拉斯維加斯金沙集團 (LVS) 2007 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Las Vegas Sands Corp.

fourth quarter earnings conference call.

My name is Maria and I will be your audio coordinator for today.

At this time all participants are in listen-only mode, and we will be facilitating a question-and-answer session towards the end of today's conference.

(OPERATOR INSTRUCTIONS)

At this time I would now turn the presentation over to Mr.

Bill Weidner.

Please proceed.

Thank you, Maria.

And good afternoon everyone.

And thank you all for joining us today.

On the call with me are Mr.

Sheldon G.

Adelson, our Chairman, Brad Stone, Executive Vice President, Rob Goldstein, President of Venetian Las Vegas and the Palazzo, Scott Henry, Senior Vice President, Rob Rozek, our Chief Financial Officer, and Dan Briggs, our VP of Investor Relations.

Before we begin I need to remind you that today's conference call contains forward-looking statements that we are making under the Safe Harbor Provisions of Federal Securities laws.

I would also like to caution you that the Company's actual results could differ materially from the anticipated results in those forward-looking statements.

Please see today's press release under the caption forward-looking statements for a discussion of risks that may effect our results.

In addition, we may discuss adjusted EBITDA, adjusted net income, adjusted EPS, adjusted and adjusted property EBITDA, which are all nonGAAP measures.

A definition of reconciliation of each of these measures to the most comparable GAAP financial measures are included in the press release.

Please note that this presentation today is being recorded.

By now, you all should have received our press release detailing our financial results for the fourth quarter of 2007.

To begin put quite a bit of detail into our release today, so we'll keep our prepared remarks top line, beginning with some highlights for the quarter, a discussion of the Macao market factors as we see them, and then moving on to a few concluding thoughts and then we'll move on to your questions.

In Las Vegas the Venetian continued it's solid performance throughout the quarter.

Fourth quarter gaming volumes were up and both the non-baccarat table drop and slot handle.

Our hotel ADR and REVPAR statistics were also strong during the quarter with both ADR and REVPAR reaching record levels for the fourth quarter.

Our entertainment offerings continued to mature.

Our upgrading and remerchandising of the property have been increasingly successful and we carried much momentum into the soft opening of the Palazzo on December 30th.

With the Palazzo now open we are extending our successful convention based business model to a far larger 7100-room asset base and an 18 million square foot integrated resort complex, which is the largest destination resort in the world.

Resort featuring dozens of fine dining destinations, world class entertainment options and luxurious shopping at both the Grand Canal Shoppes and the Shoppes at the Palazzo featuring Barney's of New York.

We're enthused about that platform for growth which also captures the efficiencies manifested in our master plan here in Las Vegas, going forward.

And now turning to the Sands Macao.

We remain pleased with the performance of our Macao peninsula property.

Our VIP gaming volumes remain strong while our mass gaming volumes continue to reflect, as expected, the increased competition from the new entrance to the marketplace on the peninsula, as well as the competition created by our own Venetian Macao on the coast side strip.

Our mass drop came in at approximately $775 million.

It is important to recognize that that level of drop still represents the largest portion of the current mass market of any single property in Macao, with the exception of the Venetian Macao itself.

Including all of the new (inaudible) Macao peninsula properties.

The Sands new 238 suite hotel tower, aimed squarely at the high end of mass market has helped the Sands to remain the leader in mass market flight on the Macao peninsula.

We remain confident that the expanded Sands product offering with more amenities like our 25th floor club and club gambling tables will be a formidable competitor in the Macao peninsula for years to come.

And now let's turn to observations to the Venetian Macao.

And with the steady consistent execution of our vision to lead the transformation of Macao to the destination of (inaudible).

The big picture everything is working.

Any concern that the elements that make Las Vegas so successful as an international resort destination somehow wouldn't work in Macao have been resoundingly dispelled.

First, visitation.

Nearly 9 million visitors have experienced the Venetian Macao since it opened approximately five months ago.

Including more than 70% of all visitors to Macao in the quarter ended December 31.

Second, hotel performance.

Our strong early hotel operating performance continued to ramp up throughout the fourth quarter with the ADR reaching $224 for the quarter, occupancy reaching 88.1% in the quarter and REVPAR reaching $198.

Third, entertainment.

We had a tremendous reception for our entertainment offers-- offerings from throughout the region, including the sell-out NBA China games, Black Eyed Peas and Beyonce.

On Thursday of this week, we expect a sold out performance once again for the Police, featuring Sting, so make the first ever performance at Macao at the Venetian Macao arena.

Upcoming acts include events like Celine Dion and Team USA Olympic Basketball.

Fourth, group meetings and convention business.

After an outstanding start this business continues to gain positive momentum with significant multi-national groups including HP, Johnson & Johnson, AstraZeneca, Coca Cola, Shell and Bank of China hosting multiple follow on groups meeting in our first five months.

Recently Conventions Exhibitions Magazine, CEI, named the Venetian Macao as voted by it's subscribers the best MICE hotel in Asia.

We now have more than 30 trade shows on the books for 2008, including for the first time some important shows sponsored by China's center for the promotion of international trade, CCPIP, who controls the substantial majority of the trade show business held in the exhibition centers throughout the mainland China, some 2800 trade fills.

Fifth, solid retail sales figures at the Grand Canal Shoppes.

With 2070 stores and more than 0.5 million square feet of retail space now open, and more on the way, retail sales have been strong and continue to grow.

According to a recent CLSA survey of 1200 Macao visitors, some 82% indicated an intention to shop on their visit.

A far cry from the gambling-only Macao of yesterday.

Sixth, gaming volumes.

Both our VIP and mass gaming volumes have been healthy reflecting the acceptance and appeal of our product in the market.

Solid and building performance in all six of these areas reflects the transformation of the market itself as coming on strong.

And the catalyst for the transformation, the Venetian Macao, is paving the way.

Those six indicators of Venetian Macao's success are clear.

So let's take a quick look at some of the external market indicators that confirm that transformation.

According to the Macao census and statistics service the average stay per visitor increased to 1.6 nights in October of 2007, up 33% from the 1.2 night s per visitors in January of 2007.

That's a very telling statistic.

Also according to the same Macao statistic service, while visitation growth in the market for the year end December 31 was a very respectable 22.8% increase, visitation growth from the relatively wealthier countries on a per capita basis was up much more dramatically with visitation from Japan, Korea, North America, the European Union, all growing more than 35% a year.

