拉斯維加斯金沙集團 (LVS) 2020 Q2 法說會逐字稿

Good afternoon. My name is Faith, and I will be your conference operator today. At this time, I would like to welcome everyone to the Las Vegas Sands Second Quarter 2020 Earnings Conference Call. (Operator Instructions)

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

Thank you. 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, our 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 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 Mr. Adelson.

Thank you, Dan. Good afternoon, everyone, and thank you for joining us today. I hope that all of you are staying safe and healthy during these challenging times.

While the company is facing COVID-19 challenges, we're excited that we are seeing the first signs of recovery. We're happy to report that Marina Bay Sands in Singapore is now open and that, since July 15, certain visitors returning to Guangdong Province from Macao are no longer subject to quarantine. This is a critical first step towards the relaxation of quarantine restrictions in provinces outside of Guangdong as well as the eventual resumption of tourist visa issuance to Macao.

While the recovery in our local communities is now in its early stages, we will remain steadfast in our commitments to the health and safety of our employees and customers, and to providing assistance in our host markets. We remain confident that travel and tourism spending in each of our markets will eventually fully recover.

My 70 -- my over 70 years of business experience are the basis for my unbridled optimism that people will travel again, shop again and come together again to enjoy entertainment and social interaction, to exchange ideas and to conduct business. Our optimism about an eventual recovery coupled with our financial strength enables us to continue the execution of our capital investment programs in both Macao and Singapore. We believe these investments will strengthen our leadership position in each of these markets and will provide a larger platform for future growth as travel and tourism spending return.

In Macao, we continue to make great progress in the execution of our USD 2.2 billion capital investment program for the Londoner in Macao and the Grand Suites at Four Seasons. As we complete these and other capital projects during the year and in 2021, we will be introducing a variety of world-class integrated resort developments. This includes 3 new all-suite hotels, more than a dozen new restaurants, additional retail and new MICE and entertainment facilities. We're very confident that these new developments will help Macao to recapture and, over time, increase its share of leisure and business tourism from China and the rest of Asia.

We remain unwavering in our commitment to long-term investment in Macao. The scale of our existing and ongoing investments enables us to play our part in supporting the local economy of Macao today, including our support of local employment as well as our support for small- and medium-sized businesses. I remain steadfast in my belief that Macao has the potential to become one of the greatest business and leisure tourism destinations in the world and the MICE capital of Asia. We would welcome the opportunity to invest billions of additional investment dollars and extend our contributions to Macao's diversification and evolution into Asia's leading leisure and business tourism destination.

Now turning to our investment in the expansion of Marina Bay Sands in Singapore. We remain excited to be part of Singapore's continued growth as a leading leisure and business tourism destination. We continue to make progress on the MBS expansion. We believe that delays in the timing of the project are likely to occur. These delays are principally related to the impact of the pandemic, and we will provide additional updates in the future as conditions are continuing to evolve.

In advance of the expansion, we will also continue to reinvest in Marina Bay Sands to enhance the customer experience and the tourism appeal of the resort.

Finally, turning to Las Vegas. The eventual recovery could take more time here than in Asia, particularly because of our reliance on group meeting business. We remain confident that Las Vegas will remain the greatest leisure and business tourism destinations in the United States.

Regarding our balance sheet, maintaining a strong balance sheet makes great business sense while we weather the storm caused by this pandemic. Our balance sheet strength enables us to invest in promising future growth opportunities and positions the company to deliver industry-leading growth in the years ahead.

We're deeply confident that the eventual recovery in travel and tourism spending, and the strength of our business model, will enable us to deliver both growth and the return of capital to shareholders in the future.

Thank you again for joining us on the call today, and now we'll take questions. Faith, we're ready for questions.

(Operator Instructions) Your first question is from Joe Greff from JPMorgan.

My first question relates to Macao. I was hoping you could give us some sense of your anticipated benefit and what you have seen over the last week or so since the Guangdong quarantine requirement was lifted.

So a 2-part related question. One, do you think this travel easing in isolation, so without any other travel restrictions easing, no new visa issuance, can get you to EBITDA breaking even in Macao?

And two, when you look at -- second part of this question, when you look at the last week to 10 days, how similar was this period's performance to the performance in the first quarter between February 20, when the casinos reopened; and March 20, when Guangdong initiated the quarantine requirement?

And then I have a Vegas follow-up.

Yes. Joe, it's Rob. I think there's a big difference between the dates you mentioned and this current period. We believe Macao is our biggest upside potential, but I think it's critical to realize, and I think you know, that without the IVS, individual visitation scheme, being resurrected, there's not much hope for the casinos to come back. The visitation is, I think, 2,000, 3,000 visas.

