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spk07: Thanks for holding.
spk02: We appreciate your time and patience. Please stay on the line, and we'll be back in just a moment.
spk01: Good day, ladies and gentlemen, and welcome to the SANS Second Quarter 2022 Earnings Conference Call. At this time, all participants have been placed on listen-only mode. We will open the floor for your questions and comments following the presentation. It is now my pleasure to turn the floor over to Mr. Daniel Briggs, Senior Vice President of Investor Relations at SANS. Sir, the floor is yours.
spk00: Thank you. Joining the call today are Rob Goldstein, our Chairman and Chief Executive Officer, Patrick Dumont, our President and Chief Operating Officer, Dr. Wilfred Wong, President of SANS China, and Grant Chum, Chief Operating Officer of SANS China. Today's conference call will contain forward-looking statements that we are making under the safe harbor provision of federal securities laws. The company's actual results could differ materially from the anticipated results in those forward-looking statements. In addition, we may discuss non-GAAP measures. A definition and a reconciliation of each of these measures to the most comparable GAAP financial measures is included in the press release. We have posted supplementary earnings slides on our investor relations website. We may refer to those slides during the Q&A portion of the call. Finally, for those who would like to participate in the Q&A session, we ask that you please limit yourself to one question and one follow-up so we might allow everyone with interest the opportunity to participate. Please note that this presentation is being recorded. With that, I'll turn the call over to Rob.
spk14: Thank you, Dan, and thank you for joining our call today. A few brief comments and then move to Q&A. The recovery in Singapore at MBS accelerated during the quarter with property EBITDA reaching 319 million U.S. dollars. The relaxation of pandemic-related restrictions in Singapore and many of its source markets has enabled this encouraging improvement in the financial performance at MBS. We expect a more robust recovery over time as additional airlift into Singapore comes online and further relaxation measures in the region are implemented. Our conviction in the long-term opportunity in the Singapore market remains steadfast. Our $1 billion U.S. capital investment is underway at Marina Bay Sands as introduced exceptional new suite product and premium segment focus amenities to the resort. More offerings will be added throughout the remainder of 2022 and 23, and this one hands the properties appeal to premium customers seeking the highest level travel experiences. In addition, we look forward to substantially increasing our investment in the Singapore market as we execute our expansion plans at Marina Bay Sands in the years ahead. Singapore remains in an outstanding market for additional investment. Let's turn to Macau. The operating environment there remains very difficult. In periods when the restrictions have been lifted, the customer demand and spending in Macau have proven resilient at the premium mass level from both a gaming and a retail perspective. As the market eventually recovers, our $2.2 billion investment program at Four Seasons in London will provide outstanding growth opportunities in both the premium and mass customer segments. We appreciate the clarity of the revised gaming law in June. We look forward to participating in the concession re-tendering process as it proceeds. We continue to have the largest footprint in this incredible market. We retain great optimism at our ability to perform to pre-pandemic levels and beyond the Macau One's visitation returns. We would welcome the opportunity to invest billions of additional dollars in Macau. We continue to believe Macau is an outstanding market for additional investment. We consider our portfolio of resorts in Asia to be an ideal platform for growth in the years ahead. In addition, we continue to pursue other opportunities in large land-based destination resorts in the U.S. and Asia. Let's go to Q&A.
spk01: Thank you. Ladies and gentlemen, the floor is now open for questions. If you would like to enter the queue to ask a question, please press star 1 on your telephone keypad now. If listening on speakerphone today, please pick up your handset to provide optimum sound quality. Also, we ask each participant to limit yourself to one question and one follow-up. Please hold a moment while we poll for questions. And the first question is coming from Joe Greff from JP Morgan. Joe, your line is live.
spk06: Hello, everybody. Hi, Joe. I'd love to start with Singapore here. When you look back at trends within the 2Q, which were obviously encouraging, and you look at the premium mass and the VIP segments, was there anything notable in one segment versus the others throughout the quarter? How even was the recovery month to month in the segments throughout the quarter other than seasonality? You talked about source markets driving improvements. What geographies are driving that improvement? And then, lastly, with my multi-part question number one here, can you talk about what you've seen so far in July in the first 20 days here? Thank you.
