with the trend expected to continue in the months and years ahead as visitation levels recover.
Details of the company’s margins were outlined during the company’s 3Q23 earnings call on Thursday morning (Asia time), with the market-wide shift away from VIP and towards the mass and premium mass segments showing significant benefit.
According to Patrick Dumont, President and COO of Sands China’s parent company Las Vegas Sands, group-wide EBITDA reached US$631 million in the September quarter at a 35.3% margin – up 210 basis points quarter-on-quarter.
This included margins of 40.1% on EBITDA of US$290 million at The Venetian Macao, while the Londoner generated EBITDA of US$167 million with margins reaching 32.2%.
“As the Macau market revenues continue to recover, our margins will naturally benefit from the improved business mix,” Dumont said, adding that The Londoner Macao was just getting started.
“The transformation of The Londoner has created a world class product that is a must-see for visitors to Macau. We will naturally have some construction destruction in 2024 but we expect future EBITDA growth and margin expansion overtime.”
Sands also revealed that it moved a number of tables from premium mass to base mass in Q3 in recognition of market demand, which also helped drive margins higher. Specifically, the 1,022 base mass tables in Q3 was 81 more than the June quarter, with the number of premium mass tables in operation falling by the same amount from 565 to 484.
More telling, however, has been the return of more visitors.
“This is what happens when you cover your fixed cost base,” said Dumont. “When we were 70% recovered we had to cover our fixed cost base in Macau, and as the market has recovered, as tourism and visitation have continued to grow, we have started to reach our run-rate margin levels which we always felt was within this context.
“What you see with The Venetian is the result of a great product that is reaching up to its run-rate level of operation post-pandemic, and the performance in margins is the result.
“And remember Macau visitation is still about 20% less than it was pre-pandemic so we’re down about a million visitors in the same period.
“We’re also very proud about what’s going on at The Londoner. We think the market is starting to understand that product and how great it is, and we’re starting to see the results. But we also think there is more room to run.
“We think there is strength in margins which will continue to grow as revenue continues to come into the market through visitation.”