There's 3 steps. We took the first big step for the quarantine being taken away. The second step will be the IVS resurrection. Hopefully, that happens -- we don't know when, but that's critical. And of course, then finally, beyond Guangdong, we need to see the other provinces open as well.

It's not really that impactful financially -- or for the income of Macao, the quarantine disappearing, without a resurrection of the IVS. And I think that subsequent -- the Guangdong opening will be helpful. But as you know, we need other provinces to come back as well. So I don't think there's much use to compare the period you mentioned. And today, it's very different. The only thing left is nonexpired IVS, and those are dwindling. So the impact is negligible.

I think the victory is pyrrhic in terms of the financial results, but very helpful in terms of once the IVS comes down -- or comes back and, of course, more importantly, that we get beyond Guangdong since Macao has so many provinces that contribute to its income.

So we feel -- we're very excited about the potential when it does happen. We're still strong believers in the pent-up demand theory. We're still strong believers that our business will come back quite well. The problem is I can't, nor can anyone else, give you a date certain. It could be next month. It could be in the fall. It could be late in the fall. So we have to remain patient. We remain steadfast in our belief that business will come back hot and heavy. And we'll wait for that day.

There are those who -- this is Sheldon. There are those who believe that it'll take a couple of weeks for each step. The Guangdong waiver of the quarantine upon return of Guangdong Province might take 2 weeks and then -- then they'll open up another province, and they'll do it gradually until we get to most or all of the provinces.

The IVS scheme, they know -- the Macao government knows that the IVS scheme is important and that we need that. So we're also hopeful that, that will take place in the -- sooner rather than later. There's no guarantee, but it's our hope.

Great. That's helpful, Sheldon. And then sorry to ask the Las Vegas question so early in the queue here. But Rob, can you give us a sense of group and convention activity cancellations, attrition rates for the fall and the rest of 2020; what you're seeing for the first half of next year; and then maybe, importantly, what you're seeing with respect to Las Vegas Strip airlift capacity for the end of this year for October through December?

Sure, Joe. As you know, we're running 3 very different businesses, very distinct businesses: Singapore, Macao versus Las Vegas. Of all of them, I view Las Vegas least favorably, and for the reasons you mentioned. Las Vegas, especially our company, but the whole city, is dependent upon group and convention and banquet segment return. I see nothing that indicates '20 would return at all. There's nothing on the horizon. We have a group here, group there but nothing of consequence. And we cannot -- Las Vegas cannot perform without a return of these segments. It cannot make money with limited hotel occupancy -- or negligible occupancy midweek, maybe 50% capacity weekend.

In essence, we're running a regional casino predicated on drive-in businesses. We have airlift somewhere around 40% of what it was, and about 40% the occupancy as planes is much less than it was previously. So we're in a world of hurt here in terms of Las Vegas.

As far as looking ahead, I don't have a crystal ball into '21. I remain pessimistic about group and convention. And the reason I say that is, if you believe in a vaccine or you believe this thing will eventually just burn out, I don't -- whatever you believe, I still think the longest -- the slowest return of our business will be large-scale group business because it tends to skew younger. It's more tech-driven, and those people are more reluctant to travel. So I think we have to take a zero, in my opinion, for the rest of the year in terms of the return of group business and banquet business of any consequence. Could there be 1 or 2 here or there? Yes, but nothing material.

I don't want to predict '21 because I don't feel I have enough insight into what might happen to the vaccine or the virus and no way to forecast that. But I would be less than honest if I didn't tell you that Las Vegas is in a very difficult place. Unlike Macao, where there's a real live, real strong desire and belief that we'll see things return much quicker in Macao this fall and I feel as well -- Singapore, we'll talk about shortly. But Vegas is dependent on airlift. It's dependent on group and convention. It's not a casino-driven market anymore. So we're struggling here.

And I think I speak for the Las Vegas Venetian and Palazzo, but I assume that may translate to other properties as well. It's an amazing transition from we were making $0.5 billion a year, and we were hitting on all cylinders, and today, it's painful. And I think it remains painful for the immediate future.

'21, I think you have to look to that as the turning point, and that would -- that depends on how you view this virus, vaccine situation. And -- but I also caution you that large-scale businesses like we are, big-box businesses, may be the most troubled in terms of the customer consuming [who will as] return to it.

So in all the years I've been here in Las Vegas, I've never felt more gloomy than I do today about what's happening in Las Vegas short term. I hope, long term, we can see a better day.

Your next question is from Robin Farley from UBS.