spk14: A lot of questions there, Joe. We're not going to break out the quarter. I think we'll be – it's a fight to say we're pleased to be back in a strong position in Singapore. The fundamental growth there comes from obviously both base and premium mass. I don't think either one outshines the other. It's consistent movement in the right direction. I think the biggest thing we're seeing is the airlift is opening up, and that also remains to be the most challenging part of the Singapore recovery. Airlift is still a challenge. We're getting a lot of good business out of the region, especially out of Indonesia and Malaysia. But I think there's a lot more opportunity as the airlift returns. And I think you see that in our deck. The Changi monthly visitation numbers are still relatively less than 50% of what they were pre-pandemic. So although we're delighted with Singapore and the numbers reflect that, we think there's reason you're optimistic in the months ahead. And Greg, my follow-up is... That's what I think I heard you say. Is there more to it?
spk06: No. Can you just talk about what you've seen so far in July? Has that trend continued?
spk14: I think we're not going to do that. We're not going to talk about July. I think the numbers, our deck gives you a real good sense of what happened in Q2. Again, I think the story in Marina Bay Sands is a regional story and a Singapore story. As that place gets more visitation, I think if you look on page 16 of your slide presentation, your deck there, you'll see that we've not even reached 50% capacity in China. It's like 46% what it was May of 19. So we're doing these numbers with still very, very distressed airlift. And as I think you know, unlike the U.S. where there's unfettered ability to get to regional markets, airlift is back. Transportation, this is still a place you need to fly to. And so... The airlift story can just hamper the recovery. So I think the $300 million plus quarter is a pleasant upside to what we thought we'd do, but there's, I think, a lot more room to run as this market opens up into places like Japan, Korea, and more travel. We're really more dependent right now on the closer-in foreign markets. Got it.
spk02: Joe, one other thing is, Patrick, I think one thing to note when you look at Marina Bay Sands, is that we're not a capacity. And what I mean by that is, to Rob's point, if you look at the amount of airlifts coming into Singapore, it's not where it can be, but we're at levels that are very strong relative to 2019. If you look at our non-rolling volumes, which are really speaking to the premium mass segment from the catchment area, this is only going to grow. And the good news is we have our team together. One of the things that's been slowing some of the growth coming out of the pandemic and really capturing some of the pent-up demand and the return to normalcy is the fact that many operators in the luxury segment didn't necessarily keep their team together throughout the pendency of the pandemic. We were fortunate enough to do that, and so now our team is ready to respond. So we have plenty of capacity to absorb the growth as it comes in. So our view is that this is a good start, but we have more room to run.
spk14: To Patrick's point, Joe, one more thing to make you aware. We were there, I guess, a month or so ago. One thing that's disturbing is the hotel business, even the luxury brands, haven't been able to get open 100%, some running at 40%, 50% capacity. because they don't have adequate personnel. And that obviously feeds into Marina Bay Sands. So as they get open fully this year, as that market returns, as employment grows, I think we'll grow with that. There's a lot of room to run here if we get that place fully open and airlift returns to pre-pandemic numbers.
spk06: Great. Thank you for your thoughts there. Just switching over to Macau, can you just talk about what your average daily operating expense average cash burn rate has been during this most recent casino closure there?
spk14: Grant, are you awake?
spk08: Grant? Yep, we're here. Okay.
spk09: So, yeah.
spk11: Good morning. Sorry, just momentarily lost you. Yeah, Joe, I think, you know, obviously, second quarter, we were running... at this 110 million EBITDA loss. So we're basically just over a million a day. Now, as we went into second half of June, we have a local outbreak of COVID in Macau. And therefore, into the third quarter, clearly the revenue environment is is lower than it has been in the second quarter, especially with the last week's closure of the casinos as well. So I think you can look back to where we were in 2020 in a very, very low tourism environment in the middle of that year and take it from that in terms of the actual daily cash burn rate, although I think operating expenses I've moderated a little bit since then, but that's the ballpark region.
spk14: Thanks, guys. Thanks, Joe.
spk01: Thank you. And the next question is coming from Sean Kelly from Bank of America. Sean, your line is live.
