拉斯維加斯金沙集團 (LVS) 2021 Q3 法說會逐字稿

Good day, and thank you for standing by.

Welcome to Las Vegas Sands Third Quarter 2021 Earnings Conference Call.

(Operator Instructions) Thank you.

I would now like to hand the conference over to your first speaker today, Mr. Dan Briggs.

Sir, the floor is yours.

Thank you, operator.

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

Also joining us on the call are Dr. Wilfred Wong, President of Sands China; and Grant Chum, Chief Operating Officer of Sands China.

Before I turn the call over to Rob, 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 and 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 turn the call over to Rob.

Thanks, Dan.

Good afternoon, and good morning to our colleagues in Asia, and thank you for joining our call today.

I'll provide some brief comments and we'll go to the Q&A.

Our results continue to reflect the pandemic impact, heightened restrictions directly impacted our results in both Macao and Singapore this quarter, we did generate positive EBITDA for the quarter in both markets, and we remain confident in the eventual recovery in both Macao and Singapore.

Singapore gaming operations were closed for a portion of the quarter, enhanced restrictions were in place throughout the remainder of the quarter.

The good news in Singapore is the travel corridors are being established with a number of source markets which hopefully will contribute to the strong recovery overtime.

Our considerable investments in Macao continue to take shape.

As the market recovers, we believe the Four Seasons in London will present growth opportunities in the future.

The spending in Macao has proven both resilient at the premium mass level from both a gaming and a retail perspective, you see on Page 29 and 30 in your deck, and we have great optimism about our ability to perform to a pre-pandemic level once visitation does return.

Our company is divided into 3 areas.

Most importantly the Asia portfolio in Macao and Singapore.

We remain confident we'll return to a strong positive cash flow in both Macao and Singapore in the future as restrictions are eased and travel and tourism recover.

The sale of our Las Vegas assets create liquidity and optionality as we pursue large-scale land-based destination resorts in both the U.S. and Asia.

We will continue to build out our digital presence and we're exploring multiple opportunities we'll face at the appropriate time in the future.

So thanks for your time again today.

Let's go to the questions.

Dan?

Operator, ready to go.

(Operator Instructions) Your first question is coming from the line of Carlo Santarelli from Deutsche Bank.

Hey, everybody.

Hope, everyone is well.

Rob, obviously, I'm not going to spend a lot of time discussing the results, as we all know that numerous things impacting results right now.

But when you think about kind of the progress as it pertains to Macao and what you're kind of hearing around potential easing of visa stuff, whether it's on a province by province basis or whatever the latest is that you could kind of share would be appreciated.

Sure.

We woke up 2 guys.

Let them speak to it.

Let Grant or Wilfred, do you take that since you're on the ground and living and breathing these issues every day.

Yes, let me give that a try.

Yes.

Thanks, Rob.

Yes, on the visas, I think the main point is the visa channels for the individual business scheme remains open.

I think if you look at the quarter -- in the third quarter, what really impacted results during the quarter, month by month is really the conditions on the ground in terms of domestic COVID cases.

So you will see that in July, we had -- at one point for about 3 weeks in July, we had a pretty significant recovery in the visitation and also room occupancy.

And we were starting to get a good momentum for the summer after the issues we had in the Guangdong outbreak in June.

And then as we moved into late July and early August, we had more local cases, starting with the Nanjing airport outbreak.

And eventually, in early August, we did have 4 local cases.

So that obviously curtailed the traffic immediately.

And then as we moved into September, again, we were recovering well, especially in the second and third week of September.

And we were building up ready for the October Golden Week again.

And unfortunately, we did have some local cases towards the last week of September, which again reduced the traffic immediately as it led to additional restrictions around the border.

So that really explains how the traffic flow evolved during the quarter.

Great.

Thank you.

That's helpful.

And then just as a quick follow-up.

Rob, you guys did disclose, and I think this is different from how you've disclosed historically around capital expenditures in the period.

The one line in there was $24 million of corporate and other.

Does that -- what exactly does that pertain to?

And does that have anything to do with the comments that you made on kind of the digital piece of the business?

