拉斯維加斯金沙集團 (LVS) 2016 Q1 法說會逐字稿

Good afternoon.

My name is Angel and I'll be your conference operator today.

At this time I would like to welcome everyone to the Las Vegas Sands Corporation first-quarter 2016 earnings conference call led by Mr. Daniel Briggs, Senior Vice President of Investor Relations.

(Operator Instructions)

Thank you.

Mr. Briggs, you may begin your conference.

Thank you, Angel.

Joining me on the call today are Sheldon Adelson, Rob Goldstein and Patrick Dumont.

Before I turn call over to Mr. Adelson, please let me remind you that today's conference call will contain forward-looking statements that we are making under the Safe Harbor provision of the Federal Securities laws.

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 affect our results.

In addition, we may discuss adjusted net income and hold normalized adjusted net income, adjusted diluted EPS and hold normalized adjusted diluted EPS and adjusted property EBITDA and hold normalized adjusted property EBITDA and constant currency results, all of which are 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.

Please note that this presentation is being recorded.

We also want to inform you that we have posted supplementary earnings slides in our Investor Relations website for your use.

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 to participate.

With that, let me turn the call over to our Chairman, Sheldon Adelson.

Thank you.

Good afternoon, everyone and thank you for joining us today.

I'm pleased we continued to execute our strategic objectives during the quarter.

Despite the continuing challenges in the Macao market, we again delivered a strong set of financial results with Companywide holds normalized EBITDA reaching $1.031 billion, an improvement over the first quarter of 2015.

This resilience and consistency in cash generation reflect both the strength of our business model and the geographic diversity of our cash flows, which, in turn, underpins our balance sheet strength.

Accordingly we can and will continue to return excess cash to shareholders while maintaining our ability to invest in new development opportunities.

Our unique MICE-based integrated resort business loan continues to positively differentiate us from our competitors.

In terms of both financial performance and economic contributions, to our [host communities].

In Macao, we gained market share of revenue despite the competitive impact of two new properties.

We improved operating margin as we've continued to reap significant benefits from our cost control program.

Last quarter I commented that we are beginning to see the first signs of stabilization in our Macao operations.

It is therefore very encouraging to report that this quarter we experienced our first sequential increase in mass gaming revenues in Macao since quarter 1 of 2014.

Our Macao portfolio-wide mass revenue per day was up 5% sequentially and our Venetian Macao mass table revenue per day was up 10%, which is no small feat considering the arrival of new competition.

Our share of EBITDA in the six operating Macao market has continued to increase to around 37% in 2015, up from 35% in 2014.

In fact, at quarter 4 our EBITDA share climbed to 39%.

In Singapore, Marina Bay Sands delivered another strong result.

On a constant currency basis, the Marina Bay Sands hold normalized EBITDA was up 10% against the prior year, as mass win per day increased by 10% to reach another quarterly record when measured in Singapore dollars.

Our share of normalized EBITDA in the duopoly market increased to 68% in 2015, up from 58% in 2014.

Because of our industry-leading investments in both Macao and Singapore, we are unique in the absolute scale of our cash flow as well as our dominant share of the industry's cash flow.

Scale, diversity and critical mass allow us to outperform our competitors.

Our retail mall portfolio in Asia is another unique differentiator.

For 2015 the operating profit of our malls in Macao and Singapore reached $0.5 billion.

I'm pleased to highlight that despite the downturn in luxury retail (technical difficulty) our Macao Mall revenue still grew by 9% during the first quarter of 2016.

We are also clearly differentiated by the strength of our balance sheet.

That balance sheet strength at 1.9 times net debt to EBITDA at the end of the first quarter allows us to stay fully committed to our development plans while continuing to return excess capital to shareholders.

Again, this is unique in our industry.

The Venetian Macao remains the iconic must-see integrated resort destination in Macao, welcoming over 30 million visitors annually.

That is almost as many visitors as the Macao market generates as a whole.

Despite all the headwinds and challenges in the marketplace, the Venetian Macao produced $260 million of EBITDA for the quarter, essentially flat against the prior year.

I have not a shadow of doubt that the Parisian, which is targeted to open in mid-September, will replicate the success of the Venetian as another themed iconic and must-see integrated resort destination of Macao's visitors.

I believe the positioning of the Parisian Macao caters well to both the current Macao market conditions and the long-term growth trends in Chinese [uppontours].