And visitation Southeast Asia up 81.2% in December alone.

It's abundantly clear that visitors to Macao are increasingly coming from further away, staying longer, bringing more money with them and spending more of that money a non-gaming activity and Macao has barely scratched the surface of this huge market plan.

But as dramatic as this transportation-- transformation is, we're clearly in the very early stages, we are quite literally just getting started.

So what's next?

First, continuing investment to Macao in the regions transportation structure.

More frequent Cotai-Jet ferry serves from the Hong Kong Harbor to the Pac-On temporary ferry terminal on Taipa at the foot of the Cotai Strip, followed by direct service from Hong Kong international airport directly to Pac-On.

These services will enable increases in visitation from Macao and the Cotai Strip and a more satisfying customer experiencers-- experience for the visitors to the strip.

In addition to ferry services, additional buses and planes were placed in service to bring new first time visitors to Macao.

These will also serve to drive visitation, increase customer satisfaction as well as elevate the status of Macao as a leisure and business destination.

Since 2004, Macao airport has introduced Malaysian-- Malaysia's's Air Asia, Singaporian Tiger Airlines, Philippines Cebu Pacific Air and in the past week alone Jet Star Asia, Air Asia and Air Macao have announced new routes serving Thailand, Bangkok, Malaysia, [Guatalonpur] and five cities of Japan including more direct flights from Tokyo, where they're now running two 767s at capacity.

Second, additional marketing and entertainment activities.

Our marketing and entertainment activities, sports such as soccer, basketball, tennis, boxing and martial arts, the world class entertainment attractions like Beyonce and the Police, will continue to put Macao on the map as the destination for leisure and travel in Asia.

These high profile events are just the beginning of a series of activities, including the opening of Cirque de Soleil's, Kozmos, a custom built theater at the Venetian Macao this summer.

The appearances by Team USA, America's 2008 dream team as they make their final preparations at the arena, at the Venetian Macao, for their competition in the 2008 Olympic basketball tournament.

These kinds of events will cement the position of Venetian Macao, thus Asia's first Las Vegas style multi-night stay destination resort.

Third steady expansion of additional dining and retail attractions included in the Grand Canal Shoppes, at the Four Seasons Macao.

We now have 250 of the total of 330 stores open at the Grand Canal Shoppes, representing over 0.5 million square feet of retail shopping area.

We expect additional retail-- retailers to open stores at a steady pace as we move toward the launch of 98 additional shoppes in the 211,000 square foot shoppes at the Four Seasons Macao.

Which will feature prestigious fashion luxury brands including Louboutin, Armani, Cartier, Dior, Fendie, Gucci, [Armai's and Ups].

The Shoppes at the Four Seasons will directly connect to the Shoppes at the Venetian Macao and will debut summer of '08.

Fourth, the opening of the Four Seasons Macao.

The Four Seasons Macao with its iconic global brand will be the second destination on the Cotai Strip and will add it's worldwide cache and extensive global marketing network to the Cotai Strip this summer.

As additional world class destination resorts are completed in the Cotai Strip with the amenities to increase multi-night visitation, a larger percent of the Macao gaming and non-gaming market will be earned by the true destination resorts on the Cotai Strips, just as destination Las Vegas strip properties have, over time, earned the lion's share of the gaming and non-gaming revenue profit of the Las Vegas market, and this increasing critical mass of destination product attracts more air service, ferry, rail and bus infrastructure, the Cotai Strip will become Asia's Las Vegas.

So to the six factors we can now measure visitation, hotel performance, entertainment, group meetings, retail sales and gaming volume.

And the four important things we see coming that will drive the transformation of Macao and contribute to ongoing growth in the marketplace, all of these bode well for the validation of the success of the vision for the future of Macao as the destination of Asia.

One final point, in December we were able to generate more than $60 million of adjusted property EBITDA at the Venetian Macao.

And while a portion of that result was driven by a favorable hold, we clearly don't have the full level of EBITDA generating power from our hotel rooms, retail and entertainment offer.

Each of these continue to build and we are clearly feeling good about the trajectory that we are on.

So that includes the highlights.

We continue to steadily execute across-the-board and lead the transformation of the largest gaming market in the world into the greatest business and leisure destination in Asia.

It's truly an exciting time for our Company, is therefore an ideal time for us to present a more detailed look at our operating plan and strategies than on these regular quarterly conference calls.

We look forward to presenting these more detailed plans at an investor conference next Monday the 11th of February, beginning at 11:30 a.m.

Pacific time and hope you'll join us for that event, either in person here in Las Vegas or by webcast which will be accessible by the Internet from the investor relations sections of the Las Vegas Sands website.

Before we go to Q&A, let me throw out a few concluding thoughts.

First in Las Vegas the Venetian is performing well and the 3068 suite Palazzo will be ramping up to full power as it's full suite of amenities comes online through the quarter.

On the Macao peninsula the Sand continues to be the resilient market leader at mass gaming volumes on the peninsula.

And as we reposition the Sands to continue to compete against the wave upon wave of competition on the peninsula, we will continue to work to capture additional operating efficiencies and focus on maximizing the Sands market leading cash on cash return.

Finally on the Cotai Strip, we'll continue the process of learning more about how the various profit centers of the Venetian Macao, rooms, retail, entertainment, convention, trade show, VIP business, mass tables, slots impact one another as we continue to grow our revenues, learn how better to control costs and maximize income as we complete additional infrastructure and product features like the super luxury retail outlets at the Four Seasons and a purpose built [surf shown] to drive traffic to the resort and attract the multi-day visitor from further away through Macao's increasing international air connections.

We will seek to convert book business, tour and travel bookings, convention business and contracted trade shows to operate a profit as we ramp up occupancy, ADR and continue to grow our VIP mass casino volume, while all executing our construction plan to fully develop the potential of the Cotai Strip, Asia's Las Vegas destination.

As we complete our destination integrated resort at the heart of downtown Singapore, we remain confident that the execution of these plans will lead to superior returns for our shareholders.

With that opening, series of statements, we will now open the phones for Q&A, so that our Management team can bring you up to date fully on the details of our presentation today.

(OPERATOR INSTRUCTIONS) Your first question comes from the line of Felicia Hendricks with Lehman Brothers, please proceed.

Hi guys, good afternoon.

