Las Vegas Sands Aggressively Pursuing Japan Expansion, Says CEO Sheldon Adelson

Gaming and hospitality giant Las Vegas Sands is deeply interested in expanding into Japan’s nascent casino market, but wants to make sure that it has taken a prudent approach toward that potential expansion and the allocation of capital that it would require.

The company’s plans in relation to Japan’s ongoing process of building its casino industry were revealed by Las Vegas Sands President and Chief Operating Officer Robert Goldstein during the company’s earnings call for its third-quarter financial results.

The Las Vegas-headquartered casino operator reported a 3.6% drop in its revenue for the three months ended September 30 to $3.25 billion and a 3% decrease in EBITDA to $1.25 billion.

The Wednesday earnings call was the first one to include Las Vegas Sands founder, Chairman, and CEO Sheldon Adelson. The 86-year-old businessman last took part in an investor call in October 2018. Earlier this year, the company announced that its boss was receiving treatment for non-Hodgkin’s lymphoma.

The Japan Plan

Mr. Adelson said in his company’s third-quarter earnings presentation that they are “aggressively pursing additional development opportunities in new markets, including Japan.”

Japan legalized casino gambling in late 2016. The country then paved the way for the start of the establishment of the nation’s casino industry with last summer’s adoption of the IR Implementation Bill. Under Japan’s recently updated gambling law, the country’s central government can issue up to three licenses for casinos that must be part of larger integrated resorts.

Mr. Goldstein told analysts on Wednesday that regarding their Japan expansion plans, they are “deep into it, and we’d like to be there.” However, the official further pointed out that they want to “make sure at the end of the day it is prudent and that a Japanese integrated casino resort offers acceptable returns.

According to Mr. Goldstein, $10 billion would be the starting point when it comes to investing into a Japanese casino resort. He told analysts that he does not think “anybody is going to do it for less… unless you’re going to do something subpar.”

Las Vegas Sands had long eyed Osaka as the potential host of its Japanese casino resort until making a surprise announcement this past August that it was dropping its plans for that city to instead pursue development opportunities in Tokyo and Yokohama.

Mr. Goldstein told analysts that while they think Osaka is a wonderful market, Yokohama “was just the better fit for our skill set.”

Expansion of Existing Macau, Singapore Resorts

Commenting on their plans for their existing operations in Asia, Mr. Adelson said in the company’s Q3 earnings that they “remain enthusiastic about our future growth opportunities in Asia.”

Las Vegas Sands and its local subsidiary Sands China are set to introduce about two million square feet of luxury accommodation on Macau’s Cotai Strip next year with the planned opening of the Grand Suites at Four Seasons Macao and The Londoner Tower Suites. The company also plans to add more non-gambling tourism and entertainment amenities at The Londoner Macao throughout 2020 and 2021.

Earlier this year, Las Vegas Sands’ integrated resort in Singapore – Marina Bay Sands – had its casino duopoly in the city, which it shares with Genting Group’s Resorts World Sentosa, extended through 2030. In return, Las Vegas Sands has promised to invest S$4.5 billion into various expansion projects at its property.

The expansion of Marina Bay Sands will, among other things, include the addition of a fourth tower near the resort’s three existing ones. The tower will expand the whole complex’s suite capacity by 40%. Mr. Adelson said that they will also add “a state-of-the-art entertainment arena” that paired with the new hotel tower “should contribute to growth in the future.”

Source: Japan exciting but prudence needed, Tokyo Bay best: LVS,

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