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Las Vegas Sands Is Ready To Wager More On China

Robert Goldstein joined Las Vegas Sands a quarter-century ago and worked his way up to become the right-hand man of billionaire founder Sheldon Adelson, helping to turn the company into the world’s largest casino operator with a market capitalization of $50 billion. “The biggest thing I learned from Sheldon was if you have a vision and a commitment to something and you go after it, then you go after it wholeheartedly, not half-heartedly,” Goldstein said in a Zoom interview from Las Vegas this month.  “The way you make a lot of money is to see something clearly, and then don’t think about it. Invest heavily and be committed to it. Have a vision and fulfill it. A lot of people see things and don’t do anything about it.”

After the legendary Adelson’s death at age 87 in January from complications related to treatment for lymphoma, Goldstein – now chairman and CEO — is now bringing that decisive spirit to the company himself. In March, Las Vegas Sands announced the sale of its Las Vegas properties including its landmark Venetian Resort and Sands Expo and Convention Center for $6.25 billion to affiliates of Apollo Global Management. “It wasn’t a bet against Las Vegas. It’s a bet on better opportunity for the capital and deployment of the capital,” he said.

So where’s Goldstein looking to apply that capital and vigor? “We’re very focused on Asia,” he said. In a statement in March, Goldstein called the area “the backbone” of the company.  The Asia-Pacific region in the past two decades has become one of the world’s top creators of new wealth; it accounted for more 40% of the record 2,755 members of the 2021 Forbes Billionaires List unveiled last week, surpassing the U.S. and Europe each. In particular, Goldstein sees a lot of promise in Macao. “We think Macao and Asia will offer us out-sized returns.”  

In the here and now, Asia is still battling Covid-19. Tourist travel into Macao is difficult for foreigners, as with Singapore. Yet mainland China, a main source of tourists for Macao that has kept the pandemic under control, will quicken its vaccination pace in the coming months, giving the company and the region an even bigger boost that it already has, Goldstein believes. Underscoring the country’s recovery, China yesterday reported a 18% jump in GDP in the first quarter from a year earlier. Tourism to Singapore, where Las Vegas Sands also has investments, will take longer to recover because it relies on airline travel as its main entry point, he said.  Goldstein hasn’t been to either Macao or Singapore in more than a year.

Investors appear bullish on the stock and recovery. On Thursday, Las Vegas Sands closed at $61.27, rebounding from under $40 a year ago. “We anticipate a healthy and swift fundamental uplift in Macao” when visa and tourism obstacles ease, Deutsche Bank said in a brokerage report last month that put a $73 price target on the stock.  Trip.com, China’s largest online travel service, backed up that optimism about Macao in a report this week, saying bookings there from the mainland were running ahead of last year. (See post here.) Macao is currently the only outbound destination where mainland Chinese residents are not required to perform a 14-day quarantine on arrival and on their return, Trip.com said. 

Adelson, born to immigrant parents and raised in a poor section of Boston, showed early entrepreneurial flair as a hawker of newspapers on a street corner as a teen. He had early success in the computer trade show business, founded Las Vegas Sands in 1988, and turned the company into one of the world’s largest convention hosts and pioneer of the “MICE” (meetings, incentives, conferences and exhibitions) business. Adelson expanded overseas by opening the Sands Macao in 2004; today, Las Vegas Sands boasts the largest portfolio of properties on Macao’s Cotai Strip including the Venetian Macaothe Plaza and the Four Seasons Hotel MacaoSands Cotai Central and the Parisian Macao. It’s one of six businesses to have a casino license in Macao, along with MGM Resorts, Wynn Resorts, Melco Resorts, Galaxy Entertainment and SJM Holdings. Las Vegas Sands’ Macao business spinoff, Sands China, raised $2.5 billion in an IPO and listed at the Hong Kong Stock Exchange in 2009.  Next, Adelson moved more deeply into Asia with the opening of the Marina Bay Sands in Singapore in 2010.  Earlier, Adelson was feted with a Malcom S. Forbes Lifetime Achievement Award in 2007. In 2019, Las Vegas Sands’ profit climbed to $2.7 billion from $2.4 billion from a year earlier, and expansion was on the horizon with a newly announced $3.3 billion increased investment in Singapore.

 Then Covid-19 hit. For 2020, the company had red ink of $1.7 billion.  And this year, the Sands lost Adelson. His fortune was passed on to his wife, Miriam Adelson, 75, an Israel-born doctor focused on drug addiction. The two were big donors to Donald Trump. Miriam has a fortune worth $37.7 billion today on the Forbes

Real-Time Billionaires List.