Hi, I have a few questions.

First one I guess is for Brad.

Just looking at the EBITDA margins at the Venetian Macao, if you adjusted last quarter for hold, it looks like they were about flat.

And I'm just wondering how we should think about that going forward?

I know it is a big endeavor to kind of get costs in normalized levels there.

But are we going to see is kind of flattish for the next few quarters?

Or do you expect-- are you seeing things now that would indicate that that might ramp?

I think personally in looking at the margins we did hold about two points below what we expected on the mass business at the Venetian and we expect to see that at below normal holds you traditionally see as the property opens and of course we held slightly below what we expected to hold on $2.72 million on the rolling program at the Venetian.

So roughly a difference of about $32 million EBITDA at a 60% margin after gaming tax.

I think it's important to recognize we're learning a lot at the Venetian Macao as Bill indicated in his presentation.

I'm pleased to see, I guess in once sense I'm frustrated to see but pleased to see a lot of opportunity for us to work on the margins as we figure out the various business segments as we figure out exactly the staffing levels needed to efficiently operate that property.

So I think you're going to see a gradual ramping up once we adjust for revenues and hold percentages and like, you're going to continue to see a more efficient sales of the room product which will drive revenues.

At the same times we're working hard at our staffing levels, looking at what entertainment venues work and how to price ourselves.

I mean as Bill said the good news on the entertainment side it is absolutely work to fill the place.

Honestly if you look back we missed some opportunities to maximize our revenues as we see more opportunities to sell tickets at a higher price for certain events.

So we're learning a the lot each time we have an event, each time we enter a new market as we get the (inaudible) going, we just see lots of opportunity to take this operation.

As the pioneers we are right now and improve those operations and see those margins grow.

Okay.

And anyone could take this next question.

I was wondering I know you don't give guidance.

But if you can just give us some kind of update on what you've been seeing in January?

Particularly since there have been in Macao, since there have been news reports which have reported revenues and market share numbers and I'm sure you've seen those and certainly these reports have indicated that you've lost the market share in January versus December.

So I was wondering if you could address that?

This is Sheldon Adelson.

Actually (inaudible) is coming out with every two weeks market share.

I'm going to propose we have an organization come up with daily and then I will lead market share statistics, and maybe that would be more meaningfully.

I think we're getting to the point where the whole thing is ridiculous.

I mean these people that are coming up with minute-by-minute market shares, and then make investment decisions on that are the kind of people I wouldn't want to handle my personal money.

Okay.

Having, having said that, can you give us any --

Having said that, we don't intend to -- January is part of the first quarter of '08.

So when we part the quarter, we'll talk about January.

Okay and then just a housekeeping question.

I was just wondering if you could just tell me for the quarter, the average square foot that was open in the mall and then your revenues per square foot?

We're not going to report and January numbers.

No no no.

For the quarter, for the fourth quarter.

I think-

Felicia we're at--

I can't judge the -- the average number of stores?

Or the number of stores ending?

For the quarter, the square foot that was open in the quarter and the revenues per square foot.

It's -- I can't answer that question.

It ramped up from 0 to about 220 stores.

So we have to figure a daily average of the number of stores and the square footage and we didn't think anybody would really want to know that.

Okay, I thought-- because I have-- I thought you gave the data for the last quarter, so just--

Felicia we did give the data for the last quarter.

Where we are at January (inaudible) today is about 500,000 square feet of space open.

For the first quarter, pardon me, for the fourth quarter we had an average of approximately, on a weighted average basis in the neighborhood of 300,000 square feet open for the entire quarter, September 30 to December 31st.

And with respect to talking about sales per square foot, we may very well be able to talk about sales per square foot sometime at the investor conference, but today we're not prepared to talk about that in any detail.

Okay thanks, Dan.

We haven't done the arithmetic on it and we'll do the arithmetic and we can answer that question offline if you'd like.

Thank you very much.

We certainly have the math on a week-to-week basis and on a store-to-store basis but the key is going back and figure how many days of the week the store is open and then how many weeks of the quarter that it's open.

So all that math needs to be put together, and we'll have some of that stats next week in more detail.

I mean we could give you the opening day, we could give you the closing day.

And we'll give you the ramp up during the period.

But we haven't done the calculations on the average.

Okay.

I look forward to hearing that next week.

Your next question comes from the line of Larry Klatzkin with Jefferies.

Please proceed.

Hey guys.

Let's do it minute-by-minute, that'd even be better.

Then we could just-- that's all we could spend our time doing.

Question one.

Has the ferry gotten going?

How's that?

Congratulations getting the ruling in your favor.

Yes, the ferry is-- are up and operating.

We're offering about every half hour service during the day now.

And my conversation end of day Monday with the fellows there in Macao, we now have qualified captains and crews to be able to do 24-hour sailing.

All we wait for now is the approval of the additional slips of Hong Kong.

So hopefully in a relatively short period of time we'll have ourselves to the point where we have enough equipment and the approvals for 24-hour sailing so we can do night cruising.

All right, great.

It's ramping us this week we just started back in business again about five or six business days ago.

And it's beginning to ramp up to the levels that we were before we had to close down.

We're very confident that that service is going to prove to be superior and the fact that you can go directionally to the strip and in minutes be at our door.

I think it'll do very, very well.

As we get into full service operations, add more ferries.

Once we ramp up in the next three to five months with every 15 minute service, I think we'll have an excellent generator of thousands of bodies to the Cotai Strip.

All right, well great.

And then the other question I have is just the timing of schedule of all the projects and the budgets as you see them.

Started with the Four Seasons, Brad what you looking for for an opening date we should use in our models and what budget, maybe you can just talk about maybe the Shangri-la and the budget with Singapore?

Okay.

The first project that's going to open is the Four Seasons, we scheduled that for June of this year, it's almost (inaudible) for the summer, but we're looking at June time period.

The budget is roughly $1.1billion, that includes the Four Seasons itself, that includes the service department complex concerning (inaudible) Tower immediately adjacent to the Four Seasons mall.

And it also includes their mansions at the Four Seasons which is very high-end, suite (inaudible),19 (inaudible) weeks with their own infrastructure that supports the very premium end of the market.

That, like I said, the main project will be open in June.

The private mansion are at the end of the year and service departments are sometime in the first and second quarter of next year.

But those sales of opportunities are beginning now.