spk10: Hi. Good afternoon, everybody. Rob, just sort of going back to Singapore for a moment. you know, the Changi numbers are really interesting. Is that a pretty good guide for, you know, I guess visitation levels at the property and sort of where I'm going is, you know, thinking about spend per visitor, right? We've obviously seen, you know, the pent-up demand and that those numbers rise across, you know, U.S. regional gaming, Las Vegas Strip, and I think we're all struggling a little bit to know exactly what, you know, Asia's going to do, but, you know, we can all, I think, do the math if, you know, visitations, you know, down 50% and obviously you're 75% or 80% of your productivity levels already. That suggests very good spend per visit levels, but obviously don't want to extrapolate just from the airport if you could give us a little bit more guidance.
spk14: Well, I think it would be careful in terms of extrapolating without recognizing we are running high occupancies already at Rainy Bay Sands where I think you struggle a bit. is to factor in when the rest of the market recovers. That's why I referenced the other high-end luxury hotels. There are lots of sleeping rooms who we benefit from. They come to shop, eat with us, gamble with us. We're not getting that lift. I think that could be very impactful down the road. We're very happy with the spend levels we're seeing, and we're happy with the occupancy we're getting, but we're not getting that extra people don't sleep in our hotel necessarily coming over to gamble, shop, et cetera. So I think that's where we're trying to point out the – Larry Silverstein, Visitation levels. I also think it will be helpful in driving better levels of play and and spend as these other markets. So you can't lose 3 million people in a month like may Larry Silverstein, And not have some impact your numbers. The question he raises how high is up and I don't want to. I'm not prepared to answer. I don't know. But you can't ignore the fact that you're losing tens of millions of people versus pre-pandemic. The point here is just to make it clear how different it is over there versus in the U.S. where visitation levels are back and access to these properties is back here in Las Vegas and regionals. It's not the case yet in Asia, and I think we'll benefit as that rises. Spend will get better. There are retail numbers that you might look at on page 31 as some indication of how powerful the recovery is happening, even without full visitation. You can see the the sales per square foot at MBS and the power of what's happening over there. So the good news is we're getting, we're profitable, we're seeing growth. The better news is there might be a lot more ahead of us if we can access more people in the Changi, fill up more hotels around our hotel, and see a full visitation return. It's not there yet.
spk10: Great. And maybe just as my follow-up, thinking about margins in Singapore, right, you know, without the revenues being back online, it's been hard to analyze. But can you just talk a little bit about puts and takes there now as we get back to very recovered levels on the revenue side about some of the, you know, kind of on a stabilized basis as different segments come online? Because I think, you know, there was a tax change, you know, there that impacted the market and some other things. So, Can you just help us think about pros and cons or segments of business that could impact margins on a stabilized basis? Pat, do you want to take that?
spk02: Yeah, sure. A couple of things to think about. First off, just as you mentioned, after March 1, our gaming tax increased both by 3% in the premium and the non-premium side. That 3% does impact margin. Now, I think there are some other things going on in Singapore. There are some higher expenses. There's Utility costs that have gone up. There's other costs to operate in the market that have gone up. Inflation that you've seen in other markets are impacting some of the things that we buy. There's also some wage inflation because there's scarcity of labor in the marketplace in Singapore. It's a high quality environment to work in. It's just a high demand as our economy continues to grow for high quality labor. So we've seen some labor increase. So there's some things that from a cost basis side are impacting our margin. The flip side of this is we're not at full revenue yet. So as we grow revenue and as we make investment in these higher value suite products and as we grow some of the services that we offer to our patrons, in the long run, we'd like to believe our margins return back towards where they were before. We just need to be operating under a normal environment. So we still have some startup, what's called fits and starts related to some expenses. And I think our goal is to get our margins back to where they were. But it's going to take some revenue growth for us to get there.
spk10: Great. That's very clear. Thank you both.
spk01: Thank you. And the next question is coming from Carlos Santarelli from Deutsche Bank. Carlos, your line is live.
spk05: Thank you. Hey, guys. Thanks for taking my question. Rob, maybe you could help here. Just in terms of the – at Marina Bay Sands, obviously, I think VIP recovered to close to 75% of QQ19 levels. As you think about that kind of moving forward, are clearly some channels, as you mentioned, Korea, Japan, and I would assume to some extent mainland China is curtailed, to say the least. But when you think about the stability of that in the current environment, does it feel as though that's a number that's kind of a new baseline thereabouts, at least as we move forward?
