Las Vegas Sands Q4 2022 Earnings Call Transcript

Presentation

[Operator]

Good day, ladies and gentlemen, and welcome to the Sands' Fourth Quarter 2022 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode. But we will open the floor for your questions and comments following the presentation.

It is now my pleasure to turn the floor over to Mr. Daniel Briggs, Senior Vice President of Investor Relations at Sands. Sir, the floor is yours.

[Daniel Briggs, Senior Vice President of Investor Relations at Las Vegas Sands]

Thank you, Operator. Joining the call today are Rob Goldstein, our Chairman and CEO; Patrick Dumont, our President and COO; Dr. Wilfred Wong, President of Sands China; and Grant Chum, EVP of Asia Operations for Las Vegas Sands and CEO of Sands China. Today's conference call will contain forward-looking statements. We will be making those statements under the Safe-Harbor provision of federal securities laws. The company's actual results may differ materially from the results reflected in those forward-looking statements. In addition, we will discuss non-GAAP measures. Reconciliations to the most comparable GAAP financial measure are included in our press release. We have posted an earnings presentation on our website. We may refer to that presentation during the call. Finally, for the Q&A session, we ask those with interest to please pose one question and one follow-up question so we might allow everyone with interest the opportunity to participate. The presentation is being recorded.

I'll now turn the call over to Rob.

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

Thank you, Dan, and thank you for joining our call today. A free few brief comments and then we'll move to Q&A. Macao's future is bright, remains the largest integrated resort market globally. Our commitment to investing this incredible market has never wavered. And with an unrivaled critical mass of world-class IRRs as well as continued improvement in transportation infrastructure in the region, Macao will mature into a vibrant diversified tourism market over the coming years. SCL's positioning and sale are appropriately captured the opportunity. Our diversified IRR model with continuous investment in non-gaming segments including MICE, hotel suites, live entertainment, retail, food and beverage positions us well to capture the growth opportunity. Our diversity, scale, and track record in non-gaming make us uniquely positioned to cater to all segments of the market to enable Macao to appeal to international tourists as well.

The new concession is a win-win. We deeply appreciate the opportunity to operate one of the gaming concessions for next 10 years. We're excited to deploy more capital to expand non-gaming offerings at SCL. The $3.8 billion commitment is just a baseline. We hope to invest more as the market continues to grow. The commitment to develop non-gaming is the core of our investment and operating strategy for the past two decades. Whether it be MICE, entertainment, themed attractions, or destination sales and margin in overseas markets, we view the investment commitments by SCL and the rest of the industry as positive for Macao. Over the past few weeks, travel restrictions have been lifted. It's too early to tell the true measure of the underlying pace of recovery, but indications are extremely positive. We have seen significant improvement on property visitation, gaming volumes, retail sales, and hotel occupancy. We remain positive on investments in The Londoner and Four Seasons. Our investments position us well as the market recovers. The quality of our new products will also help drive high-value tourism from the region, especially, the overseas markets.

Turning to Singapore, our normalized EBITDA and gaming volumes are back now to the 2019 levels. Normalized EBITDA reached $386 million for the quarter. Rolling volumes are approaching 2019 level. And mass win per day is now exceeding the level of 2019. We've also delivered strong performance in non-gaming across all segments including retail, mall, hotel, F&B and MICE. Retail is especially noteworthy with a 26% increase in tenant sales per square foot versus 2019. Our suite and casino renovation program is progressing. Renovated product will come online throughout the year. Looking ahead, Marina Bay Sands is poised for further growth as all of our markets recover and become clear of travel restrictions and airline lift continues to recover.

Let's move to the Q&A.

Questions and Answers

[Operator]

Thank you. Ladies and gentlemen, the floor is now open for questions. [Operator Instructions] And the first question is coming from Joe Greff from J.P. Morgan. Joe, your line is live.

[Joe Greff, Analyst at J.P. Morgan]

Hey, everybody. Good afternoon and good morning to those in Macao. My first question, obviously, is going to be on Macao. And Rob, Patrick, Dan, can you remind us what levels of mass GGR either on a dollar per day basis or as the percentage of 2019 levels do you need to be at in order to be EBITDA breakeven? Obviously, the 4Q saw a lot of narrowing relative to the 3Q. I'm presuming -- and would love for you to expand on it, I'm presuming what you're seeing thus far early in January is either at EBITDA breakeven or maybe more recently, generating some level of positive EBITDA.

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

So pessimistic, Joe. We're more than breakeven.

[Joe Greff, Analyst at J.P. Morgan]

Am I?

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

We're a lot more than breakeven, doing just fine. I'll ask Patrick to give us some color on those issues. But I think we're past the breakeven. We're now on the positive territory moving towards very positive territory. Patrick?

[Patrick Dumont, President and Chief Operating Officer at Las Vegas Sands]

Thanks, Rob. So, a couple of things to note. And this is important here. So, as you know, we're mass and premium mass and really a large-scale tourism investment company. And I think the key thing to note is the market is open. Liquidity is in the market. This is going to be a premium-led recovery. We invested significantly during the pandemic. And the benefit of that investment is on full display. We have new suite products. We probably have got what we think is the best property we've had in a long time open up in Macao. That investment is really showing power in the market right now today. There are significant non-gaming scale investments that we've made that is bearing fruit. And so, it's great to see the recovery. It's great to see the volumes coming back. It's interesting, I think, Rob has talked a lot about pent-up demand over the years. He's witnessed it in other places earlier in his career. We saw it here in Las Vegas. And we experienced it fully in Singapore and now we're at a run rate that is really, really strong. And I think we're seeing that in Macao. I think the key thing is this is going to be a premium-led recovery.

In terms of breakeven, I don't think that's really a consideration anymore. I think we're way past it.