Great. On last quarter's call, you had expressed some interest in potential M&A activity. And I just wonder what your current thoughts on that are.

Rob, do you want me to take that one?

Patrick, can you take that?

Yes, sure.

Yes, please.

So as we've said, as a consistent theme over the last quarters, we're very focused on returns. Our Chairman is a very returns-focused guy. And I think his mandate has always been to maximize those returns. And I think you heard him on the last earnings call -- and he's here today, so he'll probably have some additional commentary -- mention M&A, but I think that was done in the context before the benefit of the massive government stimulus programs were seen. And there was a belief that there might be an opportunistic way to take advantage of the environment and capitalize on great assets that could be purchased perhaps below replacement cost or perhaps in a cyclical trough where the acquisition could make our required returns work. And I think in this environment, given where we are today, there aren't a lot of those opportunities available.

That being said, I think we'll continue to look. I think we have an opportunity if something comes around, and we'll continue to keep our eyes open.

But at this point, we're still very returns-focused. I think we're not going to be an M&A-driven shop. But at the same time, if something comes up that's incredibly compelling, I think we'll be happy to take a look at it.

Great, no, I appreciate that. And just as a follow-up question, just given how disruptive the pandemic has been, is your expectation that the concessions in Macao will be extended for a year, that the whole sort of process of the rebid would be pushed out? Is that something that you think may be likely or has been communicated in any way to you?

Robin, it's Rob. Nothing has been communicated by the government whatsoever. And we remain waiting for their advice and counsel. But as of this time, nothing at all has been said about extension or timetables.

I want to bring up something from 2 questions ago. The withholding of the groups or the nonattendance of the groups is both a state and a federal requirement. The state and the federal could say you can't have a gathering of any more than, say, 50 people. You can't have conferences and trade shows with gatherings prohibited of more than 50 people. So we've got to wait until the state and the federal government opens the door for that.

Your next question is from Carlo Santarelli from Deutsche Bank.

Rob, on the last call, you talked a little bit about the cadence of how provinces would come online, and I was just wondering if anything has changed with respect to your (inaudible) about it being a staggered province-by-province IVS kind of release, so to speak, or if there's anything further beyond Guangdong. I know you touched on it a little bit earlier, but is it still your expectation that it will be a staggered process?

Yes. Again, I don't have any insight beyond what I -- it's all hearsay. Let's be clear: we're not getting official word from the government. But the consensus among those who seem to understand how the government thinks about this is, obviously, they're much more careful than we are here in the U.S. Their tolerance is much lower for the spread of virus.

But what we hear from various sources is that the IVS, when it happens, it stays limited to Guangdong. And then the eventual movement into other provinces will be gradual throughout the course of the fall. That's what we're being told. It won't be a green light, and the whole thing opens up one time. I think they're going to -- I think they're doing it very orderly, and you see that with the quarantine. I think the IVS will be the next issue whenever that happens, hopefully sooner than later.

But yes, I believe it's staggered throughout the fall, perhaps even beyond the fall. But I don't -- I've never -- I wouldn't say this will be lights go on 1 day, and boom, China opens up to Macao. We've never heard that from anybody, and we've heard from a lot of people.

Where is the light switch here, Rob? I'll give it a try.

Yes. Well, if you got one, please flick it quickly, Sheldon. If you've got one nearby, flick it. I'll come and give you a bazooka to help flick it.

So look, we're hopeful. Macao, I think of all the places we operate -- Singapore is somewhere in the middle. Vegas is in the deep part of the pool, and -- but Macao has such potential, we believe. So we're still excited to see a light switch go off and -- but we have to wait patiently and just wait for that day.

Keep in mind, though, actually, we should -- or what's one thing we should -- I mean, I think I'd state the obvious to you because you've followed this space forever. But again, this is the world's greatest regional market. It's not air-dependent. You don't need airlift as 10% of the customers come from air, the rest is sea and land. So it's fascinating to me how people -- I mean Macao is so accessible by land and by sea and not air-dependent. In essence, what you see in regional markets, which is a quicker recovery, mimics what I think you'll see in Macao. The minute those barriers come down, I think you'll see a lot of people coming in. They don't need airplanes, they don't need to social distance on the airplanes. It's a huge advantage of Macao, especially when the governments feel comfortable opening the borders.

Your next question? I'm sorry, I wasn't...

Sorry. It's just -- as it pertains to Marina Bay Sands, obviously, you guys -- really, when everything is clicking, I mean, it's just a cash flow machine. And right now, given some of the limitations of the social distancing aspects and, obviously, the airlift into Singapore and that being somewhat compromised, do you guys feel the property right now is able to -- with kind of the patronage that you presumably will get before things change more broadly, is able to kind of get to a breakeven? I think the operating loss was something like $65 million a month, is what you guys had in the slide deck. With maybe what you expect to see now that [some elements] are coming back online, is it possible to get that property back towards a breakeven level in the near term?

