拉斯維加斯金沙集團 (LVS) 2018 Q3 法說會逐字稿

Good afternoon.

My name is Donna, and I will be your conference operator today.

At this time, I would like to welcome everyone to the Las Vegas Sands Third Quarter 2018 Earnings Conference Call.

(Operator Instructions)

I will now turn the call over to Mr. Daniel Briggs.

Sir, you may begin.

Thank you, operator.

Joining me on the call today are Sheldon Adelson, our Chairman and Chief Executive Officer; Rob Goldstein, our President and Chief Operating Officer; and Patrick Dumont, Executive Vice President and Chief Financial Officer.

Before I turn the 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 federal securities laws.

The company's actual results could differ materially from the anticipated results in those forward-looking statements.

In addition, we may discuss non-GAAP measures.

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

Please note that we have posted supplementary earnings slides on our Investor Relations website.

We may refer to those slides during the Q&A portion of the call.

(Operator Instructions) Please note that this presentation is being recorded.

With that, let me please introduce our Chairman, Sheldon Adelson.

Thank you, Dan.

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

We delivered another great quarter.

Hold-normalized adjusted EBITDA reached USD 1.27 billion, an increase of 8% over the prior year.

Our Macao operations, once again, performed exceptionally well, with hold-normalized adjusted EBITDA growing by 18% to USD 764 million -- sorry, USD 754 million.

We experienced strong growth in both the VIP and mass-gaming table segments, enabling us to again outperform in the Macao market, while growing our market share of revenues.

We also achieved record hotel occupancy with 96% at our Macao portfolio.

All the properties at 96%.

Our hold-normalized EBITDA margin increased 150 basis points to reach 35% for the quarter.

The Venetian Macao continues to be the iconic must-see destination for every segment of visited to Macao.

Gaming and non-gaming revenues broke through an excess of 20%, while adjusted EBITDA was up by 30%.

The strong financial performance of the Venetian contributes to our unwavering confidence in the future of Macao, which will continue to benefit from enhanced transportation infrastructure and investments in the greater Bay Area.

We are steadfast in our conviction that Macao will realize its vision and evolve into Asia's greatest leisure and business tourism destination.

Given our confidence in Macao's future, we have elected to meaningfully increase our planned investments in the Macao market.

We will increase the breadth and scale of our offerings throughout The Londoner, Four Seasons Tower Suites, and St.

Regis Tower Suites.

We will also expand our entertainment, commencing in non-gaming attraction across our Cotai Strip portfolio.

These important projects will come online in phases throughout 2020 and 2021.

We believe these increased investments will allow us to generate strong returns on invested capital in the days ahead, while helping to contribute to Macao's economic and development objectives of diversification, economic growth, and leadership in MICE and entertainment.

Now move on to Marina Bay Sands in Singapore.

We continue to generate stable cash flow in Marina Bay Sands, with EBITDA of USD 419 million for the third quarter.

Both our hotel and our overall non-gaming revenues increased by more than 12% over the prior year.

Our retail mall sales per square foot increased by 22% over the last 12 months.

Marina Bay Sands continues to serve as a powerful reference site for merging jurisdictions that are considering large-scale integrated resort developments.

With the successful passage of the IR Implementation Bill in Japan earlier this year, we are continuing to pursue what would be a unique opportunity.

Now let's move on to my favorite subject, the return of capital to shareholders.

Yay return of capital.

The Las Vegas Sands Board of Directors has increased their recurring dividend for the 2019 calendar year to $3.08 per share or $0.77 per quarter.

That marks the seventh consecutive year we have increased our recurring dividend.

We also returned $300 million of capital to our shareholders through share repurchases during the quarter.

In conclusion, our cash flow generation continues to be strong and predictable.

We are increasing the scale and breadth of our investments in Macao because we have a long-term and unwavering commitment to Macao and complete confidence in Macao's future as Asia's leading leisure and business tourism destination.

We look to the future with unwavering confidence.

We have a strong organic growth outlook.

We are strategically reinvesting in our existing assets, while also pursuing new development opportunities, and we have both the intent and the financial strength to continue to return excess capital to our shareholders.

With that having been said, I want to thank you for joining us on the call today.

Now we'll be happy to take some questions.

(Operator Instructions) First question comes from the line of Felicia Hendrix.

Sheldon, I do want to touch on the expansion of your CapEx program in a moment, but I did want to start with a different topic because investors have been focused on mainly 2 things over the past few months.

First, there's been concern that the trade war-related flowing Chinese economy is going to affect demands into Macao.

