|VENETIAN REPORTS JUMPS IN NET REVENUES, CASH FLOW
Tuesday, 6 Feb 2001
By DAVE BERNS
lasvegas.com Gaming Wire
LAS VEGAS - Operators of The Venetian will double the size
Strip megaresort's baccarat pit, add semi-private gaming and dining
rooms, and expand or remodel 18 suites to accommodate high-end
gamblers, company executives said Tuesday.
The property's original convention-driven business plan with
from weekend tourists did not anticipate that the Venice-themed
hotel-casino would deal to the highest-level gamblers.
But that focus changed in late 1999, as The Venetian attempted
gain a percentage of the high-end and premium gamblers who visit Las
Vegas from Asia, Europe and cities throughout the United States.
That said, Brad Stone, executive Vice President of Venetian
company Las Vegas Sands Inc., said high-end casino play at the
21-month-old Venetian is not expected to grow this year at the same
rate it did last.
"We want to tighten expenses somewhat and not be afraid
away some business," Stone said.
Discussion of the high-end additions - part of an estimated
million of capital expenditures anticipated for The Venetian this
year - came during a morning conference call to discuss fourth
quarter and end-of-year results for Las Vegas Sands Inc., owner and
operator of The Venetian and its adjacent shopping mall.
For the quarter ended Dec. 31, the privately owned Las
generated net revenues of $149.9 million, up 33 percent from the
$112.5 million generated in the fourth quarter of 1999.
Profits for the quarter were $5.1 million vs. a loss of
million a year ago, with cash flow increasing 35 percent to $49
That cash flow figure - a measure of earnings before interest,
taxes, depreciation, amortization and rent - places The Venetian
complex third on a list of Strip cash flow generators behind MGM
Mirage's Bellagio and MGM Grand.
"We did it from a standing start without a high-end customer
... or a slot base," said Las Vegas Sands President and Chief
Operating Officer Bill Weidner.
The company has public debt, prompting Tuesday's conference
and quarterly filings with the Federal Securities and Exchange
For the year ended Dec. 31, Las Vegas Sands generated
of $589.7 million, more than doubling the $252.7 million reported
Full-year profits totaled $16 million compared with a
1999 loss of
Cash flow for the year was $195.9 million vs. $37.7 million
a year ago.
The Venetian reported a 12-month hotel occupancy rate
percent with an average nightly room rate of $182. That compared with
1999 figures of 81.7 percent and $159.
Slot machines, a strong measure of low- to mid-market
$132 per machine each day from gamblers, up from the 1999 figure of
$99 and greater than the Strip daily average of $110.
Table games won $5,200 per table daily, up from $2,780
"The basic plan works. The business plan works," said
President Rob Goldstein. "I think our job now is to mature the
business and look for opportunities within our buildings."
That plan was criticized in the weeks after The Venetian's
opening, as construction delays and county safety testing forced a
phased unveiling of the $1.5 billion, 3,036-room hotel and shopping
The atmosphere was further tarnished by a series of lawsuits
by subcontractors who worked on the project and charged that Venetian
Casino Resort LLC and contractor McGovern Bovis Inc. failed to pay
them for their work. Those suits continue to work their way through
federal and state courts.
In recent days, Las Vegas Sands Chairman Sheldon Adelson,
property's curmudgeonly majority owner, has spoken of breaking ground
by early next year on a second $800 million to $900 million phase at
the site, which would see the addition of 3,000 rooms.
Las Vegas Sands' Weidner chuckled during Tuesday's conference
saying that such talk was premature, as company executives continue
to work to secure financing for the project.
"We are competing construction plans but not ready as
discuss how the financing works," Weidner said. "It's too preliminary
to say it's a done deal."
The timing for the construction of a massive phase doesn't
to be good, as thousands of business plans languish nationally
because of a lack of affordable financing, said John Kempf, a Goldman
Sachs vice president who studies the casino industry.
But by the time Adelson raises the money and completes
construction, two or three years will have passed, and the national
economy should have recovered from any doldrums, Kempf said.
"More important, Vegas needs to reinvent itself every
years," he said. "That's what keeps driving people to visit."
Workers are moving ahead with construction of a
that will bring to The Venetian satellite operations of the New
York's Guggenheim and Russia's Hermitage museums.
Both are expected to generate increased foot traffic at
Strip property, while creating a new revenue generator for Las Vegas
Sands. The museums are expected to open later this year.
Wall Street financial analysts say Las Vegas Sands bosses
a good job of implementing The Venetian's convention-driven strategy
with a powerful boost from the neighboring Sands Expo Center.
That business has bolstered mid-week room rates that are
traditionally lower in the Las Vegas market, while apparently
insulating The Venetian from some of the volatility of the national
economy because conventions are booked more than a year in advance.
"I believe that what was underestimated with The Venetian
was how underserved the high-end part of the convention business
was," said John Leupp, a director and bond analyst for Credit Suisse
"With softness in the overall economy you could see some weakness
their convention business, but I think there would be more of a lag
effect, but I don't think that would manifest itself at least for a
year because of advanced bookings."
Executives at The Venetian have taken shots in recent
their neighbors in the high-end business who charge that the new
megaresort has created a difficult competitive environment by
discounting by as much as 20 cents on the dollar the losses of
Competitors argue that the practice has caused them to
discount rates from about 10 percent to keep pace, cutting into their
But Las Vegas Sands executives said Tuesday they've become
convenient fall guy for other companies that are simply employing a
practice that has existed since the 1970s.
"It's become a marketing tool as opposed to a business
Venetian President Rob Goldstein.
Phone: (702) 383-0478
Fax: (702) 380-4590