spk14: You mean this current quarter's results being a baseline?
spk05: I'm referring more to VIP ownership volume and kind of the stability of that segment of the market.
spk14: Oh, I think there's room to run. I think there's room in there. I mean, look at what's happened in Singapore. Let's begin with we glossed over, I glossed over in the beginning, but we're putting a billion dollars in that product. It'll be very blunt about it. It's always been a very appealing building, but it's never had the FF&E component in the suite. and room product I think it deserved. It now has that. Over the next 18 months, it'll finish. We were there, and the product we're putting together is as good as any place we've ever operated, and I think that's going to be very helpful. Two, let's be clear that Singapore is more desirable than ever as a destination. It's growing in appeal to a lot of people for a lot of reasons. We referenced the airlift. You referenced China. You're absolutely right. China's obviously not there. But I think you add these things together, the desirability of Singapore as a destination, the rethinking of the FF&E in that building, the return of a lot more airlifts than there was, hopefully, in 2019. Yeah, do I think that segment can run? Yes, I do. I think we can – we also have less competition in the region. Obviously, Macau is not operating at this point, but I think this Singapore – business is going to continue to grow because the region, the city-state of Singapore is very desirable, and more and more people are going to come to us. So if you add our better building with a more desirable Singapore, with an airlift, with the opening of China, with the opening of Japan, Korea, et al., I think the cumulative impact here is every segment can grow. I have a lot of belief that we can drive. We have to drive it because... You know, there's cost side, as was referenced by Sean and Patrick on the previous call. So we will drive revenue at all segments, and we'll be very attuned to it. But I think we're in a very, very privileged position in Singapore right now of what's happened there, both with our building and with the destination itself.
spk05: Great. That's helpful. And then just as it pertains to the expansion, the 1,000 new rooms project, I believe you guys had the construction start kind of, I guess it was an extension on what you had to begin construction in the 2Q of next year, if I'm not mistaken. Is there anything firmer that you guys have around cost and or plans there that you'd be able to share?
spk13: Yeah, Patrick, do you want to?
spk02: Sure, absolutely. So, you know, I Rob referenced our visit to Singapore. It was a great visit on a lot of fronts. I think we spent time in the building and we had the opportunity to continue our dialogue around the IR2 expansion. We're very excited to begin. I think one of the things that the pandemic did, unfortunately, was slow down that process. There's just a lot of things that have to be considered to fit it in to this very complex and very busy environment to make it sort of fit all the requirements that are necessary to get the approvals to begin. And so I think we're working on that now. And it's something that we hope in the coming months that we'll be able to get more firm about a start date. But we're excited about it and working with the government currently, and hopefully we'll get a chance to begin soon.
spk05: Great. Thank you, Patrick. Thanks, guys.
spk01: Thank you. And the next question is coming from Chad Bainon from Macquarie. Chad, your line is live.
spk15: Hi, good afternoon. Thanks for taking my question. I wanted to ask about M&A in this environment, and I know that's not a normal question for you guys, but given your strong cash flow position, your balance sheet, and just compressed multiples kind of across the gaming, lodging, leisure space, how are you thinking about maybe considering some opportunistic looks across the world? Thanks.
spk13: Patrick?
spk02: So, you know, I think one of the things as a company that, you know, all through the pandemic and part of the pandemic, we've always focused on is how we allocate capital. and how we drive the highest returns for shareholders. And you may have heard in the past say that our highest and best use of capital is new development from the ground up. And that's really what we're focused on. If you look at the history of the company and success and the way it's delivered outside shareholder returns is exploiting a strategy of building large scale integrated resorts in new jurisdictions. And that's what we're focused on. And so for us, I think we have opportunities unique to who we are. We have a long track record with Rob and his decades of experience, the rest of the team's decades of experience in developing these resources. And so we're going to look to do that before we look to buy anything. I don't think the idea is that we would never look at something. I think we're always interested. I think we're interested in seeing if there's a way to create greater returns for our shareholders. But as a practical matter, we're not an M&A driven business. And I think for us, our priorities are going to be look for new markets, develop, build and scale, and invest over the long term to create sustainable and durable returns. And that's really what we're going to look to do. So I understand that there's variability, particularly the digital side. There's a lot of things that have valuations now that may people see them as compelling for the long term. There's perhaps some land-based opportunities that may come up over time. But as a practical matter, like everyone else, we'll look at it, see if it makes any sense for us. But we're really going to be focused on ground-up development. That's who we are.
