As Sands China officially opened the first phase of its new Cotai property, The Londoner, President Wilfred Wong, stated that despite the current low visitor numbers it is necessary “to plan on the basis that eventually there will be a recovery”.
A MOP15.2 billion (US$1.9 billion) investment spanning three years, the new property held its official first phase opening today (Monday) under a background of an economic downturn prompted by the Covid-19 pandemic.
When asked when the group expected to break even from the investment made in the property, Wong stated the concessionaire always had a long-term vision for its investments in the city.
The group’s first property in the city Sands Macao earned back its entire US$265 million construction cost within nine months, a scenario hard to foresee in the current business climate.
“We believe in the long term future of Macau and that’s why we keep investing […] the [Sands Macao] case was a miracle. The other investments we made normally take longer to recovery for example The Parisian itself is very successful but it takes several years to recover. It’s normal,” Wong noted today (Monday).
The Londoner Macao property features two hotels, the Londoner Court with approximately 370 luxury suites and The Londoner Hotel with approximately 600 suites, including 14 “Suites by David Beckham”, together with several new dining options, and interactive London-themed attractions.
Daily visitor arrivals to and departures from Macau have been in the low-30,000’s to high 30,000’s per day.
“Because The Londoner has been completed we think we should introduce this to the public as well as the visitors from the mainland and let them have a choice. I think there are enough tourists to justify some luxury travel and we are offering a very luxurious environment”.
With the recent surge in Covid-19 cases in the mainland dampening some of the previous optimism the Chinese New Year period could boost visitor numbers, the Sands China President admitted there were signs visitation may no be as good as expected but also considered it was too early to say.
The upcoming holiday period will run from February 11 to February 17, with local and provincial authorities in the mainland having issued several notices suggesting for residents to avoid travelling during the holiday period.
“CNY is aways CNY, we are hopeful […] There are a lot of people waiting for confirmation of what will happen when they go back after visiting Macau since every city has a different arrangement. After that confirmation, they will decide if they come to Macau,” he noted.
In previous contends to the Hong Kong Economic Journal, Wong noted that since January there was an increase in hotel room booking cancellations for Chinese New Year, but that there has also been a trend of new bookings from mainland tourists.
The Sands China President also did not consider the property would cannibalise some of the gaming and non-gaming market covered by the remaining group properties, based on the gradual opening of its offerings.
“We have actually been operating a soft opening over the Christmas and Chinese New Year period what we found is that this creates an opportunity for people who would not otherwise visit Macau. […] There are people that previously had no plans but responded and booked a room, ” he noted today.
“Based on the occupancy of hotels I don’t think we are cannibalising any of our hotels[…] Retail business, especially the luxury segment has done very well in the first quarter”
The property will include VIP rooms by the city’s main junket operators, Suncity Group, Guangdong Group and Tak Chun.
Despite the recent Chinese government crackdown on cross-border gaming further compounding an already badly hit junket sector, Wong believed the property was still attractive to the city’s main players.
“I think the VIP segment you really need to depend on the trend. Right now the VIP segment is relatively weak for many reasons. It just shows that some of these bigger junkets have a lot of confidence in The Londoner as a product to attract their customers”
Sands China posted a net loss of US$246 million in the fourth quarter, under half of the US$562-million loss in the third quarter, however, it managed to bring back its adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) results to a positive US$47 million.