The Parisian will be a themed premium destination where the aspirational themed appeal of its public spaces, attractions and amenities is combined with affordable hotel accommodations, providing a complementary offering to the [Ulstry] hotel at the Venetian Macao.

Our existing portfolio has clearly enabled us to hold our own amidst new competition, and I am extremely confident we will see growth in Macao in the future with the opening of the Parisian.

With respect to expenses and profit margin, we exited 2015 with annualized cost reduction of around $250 million.

I believe we can achieve further savings in 2016.

Moreover as we open the Parisian Macao, we will be able to increase labor productivity and redeploy staff to operate the new properties.

Rob and Patrick can elaborate on this later, but additional cost avoidance from staff transfers will amount to approximately $140 million on an annualized basis.

Together with targeted savings of an additional $60 million, on an annualized basis, we anticipate having a total benefit to our current operations in 2017 of approximately $200 million after we open the Parisian later this year.

The combination of incremental revenue for Parisian in our various cost efficiency programs should further strengthen our industry-leading cash flow generation which, in turn, underpins our balance sheet strength and dividend programs at both Las Vegas Sands and Sands China Limited.

Let me give you some additional highlights of our results in Macao for the quarter.

For Q1, Sands China EBITDA was $518 million, down 2% over the same quarter last year.

Encouragingly, we experienced solid sequential growth across our gaming segments.

Our revenue per day grew by 5% in premium mass, 6% in base mass and 2% in slots.

Our premium [direct rolling] volumes increased by 9% sequentially.

Old normalized EBITDA margin in Macao improved by 200 basis points to 32%, primarily reflecting cost efficiencies.

I am pleased that since quarter 1 of 2015 we have been able to maintain high levels of market share despite new competition while controlling costs, increasing labor productivity, and continuing to invest in destination marketing in China and in the development programs for our local employees.

We are on track to deliver further operating margin improvements following the opening of the Parisian.

While competition and a hotel cash sales market is increased, particularly in weekdays and non-peak periods, we continue to benefit from the scale of our hotel room inventory.

In the market, we have two periods, the weekends and holidays matter more than ever before, and where mass market customers will generate the lion's share of future revenue and profitability, we believe our capacity advantages will be further amplified.

The two-week period over Chinese New Year's shows this advantage, with average hotel occupancy of 98% and EBITDA up over 20% when compared with the corresponding two-week Chinese New Year period last year.

With the completion of Parisian, we will have almost 13,000 hotel rooms in four interconnected resorts, over 850 stores across four shopping malls, 2 million square feet of meeting and exhibition space, and four performance and event venues including our Venetian Cotai Arena, which can be utilized either for our MICE business or major entertainment events.

Business and leisure visitors to Macao will be able to enjoy all of this and more under one roof at one destination.

I believe this will help to improve the tourists' average length of stay at Macao.

It is encouraging that for the first two months of 2016, the number of Macao visitors who stayed overnight in a hotel increased by 14% compared with the prior year, even though overall visitor arrivals decreased by 1% during the same period.

I believe Parisian Macao with its premium and iconic destination appeal, coupled with affordable and plentiful accommodation, will help drive sustainable growth in overnight visitors to the Cotai Strip.

We remain fully committed to playing the pioneering role in Macao's transformation into Asia's leading business and leisure tourism destination.

Our track record of being transformative pioneers in MICE, retail and entertainment speak for itself.

In summary, we regard it as a privilege to continue to contribute to Macao's success in realizing its objectives of diversifying its [economy], supporting the growth in local businesses, providing meaningful career development opportunities for its citizens, and reaching its full potential as Asia's leading business and leisure tourism destination.

We have steadfast confidence in both our and Macao's future success.

Now moving on to Marina Bay Sands in Singapore.

We delivered another strong quarter at Marina Bay Sands which, despite the impact of the stronger US dollar, generated hold normalized EBITDA of $383 million.

As I mentioned earlier, on a constant currency basis, our hold normalized EBITDA increased 10%.

On a constant currency basis, our mass win per day reached another all-time quarterly record and was up 10% year on year.

This strong performance was principally driven by the successful execution of our strategy to bring foreign premium mass customers to Singapore.

Now on to my favorite subject, the return of capital to shareholders.

We announced last quarter that the Las Vegas Sands Board of Directors has approved a 10.8% increase in our recurring dividend program for the 2016 calendar year to $2.88 for the year or $0.72 per quarter.