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

Yeah. Joe, I think we -- to be confident, I'd be very honest and direct, we are in very positive territory and keep moving up. So, I think the one thing I would say to you is that we've now more than ever questioned the power of the base mass market. I would remind you look at our numbers, base mass in Macao and our buildings plus about 1,500 Hong Kong per hand as an opening bet. So, it's a $200 bucks. And that's the base mass business. The problem we're having right now is you can't get a seat in the games and our buildings are running 95% to 100% occupancy in those games. The same applies to the slots in ETGs. The big question that everyone's thinking about obviously is premium mass. And I think you'll be pleasantly surprised when you see the numbers coming out of the premium mass and you'll see the liquidity, you'll see resilience in that segment, and it's been very pleasant surprise. Grant, can you add some color to that?

[Grant Chum, Senior Vice President of Global Gaming Strategy at Las Vegas Sands]

Sure. Yes. Good morning, everyone, and good afternoon. Yeah. I think the key thing we're seeing right now is that the quality of patronage is very high across all segments. So, it's not just premium mass, it's also base mass, even the retail segment. So, we are seeing a very strong recovery in spend per customer. And again, that's not concentrated in any one segment. It's extremely broad-based. And I think what you're seeing in the public numbers on visitations, well recovered. I think for CNY against 2019 we're about 40% of where we were in 2019 Chinese New Year for the first three base. And we're seeing revenues and volumes outperforming that visitation recovery, which is natural, which is what we've seen in other markets. So, things are looking extremely positive right now.

[Joe Greff, Analyst at J.P. Morgan]

Great color, guys. Thank you. And then maybe switching over to Singapore for my follow-up question. Obviously, your comments on Mass gaming, Rob, obviously, very strong. Can you maybe talk a little bit about your comments that, I believe, on full force in late December and thus far in January. There's been an inflection, at least, from the Mainland Chinese segment. Can you give us some perspective on the relative -- I don't know if you want to look at on a revenue or EBITDA contribution, looking at 2019 levels. And then where that was sort of more recently as a percentage of the total mix?

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

Yeah. I'll let Patrick. Do you want to address that?

[Patrick Dumont, President and Chief Operating Officer at Las Vegas Sands]

Yeah, sure. I think the important thing to note is that there was this pent-up demand story in Singapore, and now it's blossomed into full-on bonanza. And so, what we're really seeing is every segment is working. And so, we had a lot of noise in this quarter because of the hold. We've rolled north of $7 billion, which is pretty unbelievable considering where we came from. And the mass play was very, very strong. And so, while we were doing this, we had almost 20% of our room inventory out. And so, when you look at that 477 win number in mass and you look at the rolling volumes and realize we're out 20% of our rooms, there's a lot of legroom here. There's a lot of room for us to go. And so, I want to be careful when we talk about margin to contribution, because we're going to adjust that as we change mix, as we get rooms online, as we go through the renovation, as we change our suite product, as we price up, as we yield up, and as we have access to higher-value tourism. So, this is really a forward-looking thing more than it is what happened in this quarter because we're going to continue to sort of adjust while we get our mix right. So, what I would look to in this business is margin expansion over time, more rooms coming online, better product, better service, and of course, being able to capture a very strong component of both VIP play and mass play.

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

And Joe, I think we're missing Patrick's point, we're missing -- we're in a great place, we're back to 2000 -- we're back to one to six run rate, if you take out the abnormal low hold in the rolling. But the two drivers that we just -- well, there's lot of drivers, but the two jump off the page are renewed tourism throughout Asia and China in particular, that's yet to come. We haven't seen -- we're doing all this, I think, in 2019 with no China participation and -- or limited China participation. And as Patrick mentioned, handicap physical plant, we are in a very, very fortunate position with MBS. I think it's been become probably lot of growth and I believe it's going to be a $2 billion business in the future. And I see nothing holding it back except for our own renovations which are extraordinary. I hope you get a chance to see it. And the reemergence of Asian tourism including China back into the property. The only regret we have is Singapore, we just like to have more capacity because you'll see in this -- I think you'll see this year the power of the earning power of MBS. It's extraordinary product and we're lucky to have it.

[Joe Greff, Analyst at J.P. Morgan]

And Patrick, just back to your mix and yield comment. Do we interpret that, at least, if we look back to 2019, that that China MBS patron would -- had a positive mix on spend per trip or spend per day or gaming revenue per day?

[Patrick Dumont, President and Chief Operating Officer at Las Vegas Sands]

I think it's a combination of factors, Joe. I think, obviously, the China market is always powerful. But I also think there's cost issues in all these markets. There's inflationary factors undeniable, be it energy, wages. I mean, there's a different world out there and you've got to cope with it. But the thing about MBS that fascinates us is we believe we can drive revenues across the board. We're going to rethink our retail, we think our table mix, our floor, our room pricing, we think we have product that the demand will be close to insatiable for it from a gamer and non-gaming perspective. And we're going to overcome margin cost -- margin by overcoming cost with higher revenues, a lot higher revenues across the board in every segment. That's the approach. We see MBS as a very unique product that's unrivaled in that part of the world. And we can just push pricing across the board, gaming pricing, ADR pricing, retail pricing, F&B pricing. It's just not good and that desirable. And let's face it, the market right now is using our favor. Singapore is very desirable from a lot of perspectives.

[Joe Greff, Analyst at J.P. Morgan]

Great. Thank you.

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

Thanks, Joe.

[Operator]

Thank you. The next question is coming from Carlo Santarelli from Deutsche Bank. Carlo, your line is live.

[Carlo Santarelli, Analyst at Deutsche Bank Aktiengesellschaft]

Hey, everybody. Thanks, and good evening. Rob or whoever wants to handle this, I was just wondering in the brief time that China has more or less reopened, have you guys seen, positive or negative, any change in behavior as it pertains to patronage at MBS?