Yes, it is. Very much so. I mean -- but we're hoping -- just to be clear, you may have noticed, but the casino is open. You know that. Now our handicap, in a sense, there's only 300 live table games and 1,500 slot -- ETGs. But we [reclaim] all the [hotel that is] on the 27th this month. Obviously, we're -- that's a market hampered by airlift because it's kind of -- it's a hybrid market. It's got -- there's local business because of all the affluent foreigners who reside in Singapore, of which there are many, fortunately. Singapore being such an extraordinary country to live in and conduct a business, we're very fortunate we have strong foreign clientele that has PR status inside the Singapore borders and reside there permanently.

Having said that, we'd love to have more airlift and love to see Malaysia open up. But yes, to answer your question, we feel very, very lucky, very fortunate what's happening in Singapore as we speak. The casino-seeking customers, our occupancy was driven by -- mostly by casino. Next month -- I think August will be a very strong casino occupancy month, and there'll be some cash demand as well from staycations from Singaporeans. The border is still closed to Malaysia except for limited high-visibility business folks.

So Singapore is handicapped, but it can make money. And it will make money. It's going to be a nice turnaround. We're -- we feel very fortunate that Singapore is coming back online. It's our most -- our best prospect as we speak today, a much better position than we are in Las Vegas. So yes.

But obviously, the maximum potential of that property to get back to the $1.6 billion, $1.7 billion days, we need to see the airlift return. We need to see the casino fully operational. But we feel positive about what's happening in Singapore. We feel very fortunate that we've come out of this, and we're open and operational. And we're seeing customers, and we feel good about it.

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

Rob, maybe just a follow-up on Singapore. I mean, I think it's a little harder for us to track just some of the local policies in that market about the reopening and what needs to be done in the airlift side. So anything you could point to as it relates to either agreements on creating local travel bubbles, be it Malaysia or China? And could you just remind us of what are the key source markets that you really need to see open up to make that property look a little bit more like normal?

Yes. Well, we need -- the first thing obviously is going to be airlift, which I don't have any color -- any insight to help you with. I hope it opens up. But I don't see airlift being a real help to the Singapore property, probably for the balance of this year. It remains pretty much a market within the borders of Singapore. There is a chance Malaysia opens up. They have COVID under control, and they -- because they took very similar measures to Singapore. Given the relationship between the JB border with the 2 countries, there's a possibility of some limited leisure business travel opening up probably in Q4 to Malaysia.

I don't see Indonesia. There is talk -- there's hope that they can open some business lanes up to China, but that's not happening today.

But I remind you: we're fortunate to, again, have a very affluent clientele of foreign people live in Singapore. I think we'll be pleased with the results of Singapore in the fall. But I don't see 2020 being a lot of air traffic in Singapore or foreign visitation. It doesn't seem to me to be in the cards for the foreseeable 4 or 5 months.

Great. And just as my follow-up, as it relates to Las Vegas, obviously one of the biggest questions we get is on the corporate and convention side across just the whole global hotel business. And I was curious, as you talk to some of the bigger convention and groups or you break down your own business, just any thoughts about some sort of structural change as it relates to any of that activity? I mean there's so many barriers that it's really hard for people to probably extrapolate too much right now, but just any thoughts you have about just demand levels more permanently changing due to conference calls and activity levels? Or just how do you think about that?

No, I...

I would defer to Sheldon on that.

Thank you. This is Sheldon. Having been in that business, in the conference and trade show business, exhibition business for 40 years, I could tell you that the -- there are different constituencies. There are associations that run the events. There are private entities that run the events, and there are companies that run their own events. One of our biggest customers is a company that brings several big conferences to our properties in Las Vegas during the course of the year. They can't give up on that. The fact that people are working from home and communicating from home, that is never going to give up on the trade show business. To meet people, to do research, to do recruitment, to announce -- to make announcements and product introductions, there won't be a substitute for that.

Your next question is from Felicia Hendrix of Barclays.

First, just wanted to touch on your CapEx. It looks like spend on The Londoner seems to have been pushed out. So I was wondering if you could walk us through that.

From the timing or from the financial side? What would -- do you want to hear? Patrick can take you through the financial side. On the timing, we are moving quickly on getting it completed, Felicia. It'll be pretty much done: Four Seasons, done this fall; Londoner, done interior-wise Q1 of 2020 but a lot more work to be done exterior-wise, and there's other pieces to be done.