And then, also, the political tensions between the U.S. and China increases the risk that the U.S. concession holders have when their concessions come up for rebid.

So we've been having those conversations a lot with folks.

So I was wondering if you or Rob, can address both of those.

So -- and Rob, particularly, on the demand side, what are you hearing when you talk to your customers?

And I'm most curious if you can segment that out by VIP and mass, because -- is the mass player somehow more insulated from the economic ebbs and flows.

And then, regarding the concessions, what can you say to alleviate investor concerns?

Right.

As you know, we've been in Macao since 2004.

We've been there 14 years.

We've invested $13 billion.

I mean, we've seen it all over the years.

We've seen visa restrictions, union pay issues, junket difficulties, border restrictions, the great recession.

And we are in 2018, and we're probably into over $3 billion of EBITDA.

We keep growing.

We keep reinvesting.

We have a highly-diversified business, which is #1 in virtually every segment there is, from EBITDA, to mass revenue, to premium mass revenue, slots, hotels.

Our business is stable and strong, and we always believed, and we still believe, there'll never be a market as powerful as Macao.

I think Sheldon referenced in the call, we're spending -- going to spend $2 billion in the next couple of years.

If there's not a vote of confidence in that, I don't know what that is.

I was simply telling you that we believe strongly today, we believe strongly tomorrow, we believe our concession renewal is not a risk.

And more importantly, these third quarter numbers, if you earn a $3 billion in the current run rate, our business looks very good over there.

In fact, if anything, the growth in The Venetian, year-on-year, Q-on-Q, the growth on our base mass business has soared.

Our retail business has never been stronger.

It's incredible how well we're doing.

It's the highest sales per square foot we've ever had, and we're about $2.7 billion.

I just don't know what else we can do.

We run our business properly, and we're doing that.

We're doing it very, very well.

And these numbers are indicative of a very strong business that's diversified.

It's a very large footprint.

And so we talk about concessions or what we expect, all we can do is what we're told and addressed by the government of Macao.

They have asked us, over the years, to invest heavily in non-gaming assets.

Well, we've built 13,000 sleeping rooms.

We've built over 2 million square foot of retail mall.

We've built millions of square foot of MICE space.

We basically -- we built an arena when people thought that was a crazy idea.

I just don't know what else you can do, but do what you're told to do.

And we have done that.

We are big fans of China.

We're big fans of Macao.

We've been wildly successful, and our $2 billion statement that Sheldon made in the call to bring Londoner to fruition, and the Four Seasons, and the St.

Regis, is proof positive.

Actions speak louder than words.

Those are our actions, and that's what we're doing right now, today, in the third quarter of 2018.

If that's not a firm belief how we feel, I just don't know what else is.

And our business, despite the stock market, our business sales are very good over there.

We're growing in every segment, including the junket segment.

So I don't have a crystal ball, nor does anyone else I know, but we feel very bullish on the market, and we feel very bullish about our license renewal.

And we understand there's a trade war, and there's issues going on, but over the years, we've seen all of that.

We've seen -- God, in 14 years what we haven't seen.

I don't know what else we can be in control of this.

Yet, we're resilient.

We're strong.

We're making lots of money, and reinvesting in our firm belief that we'll be there today, tomorrow, and for many years to come.

And we're very privileged to be in Macao, and we're very excited about the future.

That's why we're building Londoner, and Four Seasons, and St.

Regis.

That's the best I can do in answering that question.

No.

That's helpful.

And actually, that's a good segue to my -- sorry?

This is Sheldon.

Do you mind repeating?

I will repeat it, but I would bore this group.

But I meant -- all kidding aside, we spent some time preparing for this call, and the more I look at our actions, I don't know what else we can do.

And our business today is just...

Look at everything we've done.

We've spent USD 13 billion or USD 14 billion, and that's for new construction...

Right.

Never mind the cost of maintenance CapEx.

Never mind all of the non-gaming assets that we've installed and continue to deploy.

Never mind the -- what do you call it?

The arena?

Yes.

The arena, the MICE hotel.

The arena -- we'd like to build another arena.

We love building more.

Sheldon has authorized us to keep going.

Yes.

We're putting aside some land that we were going to put aside for placement of a wave pool.

But now, somebody else has got a wave pool.

It's not that unique anymore.

So I think we can afford to use our land for that.

I also think, you should look at Macao, we came there in 2004.

The market in 2005 was about USD 5 billion.

This year, it will approach USD 38 billion.

Mass market in 2010 was $6.7 billion, now it's $20 billion.

You have to invest long term.

You can't let the cycles bother you.

Or frankly, stock market prices bother you.

You've got to stay committed.