We remain committed to maintaining our recurring dividend program at both Las Vegas Sands and Sands China, and we remain committed to increasing those return dividends in the future as our cash flows grow.

At the same time, we will remain opportunistic in returning excess capital via our share repurchase program.

While we chose not to repurchase any stock in the quarter ended March 31, we look forward to continuing to utilize the stock repurchase program to return excess capital to shareholders and to enhance long-term shareholder returns in the future.

Our industry-leading cash flows, geographic diversity, and balance sheet strength enable us to continue these recurring dividend and stock repurchase programs, while retaining ample financial flexibility to invest for future growth and pursue new development opportunities.

Lastly we announced the SEC settlement of the FCPA matter on April 7. We are pleased to have that matter behind us.

I want to thank all of you for joining us in the call today and now we'll take some questions.

(Operator Instructions)

Joe Greff, JPMorgan.

Good afternoon, everybody.

Sheldon, you referenced stabilization a few times in your prepared remarks, much like you did three months ago on the prior earnings call.

My question for you is this.

Does the Macao market feel less stable in the last month and a half versus the two months of the year?

Joe, it's Rob.

Sheldon stepped out for a second.

He'll be back.

I'm sure he'd like to answer the question, but I will give you my take on that.

I think the -- March was obviously disappointing.

We had a really great January, February.

March certainly softened up.

Worldwide I think Chinese tourism and consumer numbers are pretty depressing across the globe.

And it certainly was a little bit softer we hoped than Macao.

That was not the case in Singapore, but in Macao we felt a downturn.

But we feel great.

Cumulatively in the quarter, our mass revenues, both our premium and our [mass mass] side continue to grow.

We had some margin pressure, as you see, Q on Q. But we feel like the numbers, though they are quarter on quarter or year on year, our mass numbers which we think is the most pivotal metric in Macao and to the GGR continues to grow.

I think, if anything, we are encouraged by the first quarter and the year-on-year comps.

March, we hope, was an aberration and we will see a return of a better April, May and June.

Sheldon has stepped out for a second but that's -- I think it's a pretty clear take that we believe there is stability.

We believe might even see growth, but clearly is was a challenging March.

Great.

Thank you, Rob.

And then, Rob, another question for you.

If we assume that Wynn opened Palace in early August, and obviously you announced today a September opening for Parisian, why wouldn't you want to give more time between those two openings and letting the market absorb it versus opening it several weeks after maybe a bigger, generally more CapEx property opening up in front of yours?

You could make that argument either way, couldn't you?

You could argue that more time to absorb it, you could argue the impact of the Wynn Palace on top of the Parisian could be a very powerful catalyst for the market.

There's no way to handicap that perfectly.

I have a funny feeling that Wynn will be an inflection point for the market, as will Parisian.

And I think opening them within the same 30 or 40 days isn't going to matter a whole lot.

If you wait till November, you wait till -- what's that mean?

Not a whole lot.

I'm a believer that these two products are unique, they're pretty special.

I'm hoping they turn the corner a bit.

I don't want to be Pollyanna-ish and think the day's going to turn around, but I have a lot of confidence in what Steve Wynn is building, and a lot of confidence with what Mr. Adelson is building.

So I believe these two products might be the inflection point to the market and we are actually eager to open the Parisian.

I walked through it not too long ago.

It's a wonderful product.

It's mass driven, lots of sleeping rooms, very eye-catching, very similar in mindset to the themed concept of the Venetian.

And we all know what Steve Wynn can do with a new opening.

We have a lot of hope that that will turn the corner in the market as well.

So I don't think there's any reason to wait an extra day or 10 days or -- what's the point?

Let's open, let's drive, hopefully, some more visitation and more revenue to Cotai.

It does, by the way, complete the divisions that happened years ago when Sheldon went to Cotai, long time ago.

I think with Steve opening there and with the new Parisian product, I think Sheldon's vision is really in full force, able to move the GGR deal completely over to the majority of [GGO] M&A from Cotai.

Actually, we're pretty enthused about it and think it's the culmination.

And MGM comes along in 2017, so it feels good to us, Joe.

It feels right to us in spite of what is a difficult market today.

Appreciate the thoughts.

Thanks, guys.

Sure.

Thomas Allen, Morgan Stanley.

Hi.

On Singapore, in Sheldon's prepared remarks I think he talked about how your strategy over tracking foreign and premium mass customers is working.