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

MBS, it's a good question. I think it's too early to say, you're going to see that. I see us as getting plenty of China participation both Macao and Singapore. But it's really too early to say. It just happened so quickly, and the turnabout was so rapid that I think it's too early to predict. I think the way this is going to segment though is that we're going to get more than our fair share of the rolling business at MBS. That moves in that direction, and we'll get the premium mass customer visit more into Macao. I think our business really is going to split in that direction. I think it's very predictable it's going to happen here. And we're okay with that. So, Singapore will get the top of the top. But each of those places we get tons of premium mass demand from China and throughout the region. I also think people underestimate how powerful Macao can become as a desirable visitation place throughout China. It's got everything. It's got the rooms, it's got the access, it's got the -- one thing it has beyond Singapore it's got lots of capacity and lots to offer. So, I think I think Macao is going to be a very strong international destination ahead. We plan to be very aggressive trying to push people into Macao to see the property, all of our properties.

[Carlo Santarelli, Analyst at Deutsche Bank Aktiengesellschaft]

That makes sense, Rob. Thank you. And then just as a follow-up -- and I understand kind of looking backwards at things that are Macao-related is somewhat pointless in the environment that we're in right now. But it's just -- it does stand out a little bit when looking at your base and premium mass table revenues from the slide deck. Your premium mass is representing, I think, 20% of 4Q '19 and base mass kind of more like mid-teens, 16, something like that. However, the premium mass is down considerably year-over-year whereas the base mass is reasonably steady year-over-year. Is that a whole dynamic on just lower than normal historical volumes, or is there something else that's kind of made those two diverge more recently here in fourth quarter specifically?

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

No, I think it's just a visitation issue. It's not a hold issue, it's visitation issue. I think you're going to find that washes out. I wouldn't take those numbers too much to heart. I think when you look at Q1 or -- I wish, when you see January when those numbers are out there for the market, I think it all washed away quite nicely. It won't be -- it won't enter into your thinking, Carlo. It's a non-event. I think you'll see a surprising strength in both those segments. I would say in Macao, we're going to be very strong, very represented in the base mass because we have the capacity. We're a scale player. And so, we have the capacity in the gaming, non-gaming retail, restaurant space to do extraordinary things in the base mass. And again, as I'll reiterate, base mass in Macao is a different animal than the U.S. It's a $200 base bet, $175 base bet. So, it's a pretty special customer. We're going to represent because of our scale. But on the other hand, with all of our suite product, etc., I think we'll also be the leaders in the premium mass business. So, we have a very strong future ahead of us in Macao. I always chuckle people, if you're looking for a negative commentary in the Macao market, you're on the wrong earnings call.

[Carlo Santarelli, Analyst at Deutsche Bank Aktiengesellschaft]

Understood. And then, Rob, just quickly if you could remind us, to the extent you guys are willing to share it, 2019, your direct VIP volume, your in-house VIP volume, as a percentage of total, would you guys be able to share something like that?

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

We would, but we won't.

[Carlo Santarelli, Analyst at Deutsche Bank Aktiengesellschaft]

Understood.

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

Okay.

[Carlo Santarelli, Analyst at Deutsche Bank Aktiengesellschaft]

You could but you won't.

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

We could share [Indecipherable] No, we're not going to do that. But, Carlo, thank you. It's good to talk.

[Carlo Santarelli, Analyst at Deutsche Bank Aktiengesellschaft]

Thanks, guys. You as well. Take care.

[Operator]

Thank you. The next question is coming from Stephen Grambling from Morgan Stanley. Stephen, your line is live.

[Stephen Grambling, Analyst at Morgan Stanley]

Hi, everyone. Thanks. Can you hear me okay?

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

Hear you good, Stephen. Go ahead.

[Stephen Grambling, Analyst at Morgan Stanley]

Want to start with visitation data for Chinese New Year. It looks like Hong Kong has been a bigger driver of the recent uptick in visitation. Is there any way to parse out recovery between Hong Kong and Mainland China? And any reason why spending behavior and recovery may be different between the source markets?

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

Yes, and I've got a perfect answer to that. Mr. Chum?

[Grant Chum, Senior Vice President of Global Gaming Strategy at Las Vegas Sands]

Yes. Yeah, you can see from the visitation numbers published by the tourism bureau, the Mainland Chinese visitation is at about 30% recovery rate. That is 2019 CNY. So, obviously, with 40% recovery for overall visitations. Hong Kong visitation recovery has been higher mainly, I think, as a result of just the ease with which it's been able to go. And obviously, Hong Kong has had a longer stabilized situation as it relates to the pandemic. So, I think from a pure visitation point of view, this is not unexpected. And bear in mind, the transportation support for the Hong Kong visitor only really opens up on January 8. So, this has been a very rapid increase in Hong Kong visitations. That said, I think we referenced back to comments that Rob made earlier, and I alluded to as well, I wouldn't get too stuck on the visitation recovery. I think in these types of reopening, we're going to see the premium customers come back first. The core customer coming back as a much bigger percentage than the overall visitation. So, I think what we're seeing is the quality of revenues and the patronage from all regions that visit in Chinese New Year has been very, very high. So, we are way outperforming the visitation recovery in terms of volumes and revenues. And indeed, I think if you look at our property visitations, our recovery rate in visitations to our own property is far outperforming the recovery in the overall visitation numbers in the market versus 2019.

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

And Steve...

[Stephen Grambling, Analyst at Morgan Stanley]

That's really helpful. Yeah.