We're going as fast as we can with the constraints of COVID. We've not pulled back in terms of trying to get it done. We're not holding back. We just have some constraints construction-wise.

But perhaps Patrick could speak to the financial side.

So there's a couple of things here. Some of it's related to permitting, but I think the key thing is we've completed the Grand Suites at the Four Seasons. So that's done, right? The Londoner hotel, which is 580 suites, excluding some high-end suites, is done. And then between now and the end of the year, we're going to complete The Londoner Court, which is 368 suites together with gaming and restaurants. The Londoner casino will be done at the main gaming floor level. Paiza gaming will be done. We'll finish the rest of the high-end suites for The Londoner. And we're going to add the Crystal Palace space, which is like the wow space entrance, and then 10 new restaurants.

So we'll also, throughout the rest of -- part of '21, which is what you see in the CapEx schedule that's in the presentation deck on Page 8, is really external works on the porte-cochere, Big Ben, some retail areas and some other public spaces.

And then -- so I think that's really the shift in the CapEx. As you see, it was related to permitting. But the project from this customer standpoint, aside from the exterior works, still continues to be on the schedule that we expect.

Okay. Okay. So the $100 million shift from '21 and then the roughly $700 million shift from '22, that -- you would say most of that's permitting and maybe some COVID-related delays?

That's right.

Okay. Helpful. And then just on Vegas -- and full disclosure, we may have completely modeled this wrong, but -- because you've given us the cash burn for property. But even like knowing that, you still did better than we expected in Vegas in terms of costs. I mean we're all looking at big negative numbers, so give or take that. But just wondering, was there anything like surprising in Vegas that -- where you were able to just mitigate the lower revenues, or anything that kind of came up in the quarter that we may not have thought about?

So Rob, maybe I'll take -- Rob, can I take a quick shot at that, then I'll turn it over to you?

So as you kind of look at Page 5, it's really a near-zero revenue scenario. So when we're making revenue, we're actually able to benefit a little bit. So that's what you saw in Las Vegas. And so we were able to take some cost out of the business as we continue to focus on costs. As a team, we've been very focused on trying to reduce costs across all of our jurisdictions during this time. And we were able to make some headway in Vegas. But as a practical matter, it's really just based on the revenue that we achieved during the quarter.

Yes. It kind of sounds like we just didn't ramp up that -- ramp down the cost as much, so thank you.

Your next question is from Stephen Grambling from Goldman Sachs.

I guess on -- I was hoping you could give a little more color on margins in Macao. And given you expect some pent-up demand in the market, how are you generally evaluating marketing and/or lending to coax the customer back? And where would you say the health of the junkets are as we prep for an eventual recovery?

I think the question about when you market the building is just open the doors and watch the customers come in. I feel very confident that pent-up demand will cover a lot of our marketing. We don't plan to incent or do much more than we've ever done. Macao is a frothy market when the barriers come down. So I don't see that need to incent or do things differently. Just open the doors, let it come.

As far as the junkets, it remains a question mark. What does happen there, there's been all kinds of things. There's been issues that you read about in the press and you've covered in your discussions, Steve. And I think it remains to be seen what the strength of junkets -- or what the demand is. I know this is not the common thinking, but I for one believe the average customer, the mass business and premium mass will come back strong and heavy from day 1. And as for the junkets, we'll just let the market show us what it has and what the customer demand is and how much the junkets want to participate. I think that remains a question mark in my mind.

But I certainly feel -- we are really confident that this is a market that doesn't need an airlift, just needs to open the doors and watch people come back in, and we can't wait for that day.

That's great. And as we -- as you learn from ramping down, I guess, for the change in demand, are there things that you maybe will keep holding back as it relates to costs that could influence margins versus where they used to be on the recovery?

I think we'll let the doors open...

I think -- yes, sorry, Rob.

I think we should open the doors first to see what the distance is like. I think once you see the demand, you can make those -- just sitting here in the blind without any visibility as to how strong it comes back, I wouldn't do anything until I see a demand and what it looks like in Macao. Because, again, we have one advantage which no one talks about, but the Chinese customer is not -- doesn't have optionality in terms of coming to the U.S. or going to Europe, so -- even leaving to go to Singapore. So I think Macao becomes even more desirable in terms of the Chinese visitation. I wouldn't try to figure out the market until I see the demand side and the customers. Once that happens, then we'll make decisions.

