ATLANTA—With massive expansion under way in Macau, Las Vegas Sands Corporation hasn’t completely closed the door on adding capacity in the United States.
While nothing is imminent, there are a few markets in which LV Sands would seriously think about adding properties, including New York and Miami, said Mike Leven, president and COO, during an interview conducted at last week’s Hunter Hotel Investment Conference.
Leven said the company looked at some downtown Miami sites that it was happy with, but it doesn’t appear the Florida legislature will approve the exclusive gaming license for the site LV Sands is seeking.
“The potential for us in the United States is pretty limited because there aren’t a lot of places where you can put an integrated resort of our size and our financial investment and get a return,” he said.
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Mike Leven |
“Now, New York … there’s a little noise in New York now, and we’re going to take a look and see if we can put something … maybe in Manhattan and be able to do maybe something with (the Jacob K. Javits Convention Center) and us and a big place and put our complex in there. If the government wants it, we’d be interested in doing it.”
The plethora of gaming casinos in the U.S.—at least 22 states permit some form of casino gaming, according to the American Gaming Association—has focused on the wrong aspect of the benefits integrated resorts, such as the kind LV Sands operates, provide a market, according to Leven.
“The sad reality … is these state governments are looking for tax revenue, and our business is different,” he said. “We do integrated resorts; we produce tax revenue, but we produce jobs, we produce tourism and (meetings, incentives, conferences and exhibitions) business,” he said. “So when we go into countries like Japan or Korea or Vietnam or even Spain like we’re talking about now, that’s our pitch. Our pitch is we’re not just going to generate tax revenue, which we do.”
Las Vegas Sands’ U.S. portfolio comprises The Venetian and The Palazzo on the Las Vegas Strip, as well as Sands Casino Resort Bethlehem in Eastern Pennsylvania. The company also operates the Marina Bay Sands in Singapore.
Through its majority-owned subsidiary Sands China Limited, the company also owns a collection of properties in Macau, including The Venetian Macau, Four Seasons Hotel Macau, and Sands Cotai Central, a 13.7-million square foot, 6,400-room complex opening in April 2012 at the company's Cotai Strip development. The company also owns the Sands Macau on the Macau peninsula.
‘An economic machine’
Leven said the company’s Marina Bay Sands in Singapore, for example, in addition to tax revenue, produced 10,000 direct jobs and another 15,000 non-direct jobs. The property also sources $400 million in goods in the local market every year.
“We’re basically an economic machine,” he said. “We drive business into the market. We want to bring tourists in. We want to bring people from out of state in and out of country in. That’s really our business model and why we think we’re so attractive to these other countries.”
Marina Bay Sands and the company’s Macau resort generate approximately 90% of the Las Vegas Sands’ annual earnings before taxes, interest, depreciation and amortization, Leven said. Macau—the only city in China where gambling is legal—is where the company’s core integrated resort concept has blossomed, as it owns or is planning to build hotels under the Venetian, Sands, Four Seasons, Sheraton, Holiday Inn and Conrad brands.
“(Las Vegas Sands Chairman and CEO Sheldon Adelson’s) vision was to put these kinds of properties up, which were not just gaming centers—which represent about 2% of the space in our integrated resorts—but the full-service, convention, meeting, shopping, entertainment facilities that had not been seen before around the world,” Leven said. “His ambition and his vision and our ability to execute (are) really putting us in a position where we can go now to other Asian countries as well as in Europe.”
Two of the hotels—a 1,200-unit Holiday Inn and a 600-unit Conrad, are scheduled to open 11 April. The Sheraton property will open 2,000 rooms at the end of September and 2,000 additional rooms13 January 2013, Leven said.
“So we’ve got the biggest Sheraton, the biggest Conrad and today the biggest Holiday (Inn) opening under our management of Holiday Inn and Conrad and (Starwood Hotels & Resorts Worldwide’s) management at Sheraton,” said Leven..
The 73-year-old Leven, who has spent 51 years working in the hotel industry, said having operations in China is no different than having a presence elsewhere in the world.
“Governments are governments no matter where you go. You can put a different face on or a different culture on, but at the end of the day—I’ve been doing international business since in the ‘60s when I lived in the Bahamas for Sonesta Hotels—what I’ve found as I went around the world and did things is that people are people no matter where you go. If you treat them right, if you deal with ethics and (have) a high regard for individual dignity, no matter what you do whether it’s at the line level or the senior level of the organization, it’s the same basic scenario.”
The Vegas factor
While the company continues to grow globally and looks for well-defined opportunities in the U.S., it also is seeking to maintain its standing in Las Vegas, where it has The Venetian and The Palazzo properties. Operating there is a different scenario than in Asia, Leven said.
“In Las Vegas, for example, 70% of our profitability is from non-gaming. The nature of the customer in Vegas to play is significantly different than the customer in Asia,” he said. “Asians tend to play more and longer and as a consequence in Asia (profitability is) 70/30 the other way.”
The Venetian, which opened in 1999, is preparing for an update that will include newly-designed rooms. Leven wants to buck some current trends in the hotel industry.
“We’re redoing a thousand rooms in The Venetian in Vegas, and I called in my design people and said, ‘Listen. I don’t want any duvets anymore. They run the energy bill up. They heat up the people. When you go into a hotel and you’re under the duvet, you turn the air conditioning down; people throw all these pillows on the floor. … Let’s get out of this thing and let’s try to find a way that will satisfy the guest, make it greener, make it less difficult for the maid,’” he said.
No exact timetable is set for the rooms renovation as the company is still in the testing phase, Leven said.
Leven said the Las Vegas market is still hurting from the recession as average daily rates are 25% below what they were during 2006 and 2007.
“It’s going to be a long time catching up because you have a big supply of the high-end rooms,” he said. “Over time I think the rates will gradually improve and the visitation will continue to improve. There will be more foreign visitors with the new visa rules—China and Brazil, that will help. But it’s a long way back. There’s about $20 billion worth of real estate that’s been built in Vegas since ’07 with very little return, so it’s going to be a long time.
“But you wouldn’t know going in there when it’s convention season or when you go in on a weekend. You think everything will be great because there are tons of people,” Leven added. “But if you get tons of people but not at the right price, it doesn’t help you very much.”