You've got to hire great people to do great things.

We've done that.

And you've got to follow the advices of the government, and we do that.

We just are very, very positive about this.

And again, I think the $2-plus billion investment we're making for the years ahead reflect that -- that sincerity and that belief.

And that is a segue just to my next question, which is a little bit of a housekeeping one.

Of the announcement that you made today in terms of expanding these projects, if we spread the numbers correctly, which we did very fast, so we could have made a mistake.

But it looks like, from what you announced previously, there's slightly under $500 million increase, and then, there's some additional projects, which are now a little over $500 million.

So just maybe you can just touch briefly upon the new stuff that you are adding, and why?

I think I'll take that as well.

We are spending more money, and it's based on a few different reasons.

Number one, we see growth in Macao in all segments.

We see our hotel rooms are knocking out numbers we never anticipated.

We think there's a demand in that market from all kinds of different things, including quality of hotel rooms.

The Four Seasons will benefit dramatically by having a 300-suite facility that plays right to premium mass and to junket.

We're going to give that property that additional space.

We upgraded our game there.

We've built -- we're building better suites.

We're building better lobbies.

We're basically trying to compete in a very, very good market.

Ritz-Carlton is an extraordinary product.

The Wynn product is very good.

Our Venetian product is very good.

We weren't happy with the level of finish.

We upped our game.

We're glad we did it.

We're adding gaming space in that building.

That same thought process applies to St.

Regis.

We weren't happy with the quality.

We went back and said, "Look at the competition, not just in Macao, but regionally." To keep growing, our goal is to go beyond $3 billion, beyond $3.5 billion to $4 billion in the years ahead.

To get there, we need great product for premium mass and for the junket business.

The Londoner might be the greatest opportunity we could have.

Macao simply is the best market in the world, bar none.

And SCC simply trailed The Venetian in virtually every segment, and yet, it's perfectly located.

Now it's got a neighborhood with Wynn and MGM, has 6,000 rooms.

It should compete neck and neck like The Venetian.

The Venetian is the $1.4 billion or probably going to $1.5 billion, maybe $1.6 billion building.

There's no reason why the SCC with double the rooms, and the kind of -- our new Apple Store opened up.

Our new retail segment is coming online.

There's no reason why we can't grow our EBITDA dramatically.

We took our case to Sheldon and the board, and they said, "We believe in this project.

We want it to be very well done.

And the execution of this, flawless." So our goal is, yes, we're spending over $1 billion of Londoner, but I believe the returns will be far outsized any other investment in the globe we can make today.

So this is a dedication to quality, a dedication to diversification, a dedication to Macao, and making sure that our footprint remains the biggest and the best in that market to maximize our growth.

We are growing in every segment, every day, and we are going to keep growing.

And this is a commitment to that quality and to that growth.

You would think that our competitors would see what it is we are doing and try to compete with us.

Now right now, they can't, because they don't have the land to implement the changes that we've made.

We started out with a complete, unequivocal, integrated resource model, and that's what we did.

We've stuck with it.

Every one of our properties has an integrated resort model, and people -- we used up all the land.

Now we even used up more land than what was allocated to us.

And our competitors in Macao don't seem to understand that.

But I don't want to convince them all to do exactly what we're doing, as that's sort of counterproductive.

However, it should be pretty obvious that if we've been doing it in the past year, after year, after year, since 1988, '88.

But in Macao, 2004.

Macao, 2004.

Yes.

Right.

Yes.

But I mean, we've been building up the staff.

We've been building up the business model...

Yes.

Yes, we have.

Yes.

And it works.

It sure does.

We're doing it every year.

I know that numbers and the stock market don't reflect it, but if you look at this quarter, there's growth in virtually every segment of our business.

Especially base mass growing to over $700 million with ridiculous margins, and our retail business.

If that doesn't tell you something good is happening in Macao, our sales per square foot is spiking double digit in every category.

I don't know, it's hard to explain the disconnect between what's happening in the stock market with our business in Macao, but we remain very committed to what our business is producing and growing it.

We want to grow to $800 million and beyond per quarter, $900 million and beyond, we're dedicated to doing that.

And these investments are simply reflections of that commitment and that belief in Macao.

Your next question comes from the line of Mr. Stephen Grambling from Goldman Sachs.

I guess 2 follow-ups to Felicia's questions.

You mentioned having conversations with the government in Macao.

I guess, has there been any color on what the concession renewal process may look like?

And then, given your confidence in the forward trajectory, what is the tolerance to consider accelerating return of capital even beyond what you've done in or taking other strategic actions if the stock stays under pressure?

