Las Vegas Sun

March 29, 2024

The Sands: What slowdown?

Las Vegas Sands on Monday became the first major Las Vegas casino company to report quarterly earnings since the nation became swept up in fears of an economic recession.

Investors’ attention is focused on earnings reports and questions linger about whether the Strip’s turbocharged economic engine is hitting the skids.

The answer, at least from Las Vegas Sands, is no.

Then again, the company – which owns the Venetian and Palazzo resorts on the Strip and the Sands and Venetian casinos in Macau, China – caters to a selective group. A single Las Vegas resort that makes much of its money from convention-goers and other well-heeled travelers isn’t a good indicator of broad demand.

(The Palazzo had a soft opening in December and held its grand opening last month.)

The company’s stock slid more than 6 percent Monday on fears that it would miss earnings expectations (it did) but easily made back those losses this morning, soaring more than 10 percent.

In a word: Macau.

The Venetian Macau, which opened August 28, reported $117.1 million in earnings before taxes and other expenses in the fourth quarter, compared with $103.4 million for the combined Venetian and Palazzo complex in Las Vegas. Oh, and gambling volume at the Venetian Macau was more than $13 billion. That means more wagers and promotional betting chips passed across the Venetian Macau’s 800-plus tables than all of the casinos on the Strip earn in one year.

Back in Las Vegas, earnings at the Venetian (which included a few days of the Palazzo) declined 22 percent from a year ago and the Venetian’s casino revenue fell 25 percent – both blamed on luckier players. Had the property not been so enormously lucky a year ago, the property would likely have reported an increase in earnings, analysts say.

To explain, the Venetian made an absolute killing a year ago, keeping 37 percent of table wagers versus 24 percent this year. A “normal” percentage is in the low 20 percent range.

Other bellwethers of demand appear O.K. – at least for now.

The Venetian’s occupancy rate was down somewhat from a year ago but room rates were up. Multiplying the two, revenue per room was up 4 percent, to $244.

“If there was an issue with the lower end of the business somewhere, we didn’t see it,” Deutsche Bank stock analyst Bill Lerner said. Increased spending by international travelers taking advantage of the weak dollar could be offsetting any soft spots, he said.

Join the Discussion:

Check this out for a full explanation of our conversion to the LiveFyre commenting system and instructions on how to sign up for an account.

Full comments policy