Sands China turned in impressive third-quarter revenue and profit off the back of a rebound in visitor numbers, demonstrating a robust post-pandemic recovery for Macau’s resort casino properties.
During an earnings conference call with investors and analysts, the global gaming giant Las Vegas Sands (LVS) subsidiary reported $1.78 billion in net revenues for Q3 2023, an uptick of nearly 610% from the previous year’s $251 million. The net profit at Sands China also bounced back to $231 million in the quarter, following a loss of $472 million in Q3 2022. Meanwhile, the adjusted property earnings before interest, taxes, depreciation, and amortization (EBITDA) gained close to 16.7% from the second quarter to reach $631 million.
The positive outlook was driven by solid growth across its properties in Macau, especially at Venetian Macao. The Cotai Strip resort hotel posted more than half a billion in revenue, with near-full room occupancy and property EBITDA of $290 million registered in the quarter.
Robust Q3 Performance Signals Post-Pandemic Recovery for Sand China
Like all other casino operators in Macau, San China experienced the negative impact of the pandemic-induced downturn, particularly before the relaxation of China’s Zero-Covid policy. In the first half of 2022, Macau’s casinos collectively suffered losses exceeding $2 billion, with Sand China’s properties alone recording a loss of $759 million during this period, as reported by Nikkei.
The subsequent quarter wasn’t rosy for the Hong Kong-listed operator, either. The group’s revenue dipped to $251 million in Q3 2022, pushing the net losses to bottom out at almost half a billion dollars. However, since the full reopening of Macau borders just over eight months ago, there has been a substantial increase in both visitor numbers and revenues across the board.
The Q3 2023 performance of Sands China clearly indicates a strong post-pandemic rebound for the LVS unit and Macau as a whole. The operator reported income of $231 million for the quarter, meaning the profits are up two quarters in a row, from a $10 million loss posted in Q1 2023. At the same time, the group saw its adjusted property EBITDA rise 16.7% to $631 million in the three months compared to $541 million in the second quarter.
Sand China’s ongoing investment strategy is another crucial driver of this success, especially as business, gaming activity, and tourism pick up in Macau. Regulatory filings show that the company’s capital spend for the quarter reached $330 million, with up to $44 million allocated to new construction, development activities, and local projects.
Venetian Macao was Sand China’s Q3 Biggest Earner
The group saw strong growth across all of its properties in Macau, but the biggest earnings came from Venetian Macao. The property saw robust performance during Q3 2023, generating $723 million in net revenues, up from $104 million posted the same quarter in 2022.
Gaming activity at the Venetian Macao accounted for a big chunk of the earnings, with casino revenues gaining 55% to $575 million in the quarter, per Sands China’s regulatory filing. To show depth of improvement, the property reported just $60 million in gaming revenues in Q3 2022.
Non-gaming revenue also grew, with the mall activity contributing $58 million. Rooms pulled in $55 million in the quarter, with the average hotel occupancy hitting 98%. Food, drinks, convention, retail, and other departments generated a combined $35 million.
Adjusted EBITDA for the iconic Cotai Strip property reached $290 million as visitation and spending increased. With its signature Grand Canal Shoppes and lavish amenities, the Venetian maintained its position as the largest resort in Macau and a top destination for gamblers.
Londoner Macao Returns to Growth
While still the smallest of Sands China’s properties, The Londoner Macao saw net revenues climb double-digit quarter-over-quarter to $518 million. The resort performed better than Venetian Macao in hospitality, with $97 million in revenue from rooms, despite its size and a lower hotel occupancy of 95.3%.
However, The Londoner resort raked in $371 million in gaming revenue. The adjusted property EBITDA, which reached $167 million, was proportionally based on the $1.56 billion handle, representing a remarkable increase of over 1,300% compared to Q3 2022.
The Londoner’s strong performance outpaced the overall market recovery in Macau and reflects the appeal of the property’s luxury amenities and non-gaming attractions among business and leisure travelers.
Parisian Macao Results
The Parisian Macao followed a similar upward trajectory, with casino revenues up 37% to $181 million compared to Q2. Occupancy at the hotel was an exceptional 97%, demonstrating the appeal of the Parisian’s accommodations. Adjusted EBITDA increased to $81 million, reflecting strength across all segments, including food and beverage.
On top of the revenue and EBITDA increases, the property saw gaming tables’ handle rise sharply to $277 million in Q3. The Parisian is also popular for high-limit salon gaming, which saw slot handle reach $670 million.
The property has invested in upgrading its MICE facilities to attract more corporate events and conferences. This helped boost food and beverage revenues as well.
LVS CEO Bullish on Sand China’s Long-Term Outlook
In discussing Sands China’s strong third-quarter results, Las Vegas Sands Chairman and CEO Robert Goldstein highlighted several reasons for his optimism about the future of the Macau market. With gaming revenue already exceeding pre-pandemic levels at some properties, he believes this is merely the beginning of Macau’s rebound.
Goldstein expects further growth as visitation and spending continue trending upwards in the post-pandemic environment. He noted that the increase in EBITDA achieved in the third quarter came with borders only fully reopened for eight months.
With just over half a year of recovery underway, Macau is still in the early stages of its return to normalcy. The chairman anticipates the market will surpass its best year on record of $40 billion GGR and potentially sooner than most forecasts predict based on current momentum.
Wrapping Up: A Return to Pre-Pandemic Volumes and Beyond
Sands China’s impressive Q3 performance, with a significant increase in revenue and profit, indicates a robust post-pandemic recovery for Macau’s resort casino properties. The positive outlook is driven by growth across its properties, particularly at Venetian Macao, and the ongoing investment strategy of Sands China. CEO Goldstein believes Sands China is well-positioned, given its high-quality properties, to capitalize on the region’s demand as borders fully reopen and visitation patterns normalize in the coming years.
