Pre-opening costs, losing streak hit Las Vegas Sands' earnings
Las Vegas Sands Corp, the casino developer controlled by billionaire Sheldon Adelson, blamed soaring pre-opening costs for the US$2.4 billion Venetian Macau and unlucky streaks on tables in Macau and Las Vegas for the company's first quarterly loss since going public in 2004.
Las Vegas Sands swung to a loss of US$48.3 million in the third quarter, compared with net income of US$97.25 million a year earlier after booking pre-opening expenses of US$75.9 million and losing a higher than expected percentage of bets which erased some US$30 million in profit.
The results included the Venetian Macau's first 34 days of business.
Despite a 19.5 per cent rise in revenue to US$661 million, earnings before interest, tax and other charges fell 18.9 per cent to US$164.3 million from US$202.6 million a year earlier.
'We just didn't have a good quarter, that's the end of it,' said chairman and majority shareholder Mr Adelson.
'It's just the nature of the business. And it makes a good trading opportunity for day traders and hedge funds.'
The 3,000-room Venetian, which opened on August 28 with 878 tables and 3,318 slot machines, reported VIP gambling chip sales of US$4.73 billion in its first 34 days, far exceeding monthly chips sales at the Sands of US$2.1 billion or rival Wynn's US$3.3 billion during the third quarter.
But the mammoth resort, which averaged 65,000 visitors per day in its first two months, won back only 2.44 per cent of VIP chip sales against a forecast 3 per cent, resulting in a revenue shortfall of US$26.48 million.
'It's a lot bodies coming through the door and ... it's going to take us a while to dial that in,' president William Weidner told investors during a conference call.
'On top of that we get shellacked in the first quarter out of the chute, so it is what it is,' he said.
The Venetian is the first of 14 branded casino hotels costing up to US$14 billion that Las Vegas Sands is planning to launch on Macau's Cotai Strip. The resort booked earnings before interest, taxes, depreciation and amortisation, or ebitda, of US$23.95 million on revenue of US$150.09 million during the period. Casino winnings accounted for 87 per cent of turnover.
Hotel occupancy at the resort for last month reached 86.6 per cent with average room rates of US$206 per night.
Daily winnings per table at the Venetian averaged US$5,298 during the period, compared with US$5,846 at the older Sands casino.