The market in general did see a big pickup in Chinese visitation.

Are you seeing that business [inflect] at all?

And any other color would be helpful.

Thanks.

Sure.

It's Rob, Thomas.

To your point, 34% increase year on year in Chinese visitation to Singapore is very impressive.

I think Singapore is a jewel for us.

We are very happy with the quarter.

It's unfortunate we suffered both the currency issues -- we can't control that, unfortunately -- and we had some bad luck on the rolling segment.

But if you take that -- our numbers and you really dissect what happened there, our retail business was strong, our ADR and 90% occupancy, ADR is climbing close to $400.

Our non-rolling business was just terrific at $4.8 million a day, heading for that $5-million-a-day number.

Our margins exceeded 66% on that non-rolling business.

We are seeing more foreign visitation, better quality hotel guests and the continuing phenomenon of what we did in Singapore is just very exciting to us.

It's a solid property.

We had a bad piece of luck, it happens occasionally, where we've [hailed] now close to $300 billion with a cumulative life to date whole percent exceeding $2.7 billion.

So obviously that's simply a blip, but we are very encouraged by the non-rolling numbers.

Very encouraged by visitation, quality of visitation.

The government of Singapore's vision has been, I think, realized in terms of what we're getting there.

We are very fortunate to be there.

It's a shame -- we hold 1.5%.

We lost about $135 million of [win] disappear with that [hold] percentage.

But if you take that out, the rest of the thing was very fat and happy and we are delighted to be there.

Our performance, despite the actual results being less than we would like them to be, is a very good quarter for us there.

And to your comment, more quality Chinese and other regional visitations are occurring to Singapore and it is very exciting to watch.

Helpful, thanks.

And this is my follow-up on Macao.

Rob, earlier you talked about seeing some quarter-over-quarter margin pressure there.

Can you talk about the promotional environment?

Thanks.

Yes.

It's unfortunate -- well, fortunate and unfortunately, it is not promotional from our perspective.

What really happened, Tom, is, as Sheldon referenced and I think it is a good story, we had Q on Q increases in our mass revenue is very encouraging.

We had three hits on the negative delta.

Our retail turnover rent, which is a seasonal issue, cost us $22 million.

Our bad debt, we took a bad debt hit for $22 million versus Q4, and we had some weakness, honestly, in the rooms and non-gaming side, [F&B], about $17 million.

It resulted in a less than -- we hoped the quarter would be more like [575].

And unfortunately those factors are a negative delta for us.

But I think the most encouraging thing I think Sheldon referenced is we are seeing some strength in the mass and premium mass.

I think that goes to our core story which is we are Cotai focused, we are mass focused, we have got diversity of room product, diversity of hotel product, lots of retail, 2 million square feet post-Parisian.

And we have had a very strong presence in Cotai.

And when Sheldon started years ago, I think it's rare you see a vision come to life, but you are seeing it.

Unfortunately, this quarter we had some setbacks in three areas that it happened and it cost us about $60 million.

We would have otherwise had a much better fatter quarter in Macao.

Thanks.

Larry Haverty with Gamco.

Hi.

I was just curious.

I'm sure you people have been watching the MGM REIT offering.

If you could walk us through the rules on Singapore, any thoughts you may have on monetization of the mall and what kind of multiple those assets are trading at in Asia?

We always have thoughts of monetizing anything (laughter), except our core assets.

We have been thinking about -- we cannot monetize anything until 2017 in Singapore.

That's the rules under which we got our license.

So we have been approached.

We have been talking to people.

The Cap rates are very attractive and we may or may not sell a portion.

What we don't know -- I'm going next month to see the government in Singapore and we will see what they think about it.

If I could add one thing to Sheldon's comments is that, part of the reason that we've been looking at selling that mall, always thought about selling malls as we did here in Las Vegas 12 years ago, the one thing Sheldon's been steadfast about is maximizing the value.

You've seen that mall in this difficult environment continues to produce more EBITDA every month, every quarter.

It hit it again this quarter.

We have got some more -- our team over there has done a great job of merchandising that mall to a level where it's the premier mall in Singapore, we believe, and it just keeps getting better.

We recognize interest rates are a historical favorable position for us and for the first time Mr. Adelson has taken -- at least field some phone calls, people who want to buy part of that.

So it's under consideration.

It's a very valuable mall.

I think Cap rates are going to be extraordinary for that mall or for any mall we sell over there.