Sure.

Pat, why don't you take that?

Sure.

I think there's a bunch of stuff in there.

Some of the stuff related to digital and some of it relates to CapEx associated with moving.

Got it.

And could you kind of just update your latest thoughts on the learnings of the last couple of months of the quarter as it pertains to kind of the digital initiative to any degree, Patrick?

Yes, sure, happy to do it.

I think for us, we take a very long-term approach.

We mentioned it last quarter.

I think this is something that's going to invest over quarters and years.

We're really investing for the future.

I think for us, we're looking to be sort of mindful of the way we deploy capital.

We've always had a history of investing in things that we think provide a very high level of returns in the future.

And that's how we're thinking about it today.

We think there's a great opportunity in digital in a variety of different areas.

You key some of the valuations that the market is giving to certain areas today.

We think it's very compelling, especially for the long term.

So right now, we're just sort of moving along slowly.

And when we have more things to report we will, as Rob said in his opening remarks, but we're very confident.

We have capital to deploy against it.

We're excited about the future, and when we have more things to talk about, we certainly will.

But right now, it's very early stages.

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

Maybe changing gears to look at Singapore.

It looks like that market was also obviously impacted in the quarter of VIP, particularly soft.

If we look out further once restrictions ease, I guess how do you think about the potential EBITDA potential of that asset if VIP in Macao remains pressured.

In other words, what kind of overlap do you typically see in Singapore from the Chinese traveler.

And could that be impacted if VIP is kind of permanently restricted?

Sure.

Yes.

First of all I think the fascinating part to me is we operate in 3 markets currently.

And Las Vegas is the blueprint, I think for the recovery of Asia.

We said about a year ago, when I was coming to work and someone told me, in Las Vegas, we wouldn't see normal returns here until -- revenues until '24 or '25.

So here we are in the fall of '21 and the market is blown wide open.

And what's the path.

The path is pent-up demand, vaccinations and doors get opened.

And I think Las Vegas will be the blueprint for Asia.

That's the path.

So vaccinations in Asia are booming, if you can look at what's happening in Singapore and Malaysia, Japan, China, Korea, it's all above the percentage-wise, what's happened in the U.S. So first, we have extremely strong vaccination rates in Asia surpassing the U.S.

Number two, I think you've got to obviously have a government that wants to open the doors in Singapore is evidenced by their actions, they wanted just that.

I think you're going to see a big turn in '22.

The recovery will begin in '22.

When do we get back to $1.7 million and maybe beyond that EBITDA, I don't know the exact date, I can't tell you.

I can tell you this, it's going to be a lot better in '22 if the government continues their path, which has shown a lot of leadership, thoughtfulness, vaccination rates I think are actually approaching 80-plus percent.

The market over there feels it's ready to come back in '22.

As the government opens those travel lanes and we look at -- again, the demand issues here in Las Vegas have been, I think, very instructive.

It's great to walk through here and see the numbers that's kicking out through the entire city.

Why wouldn't that happen in Asia.

Singapore has been a hugely important market to us.

Your point about Macao versus the Chinese market.

Obviously, part of our business is dependent upon access to Chinese market, but it's not dependent.

We probably could still make a lot of money, maybe as much as $1.5 billion without a lot of Chinese inputs.

So if Korea opens up and Singapore opens up, Malaysia opens up, and Korea and Japan, those markets are very, very sad and happy for us.

And I believe we'll see them start opening up throughout '22.

That's the path.

It's a vaccination rate, which is soaring.

It's opened traveling.

It's opening the doors up and then watching what's happened in Vegas, happened in Singapore.

And I feel -- I don't want to identify a month or a quarter, but I think you're going to see a nice turn in '22.

And then the same will happen in Macao when the government decides to open those doors up.

So I know there's people argue that people will say it's '25 to Macao, it end up '27.

But the truth is, Vegas is just out 30 minutes.

Once we open doors up, it just recovers.

And as a gaming base recovery, it's not a convention banquet-based recovery actually have to come.