Parcels five and six that's known as the Shangri-la, St.

Regis, Sheraton, Trader's complex, that is roughly going to come in about 6600 total rooms, made up of the mix of the various brands.

It's a huge building just about 13.7 million square feet.

Right now, I'm just going to give the heart of the construction costs, which includes the actual construction, the what we call built-in (inaudible) including guest room furnishings and designer's cost it's roughly about $3.3 billion.

We're still working on the final FF&E budget the pre-opening budgets so that'll probably add in the area of about probably another $300 million to $400 million in that project.

That is opening the first phase of it which is the Sheraton Tower and Shangri-la Trader's Tower and almost the entire podium that opens in May of '09, as we talked about in prior calls.

And then the St.

Regis and Sheraton Hotel Towers are roughly in the fourth quarter of '09 that's the time period for that.

Turning to parcels seven and eight, we're awaiting, we have our piling rigs on site.

We're waiting any day now to get our permits to commence pilings.

The project it includes the Swiss Hotels, Fairmont, Raffles, (inaudible) Conrad complex, this complex is about 6200.

And that's again about 6200 total rooms.

This is a larger building yet.

About 13.9 billion square feet.

Again similar statistic to hard construction costs, which includes the designers, the nonowner FF&E (inaudible) slot machines, et cetera, is about $3.7 billion, roughly $266 a foot, and that we're looking at opening at the end of 2010.

It's a rough schedule, but we think we can make that we have site consolidation unlike that which we have five or six-- yes, it's a one phase opening that entire project.

And again, we're just waiting for the permits then hopefully we'll start piling this month.

The rigs are there, the contracts are left and we're ready to go.

Parcel three we're still in the final design phase, and then we hope to start piling in the second quarter.

And that's about a 4000 room project with Intercontinental, Holiday Inn and Cosmopolitan which is (inaudible).

About, right now the current design is about 6.4 million square feet.

Hard construction costs, and this is a broader estimate than the others.

The other ones are closer to the [ianudlbe] because we've had much more, pretty extensive design on the other projects.

Currently we're looking at again for just the construction, architecturals and nonowner FF&E about $1.65 million.

And that we're looking to open up in the second quarter of '11.

And again hope to start piling that this spring.

So it's roughly the same time frame as the, or--

And then Singapore.

Singapore project I was there last week, it's unbelievable project.

It's going to be magnificent, (inaudible) rooms.

This project is 2700 rooms, we talk about the size of the building because you hear what the government allows us to build, that's roughly 5.5 million square feet, 5.7 million square feet, but the actual building including land, it doesn't-- the state doesn't include in that calculation the building is actually about 9.1million square feet.

Currently we're looking at the hard construction costs of roughly $3.4 billion.

This build is coming in at roughly $372 a square foot, and it's a magnificent building.

I went through the whole process of constructing it.

It's going to be something else.

And that is end phased for the end of '09 and we continue to hold that schedule at this point in time.

We said at prior meetings,there's lots, there's challenges in Singapore in terms of the construction market, materials and everything and so despite conditions we encountered.

We are looking very positively toward this property and I believe we're going to get a favorable ruling in the amount of units that we're going to put in this project.

We met with the government and will probably talk about that next week at our investor conference.

(inaudible), yes?

Sorry.

Brad, you have at Bethlehem?

Right, well if let me take in my order.

Sorry, Brad.

Bethlehem is a block of condominiums.

That project as you can see looking at the slab that's going up right now, we're going to end up with about 1,035,000 net salable square feet.

It's hard construction costs it's just about, it's all construction costs is under $600 million.

And again that's looking for the completion fourth quarter of '09.

And lastly, Bethlehem we start standing steel this month.

We've done intensive groundwork, all the foundation systems are in.

We start putting the podium up this month.

And it's a 304 room project, with 5,000 slot machines initially.

And again our hope is that (inaudible) government-- I'm sorry 3,000 for start to 5,000 in six months, Sheldon corrected me.

3000 at opening and six months later we'll go to 5000.

But we're building the property to encompass the entire 5,000.

It has a couple hundred thousand square feet of retail space, an arena.

Total square footage on there is about $2.4 million and a hard construction of price on that is about of $552 million.

When you (inaudible) all the lights we're putting in and other issues it's probably more in the range of $800 million to $825 million.

And that project will open up in second quarter of '09.

And the hotel tower will be about two months behind that.

How's that?

Thank you very much.

That's all my questions.

Thanks, guys.

Your next question comes from the line of Robin Farley with UBS, please proceed.

Thanks.

I wonder if you could talk about anything changing Venetian the comp terms of commission rates?

I know you won't comment on January results.

But can you talk about changes that maybe implemented in February?

Yes.

In February, given the competitive nature of the commission situation there in Macao, we have now offered to our junket reps the program, it's called the 60/20/20 program.

And that the adjusted commission rates on the 60/20/20 program were higher than the commission rates that were offered on the pure commission basis.

At the expected whole percentage of 2.8%, I think it's approximately 1.22% is my recollection.

And so we've offered a bit more competitive junket structure.

The good news of that is, they share a bit in the down side.

If we don't reach our expected whole percentage, although they get more the upside, if our whole percentage is above 2.85%.

So, yes, we have adjusted our commission structure, and we've adjusted the offerings in the marketplace in terms of the independent representatives.

I don't know if you can comment on in terms of when that begins, or how not that it's February when that will begin--?

It began February 1st.

Can you speak us a little bit, Robin please?

Sure.

Can you talk about what you-- in terms of response to that in the marketplace then, whether you expect others are going to have to move commission levels up now that you've moved to this kind of commission structure?

I think others already have.

I think we were the out lier on the low side during the month of January.

So to convert to this more-- it took us awhile to convert to this kind of program, it's getting additional chips, et cetera.

But we targeted February 1st and we are now in place with the new commission structures as of February 1.

We don't know exactly how that has manifested itself yet because these are the slowest days of the year as you approach Chinese New Year, we would expect to have a much better idea during the Chinese New Year time and we're expecting a very robust business during that period of time beginning the 6th or 7th of February.

Great .

Then just the last question is, the announcement earlier today about the mall at Macao Studio City being sold for a price that suggests kind of I guess $1300 U.S.

per square foot.

I wonder if you can comment on is that when you think about your own mall sale whether you think that's a level you'd

There is a piece of property that doesn't have one lease signed yet.