But I think his vision of not selling it has been vindicated because it just keeps getting better.

It got to $100 million, then $125 million, $150 million.

We think it just keeps going and maybe $200 million, makes that mall probably one of the most valuable malls in the world today, if not the most valuable.

We are talking about a report Cap rate, I presume, Rob, right?

I think Mr. Adelson -- most people would say 3%, 4%.

He might be more aggressive than that.

But I'll let him comment.

God bless them.

I think that it appears, based upon the conversations we've been having, that our Cap rate between 3% and 4% is doable.

Of course, if we get down to 3%, why can't we get down to 2%- something?

There lies the magic.

But I will tell you that in our team over there, led by David Sylvester, keeps improving that mall.

And there's some more deals in the pipeline we're working on, that it just gets better.

If you haven't been there recently, you should go visit.

It's very impressive and we think it keeps moving upward.

So you marry that, these wonderful Cap rates, and it's a great story for us and for the first time we are listening to people's perspectives.

Trump is not the only guy that's a good negotiator.

I've been accused of that.

That's all for me.

Thanks, Larry.

Carlo Santarelli, Deutsche Bank.

You mentioned in the remarks earlier, obviously about the $140 million of labor shifting, and then an additional $60 million.

Obviously you guys had over $200 million of cost saves this year.

How should we think about where you are in the current program and then as we think about 2016, beyond the labor of that incremental $60 million?

What segments do you plan to attack?

Carlo, this is Patrick.

How are you?

Good.

And yourself?

Very good, thanks.

So the $250 million has been realized, the number's in the books, you see the effect of that through the first quarter.

The $60 million that was referred to in the script is new incremental cost savings.

The $140 million is labor and other expense that will actually be shifted over to the Parisian once it begins operation.

What you're looking at is $200 million that would be cost savings of the existing asset base in 2017.

Got it.

Okay.

And then if you guys could -- obviously, the direct business on the VIP side has trended a little bit better than the junket business, per se.

Could you talk a little bit about those customers and where they're coming from or are those just customers coming from outside of mainland China that are more your direct customers or are you starting to see junket customers more so playing on a direct basis with you guys?

Carlo, it's Rob.

I think it's a mixture of both those.

Actually we're seeing some older Hong Kong customers we've known for a hundred years who keep coming and gamble large and have no issue.

We're also seeing some mainland business that has come over from the junket side.

To your point, we are trading up in that segment.

It is getting better; it's improving.

I don't think, in the end of the day, it's going to be that material.

We are really more focused on the growth of our mass story.

We will take the business.

We only take credit we feel very comfortable with.

We are very, I guess, demanding in terms of credit issuance.

But the story there is better, it's improving.

The junket business may be a small contributor, but most of the people in that segment are really people we've known for a lot of years who are very established, have large bank accounts that can move the money without any issue.

And it's a positive story but I think our real focus, our real belief in the future of Cotai is going to be in that mass, premium mass growth.

That's where we are going to make most of our dollars.

Great.

Thanks, guys.

Thanks.

Shaun Kelley, Bank of America.

Hey, good afternoon, everyone.

Rob or Sheldon, I wanted to touch a little bit more on maybe some of the non-gaming in Macao that you guys saw.

It looks like, on the one side, we saw year-over-year growth of 4% in the mass market which we haven't seen in close to two years.

On the other side, if we look at the just sort of the non-gaming categories of rooms, retail, food and beverage and convention, I think all in we were calculating it was probably down about 10% year on year.

So as you think about new capacity coming into the market, could you help us think about what you're seeing in the non-gaming side of the business at the moment?

I think on the retail side, there is the slowdown in China that is affecting the amount of money that people are spending.

We are still doing -- there are certain categories of the retail that are doing good, and there are other categories that are not doing as good.

The room rates, which are the biggest non-gaming category.

The other properties that are open, the Studio City and phase two of the Galaxy, they're dropping rates because they're trying to fill up their rooms.

They don't have the MySpaced pressure on room demand like we do.

So they are dropping rates.

Their ADRs.

So we've got to compete with that.

But I don't see that this is going to be a permanent.

When we open the Parisian, I'm completely confident, more than confident -- just take a look at the picture of the Parisian.

It's in the supplemental deck.

What page is that?

Page 14.

You can see the picture and that is going to be a really major attraction.