spk15: Thank you. And then on MBS, again, just on margins, you kind of touched about some of the different pieces of that. Has the promotional environment between you and your competitor in the market changed versus pre-pandemic, or does it feel as rational as it was at that time? And do you expect anything to change from a promotional environment once Macau opens back up? Thanks.
spk14: We've always been lucky that that environment's not promotion-driven. I don't think it will be in the future either. And I'll have to wait and see what happens in Macau, but my sense is Macau, when it opens, will not be a challenge either. There'll be plenty of demand, and usually promotional activities get out of control when there's lack of revenue. I don't think there'll be a lack of revenue in Macau or Singapore, so I feel pretty good about it.
spk01: Appreciate it. Thank you.
spk00: Thanks, Chad.
spk01: Thank you. And the next question is coming from Brant Montour from Barclays. Brant, your line is live.
spk17: Hey, everyone. Thanks for taking my question. The first one was on Singapore, a follow-up on that last question, but more just for the Singapore market specifically. And we've heard a bunch of chatter out there in terms of potential interest in your main competitor in the Singapore market. Is there any scenario in which a different operator could come in and take that over and that would change the way you look at that competitive landscape?
spk14: We don't have any opinion on that. That's up to the government to make that decision. But it's a duopoly market, and I don't see it having an impact either way.
spk02: Yeah, I think one thing that's important to note is that we view Marina Bay Sands as the best building in the world. And in our mind, it's an unbelievable opportunity to continue to invest and operate the building and grow it over time. So I don't think we view it any differently. We think the market opportunity in Singapore is absolutely unique. and we're very committed to long-term investment there. So for us, I'm not sure it matters who operates it. That's up to the Singapore government and to the owners of that business. But for us, we're just focused on continuing to develop our property and grow the market as best we can.
spk14: The one thing I would say about Singapore, we said it before, but I'll just reiterate, is that that place has evolved to even better than it was when we started years ago, and it keeps getting better. And you look at Changi running at such a, You know, it's still 40, 50% capacity. Look at the desirability of that market. The things we're doing, I'm sure Genting is as well, to improve the product. It just feels like that market has a lot of room to run and to grow for us and for our competitor. The offerings get better. Our phase two will be even stronger. So to me, that's a market just beginning to feel its muscle.
spk17: Okay, great. Thanks. That's helpful. And then just as a follow-up on that, you know, as we sort of think about how to think about, you know, the constraints for how fast that MBS property can recover, the Singapore Tourism Board recently put out a number for 2022 international visitation that, or something along the line, well, $4 to $6 million for 2022. It doesn't seem like that would incorporate a ton of ramp from here. And I know that's not necessarily exactly what you guys would see. But does that make it seem like the Changi airlift is, for the rest of the years, baked into the cake now? Or can that be flexed up, do you think?
spk14: I'm not going to speak for the government or what their numbers say. I think the capacity opportunity speaks for itself. I think it's more dependent not on Singapore, but on the airlines themselves and the other countries themselves. wanting to re-engage and to open them up. I think the airport can obviously handle the capacity. I'd be surprised if Singapore wouldn't welcome more access, more flights. It's a question of getting the requisite employees in these airlines to get the lift going and open up these countries in a major way. It's hard to forecast where the world has changed every day is different, and I'd like to think there's a lot more opportunity than that, but it remains to be seen if the governments want to engage and if the airlines can get the the employees make it happen. I think demand, underlying demand is absolutely there, just getting the ability to get there.
spk17: Great. Thanks so much, guys.
spk01: Thank you. And the next question is coming from Robin Farley from UBS. Robin, your line is live.
spk12: Great. Thanks. Just a quick one on, I don't know if I missed in your introductory comments, any comments on what you've talked about in the past related to online gaming and sports betting and kind of looking at B2B investments. I didn't catch if you had an update there. Thanks.