So it's a pretty robust number with (inaudible).

I mean it's so--

I don't know how this hypothesis leads into reality.

Well it's just-- They're estimating they're going to do $1500 a foot.

Why don't they estimate $15,000?

That's the sale of the-- It's the sale price.

It's sold.

So now they're calculating back per square foot what the effective sales price was.

(inaudible) price for the mall?

They've sold the mall?

Yes.

There's an announcement that was out today.

I wasn't aware of that.

They sold the mall for $1300 a foot?

Among themselves they sold (inaudible).

(inaudible).

Well they had to have money.

So I don't think it's a -- I think it's something of a distress sale, is it not?

So I don't think it's --

We're not believers of selling properties or bringing in partners while your property is already half done and then saying that it was a good thing to do.

If your property has got good promise and good potential you ought to stick with it and not sell it off to get some money.

I think it's pretty cheap at $1300 if they're going to do business they'll be able to sell it at several thousand a foot.

If I can-- while I'm talking, I just want to make one comment about the-- our presentation.

And that is, that my nose is stuffed so I'm sounding -- That is that there's good news here.

I mean that's on a broad brush basis.

The good news is that there's no more waves of competition on the peninsula coming up.

There are no more developments that we know of that are being planned, Stanley Ho isn't do any more developments in the foreseeable future and none of the his sublicensees are doing any more developments there.

So the good news if that the market has grown from 2002 to-- from $2.7 billion U.S., to $10.3 million or 10.4 million, whichever number you believe, or which ever number is accurate for 2007.

That is almost a four times multiple over a, over a 5 year period.

Now, you're looking at the growth.

I believe it was about $8 million in 2001 or so, give or take about the same year, and this past year we ended up with 27 million visitors.

Now for those doubters who think that there is a prospective market in China both to grow in terms of gaming volume and to grow in terms of visitor volume, I think that the facts clearly by contradict the doomsayer's's proclamations.

The validation of the integrated resorts concept of the strip has been resoundingly proven.

That each of the elements, each of the six elements that Bill mentioned are clearly on a one-by-one basis on a very, very strong ramp up basis.

The issue of the convention center we've got 100% repeat business coming out of the exhibitions.

And 100, almost, I think it's 100% repeat business coming out of the groups, what we call in-house groups.

That is conferences and meetings, sales meetings, et cetera, (inaudible) meetings et cetera.

That, that the group market is validated resoundingly.

The hotel market is also validated resoundingly.

And when we're-- as I mentioned on the last call we're figuring out which of the components, either the non-contracted FIT, let's call it FIT, the contracted tour and travel business, the casino rooms, et cetera, et cetera we're figuring out which of those, well not the casino, which of those past generation rooms are best for us and we're adjusting the relationship with the tour operators, with the airlines, et cetera et cetera.

And when Bill talked about the number of airlines coming in, he didn't mention the number of cities.

For instance in Japan there are five cities.

I don't know all of them.

I know that Tokyo and Osaka are the big ones.

And there are a number of other cities.

But it doesn't take large population cities to fill up the, to fill up a couple of planes a day.

So more and more cities are being serviced as I predicted that the lift will accommodate the demand, and that's what's happening.

The entertainment and the arena is one thing.

That's proven itself.

Getting 15,000 people to come to a show and pay a price in the arena is validated, clearly and unequivocally.

Getting -- and so we're looking to fine tune, pick up those touring shows and the right kind of entertainers as that goes in.

The room revenue, we think that eventually, as we fully ramped up and get all the pieces working together like the cogs in a wheel, we will ramp up to a figure that I believe will match or exceed that which we've gotten over the last couple of years here in Las Vegas.

So those on a broad brush basis, those are two very good signs for the future that more critical mass that we get on the strip, the greater the service of new customers, bringing more money, staying longer, gambling more, and spending more on their non-gaming activities.

I want to add one thing to what Sheldon said (inaudible).

I was there last week and I was standing in the tower of the Sheraton.

Tower 5 and when you look across the street you see the Venetian, you see the Four Seasons complex getting completed.

You look at the city of dreams the site we call site core, which is, in my evaluation a pretty impressive looking property, key five and six.

Now you get it.

You see it's about to happen.

We're just within a year of the critical mass that Sheldon was talking about making that one of the most important places in Asia, and that's before we add site seven and eight, before we add site three.

So it's just, you couldn't help but get a chill as you look across there and say this is a powerful, powerful critical mass of products being constructed right there and across the street from the Venetian.

Next question.

Your next question comes from the line of Steve Kent with Goldman Sachs, please proceed.

Hi.

Two questions.

One could you just give us some more color on Shang Chuan Island, what kind of progress you're seeing there?

And that second what are your conference convention sales reps telling you right now about the outlook for '08 given discussion of a slowing economy in 2008 this is for the U.S.?

But then also separately, on the Macao convention market, what are you seeing there?

Just as you start to book out into '09 and '10 from a utilization perspective, what's your gut sense as to how high that could go?

I can start with Shang Chuan Island, we continue to pursue Shang Chuan Island.

We continue to communicate with the guys in Zhuhai and Guangdong Province.

It is China.

And it takes a measured, patient, step-by-step process.

So it's the primary message that we're being told by the mainland Chinese.

So we're taking it a step at a time a piece at a time.

I guess that leaves the convention part of the question to me.

That's not the giant rat, oh sorry, MICE.

Here in the United States, the-- I've been saying this for years and people are concerned.

People are always concerned about whether or not the slowing of the economy for the fact that's happening or if it will continue to happen is going to impact conventions.

And I've said repeatedly that the one thing that people cannot do in order to stay competitive in their own business, in order to be in their own business, get up to date, see new products, have new discussions about new technology, et cetera, et cetera, they can't afford to stay away from the dealer meetings, their sales meetings, their trade shows.

And the association both trade and professional conferences.

If in fact, these things are so big, you could take a 50,000 person trade show and have a 20% drop, which was the maximum that was experienced within 30 days of 9/11, just 20% right?

That means 80% of them are still coming and 80% of a 50,000 person show is 40,000.

We'll have 7000 rooms of which we only allocate about 4000 or 5000 to groups.

And we'll certainly fill up with 40,000 people coming.

If you have a 5000 person company group or a sales meeting, everybody has to go because they work for the company.

And they have to show up and the company assures it.