Stephen, it's Rob.

We have never had any real conversations with the government in terms of what the concession renewal looks like.

There's been a lot of chatter out there, and we listen to the chatter like you do.

And we stand firm in our commitment that we're doing all the right things, which is what Sheldon referenced in terms of non-gaming core assets.

And when you look at what we have done in that area, it's larger than all of our competitors together.

No one is even close to what we've done.

I guess I take solace in the fact that we have done everything from 2004 to the current.

Even yesterday, in our board meeting, when we talked to the board about approving another $2 billion.

No one flinched.

No one even thought twice.

In fact, most of that commitment is non-gaming.

It's really a focus on more hotel, more quality.

So we can't tell you what the government's thinking is vis-a-vis relicense or bid process, how it happens.

We just remain confident that we've done all the right things we can do, and we remain confident that Macao will make the right decisions as it relates to our licenses on a go-forward basis.

We're looking beyond '22.

We are very confident, very comfortable.

I'll turn to Patrick on the issue of reinvestment and buybacks.

We've been very focused on the return of capital and capital allocation, something the board focuses on every quarter, our Chairman's very focused on, and the management team is very focused on.

As you can see, this quarter, we saw significant value of the equity.

And as we described, when we raised the $1,350,000,000 at the U.S. restrictive level, we would deploy that capital, the certain capital, to shareholders, and we've done that.

And so our intent is to continue to be aggressive in the market as we look to grow our cash flows and as we can return capital in a favorable way.

So you saw the increase in the dividend.

Our board's been very good about that, raising dividend each year for the last 7 years in order to focus on the cornerstone of our return on capital program, which is a dividend.

We feel very strongly about that and its long-term nature.

And at the same time, as we have the opportunities to use our balance sheet, as we have opportunities to use cash flow generated from the business as Macao grows, as other components of the business grow, we'll be more aggressive and look to the equity markets to return capital markets -- return capital that way.

So you saw the result this quarter.

We returned $300 million through share repurchases, and we'll look to be aggressive again in the future, as we have the opportunity to do so.

And I guess, the very quick follow-up on that.

What's the upper ground on your leverage ratio kind of ex any major construction projects, let's say, in Japan?

I think we're going to be consistent with what we said.

Both the agencies and -- well, the Chairman's communicated previously between 2 and 3x.

We're very focused on maintaining our investment-grade rating.

We think that provides a long-term competitive advantage, gives us very strong access to the capital markets, and has worked very well for us, as you can see the completion of the SCL offering.

So from our standpoint, we think we have a very strong balance sheet.

It gives us a very strong competitive position.

It allows flexibility for new growth development as well as to return capital.

You saw in the last quarter, when we raised the money, the U.S. level, and we're buying back stock now.

So I don't think leverage is going to go above what the Chairman said, but we're -- obviously, we may deleverage a little bit as our EBITDA grows.

Your next question comes from the line of Mr. Thomas Allen from Morgan Stanley.

So when you look at your Macao business, you'll see, on Slide 11, so the premium mass revenue growth is slowing, while the base mass business is accelerating.

Does that feel like how the market feels?

And then, how do you adjust your strategy to adjust for kind of the current market environment?

Right.

So I think we are -- 2 thoughts here.

One, is we're unique, and we showed you the base mass business is growing materially.

And I think that performance makes us feel very -- that we're doing the right thing, vis-a-vis base mass.

We have, on the other hand, I think we've seen, I wouldn't call it slowing, as much as flattening out.

The deceleration is obvious in our premium mass business in the last 3 quarters.

But I think, after-wise, we grew from our premium mass base back in Q3 of '17 was $499 million.

We're now running at $616 million.

I guess, all trees don't grow to the sky everyday.

There's got to be some adjustments.

So we grew from basically $500 million up to $616 million in 1 year.

You're correct as you note that the decelerating, the premium mass.

However, we have -- again, our diversification, our portfolio, enables us to be in a different business here as well.

So look at our base mass on slide -- I think it's 11, growing to $705 million.

And again, our margins there are spectacular.

So not to make short shrift of the premium mass business, it appears to be flattening out a bit, albeit 1 year, year-on-year, looks terrific.

Q-on-Q doesn't look so terrific, sequentially.

But I think that business will keep growing, that's why we're investing in quality product suites.

I also believe that business will grow as our junket business gets stronger because there's a relationship there.

And lastly, I feel very bullish about our base mass business.

It just keeps getting better and better.

And to be blunt about it, that's our sandbox.

And no one else plays in it.

