Las Vegas Sands confident Coronavirus impact won’t slow Macau redevelopment projects

The widespread impact of the deadly Coronavirus, which has seen visitation to Macau plummet by around 80% during the Chinese New Year holiday period, is not expected to impact Sands China’s ongoing redevelopment projects on the Cotai Strip, the company says.

The Coronavirus was the number one topic of conversation during parent company Las Vegas Sands’ 4Q19 earnings call on Thursday (Macau time), with LVS President and COO Rob Goldstein admitting the massive fall in visitation numbers due to tightening border restrictions was a concern.

However, he said that ongoing development works – which include converting Sands Cotai Central to The Londoner Macao and upgrading the Four Seasons and St Regis – are unlikely to face any significant delays.

“We don’t anticipate any slowdown as a result of the virus,” said Goldstein, adding that the majority of works will be completed in 2020. “Obviously, it depends on what happens in Macau, but as we speak today we see no indication at all of that and we’re full speed ahead on all of our projects in Macau.”

Goldstein wasn’t so positive on the short-term financial hit the company would likely take, with latest figures from the Macao Government Tourism Office showing a 76.5% year-on-year decline in visitor arrivals during the first six days of Golden Week to 243,204, including an 81.7% fall in visitors from mainland China to 139,580.

“Our business is revenue dependent,” Goldstein said. “There is no way to hide from the fact we employ tens of thousands of people in these markets and it’s an expensive business to operate. The same way operating leverage swings towards you when volumes are good, it swings against you in times like this.

“We’re doing our best, we’ll do all the paid time off, all the things we can do to mitigate. But I think it’d be silly to think it won’t have a material impact on operating costs – and that’s the problem with these businesses when this kind of thing hits.

“Having said that, we’ve been through a lot of years of problems in Macau and Singapore and Las Vegas when things like this happen, and this storm will pass. We don’t know when. We do know when it passes, we will be first in line in each of our markets to be the biggest investor, most aggressive in Macau.

“But I think it would be foolhardy to think we can reduce costs enough to offset what’s happening – if this 80% decline continues that’s a real problem for any operator.”

Las Vegas Sands Chairman and CEO Sheldon Adelson was also on the call. This is the second earnings call he has participated in since missing three quarterly earnings call due to treatment for non-Hodgkin’s lymphoma.