So I think the future in Vegas remains, as we've always said, very bright, and there's no reason why it can't be emulated in both Singapore and Macao as vaccination rates take off and governments get more confident and travel lanes reopen.

So we're highly confident it's going to happen in Singapore in '22.

To what degree, I won't predict, but it's just a question of time for LVS goes right back to where it was pre COVID.

It's just inevitable.

So we're very confident.

That's helpful.

And perhaps as a follow-up going back to Macao.

I would love to just -- if you could provide any additional color on the consultation process.

And what are the kind of the key points of clarification that you are watching for as you think about how to strategically position the business?

Thanks.

Yes, we've been -- I've been involved in a lot of my colleagues in Macao over 2 decades.

And we've seen everything in Macao.

I mean we've been through everything.

And starting 20 years ago and people said, oh, you can't do business in Macao.

And then Cotai wouldn't be successful.

And then we have the incredibly crippling crisis in '08 and '09.

We had smoking issues.

It always worked out and we're very proud of what we've done in Macao over the years.

I think our activities, our investments speak for themselves.

I have faith in the process.

They've always treated us fairly, and we responded with the largest investment in any gaming market in the world.

So we believe we remain believers.

We wait for the government's advice and direction.

We've submitted our responses.

But looking at our history, our success, I believe, we'll be instructive for the future of our business in Macao.

And so no more kind of beyond that.

I think it's clear to say that we have a lot of lead in this market.

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

Hello, everybody.

Rob and gang, on Macao's recovery and the potential for more meaningful increased travel and mobility between Mainland China and Macao, you get the impression, whether it's from conversations with the government or otherwise, that this is more likely after the Olympics in Beijing in February?

I'll defer to the fellows in the ground.

But I don't think we've heard these points of Golden Week and it's going to happen when the Olympics are over.

I don't think we know, and I think it would be silly for us to predict, Joe.

I don't think we can really give you confidence that we have great insight to when the doors will reopen.

But we just know they will at some point.

I think '22 will be a turn year.

But I don't want to get into the game of saying it's going to happen this state.

I think we said in previous calls, we don't know when.

We just know when it does happen, it's going to be very powerful.

It's going to be like Las Vegas.

I mean anybody doesn't see that hasn't spent time in Macao.

It's going to be quite a storm of activity over there.

But I don't want to the Olympics or Golden Week or because we -- obviously, we've been wrong but those who predicted have fallen on the sword.

There's no reason to -- Grant, Wilfred, do you have a different approach to this?

Speak up.

Yes.

So we agree.

Sorry, Grant, go ahead.

Sorry, Wilfred, go ahead.

I'm just going to say, I mean we see underlying demand continues to be very strong when the opportunity arises.

Now the opportunity has -- maybe has been relatively brief 1 month here, a few weeks there, but we can definitely see the underlying demand actually across all the different segments as very strong.

And I think Rob referenced the pent-up demand that we're seeing in Las Vegas coming through.

And I think it's not going to be dissimilar in Macao but agree with Rob, that we can't be really drawing into predicting timing, but we definitely see the evidence on the pent-up demand for sure.

And I think that China will open up to the world when they feel confident that they can control any community outbreak situations.

And that depends a lot on the vaccination rate, which at this stage, stands at about 80% and the availability of medicinal cure, they're now testing with all kinds of cure methods, including Chinese herbal methods, and there's a lot of research going into it.

So we're quite hopeful that very soon with -- and they are vaccinating at about 1.3 million, 1.4 million people a day.

So if they continue like this in another 200 days, it will be another 10% of the population.

So I think as China's vaccination rate goes up, the government's confidence increases.

And we're hopeful that Macao, as part of China, adopting similar policies will benefit from the opening up.

Great.

Thank you.

Patrick, on the investments on the digital side, can you talk about how you envision maybe the size of those investments over the next couple of years?

Are we talking about relatively small more modest investments?

Or could we see investments in the hundreds of millions or $1 billion range, depending on what's available and what you like?

So it's something we talk about a lot internally.

I think some of it's going to be related to the value of the opportunity that we see.

I think sort of our thoughts right now is that we're really thinking earlier stage or mid stage.