No one else has the room capacity, the gaming capacity, the retail capacity, to compete for that base mass, high-margin business, that's fueled a lot of this quarter's success.

This quarter at $754 million, even if you lost a pivotal weekend, which could have been worth, I don't know, $15 million.

I don't know what the number would be, but clearly, lost EBITDA indicates how powerful our business is.

Others have to stay constrained to premium mass and junket.

We play in a lot of different places.

We play in retail, base mass, and so we -- and we grow in junket.

So while we recognize the deceleration last few quarters, we also note the year-on-year growth, and we note the base mass acceleration.

And as that can keep growing, that's a pretty good place to be.

So no refuting the comment, but our diversification kind of pushed us back on that issue.

And honestly, deep down, we believe base mass and premium mass will keep growing in Macao.

And then, just a quick follow-up.

Are you willing to talk at all about how October Golden week went?

No.

We don't talk about current quarter.

We'll talk to you in 3 months.

Your next question comes from the line of Anil Daswani from Citigroup.

I just wanted to focus a little bit on VIP.

Given the softness that we're seeing in the VIP market, you guys have been very aggressive in expanding and probably have some of the nicest new VIP facilities that we've seen across at the Venetian.

Do you see yourselves taking share in this business from the other operators?

Or growing the market in VIP?

Is my sort of first question.

That's a very good question I don't want to address it...

There's always one from each call.

Yes.

Of course you have.

Sheldon...

One, if they consider, that ends up with a net superior increase.

We like to think we're growing the market, but let's be blunt.

We don't have a crystal ball into other people's numbers yet.

I would say this though, very bluntly, we have always been the market leaders in premium mass, base mass, slots, ETG, EBITDA.

We run the table here in terms of leadership, and yet, our junket business has been really subpar, and at times, very disappointing.

We've committed ourselves to spending capital, fix those rooms you address.

We're very proud where we're going.

These rooms, when they get done, and they keep happening, are going to be spectacular.

We're adding more junket rooms.

We're adding more junket tables.

We're dedicating more suites to the junket base.

So while we look good in a 24% year-on-year growth and 15% sequentially, the truth is we were going from a very low base.

There's a lot more running room in this company to do a lot better in junkets.

We like the junket business.

We like our junket partners.

And we've woken up to the fact that we left a lot on the table in years past.

So I can't speak to whether grow the market or steal share.

I hope it's a little of both, and I hope it's a lot more growth in the market.

But there's a junket business out there.

We're seeing it this quarter.

We're seeing a future.

But keep in mind, our base in this area is not all that high so the growth numbers maybe look a little larger than they should be.

But again, we're committed to this segment and growing in it.

As my follow-up, just a quick one on The Parisian.

Obviously, The Venetian has done incredibly well with EBITDA above 30%.

What happened to The Parisian that's sort of dragging the performance there a little bit compared to its peers?

Well, one think we should be blunt about, year-on-year, is we had an incredible amount of very concentrated high-end play at The Venetian in the premium direct business.

And to be very honest and complete transparency, we ran into some extraordinary business last year.

That lifted The Parisian numbers it shouldn't have been at.

And I think that's part of the story.

The other part of the story is, as a year-on-year, that rolling business looks like it's slowed down.

Terrifically, it hasn't.

But the other thing about -- you should know about The Parisian is, that all the rooms, the conversions we referenced in the past, are now coming online and that is the big driver of the Parisian's future success.

We went up to 320 renovated keys there that I think will be very impactful as we go forward.

And I think that's part of the story that we believe we can grow that.

There's a 20% inventory in terms of the premium suites.

But we like the Parisian business.

We underestimated the premium direct demand and the junket demand for it.

So we really think there's brighter days ahead.

We like to pass $500 million annualize and keep growing there.

We missed it at the opening and we corrected that, so all segments are starting to come to the right direction.

Again, the only miss there was the premium direct year-on-year is somewhat last year's performance was not sustainable and pretty amazing due to very few players.

Your next question comes from the line of Joe Greff from JPMorgan.

With respect to the increased investment in CapEx at Sands Cotai and the Hotel Tower Suite at Sheraton and Four Seasons, do you anticipate any incremental renovation disruption as a consequence?

I know in the past, you said the initial investment there you thought you can manage around and doing it through seasonally slow periods.

Is there any change in your thoughts on that front?

Yes.

There's going to be disruption, Joe, I think at The Londoner.

We don't believe there'll be a very much disruption at all, at the Four Seasons, because it doesn't exist -- it doesn't -- it's not connected to an existing building.

So that's not an issue at this -- we don't believe Four Seasons is impactful, nor St.

Regis, for the same reason.

