Patrick Dumont
President and Chief Operating Officer at Las Vegas Sands
So it's a very interesting question, and it's the right question to ask. So as these properties reach run rate, so as they reach their full potential, the margin should be upper 30s. [Technical Issues] Sorry, I think someone at Sand China put us on hold, please excuse us.
So we think about margins in the upper 30s. If you look at the performance of the Venetian, that's a good benchmark, right? It was impacted a little bit this quarter again, also by the entertainment not being there in the Cotai Arena, but -- and mix-wise, to be fair, pre-pandemic, it had more mass play and that's higher margin. And so as tourism returns, so as visitation increases, which has more mass play, and we have plenty of capacity for it. So if you look at our asset base, the scale of the assets, the food and beverage we have, the amenities we have, we can accommodate a lot of mass play. And we have the positions to do it. And so for us, as visitation shows up and continues to -- on an upward trend, our assets are ready to take that visitation, revenue will grow, margins will grow and they will normalize back towards a more traditional mix. That being said, the Londoner has the opportunity to also bring a lot of high value tourism. So we're carrying the expense base without the revenue, right? So we have the team members. We have the -- we have all the things going on that you have that we're fully operating, but it's not fully operating yet. So the margins naturally are not going to look right. So as the revenue comes in and as a visitation comes in, as the patrons come in, as the hotel is completed and as the rest of the amenities are done, that will look more normal. The only problem is it's in '25. So we have a little bit of time that we have to get through with this investment.
Are there some high-value things that are very high margin that we're missing because of entertainment or ease out, yes, that's true. But when you look at the asset base that we have, the experience that we have, the team that we have there, their ability to execute and how they've executed so far and the asset base that we're creating with these investments, we're going to be in a great position. And the margins we believe we'll get there. But we need visitation to continue. That will be helpful for the Venetian. It will be helpful for the mass to recover, we need to have all of our assets in line, so that's the Cotai Arena to be finished and the Sheraton to become fully Londonerized that's a word and get to our full key count. And then you'll see the true power of these assets and the margins will get there. We have a lifestyle program that we run within high-quality amenities. If you haven't been to Macao, you haven't seen what we've done, I would encourage you to do it. It's not simply one thing. It's not simply hospitality. It's not simply gaming. It's not simply retail. It's an ecosystem that allows our customers to travel around all of our assets and have an experience they can't get any place else. And that's really what we have on offer and it's unique. And it's been invested in it and it will continue to get better. So for us, as Rob said, we're not chasing promotional activity, we're chasing asset development, and that will drive our success.