We don't think that -- there is enough demand to keep our Las Vegas rooms full.

We are the largest convention facility.

We have more convention meeting rooms, breakout rooms than the entire city of San Francisco, and the entire city of Los Angeles.

People that have larger shows have nowhere else to go and the attraction of being under one roof, all at once and never having to leave the property, is a very compelling and very difficult to turn away opportunity for meeting place.

In Macao, I would say that my experience over 35 years in the show business says that many, many groups are afraid to book in the first 12 months, because no project in their mind ever gets ready on time.

They didn't expect us to be ready reasonably as we projected, when we book the shows.

So now the people that have gone there, the words gone around to the show community and the meeting planner community that we are there with the best facility in Asia.

And pretty soon, we'll have as many as somewhere, I don't know the exact number, between 800 and 1000 meeting rooms.

800 and 1000 meeting rooms.

If 330 is the biggest single complex anywhere in the world, 800 and 1000 will be just awesome.

So it'll be the only place in Asia, if not in the world, where somebody can have tens of thousands of people sitting down at one time.

And the good news about it is that all of the trade shows that have occurred, 100% of them have repeated.

And we had a build in rinch at the [Deletouch] they sent one of their Chinese Province booth for rinch for one group event, I think it was 800/1100 people.

Now we've got one or two others from China, [Deletouch] from Japan, from Korea, from Thailand, from India and from I think Taiwan.

So I mean that's the way that it's going.

And I think it'll only be a matter of time before the exhibition center is sold out.

But hopefully, we'll never be able to-- hopefully won't sell out the groups.

But I'm not sure.

I mean at this time I can't say that we'll be adding so many rooms that, so many meetings rooms, so many sleeping rooms, we've got a long way to go before we sell all of it out.

Okay, thanks.

Your next question comes from the line of Bill Lerner with Deutsche Bank.

Please proceed.

Thanks guys.

Two questions.

The first maybe for Bill, or for Sheldon actually, it's a poorly-kept secret so I guess I'll ask.

Could you just talk about the strategy and maybe, I guess you'll see, but the economics of these two L1011 and as we're kind of days away from Chinese New Year?

And then I have a follow-up.

I don't think we're required to do that, so-- The strategy of the L1011s.

The strategy of the l1011s.

They fly a long way so we bring people a long way without stopping.

People can smoke on them if they're done in private, so I mean it's just--

It's transport, no other activity?

I don't think we need to comment on that.

Okay.

All right.

And then the--

Comment on that.

I got you, Bill.

We don't want to give our competitors the road map to success.

All right.

Just a follow-up.

In some of these smaller markets, can you just talk a little bit about the thinking there in markets like Candace?

I know it's sensitive because it's pending stuff.

But I guess it's similar in a way to Pennsylvania.

Obviously Massachusetts would be bigger.

But do you-- clearly you feel like you have the bandwidth because you're moving forward with it, but where's the strategy?

It feels like it's more intangible than the absolute amount of cash flow they generate?

I don't think so.

I mean, I-- look our hurdle rates 20 plus cash-on-cash yield.

And our view is that if you have a land base "monopoly" in an environment like that, that competes better than having to put up with river boats, and the inconveniences of river boats, that you're in a market that generates now hundreds of millions of dollars of win out of less than attractive than optimally attractive facilities, so we think you'd like to make a lot of money out of it.

Okay thanks, Bill.

Let's just to show that I'd just like to make a comment, somebody just gave me a piece of paper that talks about this.

More than five cities open in Japan and Macao, is launching a flight each to [Nasaka], (inaudible), (inaudible), Okinawa, [Lagoua] and [Hokido] and of course there's Osaka and Tokyo.

And I think I heard somebody say something about (inaudible).

Also Korean Air, Air Korea is going to start charter flights between Macao and Korea.

So that is going, that'll, that'll-- that speaks to the issue of bringing in multi-night overnight stay market and higher gaming budgets for the passenger.

Your next question comes from the line of Joe Greff with Bear Stearns.

Please proceed.

Hey guys.

Bill, Sheldon you spent a long time on the call talking about the increase in average length of stay from Macao to market.

Can you talk about what you're experience was at Venetian Macao in the 4Q?

What?

In the fourth quarter.

I didn't hear the--

The average length of stay in the fourth quarter.

Do we have that, Scott?

We don't have it presently, we're-- it's something we're preparing for the investor day next week.

I think I can say in general, Joe that --

I asked about that--

The increase when we first opened the property, whenever operating challenges was we didn't put like minimum stays on weekends and the like and we had a tremendous amount of transactions coming out of Hong Kong, (inaudible) market And so we do at times put certain minimum stays, obviously as we have more group business that business tends to stay several days, so it has really evolved number one as we've moved into more group business that generated more overnight stays.

And even our FIT policies and tour policies at times dictate minimum night stays.

We'll have a lot of those exact statistics on a couple different measurements next week at the investor conference.

Okay.

Great.

And then have you yet received the proceeds from general growth on the Palazzo Mall?

And I guess what is that amount?

(inaudible) in the final stages of negotiating the details of the contract, a time crunch.

Okay but you expect that by the end of this quarter?

I don't know.

I'm not involved in it.

End of this quarter?

I don't know.

Well the attorney's not on the line, so I cna't tell you.

But whenever it was anticipated to grow, I mean to close.

Great.

And then just to go back to your earlier comments on the United States conference convention business, Sheldon you mentioned a lot of details in there.

Thank you very much for that.

But I guess is it fair to say that where you sit, you're not seeing much of an impact in conference and convention bookings?

Is that fair to say?

I think it's the opposite, Joe.

I think what's fair to say is that if you walk through the Venetian (inaudible) and you see the size of the complex and the demand for our pace, no matter what happens to the U.S.

economy, we have no idea of obviously what's going to happen with the economy, demand on the convention side is very, very strong.

You look at this complex now, it's pretty amazing to see what it offers to the convention meetings business.

I think it's just the opposite, our business will get stronger if we want to be stronger in that segment.

I think the key for us with this property is because of that infrastructure, we have many markets we can go to.

A lot of people in the town are a lot more dependent on the tour and FIT market, we certainly have that, we constantly look to tweak and change our mix of business and we're in a fortunate position of having the most important meetings products in the world in this building.

If having the best of the best at your disposal to pick and choose when you want to open that tap and close that tap is what we have here.