It's not connected to a building.

The Londoner will be a long project.

It's 1 year and 3 quarters.

So of course, there's disruption.

There's noise, et cetera.

You can't avoid that.

And there's going to be a lot of construction.

So we're not ready to qualify or quantify how we see that, but we acknowledge there'll be some disruption.

But again, I think, like all things in life, in this, if you do it properly, the end result with Londoner should rival the Venetian and gain an incredible product that can make a lot of money for us.

Imagine having Venetian side by side with Londoner, and creating that kind of EBITDA opportunity.

So will there be disruption?

Yes.

How much?

We have no idea, and we have 2 properties that I think will not be that impactful.

So we'll have to wait and see.

Great.

And then, my follow-up is with respect to your focus on the VIP segment in Macao.

Do you anticipate investing additional or injecting additional liquidity to the junkets?

And then, with respect to the 3Q results, I know you don't want to talk about October, but with respect to the 3Q results, how much of the VIP rolling went with the function of you're increasing more liquidity junkets?

And are you getting more requests from junkets more recently?

So we don't -- Joe, it's Patrick.

We don't comment specifically about our credit to junkets, but I will tell you that we've been very consistent in the way that we work with them over the past couple of years, and we don't see anything changing.

So we provided them with significant opportunity to grow their businesses.

We provided them with better space, as Rob referenced.

And we feel very confident about our credit exposure there, as well as the fact that they have the liquidity they need from us in order to conduct operations successfully.

So we're not going to really change anything that we're doing at this time.

Your next question comes from the line of Shaun Kelley from Bank of America.

I think -- unfortunately, the other question is related to -- mostly to Macao so far.

So maybe just to switch gears for a little bit.

Could you just give us maybe the latest high-level strategic update on what's going on in Japan?

We see a lot of press reports, some renderings, crossing, different jurisdictions, but just maybe your latest thoughts on kind of how you see the process or any deadlines that are upcoming, playing out?

Yes.

Shaun, I'll just open, then Sheldon will close on Japan, because he's been doing business there for a long time.

We're in the hunt in Japan.

We're trying to do our best.

It's a long race.

It sure isn't a sprint.

We're there quite frequently, and we're assessing the value of each of the potential cities, and we've been on the ground there for a long time.

We hope it materializes as has been represented over the next year or 2. It's obviously a fast-lane market, and we're doing our best to get a license there.

And that's all I'll say about that because there's not a whole lot more to talk about in Japan from my perspective.

Sheldon?

We've been lobbying there for 10 years.

My lobbying rises out of the fact that I have a previous business experience in Japan, particularly in the MICE business.

I designed and helped to build -- advised on the biggest MICE facility in Japan before the present site in Tokyo, the big site, was conceived.

The site that I advised on was called the Makuhari Messe, and they took that from -- they took the word Messe from the German meaning of fairgrounds.

So there's the Frankfurt Messe, there's a Hamburg Messe, et cetera.

It's -- there is -- everybody in the industry believes that if anybody is going to be selected there, it's going to be us.

And we even have our competitors, coming to us and seeing whether or not we can share some opportunities.

I'm not sure that we want to share them with our competitors.

We may be -- we may already be sharing with the nationals, with Japanese nationals.

So if we do that, I think it's all set.

Yes, we do have some partners that are recognized as good partners.

We do have some expressions of interest from people that want to go in with us.

And they all know that our background, particularly my background in the field of MICE, is what is flowering our grassroots.

They're watering our grassroots, and I think that looks very good for us.

And we'll see how it comes out.

We all know that Japan is not known for working very fast.

Then again, a lot of countries aren't known for working very fast.

So if we move along with them at their rate of speed, we will then have the opportunity to grow with them at their rate of speed.

So I think what we ought to do is we ought to wait -- there's a happening that will happen on next month, on November something, that will be the World Expo.

And if the World Expo is awarded to Osaka, that the federal government in Japan will provide the capital for infrastructure that is lacking in Osaka.

So if you look at all -- if you add up all the pieces together, I think we look very good, and I'd like to make a bet on that, I would.

Great.

And then, maybe just as a follow-up, and to switch gears again, to kind of get your latest thoughts on Las Vegas.

There's been a lot of concerns around the operating, and particularly, the hotel pricing environment there.

I think your RevPAR was slightly negative, but it's also a very, I think, well-known that it was a tough convention quarter or event quarter, in the market.

So what's kind of the outlook that you're seeing in Vegas right now?

Yes.

First, I've heard something about that.

Vegas had a tough third quarter, especially in the group -- in my segments.