It will be equal to the Venetian, but, of course, the Venetian, we competed against two new openings and the Venetian is still attracting virtually the entire -- a number equal to the entire visitation in all of Macao.

I think the number was 30 million.

So as I've said repeatedly, the industry is cyclical.

We're not going down on the rooms.

There are conversations about the VIP.

Some of the analysts and some of the journalists are talking about them and quoting some of the junket operators.

The junkets, their market has stabilized.

The mass market has increased.

It's performed better.

And I think we could look forward to more of that.

And as far as the non-gaming is concerned, people have to eat, they have to sleep.

They want to be entertained, there are the non-gaming elements that I think will pick up again and do better in the future.

Thank you very much.

Just a couple thoughts on our retail for a second.

We traded down to $86.5 million for the quarter, which gives a run rate of $340 million or so.

So if you cap that at some reasonable number, it is still worth $8 billion, $9 billion that a retail Mall, that would say to build all our buildings there.

And although it's down from the previous -- it's down from $95.3 million.

Still a great asset that does two things: It creates lots of EBITDA, $350 million a year, roughly $340 million.

It also creates lots of sticky visitation, people sleep in the building.

It helps our room sales.

So I think our retail business there still is incredibly important and $340 million, $350 million of EBITDA.

On the issue of room sales, we've been doing it longer than anybody else over there, we're more diverse, we have more penetration, we have 13,000 keys to sell nightly as of this fall.

So I think our team has been on the ground a lot longer and we sell a lot more rooms than anybody else.

We have to, because we have more rooms than anybody else.

And so I think our focus on non-gaming is very high.

It's still a very important business.

Other people focus more on the pure gaming play, but I do think we'll survive and succeed despite more rooms coming online.

Again, as you know, it's a weekend holiday-driven market.

That's when we excel.

That's most of our EBITDA.

And that combination of the shopping, the retail, the diversity of room product, and our room team selling retail rooms to a non-gamer.

We're trying to penetrate mainly in China.

Our focus is not to sell rooms cheaply in Hong Kong to people looking for the best deal.

That's what's happening a lot in that market is deep discounting, we can buy a room for sub $100 a day.

Our goal and our team's goal is to stay occupied with mostly people coming from further away, a larger shopping/gaming budget.

And I think that's going to prove to be a very big advantage for us in the Parisian and throughout the entire portfolio.

We are longer doing this, we're better at it and we have more experience.

And, again, we have the convention space as well.

So we are very focused on maximizing our retail, non-gaming portfolio in Macao.

Thank you both for all the detail.

Felicia Hendrix, Barclays.

Thank you.

Rob and Sheldon, you guys have made your excitement for the opening of the Parisian very clear.

But as you prepare for the opening, and in the new competition coming from your peers, what are you doing at your other properties in Macao in terms of maybe slot floor reconfiguration, new restaurants, attractions, so on, to prepare for the new competition?

Like I said, it's an ongoing process.

Sheldon's authorized -- we're basically spending a lot of money to rehab our products and keep them fresh.

We're in the middle of a redo of every room at the Venetian, as we speak.

We are redoing all the Four Seasons rooms.

We are looking at our F&A offerings with a little more of a jaundiced eye, if you will.

We're looking closely at how we can do better.

We don't think we've done as well.

Some of our competitors have done very well in the restaurant offerings.

We are very happy with retail.

We're less happy with some of our F&B.

We want to get better at that.

But to your point, it's a very competitive place; $20 billion of fresh capital coming on line in the last year and this year.

We need to be very good at this.

And [last times] at Macao we made a concerted effort to rethink a lot of our F&B offerings, redo the rooms, redo gaming floors, constantly reinvesting in slot machines, always buying new games, new ETGs, rethinking signage, rethinking floors, keeping the vision fresh.

It is the only asset left in Macao that does $1 billion-plus.

It's approaching its, what, ninth-year anniversary?

Actually 10th year next year.

So it's an amazing machine.

But you've got to respect the customer and always reinvest in F&B, retail, the room offerings.

We're very, very cognizant of that and we have a very large -- our CapEx budget for Macao was extraordinary, hundreds of millions of dollars annually, so we are very focused on that as well as our shortcomings now, to get better.

Very competitive market.

Very serious people coming to the market with new products on Cotai.

We are very, very careful and constantly re-examining how we can do better in Macao.

Felicia, this is Sheldon.

We have good news and we have a little less than good news.