In the past it's been more of a challenge of turning off the group business to go after the FIT.

And if we do see some weakness if the FIT market more than likely, as it happens with the economy, we have a strong group business and as Rob mentioned that demand to fill our rooms with them and change the mix to a more group intensity.

At the risk of sounding repetitive, I've been saying for years that well, I'll say this now.

Not all operators, not all gaming and hotel operators or (inaudible) resort operators are created equal.

Some are created more equal than others.

Our fundamental strategy, convention-based is what differentiates us from other properties in all of our developments, that the reality is that mid-week, you don't get everybody coming because people have to work.

Now there are a lot of people that have retired, a lot of people take vacation times at different times, so there's a lot of FIT in tour and travel market out there, however they don't pay as much as the convention market pays.

It's very compelling.

Somebody works for a company and has got it get the information they need to do their job.

That is a business expense, and that continues.

So we're just created more equal than the other guys, because they never, they always derided, they always demonized our convention strategy and look whose laughing last.

Our ADR was the highest in the history for rooms.

For sleeping rooms in the highest history of the hotel industry.

Our occupancy rate was the highest in the history of the hotel industry.

The amount of money we took in, the same, on an annual basis.

We've set the records.

Now, we don't see any reason that businesses don't have to operate any more.

As a matter of fact, they have to operate.

In some cases, when things are not going very well, the guys that really get hurt on the-- from the general economy and the guys that go out there and cater to the mid-market that don't have a convention-based security to know that tomorrow's rooms are going to be filled, and if the economy starts to hurt people and it's always very sensitive in the United States.

If the economy goes bad and people start tightening their belts the guys-- the operators that are going to get hurt are the people that jaded to the mid-market and to Mr.

Joe six pack.

We're catering to the luxury market and the high end and the convention.

And we know, I know that 35 years of being in that business that that doesn't end.

That just continues.

Great.

Thanks guys.

See you next week

Your next question comes from the line of Dennis Forst with Keybanc.

Please proceed.

Good afternoon.

I had a couple of questions.

Can you clarify the foreign currency translation losses?

That was much bigger other expense than I had been anticipating.

Yeah.

That, Dennis, relates to our inter-Company lending arrangements between the U.S.

and in Macao And that's just really an accounting convention because it's an inter-Company account we have to take that to the P&L rather than taking it to equity.

If you look at it in the quarter it was a little bit bumpy, but if you look over the course of the year, the year was-- the currency didn't move that much and I think the total effective (inaudible) is about $8 million or $3 billion of inter-Company account.

So it's really pretty --

Yeah you had a nice profit in the third quarter.

Yeah, yeah so it leveled out over the course of the year to a very, very immaterial amount.

Okay and then what about construction under, I'm sorry, construction in progress at the end of the year, do you have that?

Or any other balance sheet items?

Do you have the amount of debt at the end of the year?

They should all be in the balance sheet information that we have.

I'm not sure what your question is, Dennis.

Specifically, just construction in progress.

Or the -- I don't see the balance sheet in the press release.

If you go to the, it talks about the CapEx, in the quarter, the capital expenditures were about $1.07 billion.

See that section.

Yeah.

And balance sheet is above that.

Talks about cash under the balance sheet, GAAP 5.7.

About $7.5 million.

But it's always better, in my opinion, to break out that construction in progress so that we don't kind of ding you for it.

That construction is not generating any cash flow.

So that it is, we back that out, usually.

We'll have that for the investor day next Monday.

Okay.

Then looking out into the future, your tax holiday ends at the end of this year in Macao?

No it ends at the-- actually at the end '08.

At the end this year.

So if we're modeling next year then, should we use a normalized 30%, 35% tax rate?

No our accounting for that reflects the fact that we fully expect that the tax holiday's to continue.

You do?

In fact the government gave [Stanley Ho] his holiday and there's laws in Macao that prevent anybody from being harmed competitively as a result of the income taxes there.

But we fully expect that to continue for us as well and that's the way we've done all of our accounting for income taxes.

Okay.

What is the status there about issuing new licenses come '09?

Has there any talk about changing that date, either moving it up or moving it back, or doing anything?

Well, we have to tell you about this anecdotal information.

The anecdotal information has it that there will be no new licenses issued in '09.

At the end of '09 there'll be a new Chief Executive, and I think the Chinese government and we can't state this as a matter of fact, but our relationship with them indicates that if anything, there'll be a contraction of some of the licenses.

Some of the bottom, the bottom, the older individual nonknowns what I call sublicensees of [Stanley Ho], like Golden-- the Golden Dragon, not the Golden Dragon.

Some of the-- in Greek mythology and these other places.

If there's a new Chief Executive being appointed, I'm think that, I'm hoping of course, that some of those sublicenses will be closed.

Now I have nothing, no statement to base that on, except the feeling that when we talked to the Chinese government that they indicate to us that they feel there have been too many licenses out there.

The good news is that it doesn't seem to be anything on the horizon between now and then to open.

And so we're going to make every effort to see that they don't, that this doesn't expand at al.

Now-- so we're going on the basis there'll be no new '09 licenses.

Okay.

Dennis, you and I haven't talked for many years but good to hear your voice again.

Thank you.

I do read about you once in a while.

Dennis, I want to tell you, it is a very good point about the currency exchange.

In Singapore, we're winning, I think we've got a very substantial upside there.

Because we're borrowing at Sing rates, and our Sing rates are about 4% give or take.

I think the first went, the first one went down to--

3.6%.

3.6% and I think the next one if we pick 90, or six months, 90 days or six months maybe we'll be 4%.

Six months today would be 3.9%.

3.9% okay that's good.

We're building in Singapore dollars.

But when we earn money, we'll earn money in Singapore dollars.

But when we convert it, it goes way up, in terms of dollars.

So I think maybe if I were an analyst I'd probably make an adjustment for the exchange rate it's tough to predict two years out, but it's on a maybe.

When we started, I think it was 1.7%.

Actually 1.65%.

Today it's about 1.42%.

So we're down about 23 basis points, which comes to about a 15% number.

So when we convert, we can look forward to converting Singapore dollars, we don't see anything that will weaken the Singapore exchange rate.

So that's good news for us.

Good.

I'm assuming you're going to combine going forward the two Vegas properties, we'll see the numbers combined as one?

There will be, I think, there'll be some at the bottom line there will be combined because of all the operational synergies and the way the businesses are managed.

