Earnings Call Transcript - LVS Q4 2022

Operator, Operator

Good day, ladies and gentlemen. And welcome to the Sands' Fourth Quarter 2022 Earnings Conference Call. At this time, all participants have been placed on listen-only mode, but we will open the floor for your questions and comments following the presentation. It is now my pleasure to turn the floor over to Mr. Daniel Briggs, Senior Vice President of Investor Relations at Sands. Sir, the floor is yours.

Daniel Briggs, Senior Vice President of Investor Relations

Thank you, operator. Joining the call today are Rob Goldstein, our Chairman and CEO; Patrick Dumont, our President and COO; Dr. Wilfred Wong, President of Sands China; and Grant Chum, EVP of Asia Operations, Las Vegas Sands and COO of Sands China. Today's conference call will contain forward-looking statements. We will be making those statements under the safe harbor provision of federal securities laws. The company's actual results may differ materially from the results reflected in those forward-looking statements. In addition, we will discuss non-GAAP measures. Reconciliations to the most comparable GAAP financial measure are included in our press release. We have posted an earnings presentation on our website. We may refer to that presentation during the call. Finally, for the Q&A session, we ask those with interest to please pose one question and one follow-up question, so we might allow everyone with interest the opportunity to participate. The presentation is being recorded. I'll now turn the call over to Rob.

Rob Goldstein, Chairman and CEO

Thank you, Dan, and thank you for joining our call today. A few brief comments, then we will move to Q&A. Macao's future is bright and remains the largest integrated resort market globally. Our commitment to investing in this incredible market has never wavered, and with an unrivaled critical mass of world-class integrated resorts as well as continued improvement in transportation infrastructure in the region, Macao will mature into a vibrant, diversified tourism market over the coming years. SCL's positioning and scale are perfect to capture the opportunity. Our diversified integrated resort model with continuous investment in non-gaming segments, including MICE, hotel suites, live entertainment, retail, food and beverage, positions us well to capture the growth opportunity. Our diversity, scale and track record in non-gaming make us uniquely positioned to cater to all segments of the market, enabling Macao to appeal to international tourists as well. The new concession is a win-win. We deeply appreciate the opportunity to operate one of those gaming concessions in the next 10 years. We are excited to deploy more capital to expand non-gaming offerings at SCL. The $3.8 billion commitment is just a baseline. We hope to invest more as the market continues to grow. The commitment to develop non-gaming is the core of our investment and operating strategy for the past two decades, whether it be MICE, entertainment, themed attractions or destination sales and marketing in overseas markets. We view the investment commitments by SCL and the rest of the industry as positive for Macao. Over the past few weeks, travel restrictions have been lifted. It is too hard to tell the true measure of the underlying pace of recovery, but indications are extremely positive. We have seen significant improvement in property visitation, gaming volumes, retail sales and hotel occupancy. We remain positive on our investments in The Londoner and Four Seasons. Our investments position us well as the market recovers. The quality of our new products will also help drive high-value tourism from the region, especially the overseas markets. Turning to Singapore, our normalized EBITDA and gaming volumes are now back to the 2019 levels. Normalized EBITDA reached $386 million for the quarter. Rolling volumes are approaching 2019 levels, and mass win per day is now exceeding the levels of 2019. We have also delivered strong performance in non-gaming across all segments, including retail, mall, hotel, food and beverage, and MICE. Retail is especially noteworthy with a 26% increase in tenant sales per square foot versus 2019. Our casino renovation program is progressing, and the renovated product will come online throughout the year. Looking ahead, Marina Bay Sands is poised for further growth as all of our markets recover and become free of travel restrictions and airline lift continues to recover. Let's move to Q&A.

Operator, Operator

Thank you. The floor is now open for questions. The first question is from Joe Greff from JPMorgan. Joe, your line is live.