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

To Grant's comments, just, again, we don't want to confuse visitation with GGR, it's not necessarily an easy way to make them work. I was recently in Singapore. I walked in one of our retail stores with our retail person and she told me that sales in the store were like $70 million. And I said there's nobody here. No one in the store. And she said, Rob, we need the right people, not a lot of people. I think that's what's happening in Macao. You're getting the right people showing up in mass. And it's reflecting in the numbers. You'll see that when the market numbers come out. I think the early adaptors of the market are the right people for the market. And I think that's why there's a confusion in the visitation versus the actual revenues.

[Stephen Grambling, Analyst at Morgan Stanley]

Thanks, Ron. And maybe as a related follow-up there, there has been a similar dynamic of stronger spend per visitor in the U.S. that ultimately drove much better margins. How are you thinking about the puts and takes to margins in Macao versus what we've seen in other markets?

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

Grant? Margins?

[Grant Chum, Senior Vice President of Global Gaming Strategy at Las Vegas Sands]

Yeah. I think first of all, our cost structure is in good shape. We've spent -- unfortunately, we've had to spend extra effort in optimizing the cost structure over the past two, three years. So, we've got a very lean cost base right now. In terms of gross margins on the revenue, I think couple of things. One is a mix obviously is more favorable going forward just as from a first margin mix perspective simply because a vast majority of our revenues would be coming from the non-rolling and slot segments. And then secondly, the non-gaming we expect to be growing and that's obviously a much higher margin. We expect to be growing in retail, hotel. F&B, actually, all the non-gaming segments. So, that's the structural framework for the margin. But obviously, the actual flow through in the percentage margin we ultimately deliver from this very positive structure is really dependent on the rate of volume recovery. So, you still need the top-line to recover to a certain level before you get the flow-through and then to go beyond that, obviously, we hope, and we're all working towards that, is for this market to continue to grow, and hopefully, at least in the mass segments and non-gaming segments to go beyond where we were in 2019. So, if that happens, obviously, our margin structure should be very positive. So, hopefully that gives you a sense of how we think about the structure of margins going forward.

[Stephen Grambling, Analyst at Morgan Stanley]

Absolutely. Thanks, so much.

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

Thanks, Stephen.

[Operator]

Thank you. And the next question is coming from Robin Farley from UBS. Robin, your line is live.

[Robin Farley, Analyst at UBS Group]

Great. Thanks. I wanted to ask, you've obviously always been very focused on the mass business there, but some of your competitors that have been more VIP focused, are you seeing them do things differently now that there is not the VIP market to go after and the same where there had been, is that -- is it too soon to be seeing what changes that might mean?

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

I would assume it is above the 30 brands in [Indecipherable] I can't imagine we have any visibility into that at this point. But clearly, we have a new market here which favors our asset base. And our approach for the last 20 years has been scale as you well know, Robin, it's a mass story with premium mass, retail commencing, etc. So, we don't -- means a lot, it was tailor-made for what we do with this environment. Our competitors will adopt and have to change, but I don't know. Grant, is there any color on that?

[Grant Chum, Senior Vice President of Global Gaming Strategy at Las Vegas Sands]

Yeah. I think, Robin, the competition for premium mass has always been very intense and I think will continue to be given the dynamics you just referenced. But at the same time, I think as Rob says, we've got footprints and scale advantage in Macao [Technical Issues] non-gaming assets and facilities, I think, really position us very well for all things to match. And then as Patrick referenced at the outset, the products that we've been developing for the past three years, especially, The Londer and the Grand Suites at Four Seasons, are really trying to position us well to help us be more competitive with premium lifestyle segments up in the market as well as, I think, hopefully to drive overall high-value tourism to Macao over the coming years. And at the point about international tourism as well, I think, our footprint combined with our new products in the traditional strength in MICE and international marketing network really position us very well to bring those high-value guests to Macao as well.

[Robin Farley, Analyst at UBS Group]

Yeah. Great. Thank you. Thank you for that color. And then just for my follow-up question on Macao, can you give us a rough sense of your dollar commitment that you've made to invest over the next 10 years in Macao? Kind of roughly what percent of that might be new projects and what percent might be -- might kind of fall into the opex line kind of like overseas marketing and things, just kind of a capex versus opex split, just ballpark? Thanks.

[Patrick Dumont, President and Chief Operating Officer at Las Vegas Sands]

Yeah. Sure. I think one thing that would be helpful is if you turn to Page 22 in the presentation, you'll see some details on that. So, it might be best to refer to those pages because we do break it out and there are several pages behind that that explain what our concession renewal commitments actually are. So, it's there in the presentation.

[Robin Farley, Analyst at UBS Group]

Okay. Thanks. It's always tough to get through all of your slides before saying anything.

[Patrick Dumont, President and Chief Operating Officer at Las Vegas Sands]

No problem. I apologize. I think the key thing here is that we're very committed to investing in the Macao market. We think this investment will drive additional long-term tourism value, add diversification to Macao's economy. We're very excited to make these investments. And we think these are things that will really help achieve our goals and the goals of the government. So, we're looking forward to it actually.

[Robin Farley, Analyst at UBS Group]

Great. Thank you.

[Operator]

Thank you. The next question is coming from Shaun Kelley from Bank of America. Shaun, your line is live.

[Shaun Kelley, Analyst at Bank of America]

Hi. Good afternoon. Good morning, Grant. So, just high-level, as you kind of look through kind of what you're seeing probably real time, could you give us just your latest thoughts on maybe the pace of recovery here? Do you expect things to be pretty linear, or any chance of a whether it's COVID restriction related setbacks or anything else that could change what you're seeing on the ground? I mean, obviously, Chinese New Year is fantastic. But it would seem like the opening here is just going to continue. Any reason that that would be kind of different from the reality? Or, how are you seeing your bookings shape up and the patterns you're expecting to see over the next couple of months?