So just one comment on the margin structure. If you think about the run rate business prior to COVID, more than 60% in Macao of our expenses were really variable -- they were gaming taxes and sort of things related to the activity of the business. And so when you think about our controllable operating expenses, we have taken cost out of the business, but the margin structure you should expect is going to be related to the mix of business more than it is on the incremental costs we've taken out. So if we can start achieving the premium mass business that we think we can achieve with the opening of the Londoner and the Four Seasons, and grow that business with this new product that is incredibly compelling, the margin structure will improve, just because it's -- it will overweigh towards this high-value customer.

So I think I'd like to believe in the long run that the base mass business comes back and the premium mass business comes back and we get this volume that takes advantage of some of the benefits that we've had in the margin structure. But the long run, run rate margins should look similar to what we've done in the past, assuming the business returns as normal.

Your next question is from Thomas Allen from Morgan Stanley.

So you obviously have one of the leading mall portfolios in the world. Can you just update us on your conversations with the tenants, both in terms of rent payments and renewals? And just help us think about that for the future.

Patrick, you or I? What do you want to do?

Why don't you start? And I'm happy to add if there's anything that's helpful.

I think we've worked very well with our -- Thomas, to your point, our retail portfolio is a very important part of the mix of our business. We remain believers in that will come back in a big way in Asia. But MBS has started to ramp already. Obviously, Macao has not.

We've been very -- we've worked very hard to foster strong relationships with the tenants in both jurisdictions, and we did rent reduction, et cetera. We'll take a wait-and-see attitude once again. The tenants have worked hard to be -- to work with us and not -- we've all tried to work in the same manner of fair, open dialogue about how we see the future.

I assume that this will mimic the casino hotel demand. As Singapore gets stronger day by day, the tenants are coming back. We've had a lot less visits than we wanted to have, as compared to Orchard Road. That's started changing. The mix is coming back to us now that the hotel is starting to open. So I think it's very simple. We have 200-plus tenancies in Singapore and, I think, 800 tenancies in Macao. We take them one by one based on how we see the market treating them.

There'll be some casualties. There's been some casualties already in some of these places because of, obviously, the shutdown. But just like we will at the gaming side and the hotel side, I'd like to wait and see what demand looks like until we renew those relationships, talk base rents, percentage rents. But something tells me that in both markets, we're going to see return to normalcy rather quickly. I think it mimics, again, what we're going to see in the gaming side as long as that hotel is still up.

It will take time, especially, I think, in Singapore, because without the airlift, it's a locals retail market. I think Macao will come back much quicker because without the airlift issue, once the borders open up, I think Macao should return to normalcy rather quickly.

And just one other thought. The -- we've spent a lot of time with our tenants in order to help get them through this time, which is unprecedented, with the goal of having them be able to trade again when the recovery that Rob was just discussing comes to fruition. So from our standpoint, we view the mall as a very important asset, very important for our customers' experience. We have relationships with some of the leading brands in the world and in Asia. And we want to ensure the continuity of those relationships, and we've been working with them to ensure that they continue to trade in the recovery.

Helpful. And then respecting that your Asian properties aren't as MICE-intensive as your Vegas properties, it does seem like there is some signs of recovery in group business in Asia. Are you seeing that in the bookings heading into 2021 for your Singapore and Macao properties at all?

We're seeing -- there are still [things in] the books but [so it's easy to see] Singapore as a starting point. We are seeing demand in Singapore, but I think people are very tentative about committing. People are -- there is inquiries. There's definitely bookings. But the caveat being that they can bow out within 90 days, there's plenty of room to quit if they don't see demand. So I think group is different. Corporate stuff is different than obviously, than large-scale groups that require attendees. And I think what we're seeing is people are tentatively putting their foot in the water. But even Singapore, since you can't get there, how do you really make real commitments? I mean if you wanted to come this Singapore with a large group, you can't fly into Singapore. So it's a Singapore-driven market only at this point. I think it's too murky, too unclear to talk about '21 in Singapore.

That same applies to Macao. Macao tends to be a shorter booking window. And as you know, the challenge in Macao is if the gaming piece comes back strong, and I anticipate it will, it negates the need for much MICE business. If anything, it's an impediment to MICE. Because gaming demand is so strong, it takes the majority of the rooms. You can't put large-scale groups in Macao because you don't have enough rooming capacity. Our competitors won't participate anyway.

So I think it's unfair to -- this far out to say what happens in Singapore. Without airlift being determined, I still think it's too early to call that situation. And yes, there's inquiries. There's people talking to us. But everyone's scratching their heads saying, what does happen, how do we get there, when do we get there? So I think it's too early in the game to call it.

Your next question is from Jared Shojaian from Wolfe Research.