Joseph Greff, Analyst

Hey, everybody, good afternoon. And good morning to those in Macao. My first question, obviously, is going to be on Macao, and Rob, Patrick, Dan, can you remind us what levels of mass GGR either on a dollar per day basis or as a percentage of 2019 levels do you need to be at in order to be EBITDA breakeven? Obviously, the 4Q saw a narrowing relative to the 3Q. I'm presuming and would love for you to expand on it. I'm presuming what you're seeing thus far early in January is either at EBITDA breakeven or maybe more recently generating some level of positive EBITDA.

Rob Goldstein, Chairman and CEO

So pessimistic, Joe. We're more than breakeven. A lot more than breakeven, doing just fine. I'll ask Patrick to give us some color on those issues, but I think we're past the breakeven. We're now in positive territory moving towards very positive territory. Patrick?

Patrick Dumont, President and COO

Thanks, Rob. So a couple of things to note. Mix is important here. So as you know, we're a mass and premium mass and really a large-scale tourism investment company. And I think the key thing to note is the market is open. Liquidity is in the market. This is going to be a premium-led recovery. We invested significantly during the pandemic, and the benefit of that investment is on full display. We have new suite products; we probably have the best new property we’ve had in a long time, opened up in Macao. That investment is really showing power in the market right now today. There's significant non-gaming scale and investment that we've made that is bearing fruit. And so it's great to see the recovery. It's great to see the volumes coming back. It's interesting; I think Rob has talked a lot about pent-up demand over the years. He's witnessed it in other places earlier in his career. We saw it here in Las Vegas, and we experienced it fully in Singapore, and now we're at a run rate that is really, really strong. And I think we're seeing that in Macao. The key thing is this is going to be a premium-led recovery. In terms of breakeven, I don't think that's really a consideration anymore. I think we're way past it.

Rob Goldstein, Chairman and CEO

Yeah. Joe, I think we can be confident, be very honest and direct. We are in very positive territory and keep moving upside. I think the one thing I would say to you is that no one ever questions the power of the base mass market. I would remind you I was looking at our numbers; base mass in Macao in our building costs about 1,500 Hong Kong per hand as an opening bet. So it's a couple of hundred bucks a hand USD. That's the base mass business. The problem we have right now is you can't get a seat in the games in our buildings. We're running 95%, 100% occupancy in those games. The same applies to slot ETGs. The big question everyone's thinking about obviously is premium mass. And I think you'll be pleasantly surprised when you can see the numbers coming out of the premium mass. You'll see the liquidity; you'll see resilience in that segment. It’s been a pleasant surprise. Grant, can you add some color to that?

Grant Chum, EVP of Asia Operations and COO of Sands China

Yeah. Good morning and good afternoon. Yeah, I think the key thing we're seeing right now is that the quality of patronage is very high across all segments. So it's not just premium mass; it's also the base mass, it's in the retail segment. So we are seeing a very strong recovery in spend per customer. And again, that's not concentrated in any one segment; it's extremely broad-based. And I think what you're seeing in the public numbers on presentation were recovered. I think for Chinese New Year against 2019, we're about 40% of where we were in 2019 for the first three days. We're seeing revenues and volumes outperforming that visitation recovery, which is natural, which is what we've seen in other markets. So things are looking extremely positive right now.

Joseph Greff, Analyst

Thank you for the insight, guys. Now, shifting to Singapore for my follow-up question, Rob, your remarks on mass gaming are quite impressive. Could you elaborate on your thoughts regarding the trends observed in late December and into January, particularly the changes from the Mainland Chinese segment? I’d appreciate some context on the revenue or EBITDA contribution compared to 2019 levels and how it stacks up recently as a percentage of the overall mix.

Rob Goldstein, Chairman and CEO

Yeah. I'll let Patrick address that.

Patrick Dumont, President and COO

Yeah, sure. I think the important thing to note is that there was this pent-up demand story in Singapore and now it's blossomed into a full-on bonanza. And so what we're really seeing is every segment is working. And so we had a lot of noise in this quarter because of the hold. We rolled north of $7 billion, which is pretty unbelievable considering where we came from. The mass play was very, very strong. And so while we were doing this, we had almost 20% of our room inventory out. When you look at that 477 win number in mass and you look at the rolling volumes and realize we're out 20% of our rooms, there's a lot of legroom here. There's a lot of room for us to go. And so I want to be careful when we talk about margins and contribution because we're going to adjust that as we change mix, as we get rooms online, as we go through the innovation, as we change our suite product, as we price up, as we yield up, and as we have access to higher value tourism. This is really a forward-looking thing more than it is what happened in this quarter because we're going to continue to sort of adjust while we get our mix right. So what I would look to in this business is margin expansion over time, more rooms coming online, better product, better service and, of course, being able to capture a very strong component of both VIP play and mass play.