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

I'll begin by saying, first of all, we're just thrilled to be open and making money and seeing demand like we're seeing. I don't think any of us have the aptitude or the insight to tell you what's going to happen post Chinese New Year. But I do think longer-term, you have to have real strong confidence. And you see, when you get to see these numbers that we are seeing that this is a market that's going to rebound. This is the market that's going to have a strong base mass, premium mass. And then some of the fears feel in the market, obviously, what's liquidity like, what's the resiliency, I think those fears will be pushed to the side. What's the trajectory and how fast that it happens -- having any of us have the gumption to venture a guess, I think, would be silly. We just feel fortunate we're open. We're operating. We think it keeps getting better, not worse. I don't believe COVID is going to be -- obviously, China has gone through a different trajectory than we did here in the U.S., but hopefully, that won't be a problem. Again, don't want to speak for anyone I can't speak for, but if things keep going like they're going, we'll be in a very happy place in 2023, especially, I think somewhere in the second half of the year as normal travel patterns resume, Hong Kong gets back on speed, Mainland China, I think there's a lot of growth potential and a lot of good thoughts coming our way vis-a-vis the future. We are big -- again, as I said earlier, we're not going to tell you that we don't believe in this -- we believe in the story very strongly. We believe in our assets very strongly. We believe in international tourism in Macao very strongly. So, we're not going to predict when it happens, how it happens, how fast it happens. But we feel very positive about what's going to happen in Macao in the long term. Very positive. And we're looking to investing money in there and getting back to where we were in the past in Macao. We couldn't be more positive on Macao long term.

[Shaun Kelley, Analyst at Bank of America]

Great. Thanks for that, Rob. And then maybe a little bit more specific one for Grant, if I may. But just wanted to dig in a little bit more on just the labor and staffing side of what you're seeing in Macao right now. You talked about the margin structure high level. But are you fully expecting to return to levels of staff that you had pre-COVID? Are you already there? Will it be even above those levels? Kind of, what's needed and what have you optimized? I know there's people have many of them have found employment elsewhere and the market has grown since where we started. So, kind of how do you think about maybe either FTEs or our overall operating expense run rates relative to 2019?

[Grant Chum, Senior Vice President of Global Gaming Strategy at Las Vegas Sands]

I think, Shaun, we've also become more productive and efficient through the past couple of years. So, I think, we'll have to -- we think it wouldn't necessarily be referencing exactly back to 2019. And also, our mix of product has also changed quite a bit through The Londoner. We did have more high-quality non-gaming asset base to operate as well. So, to give you a bit more color, today, we are short of manpower relative to our full operating capacity and relative to the demand that we're seeing. So, we're not operating one of the [Indecipherable] hotels as we speak. So, we are minus 2,200 rooms from an operating capacity. And our newest hotel, London Court, which was soft opened in the past year, we're not at the full operating capacity for that high-end all-suite hotel. We're still only about two-thirds of the way through in terms of our ability and manpower to operate the whole hotel. So, both at the top end and at the mass end, we are still short of manpower to operate at full capacity. And we'll be progressively hiring to fill the gaps as we go through the recovery. And hopefully, within the next few months, we're going to be in a better place relative to our full operating potential, because we clearly see the demand pattern. I think it's going to the urge the whole industry to staff up and to be able to operate, especially, for these peak periods. And that's another department, we have no crystal ball as Rob says on the post CNY, but clearly, the early indications of metrics like the demand for the hotels is telling you that yes, the demand is staging a strong recovery.

[Shaun Kelley, Analyst at Bank of America]

Thank you very much.

[Grant Chum, Senior Vice President of Global Gaming Strategy at Las Vegas Sands]

And obviously, we're going to have to stop, it's already been -- thanks.

[Operator]

Thank you. The next question is coming from Chad Beynon from Macquarie. Chad, your line is live.

[Chad Beynon, Analyst at Macquarie]

Hi. Afternoon. Thanks for taking my question. In the slide deck, you highlighted principal areas of development being Macao, which we just talked about. Singapore, which we talked about. And New York, which I was wondering if you could elaborate a little bit more on. But second part of that question is, I know in the past, you had talked about other potential opportunities in Asia, like Korea or Thailand. Years ago, we talked about Japan. Wondering if those are going quiet at this time. So, I guess, firstly, on New York, and then secondly, potential Asian opportunities. Thanks.

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

I've sort of read your mind and I'll reverse it. Just, I think we all know Thailand, there's been discussions there and we're certainly looking at Thailand and that's, no secret, it's been in the press that Thailand is a possibility. So, we're certainly looking hard at Thailand and we'd love to be have a presence in the future. Japan, as you referenced, is not there. And Korea is nothing viable to speak of today. So, we'll jump to New York, which is an extraordinary and unique opportunity. And I think for the winning bidder or bidders, it's going to be an amazing opportunity because of very simple dynamic of a huge market with limited capacity. There's only a few casinos there. It's probably the only place in the U.S. where you have millions and millions of people, and yet, there'll be probably just a handful of casinos total. The win per units there will be exceptional. The lucky winner is going to do very, very well. I think the evidence to the market is clear just by looking at the three operating properties other than table games and really I don't have much of a -- it's not a great product right now in New York as far as room capacity. We're yet still doing approaching $2 billion with just slot machines. So, our approach is very much in LVS, it's anchored by an LVH historical approach, which is scale and quality. We're not looking to build a casino; we're looking to build not a regional casino but rather a truly large hotel with spa, convention space, dozens of restaurants, a new theater, a huge entertainment feature, a transformational product which will positively impact the community and grow tourism. A powerful statement, we're not looking to be in this thing in a limited way. We'll be all the way in. And we think if we do it, it'll be transformational for the county we're working in and very good for the people in the county and something they'd be very proud of. And it will drive tourism, outsize tourism into Nassau. And our bid is very much positioned on the thinking of LVS, large-scale with numerous non-gaming assets, lots of meeting space, probably 400,000 square feet meeting space. So, I view New York very much, very unique to the rest of United States. It's not -- it's a population in the many millions, maybe just a couple of casinos. Very different here in Las Vegas. We've got a huge local market but dozens and dozens and dozens of casinos. There you'll be basically alone. And so, it's going to be very -- it's an exceptional opportunity. It won't come along again. I think this is one and done. So, we're trying very hard, and we've been trying to do in New York for a number of years, but it looks like this is following someone's opportunity. Hopefully, it's ours.