The good news is that my vision about Cotai Strip has come to fruition, that the Cotai Strip has taken over the majority percentage of the GGR, the gross gaming revenue in Macao.

This is if you -- you have been around long enough to remember back in 2004 when Stanley Hill and I had disagreements over whether or not Cotai was going to even survive.

And at that time I said we are going to -- the peninsula is going to be comparable to the Las Vegas Strip in Las Vegas downtown.

But we can easily pick up the Sands tables and bring them to Macao and make the whole 100% best.

But the fact is that the bridge from Hong Kong -- the Hong Kong zoo on Macao bridge will be opening, I think, in 2017 or 2018 and nobody knows how it will affect -- we don't know where the -- the islands that are off the Peninsula are where everybody's going to park.

They'll distribute the visitors by bus.

We don't know where those bus routes are going to be, but everybody believes that will help out the Peninsula.

And, of course, I just read an article today that the light rail won't be completed until 2019, so there still leaves three years for that.

So, of course we're doing everything we can to maintain the growth potential of the other properties.

We are not going to, because we think the Parisian is going to be a whopper of an opening and a whopper of an operating [payer], that we are going to ignore the other places.

No, no, no, we are doing everything we can.

We're improving the retail, we're improving where -- improving the rooms.

We've allocated money for the Venetian.

Look, 30 million visitors, which is equivalent to one visit for every visit tour coming into Macao, is something to write home about.

So we are not ignoring and we're not going to rest on our laurels.

We're going to continue to promote and continue to market our other properties.

And we just believe that, without a doubt in our mind, the Parisian opening will be the best by far of all the six concessionaires opening new properties.

Thanks for that.

And I think it sounds like you're more optimistic than others on that bridge opening.

But my follow-up question is just in terms of the cost structure -- and thank you for the details you gave us at the beginning of the prepared remarks.

I'm just wondering which property will benefit the most from the shift in labor to the Parisian?

Is one property holding more FTEs than others?

Sorry.

So it will be probably be proportional, shifted from the Venetian, so the property will benefit the most is likely going to be the Venetian, although there will be some from Sands Cotai Central.

Okay, that's helpful; thank you.

No problem.

Robin Farley, UBS.

Great.

Just had two quick ones.

One is do you think it's reasonable to think you'll get 250 tables for the Parisian?

Is that kind of your expectation at this point?

And then I'm also glad you mentioned that March was not as strong as January and February in Q1.

I wonder if you could just give a little color, since we're three weeks into April, whether you feel like March was an aberration or whether that's kind of continued?

Thanks.

I don't understand that question.

Well, Robin, March, obviously I made the comment because I don't know what's going to happen.

I don't want to pretend to have clarity in the future, but it was disappointing after a really great February and a really pretty strong January.

I think the entire market felt the doldrums.

And you look at the Global numbers of Chinese tourism, et cetera, is pretty dismal as well.

We are hoping it was an aberration.

We are hoping for a good, strong April, May, June, but obviously we can't give guidance what's going to happen.

I think it was across the board, so that leads me to believe that something is happening over there.

I don't think we are alone in this concern.

But as for the future, we don't comment, as you know, and we're just hoping for a return to numbers that resembled more like January and February.

As for the tables, I think we again -- we've learned to be respectful and wait for the government's guidance.

We're hoping we're treated fairly.

I think Sheldon, if anything -- if anybody's been a visionary and a guy who plunges and puts his money where his mouth is, he has.

The Cotai Strip is now pretty clear what it's done.

That was his vision.

I would hope the government would treat us fairly and respectfully, but whatever their decision is, we will embrace it and hope we get the best treatment we can get.

I don't know if it's 250 tables, 10,000 tables, but we're hoping for a fair treatment.

And whatever it is, it is.

As you know, we have -- because of our other buildings, we have a lot of tables in the market already, but we will need the tables for the Parisian.

We will need tables because we think the mass demand for that property is going to be overwhelming.

We don't pretend it is going to be -- it may not be at the Venetian level from day one, but I think when you see it, it's got a lot of mass appeal.

The themed feel of that building is pretty impeccable.

Very -- it's very seductive when you go through it, and I think it'll get a lot of demand, so hopefully we'll have a lot of tables the government will grant us.

Great, thanks.

And maybe just a last little follow-up is without thinking about knowing what May and June is going to look like, how do you feel about what you've seen in April so far?

So not forward-looking, but just looking at the last three weeks, do you feel like the -- so far not necessarily a change from the trend of business in March, or --?