Rob Goldstein, Chairman and CEO

Joe, I think we're in a great position. We're back to a 1.6 run rate if we account for the unusually low hold on the rolling. The two significant drivers are renewed tours throughout Asia, particularly in China, which are yet to come; we haven't had China participation and limited involvement in 2019. As Patrick mentioned, we are fortunate with Marina Bay Sands regarding the physical plan handicap. I believe it will become a $2 billion business in the future, with nothing holding it back except for our own extraordinary renovations. I hope you get a chance to see it, along with the resurgence of Asian tourism, including China's return to the property. Our only regret regarding Singapore is that we wish we had more capacity, as I believe you'll see this year the earning potential of Marina Bay Sands. It's an exceptional product, and we're fortunate to have it.

Joseph Greff, Analyst

And Patrick, just back to your mix and yield comment. Do we interpret that, at least if we look back to 2019, that that China MBS patron was a had a positive mix on spend per trip or spend per day or gaming revenue per day?

Rob Goldstein, Chairman and CEO

I think it's a combination of factors, Joe. I think, obviously, the China market is always powerful. But I also think there are cost issues in all these markets. There are inflationary factors, undeniable, be it energy, wages. I mean, there's a different world out there, and you've got to cope with it. But the thing about Marina Bay Sands that fascinates us is we believe we can drive revenues across the board. We're going to rethink our retail, rethink our table mix, our floor, our room pricing. We think we have a product that the demand will be close to insatiable for it, from the gamer and non-gamer perspective. We're going to overcome margin cost by overcoming costs with higher revenues, a lot higher revenues across the board in every segment. That's the approach. We see Marina Bay Sands as a very unique product that's unrivaled in that part of the world. We can just push pricing across the board: gaming pricing, ADR pricing, retail pricing, F&B pricing. It's just that good and that desirable. And let's face it, the market right now is in our favor. Singapore is very desirable from a lot of perspectives.

Joseph Greff, Analyst

Great. Thank you.

Operator, Operator

Thank you. And the next question is coming from Carlo Santarelli from Deutsche Bank. Carlo, your line is live.

Carlo Santarelli, Analyst

Hey, everybody. Thanks, and good evening. Rob, or whoever wants to handle this, I was just wondering, in the brief time that China has more or less reopened, have you guys seen positive or negative, any change in behavior as it pertains to patronage at Marina Bay Sands?

Rob Goldstein, Chairman and CEO

MBS, that's a good question. I think it's too early to say we're going to see that. I see us getting plenty of trying of participation, both in Macao and Singapore. But it's really too early to say. It just happened so quickly, and the turnabout was so rapid that I think it's too hard to predict. I think the way this is going to segment though is that we're going to get more than our fair share of the rolling business in MBS. That moves in that direction, and we'll get the premium mass customer to visit more into Macao. I think our business really is going to split in that direction. I think it's very predictable what's going to happen here, and we're okay with that. So Singapore will get the top of the top. But each of those places will get tons of premium mass demand from China and throughout the region. I also think people underestimate how powerful Macao can become as a desirable visitation place throughout China. It's got everything. It's got the rooms, it's got the access. One thing it has beyond Singapore is that it has a lot of capacity and a lot to offer. So I think Macao is going to be a very strong international destination ahead. We plan to be very aggressive in trying to push people into Macao to see the property and all of our products.