Can you just talk about what's changed over the last few months in terms of your thinking on Japan? And then I guess going back to the M&A topic, I mean, have you had any inbound calls, any substantive discussions with anyone?

And in your slide deck, you list Macao, Singapore and South Korea as areas of potential development interest. Are you kind of agnostic to location? Are you more focused on the return? I mean how are you sort of thinking about that?

I think Japan, we -- no one wanted to be in Japan more than Sheldon and the team here. We were very bullish on Japan. We've spent a lot of time and money, and we're very hopeful. But the environment there just wasn't suitable to make the kind of investment that this company demands in terms of returns. It didn't make -- we couldn't make it work. We sure tried. We spent endless time and endless dollars pursuing Japan. We wish we could have stayed. We wish the construct was more welcoming to the investor, but it wasn't. And I feel comfortable that we made the right choice.

I think Shel was extremely -- he did business there for decades. He was the biggest proponent. We're all disappointed in what's happened in Japan. And -- but it didn't make economic sense.

So we're keen to invest, obviously, when this all works out and things get better, and especially in Asia, we're keen to be back looking for opportunities, be it Korea or other countries, we'd like to be investing. But it has to be the right environment. It has to be a country that wants us to invest and wants to do the model that Sheldon has -- well, he's authored his unique model. It's a unique -- it's a huge capitally intense model. It calls for a cooperative government that understands scale of these investments and the needs for return. So we continue to look at everything in Asia, and we're keen to do it.

Sheldon, do you want to comment?

The regulations that were promulgated by the Japanese government that went through the Diet were not conducive to attracting the kind of investment that it requires. The cost of construction and the cost of land in Japan is very high. And it didn't justify -- if it was down -- like in another jurisdiction, if it were down to $3 billion or $4 billion, it's -- well, I'm not sure that it would have -- that would have made much of a difference because some of the rules -- they're talking about withholding income tax from foreign winners. So a player comes in from another country, he wins, they want us -- the government wants the operator to withhold the taxes to pay the Japanese government. That will never attract one foreigner. So -- and the taxes were 30% gaming taxes, 30% income taxes, and there was no assurance that they won't raise the taxes from there.

So there were just too many negative regulations that we couldn't live with. Listen, if they change it, our mind is open to go back.

Okay. It's very helpful. And then just going back to Las Vegas, realizing it's an obviously much smaller piece of your business, but can you talk about what type of customer you're seeing initially? Would you say it's primarily a lower-yielding drive-to customer? Anything you can share there? And is there a revenue percentage you need in order to get to breakeven?

No, we need more, more customers, and we need lots more. The truth is the hotels are running in this town, mid-week, 20%, 25%, 30%; weekends, 50%, 60%. That doesn't work. They're only coming basically from drive-in markets, so in a lot of the markets, not just international but throughout the U.S.

Actually, we've had a very high-yielding, very strong customer because our marketing team has incented. We brought some great business in using our airplanes and our marketing, our lists. We see actually a very strong high-end play from both slots and tables. Extraordinary amounts of players have gone through here.

The problem is, as you know, it takes a lot of different segments to make this company make the $0.5 billion in Las Vegas we did last year. We don't have any convention business. There's no yield on the week -- on mid-week from the -- on the room side.

You're seeing strong FIT demand weekend, but there's nothing else in there but FIT, strong high-end casino demand. Our numbers might surprise you [in casino] how good they are in terms of the slot machines and the table yields. We're not -- yes, they're seeing some drive-in business, which is not very high demand gaming side.

But again, Vegas has morphed into a hospitality-driven market. And I think, for a lot of people, it's confusing. Even people who operate here surprise me sometimes, that they're surprised how soft it is. Without the hotel being full, without the convention driving the rates midweek, without the banquet piece -- we did here almost $200 million in banquet sales at massive margins -- it's just very hard for our model to work, and I assume that's true in the entire marketplace. If you're running a large-scale building, like most of these buildings are, you're not getting by on gaming win, no matter how good it is. You're not getting by with 30%, 40% occupancy. If you're making money on a weekend, which we can, you're losing it back midweek, which we all do. And I don't think that picture is different from most.

It's just that this company has been such an incredible success story in the convention banquet segments. We've driven so much business through here. I mean last year, again, I think we broke a $0.5 billion of EBITDA. But to do that, you can't run a hotel with these kind of occupancies. You can't run a no-banquet facility. You can't rely on high rollers. It just doesn't work. Those days in 1967 left.