spk14: We didn't have an update. We didn't mention it. We've been focused right now on what's happening. We remain committed to our digital investments and looking at that market. But right now, the story for us is this land-based recovery, which we're feeling in Singapore. And we've made some major strides in this company in terms of liquidity, the reopening of Singapore, and we think the upside potential of Singapore is The licensing process in Macau are focused on that. And of course, most importantly, the return to a normalized operating environment in Macau is paramount. We've just been so busy without it. The focus wasn't on digital right now. We continue to look at that opportunity. We continue to invest. We made a few investments, as you know, in the past. So just simply a focus right now on land-based.
spk12: Okay, great. And then also... Has there been a change in what you expect for timing and spend at a potential New York project since, you know, since last quarter?
spk14: I'm sorry, I missed your about New York. Oh, timing and spend. No, I think we remain a believer in that market and the process is taking longer than I thought it would, but hopefully it'll come to a, hopefully this year or early next, we'll know what's happening there. No, I still, the, the, the, the density of population and the ethnicity, And the access in New York makes it very appealing. And the lack of capacity still remains a premier market in my mind, if we can get there. A lot of competition. We're one of many in the hunt there. So nothing new to report. We have a plan in place. We're executing to it. Let's wait for the RFP to unfold. So we have nothing new in New York.
spk01: Okay, great. Thank you.
spk14: Thanks, Robin.
spk01: Thank you. And the next question is coming from Steve Wojcicki from Stifel. Steve, your line is live.
spk03: Yeah, you guys, good afternoon. So this will probably be for Grant, and it's probably going to be a difficult question to even answer. But, you know, Grant, I guess for, you know, for us non-Chinese citizens, it's, you know, it's extremely tough for us to understand, you know, where China is with respect to the, you know, the reopening process. But I don't know if you can help us understand maybe what you're hearing around the zero case policy, which I think the rest of the world probably fully knows at this point is never really going to work. And if some of these harsher stances toward the virus could start to get relaxed before, maybe is there a timeframe you guys are watching or is there anything you've heard? Maybe is it the October election? I guess anything around that would be very, very helpful. Thanks.
spk09: Yeah, thanks for the question.
spk11: I think as you alluded to, there's not much that we can help with in terms of any speculation on timelines or changes. I think what we're focused on is what's happening in Macau. So I think the things that we can effect is to make sure that we do help the prevailing government policy so that we can actually get Macau reopened back with Zhuhai, the neighboring city in mainland, as quickly as possible. And that means, I think, aligning ourselves fully and safely with the overall COVID policy. And that's what's happening right now. And so hopefully in over the coming weeks, we will be progressively reopening all of the facilities that we've had to close in the past week. That's what we're really focused on. And it's really not our place to speculate on future changes on the overall health policy.
spk08: I don't know if Wilfred has more to add on that.
spk07: I think, Grant, you're right. At this stage, I think the whole country is also employed in this COVID situation. And obviously, policies will evolve. And we in Macau is trying our best to support the local government in order that Macau can return to normalcy.
spk03: Okay, great. Thanks for that, guys. And then, Rob, obviously there's been some movement with regards to the new Macau gaming laws, regulations, whatever way you want to think about it, which actually seem pretty favorable. But wondering how you guys are viewing those regulation changes and maybe any of the pros or cons that you see emerging from those.
spk14: Well, we're grateful for the clarity from the government. I think the process is moving very well. And I think a lot of the concerns some people have have been eliminated. So we're just going through the process and hoping to complete this thing in due course, but obviously we're all pleased. I think all the operators are pleased how this is playing out, and we're hoping for a positive conclusion. I think a lot of the fears have been erased. Grant or Wilfred are going to comment. That's as far as I can take it.
spk08: I think that's right, Rob. Yeah, absolutely. Greg, go ahead.
spk11: I'm just going to add that obviously we're very appreciative that during this difficult time on the COVID front that the government and the legislature were able to move forward to complete the passing of the revised gaming law towards the end of June and that we were able to also execute the six-month extension.