[Chad Beynon, Analyst at Macquarie]

Thank you very much, Rob. And then secondly, I just wanted to ask another one on Macao. Now that you've had some more data in the market, Grant, it seems like there's an even bigger shift towards Peninsula -- or I'm sorry, versus to Cotai versus Peninsula than we've seen in the past. I was wondering if you could confirm that or if that's really just kind of a mix of a reflection of what we're seeing from the different modes of transportation. Wondering if that's a trend that could continue in '23. And then related to that, how are you thinking about your asset in the Peninsula if there's capex opportunities? I know that's not part of the big capex plan. Thank you.

[Grant Chum, Senior Vice President of Global Gaming Strategy at Las Vegas Sands]

Sure. Rob, shall I take that? Yeah. I think I haven't seen any data on the split between Cotai and Peninsula. However, it stands to reason, I think structurally, we see and we have always said that Cotai will become the primary hub. And I think even in pre-COVID, we were already more than half of the mass revenues from Cotai. And I think that trend will continue. I think there's a lot of different reasons. But I think at its heart, the main reason is just the cluster of world-class integrated resorts that we have on Cotai. And what this, I think, the next generation of these lifestyle consumers are looking for from Macao is a destination and all of the investments in non-gaming are going into basically making these results even more desirable over the next 10 years. All of those structural factors surely will continue to push the balance of revenues towards the Cotai side. And that's a structural issue that will continue to evolve over the long time. As regards to we always have one asset on the Peninsula, we do intend to reinvest in that asset. But clearly, the majority, the vast majority of our capital would still be going towards our Cotai properties.

[Chad Beynon, Analyst at Macquarie]

Thank you very much. I appreciate it.

[Operator]

Thank you. The next question is coming from Brandt Montour from Barclays. Brandt, your line is live. Everybody, good morning. Thanks for taking my questions. Starting on Singapore, I was curious if you could compare the spend per visitor that you're seeing there to what we saw in Las Vegas in 2020 and 2021. If that's sort of holding up in the same way, if it's -- if the curve looks different quarter-over-quarter. And then if you want to throw Macao early days into that comparison, that would also be helpful.

[Patrick Dumont, President and Chief Operating Officer at Las Vegas Sands]

Yeah. I think it's really hard to compare between markets. The key thing to note is that it's really all about pent-up demand, consumer tourism experience, and the products that we offer and sort of the nature of those assets, it's for high-quality tourism. So, it's not really fair to compare between markets. The price points are different, consumer behaviors are different. It really doesn't look the same. What is thematically similar is the pent-up demand story. And Rob -- as I've said before, Rob has seen it in his current other locations. We experienced it here in Las Vegas in a very strong way. We saw it in Singapore in a very strong way and it's still in effect. And we're starting to see it in Macao now and it's coming on strong. So, I think it's really the nature of consumer behavior as opposed to the specific price points in each market.

[Brandt Montour, Analyst at Barclays]

Okay. That's great.

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

It's hard being -- to Patrick's point, I think that the Singapore's market GGR versus Macao's, Macao could be a $25 billion, $30 billion GGR market. Has been higher than historically. And Singapore, just not at the capacity. And then, Las Vegas is much more of a -- it's got a gaming component, but it's got a very strong non-gaming. So, it's almost impossible to apples to apples. The driving force is the scale of people in Macao and Singapore and in Mainland China. The accessibility to adjustable market is so huge in Macao and so is the product offering. To Grant's point, the Peninsula versus the Cotai, it's got such enormous capacity and great product that it's hard to -- that market, it's so outsized when it gets back to full capacity, it's hard to compare it to anything. It's so powerful.

[Brandt Montour, Analyst at Barclays]

Okay. Thanks for that. And then on Slide 22, the long-term commitments in Macao slide, on the capital, the left side of the slide, I was curious, looking at your plans for the next 10 years, if you think you're going to be able to achieve return levels commensurate to recent projects that you've done in that market, you've enjoyed in that market?

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

Yeah, we sure do. I mean, again, we -- you're talking to a bunch of people that have been doing business in Macao for 20 years. And we've seen the returns. We've seen what non-gaming can do. Our theaters, our retail, our entertainment has driven billions and billions and billions of dollars of EBITDA, and they will in the future as well. We have no concerns whatsoever about investing and getting a solid return on non-gaming commitments as all they do is drive more visitation in the market. They're additives to the market, so they're going to drive more business right now. We look at this as a 10-year starting commitment and going beyond that. Our commitment to Macao is as long as we can be there. And so, we have no hesitation to invest or show the market a very, very considerable return, just like we've done in the past. I mean, our current assets, mostly non-gaming. The lion's share of our investment in Macao is non-gaming. The great majority. That's worked out pretty well for us. So, we think the next 10 years will continue that trend. And we're very happy and very committed to Macao.

[Brandt Montour, Analyst at Barclays]

Excellent. Thanks so much, everyone.

[Patrick Dumont, President and Chief Operating Officer at Las Vegas Sands]

Thank you.

[Operator]

Thank you. The next question is coming from Ben Chaiken from Credit Suisse. Ben, your line is live.