Now taking on the helm is Goldstein, who was president and chief operating officer of Las Vegas Sands at the time of Sheldon’s death; he moved up to chairman and CEO after. Goldstein had become president in January 2015 after serving in a variety of leadership positions covering the U.S. and Asia since joining the company in 1995. He graduated from the University of Pittsburgh, holds a law degree from the Temple University School of Law, and continues to live in Las Vegas.

Why is Goldstein optimistic about Macao?  In part, its location. The former Portuguese colony that was returned to Chinese rule in 1999 is part of the doorstep of China, the world’s most populous nation and second-largest economy after the United States.  And its easy connections from Hong Kong’s airport, by ferry from Hong Kong’s central financial hub, or over a bridge connecting the two vibrant areas are a big plus for tourism.   “It’s been a rough year – no question about it, “ Goldstein said, adding, however:  “We’re feeling very good about Macao’s future.”

As such, the business executive and Adelson student is keen to invest more. “Macao is a spectacular place but it needs more. It needs more sleeping rooms. It needs more entertainment. It may need more golf,” he said. “If I were in (the government’s) position, I’d want to grow Macao into Asia’s best destination for business travelers (and) leisure travelers. It’s got the chance to be the best place in Asia.”

“If the government would agree to it, we’d be thrilled to invest a lot more money in Macao, very quickly,” Goldstein said. It’s likely the six other licensees of casinos there feel the same, he added. “They’ve got six licensees who are happy to invest in Macao.” For its part, Sands China’s gaming license is up for renewal next year; Goldstein is happy to expand into non-gambling projects, he noted.

Nearby Hengqin island also holds good promise for the area’s economy and tourism, he believes. “Hengqin would be a great place to develop. There’s more land than in Macau. It’s really is up to the government to dictate what they want. You’re going to find six eager investors if they want to develop it.” Overall, foreign investment in China in the first three months of the year rose by nearly 40% from a low, Covid-influenced base a year earlier to $45 billion, the Commerce Ministry said on Thursday.

One notable difference from Macao and the U.S. for Goldstein is the age group of his customers.  “Our business skews younger. We get younger, very affluent, fashion savvy (and) food savvy” customers there, he said. “They are very lifestyle driven,” a

preference that is helping to boost his retail business in Macao so far this year above the same period of 2019, the year before the pandemic wreaked havoc on global tourism in 2020.   To reach that group, he said, “Digital communications is critical. You’re not buying billboards.” Their visits to Macao aren’t driven “just by the gambling but every other aspect,” Goldstein said.

Singapore, by contrast, may face a longer runaway to growth. “It was an astonishing success story” before Covid-19 hit, he said. Today, business is about a third of the pre-covid level and limited to local traffic. “There’s no tourism into Singapore to speak of. So we struggle. And we’ll continue to struggle,” he said. “Singapore as a country has done very well” battling the disease, but “I think Macau will recover quicker.”  

Yet Asia isn’t the only business that has Goldstein’s eye.  He also sees great promise in digital gaming. “The future of digital is undeniable.  Whether it’s Zynga, Fortress and social gaming, whether it be casino gaming, whether it be pay to play or pay for fun, we’re looking at all of the them right now. We’re going to build a team to participate,” Goldstein said.  “Some of these companies that have come out of the woodwork are making $200-300 million EBITA and their value is as big as we are, and we’re making $5-6 billion EBITA. The multiples are better, the growth potential is better, and unlike land-based (operations), you don’t have to wait 20 years for a government to say, ‘Yes, you can go in there and build the buildings.’ It’s pretty compelling.” He sees promise for digital business in the U.S., Europe and South America.

When it comes to digital business, Goldstein conceded that Las Vegas Sands has “had a slow start, really for moral reasons. Sheldon had an interesting take on it. He felt that young people and poor people were going to be very vulnerable, and he was very much opposed to it.  But later in life, he came to realize with geo ringfencing and proper use of technology, you can better protect the customer than land-based.  He became a believer,” he said. The question is “how we get there.”

And Goldstein intends to bring Adelson’s decisive style to Las Vegas Sands’ digital push. “I think Sheldon, if he were sitting here today, would shake his head and say, yes, as long as you can protect the vulnerable, let’s go at it aggressively. That’s our plan,” Goldstein said. “We have no interest in being half-players. We go in, we go all the way – with capital, people commitment and a complete commitment to being successful, whether that be digital or land-based.”

Mainland China Travel To Macao Poised For Recovery: Trip.com

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@rflannerychina

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