spk14: um that takes us to the end of this year so i think the whole process is moving forward expeditiously um and as rob said we we look forward to um you know participating in the tendering process steve one thing i would say our company as you know has been through it's been a an awfully difficult couple of years more than most because we're asia focused but we've now completed the sale in las vegas gives us more than ample liquidity no matter what happens uh singapore is up and making money and there's more to come we're very grateful for what's happening in Singapore. We see a lot better days ahead. The Macau licensing process is the same way. It feels like we've survived what a lot of people are concerned, but in the end it's worked out for everybody in a positive manner thus far. I hope that continues. And we're just waiting for the thing you referenced initially, which is when does Macau, when does the government rethink the zero COVID or how does that play out? We don't know. Don't pretend to know. But that's the last thing. We're waiting for it to get our company back to a a much better place. But three of the four have been achieved, so we'll continue to press on with a license and wait patiently for the government to advise us on the reopening of Macau.
spk03: Okay, great. Thanks, Rob. I really appreciate it.
spk14: Thank you.
spk01: Thank you. The next question is coming from David Katz from Jefferies. David, your line is live.
spk16: Hi, afternoon. Thanks for taking my questions. Number one, I wanted to ask about just the physical plant in Macau. And, you know, recalling that, you know, those are, you know, have a significant number of, you know, private rooms that were historically used for VIP. You know, how do we think about kind of that spatial layout and planning going forward? And then I have a follow-up in another direction.
spk14: Brian, you want to take that? Because I have my own views, but I think you should.
spk11: Sure. I think we've been... watching as the market has been evolving and also planning for the future. I think a lot of the salons, and certainly that applies to the new salons that we've developed as part of the Gran Suiza Four Seasons and the London and Macau projects. I think they're really premium salons, premium gaming salons that could be applicable and used by the different segments, whether that's the VIP rolling or the premium mass. So clearly, I think Macau overall may be re-looking at how each operator redeploys their assets. But as far as we're concerned, especially the new products that we've developed over the past two years, we feel pretty positive about redeploying a lot of those gaming spaces for the premium mass segment. But also over time, as we look towards the future, also the premium direct segment and attracting the overseas markets in the rest of Asia into those products. So we've been currently going through a planning exercise on the future deployment of those areas. But as the market evolves and as things normalize, we'll be able to get more definition around that. But even as of the past 12 months, we've been redeploying some of those rooms that were side to the rolling segment, to the non-rolling segments.
spk14: Hey, David, no one ever thought, you know, additional gaming space in Macau is a bad thing as we focus more on base mass and premium mass. I think it actually expands our ability to make more money. The junket business we always know is a margin challenge business. I feel grateful we have all this new space coming back to us that we can redeploy and we're still going to be the world's biggest gaming market for land-based and we'll have the biggest footprint. So as this, as Grant and Wilford and the team rethink that space. I think it adds all kinds of premium opportunities for base mass, premium mass, and direct premium as well. So to me, it's a very valuable transition to a higher focused margin business that enables us to, again, Singapore, I mean, Macau, the penetration in China is still, I think, sub 3% for the China population. It's going to be a growth market. Capacity will be an issue down the road because there are new casinos opening. So I think that space may prove to be very valuable as we get back to work in Macau, hopefully this year or next. But I think we're lucky to have all that extra space. We can redeploy it in a more profitable way down the road. So happy to have it back.
spk16: Understood. And as my follow-up, you've done, obviously, the Singapore MBS did a lot better than what we had. But just looking at the ADR of I think 330. And I'm not sure that you covered this directly so far. When we look back to 2019, there's still some headroom there. It was about $90, 80 or higher. How do you sort of see that evolving as we roll forward? Patrick, you want to take that?