[Benjamin Chaiken, Analyst at Credit Suisse Group]

Hey, how's it going? Just a quick one for me. Historically, capital return has been really important. And you guys, obviously, Macao is just beginning to ramp and there's a lot of areas to invest. But how are you thinking about the dividend these days? Is that still important? And if so, how should we think about timing of that.

[Patrick Dumont, President and Chief Operating Officer at Las Vegas Sands]

If Sheldon were here, he would say, yay dividends.

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

I'm so tempted to [Foreign Speech]

[Patrick Dumont, President and Chief Operating Officer at Las Vegas Sands]

I think someone put us on hold in Macao.

[Benjamin Chaiken, Analyst at Credit Suisse Group]

Sorry about that.

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

Sorry about that. Brief commercial from Macao.

[Patrick Dumont, President and Chief Operating Officer at Las Vegas Sands]

So, as I was saying, if Sheldon were here and we miss him dearly, he would be saying, yay, dividends. I think Las Vegas Sands is a growth company. We're back to growth. We're development company. We do large-scale developments in key markets. But most importantly, we're also a return-on-capital company. And I think as our business returns and as we see normalization of cash flows, we're going to look to start the dividend again. And that would be very shareholder-friendly. But at the end of the day, we're very focused on the strength of our balance sheet of new developments. And you heard Rob talk about New York. It's very exciting. There are other things that hopefully we'll get a chance to do with the near term. And opportunistically, I think, we'll continue to deploy capital where the highest returns are. And as part of that, the dividend will be fundamental to our shareholder return strategy. But I think, we're going to wait and see where operating cash flow ends up and we'll make some assessments at that point.

[Benjamin Chaiken, Analyst at Credit Suisse Group]

Got it. Thank you.

[Daniel Briggs, Senior Vice President of Investor Relations at Las Vegas Sands]

Thanks, Ben. Thank you. And the next question is coming from Steve Wieczynski from Stifel. Steve, your line is live.

[Steven Wieczynski, Analyst at Stifel Nicolaus]

Yeah. Hey, guys. Good afternoon. So, Rob or whoever wants to take this. I mean, if we look at visitation to Macao over the last, let's call it, week or so around the start of Chinese New Year, it does seem like it has been pretty strong. And I guess, is there any commentary or color you could give us about the spending patterns of these folks that are coming into the market, meaning are these folks gambling as much as they did before, or are they -- or is that some of that spending being pushed more into the non-gaming side of the floor? And maybe it's just too early to tell, but I think with how high Chinese savings levels are right now, I'm just wondering if you could provide any color around that.

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

Yes, yes, and yes. They're spending in retail, they're spending in gambling, they're spending, as we referenced earlier, Steve, it's just the right customer showing up. And I think this is historically how it's worked out in recoveries where those who are the most aggressive gamers and retail spenders show up first. And we're seeing that strongly in Macao. It's a very good audience. It's a very strong audience. You'll see it in the market numbers when they come out. It's really gratifying for those of us who waited long time, about three years to see these days return. And they're returning. And I think the real question is, these customers have been, now the question is how many more coming behind them, because to your point, visitation has been mediocre out of Mainland China relative to what had been previously. We're not even there. We're getting some pretty big numbers coming out of Macao in the market. So, we're very enthused about. I don't think -- it's not necessarily choosing gaming or retailing to doing both and then they're eating and shopping and funding everything. So, it's very typical of these recovery situations where the people who want to most show up there and they're buying, they're spending and enjoying life again. And I think the Chinese are no different than Americans who came to the U.S. markets and enjoyed themselves. And hopefully, the party continues. It's just getting started. We've got a -- we've had a very encouraging start to this whole thing after the last three years.

Grant, do you want to add some color to that? Any issues you can raise that I haven't?

[Grant Chum, Senior Vice President of Global Gaming Strategy at Las Vegas Sands]

No. I think it's, just as you said, the nature of these re-openings. It will attract the high-quality customers first. And that's what we're seeing, and I think we saw that in Singapore in April as well. We had much stronger recovery in the Southeast Asian overseas spend in Singapore versus the recovery in the tourist arrivals. And I think Macao is also following something similar except for the fact that Macao has a much bigger advantage in being able to support visitations not just by international analysts, visiting analyst, but also by land and sea as well and domestic analysts have been connecting through the Southern China as well. So, I think it's -- let's see how -- what the pace of visitation recovery is like versus the revenue recovery. But so far, I think the pattern that we've seen in line CNY does support that pattern. Yes, you're getting much stronger revenue I think in visitation.

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

I think that last comment, Grant, is really -- I assume that's a great one in that, this is not an air-dependent market like Singapore. You don't need the airlines, you can come other ways and access Macao, it's mostly vehicular or both. So, I think it's a huge advantage in Macao that as the population conquers the virus situation, it gets more confident. There's nothing -- no impediments to massive growth in visitation coming Macao from China. That's a very positive point. But Steve, look, we just -- we are pleased we're saying in they're spending in every direction. So, we feel very fortunate. And hopefully, it just continues to ramp up from here.

[Steven Wieczynski, Analyst at Stifel Nicolaus]

That's great color. That's it from me, guys. Really appreciate it.

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

Thank you.

[Daniel Briggs, Senior Vice President of Investor Relations at Las Vegas Sands]

Thanks.

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

As always.

[Operator]

Thank you. The next question is coming from David Katz from Jefferies.

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

Hi, David.

[Cassandra Lee, Analyst at Jefferies Financial Group]

Hi. This is Cassandra [Phonetic] on behalf of David. Happy Chinese New Year to everyone.

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

Thank you.

[Cassandra Lee, Analyst at Jefferies Financial Group]

Yeah. I think a lot of my questions have been answered already. So, I hope it's not getting repetitive. You mentioned cost issues in all markets, especially, in energy and wages. So, could you discuss to what extent are those permanent? And where we might be run-rating in terms of EBITDA versus 2019 level today?

