Business strong for Vegas megaresort

Tuesday, Oct. 29, 2002 | 11:16 a.m.

Gaming entrepreneur Sheldon Adelson's Venetian hotel-casino on the Las Vegas Strip today reported improvements in third quarter revenue and cash flow, confirming indications of a strengthened financial position for the $1.5 billion megaresort.

Las Vegas Sands Inc., Adelson's parent company for the Venetian, reported third quarter cash flow jumped 81 percent from the third quarter of 2001. Cash flow of $59.9 million was up from $33.1 million during the 2001 quarter, which was marked by a slowdown in visitation to Las Vegas after the September 2001 terrorism.

Today's strong cash flow report confirmed an Oct. 17 report by the debt-rating service Moody's Investors Service, which said it was considering upgrading its ratings on Venetian debt because of its improved cash flow performance despite the sluggish economy and fierce competition for gamblers, tourists and conventioneers on the Strip.

Moody's is reviewing how the company's cash flow will change next summer when a new 1,000-suite expansion atop the existing parking garage is completed. The Venetian already has more than 3,000 suites. The additional suites, to open in June, are part of a $200 million expansion that also would add 150,000 square feet to the Venetian's Congress Center convention area.

"We're impressed with the results, particularly given some of Las Vegas' numbers that came over the summer," said John Maxwell, a gaming analyst who follows the bond market for BNP Paribas, New York. "They were better than we expected."

Maxwell added that the company's current expansion program "will be a good catalyst for the company in '03 and going forward."

Between the Venetian convention area and Adelson's adjacent Sands Exposition and Convention Center, the complex has more than 1.2 million square feet of meeting space, making it the fifth largest in the country.

Las Vegas Sands today also reported record third quarter revenue of $152.8 million, up 24 percent the 2001 quarter.

Net income before "preferred return" and a loss on the early retirement of debt was $15 million, compared to a loss of $6 million in the third quarter of 2001.

"Although we benefited from a favorable comparison with the 2001 third quarter when visitation to Las Vegas declined due to the Sept. 11, 2001, terrorist attacks, the strength of the recovery has validated our mid-week rooms strategy," Sands President William Weidner said in a statement, referring to strong convention and business travel bookings at the Venetian. "In addition, we continue to improve our operating margins in The Venetian's casino department by evaluating the highly competitive table games market and addressing gaming risk and credit risk to determine that our customers fit a gaming profile that is profitable to us."

Room occupancy was 96.6 percent, compared to 87.1 percent during the prior-year's third quarter. But the Venetian's average daily room rate was $178, down from $181 during the prior-year's third quarter.

"We continue to achieve record hotel occupancy and strong average daily room rates from our combination of midweek group and convention business and weekend and holiday FIT (leisure traveler) revenues," Weidner said.

Weidner said Las Vegas Sands continues pre-development of a resort in the Chinese island city of Macau, continues to work on a possible investment in Internet gambling and is exploring development options for 15 acres of land on the Strip between the Venetian and Sands Avenue.

Adelson has previously disclosed his intention to build another resort at that site, which is across the street from Steve Wynn's Le Reve megaresort and is kitty-corner from the newly expanded Fashion Show mall.