But again, it would fit into a larger strategy and that's kind of how we'll think about being effective for the long term and how we think will create long-term value.

I don't know that we'll necessarily look at something that's transformational right away.

That's something that we may consider in the future depending on where things go and what market opportunity we see.

But I think the good news is we've got plenty of firepower.

We've got a strong management team and expertise in the industry, and we think we can be really helpful to growing technology.

So from our standpoint, we're going to be opportunistic, and we'll see how it goes.

But in the beginning, we're going to start small and sort of build from there.

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

Great.

I wanted to ask about one of the proposals in the new legislation is that it would require government approval for dividends.

And if that were enacted, I realize just in the discussion stages now.

But if that were enacted into law, would you think twice about investing if you -- if then there would be a chance that you wouldn't be approved to get a return on that investment.

In other words, how much of a concern would that be for you?

Pat, do you want to take that?

I'm sorry.

Yes.

I think it -- I think from our standpoint, I think we're obviously very much focused on building on our past.

And as Rob mentioned, I think we have a great track record of investing in Macao in scale and non-gaming amenities.

And I think from our standpoint, we have confidence that what ultimately will result from this process will be a good path forward.

And so we're very confident.

We're eagerly awaiting instructions on how to proceed.

But in our mind, Macao is the best market in the world.

We continue to invest.

We're very excited about the long term in Macao.

And that we'll wait see how things go.

But from our standpoint, we're very confident about the future.

Look, Robin, one thing I think what we're trying to reference is after 2 decades of being there, we've never found the government to be not thoughtful.

They're very thoughtful, and they're going to take these issues and make it reasonable for all of us.

We're not that concerned.

I mean I saw initially the response was like that, big concern.

We don't have those concerns.

And yes, we're eager to reinvest in Macao.

And we're assuming that the process will be fair and equal and we're also assuming that they want us to invest as well.

The government, they want to see growth in Macao.

So we're not that concerned about that issue at all.

Okay.

No, that's helpful.

Thank you.

And maybe just a quick follow-up, just in terms of timing or potential extension of your existing concession.

Is there a point at which you feel like the indication is that it's going to be extended for at least another 12 months.

I mean just given the timing already seems would be -- seems very challenging to do anything before June of '22, given the inability to travel into the country.

Is that safe to assume that at this point, it's not something you would expect to come up for bid before June.

Thanks.

I don't think we're going to -- we're not going to voice an opinion because we just -- again, we remain confident in the process to work out.

Again, we have 2 decades of history with this government.

And it's been a very good 2 decades.

This company built a great business based on it.

We've had -- like every business, you have stops and starts, we've had good days and bad days.

But in the 2 decades since we started the business in Macao, we've always found the government very reasonable, very thoughtful and very fair.

And we're not concerned whether they make that decision next month, the month after or make it in June.

I don't know when they're going to make that decision.

I'll let them make that decision and tell us.

We'll respond accordingly.

But we have no trepidation or any fear that there will be an issue of this.

We knew this was coming.

I mean it is a leasehold.

We knew this day was coming, and we're prepared for it.

And we're also fair to wait until the government tells us how they want to proceed, and we'll respect for that process.

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

Just to maybe follow up on this -- the whole licensing process, I mean I think one thing we've all thought about is the requirement or the idea that there are probably incremental capital that would need to be invested either in Macao, theoretically in non-gaming amenities, which you know well, or in somewhere in sort of greater Mainland China.

And just kind of wanted to ask about that last point.

Any thoughts on your desire, your ability to invest directly in Mainland China?

Is that something you'd be prepared to do?

And sort of how would you kind of underwrite returns or think about underwriting those given some of your return focus, if that was the ask?

I'm going to refer to Patrick, but I'm going to preempt that by saying we -- again, you know we have the ability to invest now that's clear based on our balance sheet.

We have the appetite to invest.

And we have a track record obviously, we've invested $15 billion.

We invested a few billion dollars right before the pandemic hit, which people thought, "Oh, gee, you want to cloud in-license, we did it." So we remain willing and eager to invest in Macao and perhaps other parts of Macao and just waiting that day to happen.

