Thursday, Oct. 30, 2003 | 11:07 a.m.
Earnings increased in the third quarter for the company that owns the Venetian hotel-casino, despite a dramatic decrease in table game revenue, the company said today.
Las Vegas Sands Inc. reported net income of $13 million on revenue of $168.3 million for the quarter ended Sept. 30. That compares with net income of $410,000 on revenue of $152.8 million for the comparable quarter in 2002.
Net income in the 2002 quarter included a loss on early retirement of debt of $8.6 million.
The company also reported an 18 percent increase in cash flow to $70.7 million, up from $59.9 million in the year-ago quarter.
Results beat Wall Street's expectations. One analyst had forecast cash flow of $65 million.
The company was able to offset a substantial decrease in table game revenue with revenue generated by the opening of the Venetian's new 1,013-room Venezia tower while maintaining the resort's overall occupancy rate and increasing room rates.
"The main catalyst (for the company's results) is clearly the thousand rooms added at the Venetian," said Andrew Zarnett, a gaming analyst with Deutsche Bank. "Another factor that confirms how strong the quarter was in terms of volume was that they were able to maintain their occupancy rate early on in July and August, which is much more a time of leisure travel, and then in September when you ramp up to a greater percentage of convention guests."
The 1,013 new rooms brings the total number of rooms at the Venetian to 4,049.
Hotel revenue was $67.8 million for the quarter, a 42.4 percent increase over the $47.6 million in the third quarter of 2002, and room occupancy maintained year over year at 96.6 percent. The increased number of guests drove slot-machine handle up, but table game drop, or volume, was off from the comparable quarter.
Casino revenue for the quarter was $69.2 million, compared with $80.1 million in the third quarter of 2002.
In a statement accompanying the release of earnings today, William Weidner, president and chief operating officer for Las Vegas Sands, said table game win percentage was within a normal range in the 2003 quarter, but was significantly higher in the third quarter of 2002.
Table game drop was $196.9 million for the quarter, compared with $243.3 million in the comparable quarter. Slot machine handle was $510.5 million compared with $414.8 million for the same quarter a year ago. The company did not break out revenue by slots and table games.
"We are pleased with the 23.1 percent increase in slot volume, which coincided with the opening of the new 1,013 Venezia tower rooms." Weidner said in the company's statement. "Table games volume declined because of fewer select high-end casino guests during the third quarter of 2003, as compared to the same period of 2002."
Company officials said the opening of the new tower has helped drive additional convention traffic to the Venetian's expanded conference center, which has added three ballrooms, 64 meeting rooms and three board rooms.
The new tower also has driven additional sales in the hotel's retail component, the Grand Canal Shoppes at the Venetian, as well as in its restaurants, the company said.
Company officials also said its resort under construction in Macau is on track for an opening in about six months
Las Vegas Sands and Wynn Resorts Ltd., Las Vegas, both have won gaming licenses in the Chinese resort city, but Wynn Chief Executive Steve Wynn has delayed construction of a casino in Macau until legislation clarifying gaming tax and credit regulations is approved.
Las Vegas Sands "took a different path" in Macau, Zarnett said, opting to develop a smaller project regardless of what credit regulation is enacted.
"They said, 'Let's build a modest project,' and whether or not credit rules change, there should be enough cash business to generate extremely strong returns," Zarnett said. "Macau is on time and on budget and it looks like (Sands) will be the first to market. That should also help them in their ability to cross-market the Las Vegas property with their new Asian customers."
Weidner said construction of the 163,000-square-foot casino near a ferry terminal that carries passengers between Hong Kong and Macau "continues to raise our profile in Asia."
"As a result," Weidner said, "we continue to experience an upturn in Asian high-end casino business at the Venetian Las Vegas."
The company eventually plans to build a replica of the Venetian in Macau, using it as a centerpiece for a cluster of eight hotel-casinos in Macau's Cotai Strip area. The company is marketing the proposal to other hotel companies.
In addition, Las Vegas Sands is continuing to plan its second Las Vegas resort on property between the Venetian and the Wynn Las Vegas, formerly Le Reve.
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