Robin, one month does not a trend make.

We can't say authoritatively that it's an aberration, it's not an aberration.

If January and February were good, why do we think that March could have been an aberration or signals a trend?

It's too early.

It's only one month.

Robin, just one thing.

I'll go back in your earlier comment, because of our -- I mean, the fact we've invested more than anybody by a landslide in non-gaming in Macao, I think we hope that on the table issue we would be treated equally.

No one's built more retail, more convention space, more sleeping rooms, more anything than us.

And we'd hope that would be taken into consideration by the government.

So we'll see how that plays out.

Okay, great.

Thank you.

We have time for one more question.

David Katz, Telsey Advisory Group.

Afternoon.

Well done; congratulations on a solid quarter.

I'm not sure if I'm exactly following up what Robin was getting at also, bit as we look out 12 to 24 months, with the new projects opening, how do you -- what are the key factors or the gating factors or what needs to happen in terms of really just getting new people into the market?

And, quite frankly, extracting greater spending from those people because your execution, your ability to execute is quite clear.

But it appears that the market, at the moment anyway, is constrained and so for everyone to be successful, it has to come from somewhere.

How do you envision that?

My comment is, I'll just repeat again, everything is cyclical.

There have been times over the last -- we've been in Macao for 12 years now.

And there's been times over the 12 years that people thought that the business was going down and then it's going to go up.

I remember somebody saying that things have gone to hell in a handbasket because the growth that year was only going to be 50% and people were projecting 70%.

I mean, everything is cyclical.

It's going to change.

People that come from China that aren't coming now, will come again.

The same thing with the high-end of the market.

We are seeing an increase in our premium direct, meaning the highrollers that are not going through the junkets, we are seeing junkets -- more regulation of the junkets.

Just everything evolves and I don't see that we can take away any direction of a trend for one month.

So if March wasn't as good as January or February, so be it.

Who knows?

It could have been the weather, it could have been anything else.

I am very optimistic.

I have no reason to be pessimistic.

In fact, I have more reason to be optimistic, at least in our placement within the framework of the six concessionaires.

We are holding -- we are up at close to 40% of the business in the EBITDA in Macao, and you can't have six 40%ers.

You could, (inaudible).

It will add up to more than 100, and it won't be because of rounding.

Our competitors -- we think that, look, we respect our competitors.

We respect Wynn, we respect Galaxy, we respect the others.

We don't necessarily agree with how they do things, so we just focus on how we do things.

And we tried to improve every aspect of our business and we don't give up on it.

We spend an enormous amount of money on CapEx.

We had a Board meeting yesterday and we told the Board from our development department which handles CapEx, and we had a very large amount of money scheduled to keep things in good shape.

Look, we have so many rooms.

We will be the only destination in the world that will have two -- 13,000 rooms available without leaving the building.

I would add to Sheldon's comments, it's like no place in the world.

I've been going there for three decades since the early 1980s, and there's 1 billion-plus Chinese people and enormous propensity to gamble, billions and billions of dollars being poured into Cotai.

Anyone who thinks this market is done growing is simply silly.

We don't know when it starts growing again, but it will grow.

And to Sheldon's point, life does go up and down, as you get older, you recognize that.

There will be a day and I can't tell you when that day will be, but a lot of faith in what we've seen, the new products there.

I think the Wynn product will be great, our product will be exemplary and I think this market will resurrect.

We don't know when.

And to your point, you've got to grow some GGR for everyone to win.

We've been winning for a long time there.

We have huge faith in the government, in the market.

And the question is when is that time coming?

Is it later this year?

I hope so; hope it's this fall.

Maybe it's the opening of the Wynn and the opening of Parisian.

But it is too wonderful a market with too many people close by who love to gamble and too many great products for it not to resurrect and come back to a growth process.

So we're weathering the storm.

We've proved we can run our business very well in a difficult environment.

I think our team over there has done great work with the cost-cutting, cost controls.

I think Sheldon's vision to Cotai is coming to full fruition this fall.

Believe it or not, we're encouraged.

We think the turn is coming.

But we don't want to point to a month or a day, we just believe long-term this is a great place to be.

So let's hope for the best and hope for a healthy second quarter ahead of us.

Thanks for your comments.

I appreciate it.

You're welcome.

There are no further questions at this time.

Thank you for joining today's conference call.

You may now disconnect.