Patrick, do you want to jump in?

Sure.

Thanks, Rob.

We're very happy and very proud of Sheldon's long-term vision for Macao and for our company's investments, we're very proud of what Sheldon and the company and the team has accomplished over many years there.

The amount of investment, the high quality of tourism assets that we've created, the tourism drivers, the non-gaming diversification.

And really to be fair, a lot of the tourism innovation that we brought to Macao have all been things that have been complementary and followed through with the original goal of the first concession.

And so we're very proud about that, and we're very confident about the future and our ability to invest in order to support these long-term goals of the government and for the company.

And so I think as we look to potential things that we may have to do in terms of future investment, we welcome the opportunity.

We would love to invest more.

We're very eager to deploy capital into these markets.

We think they're very high quality.

And we really believe in the future.

So there's just been a lot of commentary around things that may happen to occur or may have to occur.

I don't think anyone really knows.

I think the only thing that we're very confident about is our ability to invest, to innovate from the tourism side and to drive really the support of the initiatives that have been asked of us.

So from that standpoint, we're ready to do it.

But until we get clear direction, there's not really much more we can say.

Great.

And maybe just as the follow-up, sticking with the investment theme, probably for you, Patrick, but just thinking about the -- like the same question for Singapore.

Obviously, there, you have a little bit more of a developed path on dollars that have been allocated and when you want to get going.

But can you just give us the latest on when you think you'd actually be moving on some of the investment you guys have committed to make there and building out the additional hotel tower and expansion?

Sure.

As we've said before, I think we're very excited to do it.

It represents a tremendous opportunity to support Singapore's goals to deploy a significant amount of capital in the most privileged market in the world, which is really one of the great cities in the world.

Singapore is growing.

It was growing tremendously before the pandemic.

And they've really been leaders in their public health initiatives to support their population during the pandemic.

So we're very proud to be there.

I think we would love to get started as soon as possible.

But right now, they're dealing with a lot of things that have a higher priority.

So we're waiting patiently.

We have a long-term partnership with the government, and we're looking forward to working through the open remaining items so that we can begin.

But our plan is to begin and we're very excited about it.

So the question is when, and I think that's going to be dictated by necessary public health responses around timing and opening.

Your next question is from Ben Chaiken from Crédit Suisse.

Hey, everyone.

There's been lots of conversation understandably about investing in digital and future investments that may be required in Singapore and Macao.

But at the same time, you spoke about pent-up demand in Macao and Singapore, which seems to make a share buyback at these levels potentially a more compelling ROI.

I guess, how do you balance the optionality of those different options, I guess, yes?

So we think about this a lot.

We spend a lot of time on it as a management team.

We run a lot of sensitivities and scenarios around potential returns.

And it's interesting.

We have a lot of opportunity as a company.

We're really excited about it.

And I think our highest and best use of capital and to create the best shareholder returns really is to develop new projects from the ground up.

That's how we built the company.

That's how we've always created the return profile that has made our equity very compelling.

And so from our standpoint, that's our focus.

Rob and the rest of the team spent a lot of time looking at new development opportunities in many different jurisdictions.

And so we're focused on deploying capital into those jurisdictions to grow the business.

At the same time, we recognize there's opportunity in the equity.

And in the past, we've always returned excess capital through share repurchases.

And so that's something that we'll look to do in the future.

But at this point, I think we're evaluating a lot of opportunities for real growth.

And so from that standpoint, we're very excited, but we'll always look at the return potential of buying equity.

Do we believe the equity is at a compelling level?

Absolutely.

But at the same time, we also like to believe that we have some real significant development opportunities in the future that will create very significant returns as well.

So to your point, it is a balance.

But we look at it, and we're trying to allocate capital in the best way that we can.

Your next question is from the line of Dan Politzer from Wells Fargo.

So on Singapore, how do you think about margins for this property over the next couple of years?

I think there's a higher tax rate that goes into effect and potentially impact from construction disruption and possibly some of the costs you were able to optimize over the past 18 months.