And we participated in that, as you referenced to RevPAR.

Fourth quarter looks better.

It looks, actually, pretty good, and we believe will go back to over 800,000-room nights dedicated to the convention space in 2019.

There was a blip in the third quarter.

From our perspective, it's a blip.

We don't have the scale like some people do as far as rooms, but pretty confident fourth quarter resurrects and next year looks like a more typical 2019 solid MICE business, solid rooms business.

So not much concern in Las Vegas.

We're going to run 400 -- 500 -- $450 million EBITDA, very comfortable with our business here.

Dan, can I make a quick note on one call.

I'll jump in here.

On -- one question was asked about The Parisian, I failed to mention that we have 600 rooms out of commission this year for renovation.

So this quarter, about 20%, 25% of our room inventory was off the market, and it certainly has an impact on our Parisian business.

So just want to note that.

I think it was Anil Daswani who made the comment.

So I missed that, and I apologize.

Your next question comes from the line of Robin Farley from UBS.

It looks like, from some of the detail on the -- in the slides, that the budget for The Londoner maybe almost doubled since you last put numbers out for it.

Can you give a little bit of color on what the -- just a pretty significant incremental spend?

Robin, it's just the same story we've mentioned earlier.

I think we look -- we jumped into the Londoner and it was so compelling to begin with when we first looked at it because you look at what the Londoner does or the current SCC as opposed to The Venetian.

And it's somewhat confusing to see if a hotel makes about $700 million to $750 million, where Venetian's going to go double that.

So we thought we'd put a plan together.

The more we delved into it, the more opportunity we saw to spend more money intelligently and create a product that could be with The Venetian.

And our goal is to create bookends.

We want to see $2 billion in trough, $1 billion, $2 billion, $3 billion, $4 billion or side-by-side.

We also love the geographic location with Wynn right behind us and MGM.

And the more we got into it, the more we saw compelling opportunities to invest in things from an entertainment perspective, enhanced room perspective.

And we convinced ourselves that this is a great place to invest capital.

It's really that simple.

We saw, and the Board saw yesterday, and Sheldon saw -- when he first saw the opportunity to make this product much, much stronger is there.

6,000 keys, centrally located, right across The Venetian in every category from retail, base mass, slot, ETG, junket, premium mass, we can grow considerably.

Our retail sales are, I think, are 25%, 30% we do at The Venetian, which is crazy.

Venetian's a $220 million retail environment, and we're seeing a cross to $60 million.

If that goes up $100 million, that's pretty -- that's a big consideration.

And everybody likes that building as far as the rooms.

They don't like the physical, the external.

And the casinos are somewhat confusing.

It lacks an identity.

The Londoner will give it a very clear identity.

And we believe when it's done, it's going to be a force to be reckoned with, in the same vein as the Venetian.

So hence, we decided to invest more capital.

And everyone in this team, from both the Executive Board position, has reviewed it and agreed with that, and that's the simple answer.

Okay.

No, I was looking for if there was some -- or maybe a specific feature or something, just with that budget increment.

But it sounds like there's...

No.

There's a lot of -- there's a St.

Regis feature.

There's an entertainment feature.

There's retail future.

There's incredible -- there's some ceilings that are being raised.

It's just, when you get done with that thing, I think the theming will be pretty extraordinary.

We're hoping the results that accompany the EBITDA results will be extraordinary too.

There's not one -- there was no problem.

It's just a commitment to spend more capital and make the place much more impressive.

Okay.

Great.

And then if I could just follow up on a topic that, with -- in terms of VIP trends.

Maybe if you could just give us your take on what is it that maybe drove some of the more recent period to not look as strong?

And how do you -- is that something that you -- how do you feel about that as a kind of long-term versus immediate term, when those trends might turn?

When you say VIP, are you talking premium mass?

You're talking junket?

How do I think about that?

I mean, really, VIP more than that -- more than the premium mass business, which I realize is only 8% of your EBITDA in Macao.

But just can you kind of...

Yes.

Unfortunately -- well, we're a little different in that we did grow sequentially and year-on-year strongly.

And so -- perhaps our visibility to VIP is a little different than others.

We see growth in those segments, but we've been a laggard, and we're replacing that approach with a much more aggressive one.

And so we're seeing VIP trends continue to grow aggressive double digit, and we're thrilled about it.

I can't speak to our competitors, but I think, again, our dedication to capital and suites and gaming capacity will fuel -- we believe, we have a lot of running room left in VIP, a lot of running room.

And not because we've -- I think we have done so -- had weak performance relative to the competition.

So our hats off to the competition, but we're enjoying the party, and try to do a lot more business in that VIP segment.