But I think on the top line we're still kicking it around internally but there is discussion of presenting separate top line specifics for the Venetian and then for the Palazzo.

Good.

Hope that is the case.

Thanks a lot.

See you next week.

Thanks, Dennis.

And your last question comes from the line of Celeste Brown with Morgan Stanley.

Please proceed.

Hi guys, good afternoon.

If you could just clarify a couple of comments on the call.

Brad, with the budgets you were giving for the various properties, do they include or exclude land?

And then it sounded like there would be a-- you talked about it for five and six a little bit more on each project for FF&E?

Yes, they include land and I said that they don't include pre-opening or what we call owner's FF&E, which are things like slot machines, table games, computers.

It includes kitchen equipment, it includes anything built in and it includes all the furnishings for all the 6000-plus rooms and suites.

Yes, but Brad there is no incremental land costs for site two or three.

We captured that already in the Venetian land concession agreement.

(inaudible) but sites two and three have already been captured in the Venetian.

It does include land costs for sites five and six and--

What I see doing is a good (inaudible).

What I'm figuring is (inaudible) contribution to our cost of land which we never billed them for.

So where are they going to get credit on one of the builders, whose going to give us the money.

And in terms of the land costs, it's not been clarified whether the government what you'll pay?

Or are you kind of comfortable with what you're going to pay on the rest of the sites there?

Well land costs, remember you have to understand what happens in Asia.

Land cost is based on the square feet you build on the building, so it is imputed into cost of building.

So you don't really buy land.

You buy the right to build the square footage you're going to build.

So your costs are based on the category of built space times a formula.

That's the way that it works.

So land costs are then computed by what the final approval and the final development of the building is.

So while we're at it, because this premium thing is so confusing or how land costs and things are computed, plus I noticed in your report you're talking about selling of malls.

Understand that the Cotai Strip, any mall built on the Cotai Strip, for example, can be sold.

Can be sold at almost anytime.

Because there is no prohibition against malls when they pay an additional premium.

The only difference between the mall and static stay and the time which it's sold is you have to pay an additional premium based on whatever the profit is of the mall itself.

So malls are in an entirely different category than service departments or condominiums.

The Cotai Strip by its approval process by the government, anything on the Cotai Strip cannot sell a strata title.

That strata title only relates to residences, because residence aren't allowed on the Cotai Strip.

So malls can be disposed of.

Malls are then revalued at the time of the sale and the higher land premium is paid for the mall, and they're transferable really pretty well at any time.

The regime relating to the service departments we're still working on in terms of developing a regime where long term leases or rights to use may be sold in a different form than perhaps an individual title like a condominium.

But I just wanted to clarify the point about the malls themselves.

That's really helpful.

It's hard to get straight info out of Macao sometimes.

And then Bill, you mentioned a 60/20/20 or did I miss hear you on the commission structure?

Yes, it's a sharing of risk.

60/40 or 60/20/20 or whatever way you want to--

All right, okay.

So is it equivalent to what your competitor uses the, I guess they call it the 40/40/20?

Yes.

U.S.

competitor.

Came with 120%, that's right, 40/40/20.

And then--

Same thing, the junket rest gets 40/40, however the rest is allocated is irrelevant, we get 60 they get 40.

And then Sheldon it sounded like, based on your comments about, you said selling early, that if given the choice, you wouldn't sell the Palazzo mall, pre-sell the Palazzo mall again?

And you wouldn't be willing to sell your Macao malls until they really prove themselves to get the highest price?

Is that a fair assessment?

Well first of all, it's not a fair assessment.

Let me clarify that.

It looks like it's obvious.

But the Palazzo mall we had a 30-month true up.

That means that when I'm selling the final price isn't arrived at until 30 months from the time we transfer-- the first day we transfer it.

So we already got the future built into that deal.

And so as far as the-- you're asking about Palazzo.

The bottom line is that I don't think I would pre-sell any more malls, because it's not a question of where we put the mall, whether or not it's going to succeed.

It's only a question of if there's a ramp up time, how long will the ramp up time be?

Three months?

Six months?

Or with-- because in our mind there's no issue.

We've already proven it with the Venetian.

The Venetian is Asia's first integrated resort.

Anywhere else in the world, we build an integrated resort, it's going to be the first in that part of the world, whether we do it in South America, we do it in India, we do it in Europe, we do it in Timbucktoo, it's going to be the first and only integrated resort.

And people are going to come to it because human beings are human beings.

Every adult wants to be entertained and there is an awful lot of people around the world that would like to go to Las Vegas but can't go to Vegas because of the distance to travel.

And why should they do all of that, if we bring the mountain to the customers, no doubt in our mind that the mall is going to succeed and whatever we do is going to succeed.

And if you can't see that, I mean if it can't be seen by anybody out of the Venetian Macao, I guess it'll-- we'll just have to wait a little more, it's already happening.

Our December run rate is in excess of what some analysts have projected.

$60 million, $61million, $62 million EBITDA run rate for the month of December is a satisfactory run rate as far as the projections of all the analysts are concerned, and not all pistons are firing at the same time.

As each of the pistons get fine tuned, and they all fire at the same time, like an 8 or 12-cylinder car, fine car, then we believe that the cash flow coming out of that will be, it will be an opportunity to maximize.

Okay.

Thank you.

Your welcome.

This concludes the Q&A session for today.

I will now turn the call back over to Bill Weidner for final remarks.

Well thank you again for listening to our conference call.

I mean obviously we're very excited about what's going on and about the trends that we see, not only in terms of what's happening at the Venetian Macao, what's happening in our building here in Las Vegas and what will be happening to Macao as we finish more critical mass on the Cotai Strip.

As the ferry operations ramp up, as more airplanes fly into Macao, there's nothing but a terrific upside in that marketplace, and as we begin to see our building coming out of Singapore and as we recognize the value of additional capacity in that marketplace, we're very bullish about the future.

So thank you again for listening to our conference call we look forward to talking again.

And more importantly we look forward to talking to you on Monday to go through a lot more detail, a lot more numbers so we can get a better handle on exactly how this thing is going and the timing of the process of ramping up into the future.

Thanks again for listening to our conference call.

We look forward to talking to you again.

Have a good day.

Thank you for your participation in today's conference.

Ladies and gentlemen, all parties may now disconnect.

Enjoy your day.