Carlo Santarelli, Analyst

That makes sense, Rob. Thank you. And then just as a follow-up, and I understand kind of looking backwards at things that are Macao related is somewhat pointless in the environment that we're in right now. But it just does stand out a little bit when looking at your base and premium mass table revenues from the slide deck, your premium mass is representing, I think, 20% of 4Q '19 base mass, kind of more like mid-teens, 16, something like that. However, the premium mass is down considerably year-over-year, whereas the base mass is reasonably steady year-over-year. Is that a whole dynamic on just lower than normal historical volumes? Or is there something else that's kind of made those two diverge more recently here, and then the fourth quarter specifically?

Rob Goldstein, Chairman and CEO

No, I think it's just a visitation issue. It's not a whole issue. It's visitations sure. I think you're going to find that washes out. I wouldn't take those numbers too much to heart. I think when you look at Q1, I wish when you see January when those numbers are out there for the market, I think it will all wash away quite nicely. It won't enter into your thinking, Carlo. It's a nonevent. I think you'll see a surprising strength in both those segments. I would say in Macao; we're going to be very strong, very represented in the base mass because we have the capacity. We're a scale player. And so we have the capacity in the gaming, non-gaming, retail, restaurant space to do extraordinary things in the base mass. And again, as I'll reiterate, base mass in Macao is a different animal than the U.S. It's a $200 base bet, $175 base bet. So pretty special customer. We are going to represent because of our scale. But on the other hand, with all of our suite product, etc., I think we’ll also be the leaders in the premium mass business. So we have a very strong future ahead of us in Macao. I always chuckle at people; if you're looking for a negative commentary in the Macao market, you're in the wrong earnings call.

Carlo Santarelli, Analyst

Understood. And then, Rob, just quickly, if you could remind us, to the extent you guys are willing to share it, 2019, your direct VIP volume, your in-house VIP volume as a percentage of total, would you guys be able to share something like that?

Rob Goldstein, Chairman and CEO

We would, but we won't.

Carlo Santarelli, Analyst

Understood. You could, but you won't.

Rob Goldstein, Chairman and CEO

We could share it; we just won't. No, we're not going to do that. But Carlo, thank you. It's good to hear from you.

Carlo Santarelli, Analyst

Thanks, guys. You as well. Take care.

Operator, Operator

Thank you. The next question is coming from Stephen Grambling from Morgan Stanley. Stephen, your line is live.

Stephen Grambling, Analyst

Hi, everyone. Thanks. Can you hear me okay?

Rob Goldstein, Chairman and CEO

Pretty clear, Stephen. Go ahead.

Stephen Grambling, Analyst

So the visitation data for Chinese New Year looks like Hong Kong has been the bigger driver in the recent uptick in visitation. Is there any way to parse out recovery between Hong Kong and Mainland China? And any reason why spending behavior and recovery may be different between these source markets?

Rob Goldstein, Chairman and CEO

Yeah. And I've got a perfect answer to that. Mr. Chum?

Grant Chum, EVP of Asia Operations and COO of Sands China

Yes, you can see from the visitation numbers published by the Tourism Bureau, the Mainland Chinese visitation is at about a 30% recovery rate versus 2019 CNY. So obviously, with a 40% recovery for overall visitations, Hong Kong visitation recovery has been higher, mainly, I think, as a result of just the ease with which they've been able to go. And obviously, Hong Kong has had a longer stabilized situation concerning the pandemic. So I think from a pure visitation point of view, it's just not unexpected. And bear in mind, the transportation support for the Hong Kong visitor only really opened up on the eighth of January. So this has been a very rapid increase in Hong Kong visitations. That said, I think we referenced back to the comments that Rob made earlier, and I alluded to as well; I wouldn't get too stuck on the visitation recovery. In these types of reopenings, we're going to see the premium customers come back first. The core customer coming back as a much bigger percentage than the overall visitation. So I think what we're seeing is the quality of revenues and the patronage from all regions that visit in Chinese New Year has been very, very high. So we are way outperforming the visitation recovery in terms of volumes and revenue. Indeed, I think if you look at our property visitations, our recovery rate in visitations to our own property is far outperforming the recovery in the overall visitation numbers in the market versus 2019.