And so this is a new business in Las Vegas. And what allows you to build these multibillion-dollar buildings is the true IR nature of what Sheldon authored 20 years ago. I mean this town has moved away from the gaming-dependent to a very diversified plan. And I don't know how you fix it until you get airlift that enables you -- and groups that feel comfortable coming back here and banquets coming back here, and that's just a fact of life. And I don't think we're alone in this thinking.

So we remain hopeful that things will turn. But the Las Vegas here in July of '20 is in a very difficult place. And I hope it gets better, but that's the truth of the market today.

We're now down to our last question of the day from David Katz from Jefferies.

Look, we all may have our own set of beliefs as to why the demand will be there once the access is available. Can you just talk about what discussions or any data you've collected, what -- why you're convinced that the demand will be there as many of us are?

Are you talking about, David, Macao? When you say demand...

Yes, in Macao.

Okay, so not Singapore. Okay, I got it. Look, you're talking to a guy who has been going to Macao for almost 40 years. And I don't think anybody who has gone there and seen what I've seen could have any other rational belief. There's a number of factors. One is the propensity to gamble remains among the highest in the world. Two, Macao is a very seductive place. It has all the things you want. It's got high-quality retail, high-quality restaurants, high-quality lodging. It's got enormous casinos. They're plentiful and diverse. It's very accessible. And they can't go anywhere else. I mean, frankly, they're locked down just like we are. No one's going to Europe. No one is going to the U.S.

So if you're an affluent Chinese person, and Macao is such a -- has become such a compelling place to visit. I mean when I went there in the '80s, it was a whole different world. In 2019, it's a stunning world of opulence, food, entertainment, retail. It has all the things that are seductive to tourists. So I have no doubt in my mind, not an iota of doubt, that Macao, when those doors open up, will see a lot of Chinese tourists come back.

The only thing you can point to is, do you believe the economy has weakened the consumer's ability to gamble? That's a call only you can make individually. I believe that we'll come back strong, I'm again, convinced Macao resurrects quickly.

Also, you should be advised, and I think you know this, that this virus for the U.S. is very difficult. And I hear all the time Americans wearing a mask, having your temperature -- it's all so foreign to people in the U.S. It's so confusing. And I was in a store the other day, a lady got mad because they made her put on a mask. They kicked her out of Walgreens because she wasn't wearing a mask, and she was screaming about her First Amendment rights. It was a bizarre situation.

That's not the case in Asia. People are very comfortable wearing masks, having their temperature taken. It's a normal part of life there. So you have that factor, which is they're more comfortable with this virus environment. They've lived through it. They understand it. They wear a mask, they're complying, you walk around Hong Kong today. So I think that bodes well as well.

But again, I would [line up] Macao itself. It's such a wonderful place for the Chinese tourists. They offer so many wonderful amenities. I have no concern at all saying when that wall comes down, that border wall comes down in terms of IVS and they allow provinces to open back up, I remain completely convinced that, that business will come back very quickly and it will come back in multiple segments.

The 2 caveats, I think, would be one, how you view the junket business is a bit confusing right now. And two, do you believe the consumer has adequate spending money in their pocket to partake? I think they do.

So I feel very -- as good as I feel about Macao, I just wait for that day to happen to be validated. But that's one person's opinion, but I believe it's a shared sentiment among those who have been to Macao many, many times and watched that place in action.

As I have, and I would agree that Macao is far more exciting than a Walgreens. If I can just follow that up. If there are ways in which you're discussing what the new normal will look like or any aspects of the business that may change that may have an impact or benefit on your ability to operate once it does open, that may incur some costs or maybe not. I'd love your updated perspective on that.

I think it will look like a lot of things here in the U.S. It won't look that different, will it? You'll see people wearing masks. You're going to see temperature checks. You're going to see extreme cleaning. But by the way, it happened pretty much -- it's been happening for years in Asia with the -- since the SARS times.

It's a much different -- one of the most fascinating things I ever saw in Macao was the smoking rooms. When I first went there, everyone was worried smoking would decimate the market, and if you can't smoke, they're not going to come. And everyone's convinced. Well, what was hilarious to me was they all stood in this smoking room smoking and making bets in the smoking room, dictating to a guy bet this, bet that. It didn't deter Macao people from gambling. It didn't deter the Chinese consumer.

The COVID virus, they'll accept the fact there's risk. They'll wear the mask. They're very compliant, and they'll do the right thing as far as being respectful of social distancing.

It may be impactful in terms of the table counts, table occupancies. Now that will be an issue. We're fortunate that we have 1,500, 1,600 table games there and thousands and thousands of slot machines. So do I think it's going to be hurtful? Maybe on weekends when we're full capacity and the place is jammed, yes, possibly. But I look forward to addressing those problems when they happen.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.