So going forward over the next couple of years, how do you think about that given the expectation for pent-up demand to come back in 2022?

Well, first of all, I look at what's happened, again, it's instructive look at Las Vegas.

The so-called 4-year recovery took again about less than a year.

I think Singapore is a viable Las Vegas in terms of the pre-COVID recovery being stronger, which means stronger margins for us and bigger growth.

I think this market in Singapore is proving very resilient in the past, especially when the governments come open the travelings, open the doors up, I think margins will be just fine.

We didn't -- by the way, we didn't furlough people and lay off lots of people, didn't squeeze people out the door, we stood by our employees.

And I think we didn't necessarily maximizing credit.

We decided not to do that.

And I think that's to our credit.

But on the other hand, I think our business there will reoccur back to pre-COVID levels and probably beyond pre-COVID.

And again, if Vegas is instructive, and I believe it is, the demand is going to be extraordinary in Asia.

The lockdown here in Las Vegas was much shorter than the lockdown in Asia.

Yet the gambling proclivity for lot of Asian countries is stronger than Las Vegas.

So anybody who thinks Singapore is not going to come back with a vengeance, I think has mistaken, the same in Macao.

And of course, those revenues will drive our margins.

So I have no fear that we're going to return to pre-COVID margins and pre-COVID revenues and exceed both.

In fact, I'm really bullish on Singapore, will be the first and the best place open next year for the gamer or for the tourists or for the leisure traveler.

It's going to be exceptional plan to revisit.

You see where the government is going.

I mean they've indicated they're anxiously get open there.

Vaccination rates are soaring.

The traveling to be established.

The neighborhood is being better in Malaysia, Korea, Japan.

Indonesia is still lagging, but coming on.

So I think it's just question of time, '22 is a turn year.

So we see margins and revenues and EBITDA as being much more back to normal than in the last 24 months.

Got it.

And then just one more on Macao.

I mean, when Macao does eventually recover, how do you think about your share of mass and slot GGR evolving given the opening of the Londoner which we didn't have back in 2019.

And also, I know you targeted a different customer, but how do you anticipate any impact from Lisboa Palace on your properties?

And if so, if there is an impact, which ones?

Yes.

Mr. Chum, are you still there?

Yes, Rob, I think history of Macao shows every time we have large scale, high-quality product coming in on Cotai, it helps the market.

And I think when the demand comes back, it's going to be to the market's benefit and to the whole industry's benefit that we've got good new product that customers can patronize.

And that applies to Lisboa Palace that applies to what some of our other competitors will be -- will have opened by then.

And obviously, we think first and foremost is going to apply to what we've completed in Grand Suites at Four Seasons and also the Londoner Macao.

So we're very excited and confident that when the demand returns, all these new projects, but I would say, especially our projects is going to be a growth driver for the industry and by implication, we hope that we will achieve good market share.

But I think it's much more about as the history and 2 decades have shown growing the overall pie.

And I think in terms of segments, again, I wouldn't hesitate to say that it's going to be positive across a very broad base of segmentation of the mass, the premium mass and so forth.

Your next question is from the line of David Katz from Jefferies.

Okay, we'll go to the next question.

It's from the line of Steve Wieczynski from Stifel.

Just one question here for me.

And Rob, I know you're probably tired of answering a bunch of hearsay questions about the renewal process and this one, it's probably going to be a bit more direct.

But I guess, a simple question is, do you guys see a scenario out there where you are not operating any casino assets in Macao at some point in the near future.

And I'm sorry to be so blunt, but it's a question I think a lot of investors are pondering right now given the vagueness that has come out of the Chinese government about what they're actually looking for.

I do not.

I see no chance of that whatsoever.

I think we're -- but I'll refer is -- I apologize if I sign a broken record.

But the truth is we've been doing this for a couple of decades.

We have the unparalleled track record.

The whole Cotai developer was the one guy did that at Sheldon.

One guy put $15 billion in ground of non-gaming and gaming assets.

One company made almost $4 billion EBITDA.

And I think we have been a seller with our employees.

So I remain beyond confident that we'll be operating in Macao.