We see the benefit in that segment to us is both the profit we make, but also the residual effect, the spiller effect, into premium mass and other categories.

So I can't speak to the rest of the -- we don't see problems in Macao for us.

I can't speak to other companies, but for us, VIP looks like a growth segment, a consumer growth segment, and we dedicate the capital and the gaming space and the tables, and of course, the suites to accompany that.

So we're growing our business aggressively in that segment.

Your last question comes from the line of Carlo Santarelli from Deutsche Bank.

Rob, quickly.

In terms of the bridge opening.

I haven't heard you guys kind of discuss it much, but could you talk a little bit about maybe some of the benefits that you see coming from that besides the obvious.

But levels of magnitude in terms of what you think that could potentially do, whether that help comes more on the VIP side, the mass side, premium mass side or a mix?

I think we all believe -- I think I speak for the industry or maybe at least in this room, but we believe it's a mass phenomenon.

It's going to drive a lot of mass.

Yes, we also recognized it's not there yet.

It's in its infancy.

So the impact, we shouldn't think about that for a bit.

But I think it's unequivocal that the potential of that bridge to drive more people into Macao is terrific, and for us, as the biggest footprint, it's more terrific than others.

So I think we had a -- we're very excited about the bridge.

It's an extraordinary architectural feat.

I've been watching it for years, and I'm always amazed by it, and the CIC open is exciting, but it's early yet and the impact is negligible for this quarter and probably for next year.

It might kick in, who knows, if it's 18 months away or whenever it's going to be, until it really kicks in.

But I think you -- we all believe it's more of a mass-based phenomenon because it feeds our rooms.

It feeds our retail.

It feeds our base mass.

And again, for us, base mass is a big business.

I mean, we're -- worth $700 million a quarter in tables, worth $150 million in slots and growing.

So we like to see it grow our base mass into $1 billion-plus a quarter.

That bridge is going to be the catalyst to get us there.

We are huge fans of it, and we can't wait to see it ramp up.

But that's not happening today.

Great.

And then, just one quick follow-up.

With respect to Marina Bay Sands, obviously, first quarter, tremendous margins.

Last 2 quarters, margins under pressure a little bit.

I know you guys, obviously, have lapped some of the commission stuff that you did on the VIP side.

But is there anything else that's kind of influencing the margins there?

Or is that just really boiling down more to business mix on a quarter-by-quarter basis?

Well, business mix is always important at MBS, but I got to take a moment to say that we -- I think it's a misunderstood product, and is our profit drivers there.

We -- our first driver there, as you know, is base mass, and that's premium mass slot, ETG.

It runs 60-plus-percent quarter after quarter.

We wish it could make more money, but we're capacity constrained, unfortunately.

But that is the #1.

It's $1 billion of contribution plus, and so that's the #1 thing.

The other business that drives like crazy is hotel, food and beverage, which runs consistently $95 million with, again, extraordinarily good margins.

Our retail business, which is $160 million, $170 million, again, retail business is always a high-margin business.

The outlier is the VIP business.

And what's ironic as we go back and do some work in what we're doing there, the team there has effectively grown the margin by double from a 15%, 16% business to a 30-plus-percent business.

The struggle there is growing the top line.

And so as you know, we've struggled there, and we're going to keep struggling.

It's not a growth business in terms of the rolling business.

But I guess, we're proud of Macao.

We've got the margins at, roughly -- we think they're exceptional, $1.5 billion, $1.6 billion, $1.7 billion properties, hard to find.

Not many of those around.

So we're thrilled with that business.

We wish we could have more ability to grow it, and we wish -- but can't raise rates a whole lot more.

We can't -- we're winning the slots, something like normal slots are up to $800 a unit.

I just don't know what else we can do at Marina Bay Sands, but we'll take $1.6 billion, $1.7 billion.

It's, as Sheldon says, it's a living.

So we're trying.

But I don't -- I think our mix is -- the only thing that -- those 4 segments that is vulnerable to margin pressures, is the rolling piece.

We're consistent every other business, from retail, hotel rooms, food and beverage, and base mass and rolling.

So a great business.

We just need to get more capacity.

It's just like the joke goes.

Two guys are on a rowboat, somebody falls out.

And the other guy yells out, "Where are you?

Where are you?" Couldn't see him in the dark.

He said, "I'm here.

I'm here." He said, "Are you okay?".

He said, "I make a living."

Well, it's like that.

And we do -- yes, we're thrilled with MBS, but it is what it is.

And that concludes our conference call.

Thank you for participating.

You may now disconnect.