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

We're not going to discuss EBITDA at this point except for what you've seen in Singapore. I do think energy is fascinating. It does vastly. It doesn't go one way as you well know. Whereas wages, I think, worldwide are going to be an issue for everybody. And I think we'll deal with that. I don't see them coming down a whole lot. Again, our resorts and our capacity constrained ability to price up, the great thing about our business is you can price up and retain your margins. And that, I think, will be our strategy in Singapore and also in Macao. I don't think wages are going to decline greatly. I think Grant alluded to efficiencies and then that's important. We've got a large workforce, in the tens of thousands in Macao. So, more efficient and better at doing what you do. That should be helpful. But I think we're all going to learn to live with at this point in the U.S. and Asia, higher wages appear to be in the structure for now. Patrick?

[Patrick Dumont, President and Chief Operating Officer at Las Vegas Sands]

I think the key thing is that by the nature of our business, we have resiliency in the face of inflation. So, as Rob mentioned, we have a lot of flexible pricing. Hotel rooms, gaming pricing, the way we operate food and beverage, the way we operate all of our non-gaming amenities, these are not long-term contracts. We have the ability to go with the market. So, while there are some structural increases around wages, around inputs that we use, at the same time, we have the ability to price because of the unique nature of our products, the experiences we offer. And if you compare the positioning of the products that we have, we've invested a lot over many years in both markets. It's the reason why they're so strong. So, in our mind, inflation is a real thing. We have to take it into account. But we have the ability to work through it and actually grow the margins of our business over time.

[Cassandra Lee, Analyst at Jefferies Financial Group]

Great. Thank you. And shifting to New York. Have you shared or disclosed publicly what kind of investments you expect to make if you win the gaming license versus if you don't?

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

Yeah. The current thought in our heads is about $4 billion to $5 billion. Again, this is not a regional casino. This is a full-blown resort with MICE, entertainment, retail, restaurants. It's the real thing. It's not meant to be a small-time investment. We're going all the way in and building something transformational that drives tourism and we think will be the biggest -- in terms of the casino business, will be the biggest revenue generator.

[Cassandra Lee, Analyst at Jefferies Financial Group]

Great. Thank you so much for taking my questions.

[Robert G. Goldstein, Chairman and Chief Executive Officer at Las Vegas Sands]

Thank you. Appreciate it.

[Operator]

Thank you. And the last question today will be coming from Dan Politzer from Wells Fargo. Dan, your line is live.

[Dan Politzer, Analyst at Wells Fargo & Company]

Hey, good afternoon, everyone, and thanks for fitting me in. I guess, first on Macao. I know VIP was historically about a quarter of your total business. I mean, to what extent, if any, have you seen the customer return and in what form? Has there been more of a credit, direct VIP type customer, or is this customer showing up in premium mass?

[Patrick Dumont, President and Chief Operating Officer at Las Vegas Sands]

So, one thing to note is our -- the VIP contribution was much lower than that. So, let's call it high-single-digits, low-double-digits historically. We've always been mass and premium mass-driven on a contribution basis, because of the margins in premium and VIP need to be fair junk of business, we're always structurally much different than they were for our mass business. So, we've always been led on our contribution basis by our mass play and our premium mass play. And you can tell that by our asset base and how we speak to our customers and the type of tourism we attract. That being said, I do want to turn it over to Grant for some additional comments.

[Grant Chum, Senior Vice President of Global Gaming Strategy at Las Vegas Sands]

Thanks, Patrick. Not a lot to add. I mean, all of our rolling business currently is in the premium direct program. And I think the second point is premium mass is doing -- recovering much, much faster than premium direct. I think that's what we're seeing right now.

[Dan Politzer, Analyst at Wells Fargo & Company]

Got it. And then just a follow-up on the New York investment, the $4 billion to $5 billion you mentioned. I mean, is there -- should we expect a commensurate return on that project as you've seen in your Asia-based investments or given the high-density population and the spend per unit, is it reasonable to think that there could actually be upside to that kind of 20% historical return?

[Patrick Dumont, President and Chief Operating Officer at Las Vegas Sands]

I think for us, we're very focused on return on invested capital. So, Rob and the rest of the team really looks everywhere that we can to try to best deploy capital in the highest return outcomes. And so, we wouldn't be interested in New York if we didn't think the returns were there. We think it's a very strong potential opportunity. And for us, it's going to be about the jobs we create, about the tourism we drive, about the investment in the local community, the relationships that we have. And every market that we're in, we're typically the largest trade partner with small and medium enterprise. We're looking to develop deep community routes so we can support the community, and really show this industry it's something that can benefit everyone. So, we're very excited about it and we think the returns are there. Otherwise, we wouldn't be interested.

[Dan Politzer, Analyst at Wells Fargo & Company]

Got it. Thanks so much.

[Operator]

[Operator Closing Remarks]

Participants

Corporate Executives

• Daniel Briggs, Senior Vice President of Investor Relations
• Robert G. Goldstein, Chairman and Chief Executive Officer
• Patrick Dumont, President and Chief Operating Officer
• Grant Chum, Senior Vice President of Global Gaming Strategy

Analysts

• Joe Greff, J.P. Morgan
• Carlo Santarelli, Deutsche Bank Aktiengesellschaft
• Stephen Grambling, Morgan Stanley
• Robin Farley, UBS Group AG
• Shaun Kelley, Bank of America Co.
• Chad Beynon, Macquarie
• Brandt Montour, Barclays PLC
• Benjamin Chaiken, Credit Suisse Group AG
• Steven Wieczynski, Stifel Nicolaus
• Cassandra Lee, Jefferies Financial Group Inc.
• Dan Politzer, Wells Fargo & Company