I don't think there's any chance whatsoever that we wouldn't be.

And I'm not saying that rhetorically, I mean that sincerely, every indication we've gotten is the opposite.

So we, again, are very proud of our track record, proud of our development and proud of our investment.

But I think the government has recognized we've been awfully good licensee and partner and friends with China and Macao, and we're eager to be back there.

So no, I don't believe that's a possibility.

Your final question is from the line of David Katz from Jefferies.

Hi, all.

Can you hear me now?

Yes.

We thought you fell sleep on us because you're in Macao.

There is no sleeping at Jefferies.

What I was really hoping to have the team's perspective on is really VIP gaming because we do spend a fair amount of time talking with investors, with people on the ground, et cetera, around what the VIP -- what the future of the VIP business really looks like.

There have been some sort of public pressures on it, talk about currency changes and things like that, that presumably would have some impact.

What is the solid recovered core look like in VIP.

Yes.

I just want Grant to take that questions he lives and breathes.

You're talking Macao, I assume, in the whole junket issues.

Is that right?

Yes, I guess.

Yes.

Okay.

So let's begin with a little bit of historical perspective.

Again, for the 20-plus years we've been doing business in Macao, we've heard this.

This isn't going to work.

That's not going to work.

This is -- the revenues will never go anywhere.

We've been hearing this for often lot.

Segment is going to fall apart.

The latest thing is to say the VIP is going to go away to the junket.

So I just remain a huge believer in that market of all segments.

Obviously, we made our strength in the mass premium.

That's been our bread and butter and will continue to be, but I don't think there's every discount.

Those who have discount this segment has done it at their own prowl.

I think it can -- it could move to a different channel, a different way of being available.

But the gamers are going to keep happening in all segments in Macao.

As a pre-cursor to Grant's comments, I think you have to realize how powerful this market has been, the growth has been unbelievable.

Those of us who started back in 2002, '03 and '04, never have dreamed the way every segment just developed.

In the 2010, '11, '12 year, it was the junkets that drilled Macao, that morphed into our premium mass market and now premium mass-mass market.

And again, our company has been more focused on those base mass and premium mass segments.

But the VIP has served the market very well.

So I think it will reemerge in a different form with different channels of distribution.

And that's my take.

Grant, you're much closer to this, so please speak up.

No, I think you said it very well, Rob.

I think it's important to remember, again, the -- that the proportion of profit coming from that segment especially, I think you're more referencing the junket segment versus our own VIP business is very, very small.

It's really low single digit on pre COVID.

So I know people spend a lot of time talking about it, but our business is really geared to that large-scale destination resort with premium mass, mass, the leisure, the FIT and the future is going to be that structural growth in those segments as well as the non-gaming, the retail, the mice.

And so that's where really our reinvestments and our asset base have really focused on.

I think the driver -- to Grant's point, the driver that market is always going to be what we're focused is lifestyle, extraordinary entertainment, restaurants, retail, rooms.

That's where our investment is.

You'll see the Londoner, that's where the focus was, the Four Seasons is more towards the very high-end premium mass.

But no matter what form it takes, the gamer is going to keep growing over there and the desire to come to Macao is going to grow.

So whether it'd be the new assets we built another company, it just enhances the market.

And I don't think there will ever be a lack of customers, a lack of visitors to Macao.

The problem is going to be and the market is going to be back and wherever it's '22, whatever, I think the problem is going to be lack of capacity, I mean, lack of rooms.

That market is always burdened by new capacity, new lodging because whether it's be base mass, premium mass is no longer a Hong Kong dependent overnight market.

It's a stay overnight market.

It's a leisure market, a business market.

It's a spectacular market.

And we're going to be there with everybody else trying to get our fair share.

And I think our new assets, if you ever get to see them and we're open to the next year are going to surprise you.

What we've done with the Londoner and Four Seasons is the best thing we've ever done in my opinion.

So we look forward to getting back to Macao and getting back to business.

Thank you, speakers.

There are no more questions.

And ladies and gentlemen, this concludes today's conference call.

Thank you all for joining.

You may now disconnect.