In recent updates from Sands China, significant renovation works are underway at the Sheraton Grand Macao and The Londoner Macao. These renovations are part of a larger strategy by Las Vegas Sands (LVS) to enhance its offerings in Macau. The ambitious Phase 2 renovation of The Londoner Macao, costing $1 billion, is set to transform the property into one of the company’s premier assets in the region.
Financial Performance Overview
During the 1Q24 earnings call, Sands China reported a slight decline in revenue and Adjusted Property EBITDA compared to the previous quarter. Net revenues at The Londoner Macao fell from US$589 million to US$562 million, largely due to ongoing renovation works that impacted hotel room availability.
Renovation Details
The Phase 2 renovation of The Londoner Macao encompasses the Sheraton Grand Macao and involves a substantial investment, adding to the US$2 billion spent in Phase 1. Sands China expects the first tower of the Sheraton to be completed by the end of 2024, with the second tower slated for completion by May 2025. Similarly, renovations for the second casino at The Londoner Macao are scheduled to conclude by December.
Projected Benefits and Disruption
Patrick Dumont, LVS President and COO, expressed confidence that The Londoner Macao will emerge as one of the company’s flagship properties post-renovation. He emphasized the anticipated improvements in design, casino layout, and additional amenities, all of which are expected to drive future results. Despite these promising developments, Dumont acknowledged that the renovation process would cause disruptions, especially during the summer months when hotel capacity is significantly reduced due to ongoing works.
Strategy and Long-Term Vision
The decision to accelerate renovation projects, including taking the Cotai Arena offline for upgrades, reflects LVS’s commitment to enhancing its market competitiveness and attracting high-quality tourism. Grant Chum, CEO and President of Sands China, highlighted the importance of the Cotai Arena in the company’s entertainment offerings and acknowledged the short-term challenges posed by its closure. However, he emphasized the long-term benefits of transforming the arena into one of Asia’s premier entertainment venues.
Impact on Business Operations
The closure of the Cotai Arena has affected Sands China’s ability to host shows, with a notable decrease in the number of events compared to previous quarters. This disruption underscores the short-term trade-offs necessary to achieve the company’s long-term vision.
Sands China’s ongoing renovations at The Londoner Macao and other properties reflect a strategic shift aimed at bolstering its market position and enhancing customer experiences. While these initiatives may cause temporary disruptions to business operations, company executives are optimistic about the long-term benefits they will bring, positioning Sands China for sustained success in Macau’s competitive gaming and hospitality landscape.