spk02: Yeah, sure. Happy to. I think some of it has to do with sort of startup across the quarter. I think one of the other things to note is that it's not fully recovered with all the different segments because there is You know, sort of not as much FIT and mice demand as we had, you know, across 2019. So you're going to see some ADR spread from that. But I think the most important thing to note is we're making, as Rob referenced, a billion dollar investment in our product there. Over time, our ADR will be higher. So across the next six quarters, and let's sort of, you know, sort of focus on at the end of 23 in time for Chinese New Year of 24, we're going to have 400 new suites that we never had before. And they're the highest quality suites we've ever done as a company. And we're going to drive different ADR. So while, while we're out a couple of hundred suites now with that rooms out of inventory, we've had a lot of things going on through the building. It started a period. I wouldn't look at this ADR as representative. And so over the next couple of quarters, as we have rooms out of inventory, it's going to, it's going to, there's going to be some choppiness, but by the time we're done getting into 23 and getting across 23, when the project is completed, then you'll have a good look at what ADR can really be under the value of the full investment, which is substantial. It's basically a complete redo of Towers 1, Towers 2, and some of the common spaces and amenity spaces that we have. It's going to be a fundamentally different experience for our guests, and we hope and believe very strongly that they'll pay a lot more for it because it will attract a higher value tourist, and that's really our goal.
spk14: Our biggest problem the days ahead in MBS is as that Changi recovery continues and passengers come back, Our biggest problem won't be ADR. It's going to be having enough rooms to accommodate all the demand. ADR will climb either through casino, direct, or through cash customers, or through convention. There'll be no problem getting back. That's not the issue. The issue has always been capacity constrained at MBS. We need more sleeping rooms, and we'll get the ADR. The recovery you're seeing here is in its infancy. It's just beginning. and be assured that we can get the ADR back to pre-COVID levels and above. In fact, I hope we can do much better with casino demand and drive the casino ADR as well.
spk16: Perfect. Thank you so much.
spk14: Sure. Thank you. Thanks, David.
spk01: Thank you. And the last question is coming from Dan Politzer from Wells Fargo. Dan, your line is live.
spk04: Hey, thanks for taking my question. So, you know, given the momentum you're seeing in Singapore and the recovery is still in its infancy, how do you think about the long-term path, you know, to getting back to pre-COVID, you know, the $1.7 billion of EBITDA in the event China doesn't open? Do you need China to reopen to kind of get back or get close to that level? Or, you know, given what you're seeing now, do you have a line of sight to getting near there in the absence of China reopening?
spk14: It's a good question, and we're watching like you are. I think let's not ever dismiss the importance of China in any of our businesses. China is still a powerhouse as a consumer market, and we should never dismiss it as powerful. Can we get to 400 million a quarter without China? Most people would think not, but then again, I would have thought we wouldn't have done this well with Changi still having underperforming in terms of visitation. You know, it depends. Like the U.S., I think you have to question where will the over-indexing come from? Will Indonesia, Malaysia, and other source markets over-index? And that's the question. We don't know the answer to that. Will there be pent-up demand coming out of Thailand and Vietnam and Indonesia? And could Korea outperform? I just don't know. We'll have to wait and see how those markets open up again. We're in uncharted waters here. It's new. But I would never dismiss the importance of China as a market for anybody. In our retail business, our hotel business, our casino business, China is very, very critical to everybody in Asia. And you can see that in any market you participate in. But how high is up without China returning? I think we'll have to wait and see together. There's a lot of good drivers here that make us feel good. The visitation makes us feel like there's an opportunity there. Our renovation feels like it's going to be very impactful as it comes online. The over-indexing of non-China markets feels like it's It's coming on strong. But I think we'll revisit that and we'll have a better answer for you next quarter. We print our numbers.
spk04: Got it. And then just as a follow-up, I know COVID cases in Singapore actually have been rising lately. Given your experience working with the government and your perception, I guess, on their stance of living with COVID and the stage of reopening we're in, do you see any risk with additional restrictions coming back or being put in place? Patrick, I'll grab that.
spk02: Yeah, sure. Happy to. I think at this point, all we can do is be optimistic about the public health posture that Singapore has shown. They've shown a lot of leadership. They have a significant history of investment in their hospital system and their public health infrastructure. And I think they're proceeding as they've said. I think they've broadcast it all along and they've followed what they've laid out. So as we sit here right now, I think they're moving in the way they said they're going to do, which is continue to have visitation, continue to be involved in the growth in their economy and move forward with You know, this is an endemic situation. But we don't know. And I think this is something where, you know, we've obviously shown flexibility to respond as needed to support the government and their initiatives. But at this time, it seems like we're heading in the right direction. But could that change in the future? We don't know.
spk04: Got it. Thank you.
spk01: Thank you. And thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. We thank you for your participation.
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