Rob Goldstein, Chairman and CEO

Steve, to Grant's comment just again, we don't want to confuse visitation with GGR. There's not necessarily an easy way to make them work. I was recently in Singapore; I walked in one of our retail stores with our retail person and she told me the sales in the store were like $70 million. I said there's nobody here, no one in the store. She said, Rob, we only need the right people, not a lot of people. I think that's what's happening in Macao; we're gaining the right people showing up in mass, and it's reflecting in the numbers. You'll see that when the market numbers come out. I think the early adapters to the market are the right people for the market, and I think that's why there's a confusion in the visitation versus the actual revenues.

Stephen Grambling, Analyst

Makes sense. And maybe as a related follow-up there, there's been a similar dynamic, stronger spend per visitor in the U.S. that ultimately drove much better margins. How are you thinking about the puts and takes to margins in Macao versus what we've seen in other markets?

Rob Goldstein, Chairman and CEO

Grant, margins?

Grant Chum, EVP of Asia Operations and COO of Sands China

I believe our cost structure is in a good position. Unfortunately, we've had to put in extra effort to optimize it over the past couple of years, but we currently have a very lean cost base. Regarding gross margins on revenue, there are a couple of points to consider. Firstly, our revenue mix is becoming more favorable from a gross margin standpoint, as a significant portion of our revenue will be coming from the non-rolling and slot segments. Additionally, we anticipate growth in the non-gaming areas, which typically have higher margins. We expect growth across retail, hotel, and food and beverage segments, among others. This sets a strong framework for our margins. However, the actual percentage of margin we achieve will depend on the rate of our volume recovery. We need our top line to rebound to a certain level to see that impact. We are optimistic about continued market growth, particularly in the mass and non-gaming segments, and we hope to surpass our 2019 performance. If that occurs, we believe our margin structure will be very favorable. I hope this clarifies our outlook on margins going forward.

Stephen Grambling, Analyst

Absolutely. Thanks so much.

Rob Goldstein, Chairman and CEO

Thanks, Stephen.

Operator, Operator

Thank you. And the next question is coming from Robin Farley from UBS. Robin, your line is live.

Robin Farley, Analyst

Great, thanks. I wanted to ask, you've always focused on the mass business there. But with some of your competitors focusing more on VIPs, are you noticing any changes in their approach now that the VIP market isn't as accessible as it used to be? Is it too early to determine what these changes might entail?

Rob Goldstein, Chairman and CEO

I believe it is, but I will let Grant weigh in since he's closer to the situation. I can't imagine we have much insight into that right now. However, we definitely have a new market that benefits our assets. For the past 20 years, our strategy has been to scale. As you know, Robin, it's about mass with premium mass and retail beginning, etc. This environment is ideally suited for our operations. Our competitors will need to adjust and evolve. But I am unsure. Grant, do you have any insights on that?

Grant Chum, EVP of Asia Operations and COO of Sands China

Yeah. I think, Robin, the competition for premium mass has always been very intense. I think we'll continue to be, given the dynamics you just referenced. At the same time, I think as Rob says, we've got a footprint and scale advantage on our non-gaming asset facilities, which really position us well for all segments of mass. And then as Patrick referenced at the outset, the product that we've been developing for the last three years, especially The Londoner and the Grand Suites at Four Seasons, are really prime position to help us be more competitive in the premium lifestyle segments up in market as well as, I think, hopefully, to drive overall high-value tourism to Macao over the coming years. And I do, as to point about international tourism as well. I think our footprint combined with our new products and our traditional strength in MICE, in our international marketing network really position us well to bring those high-value guests to Macao as well.

Rob Goldstein, Chairman and CEO

Great. Thank you for that color. And then just for my follow-up question on Macao. Can you give us sort of a rough sense of the dollar commitment that you've made to invest over the next 10 years in Macao? What percent of that might be new projects and what percent might kind of fall into the OpEx line, like overseas marketing and things? Just kind of CapEx versus OpEx split, just ballpark?

Patrick Dumont, President and COO

Yeah, sure. I think one thing that would be helpful. If you turn to Page 22 in the presentation, you'll see some details on that. It might be best to refer to those pages because we do break it out, and there are several pages behind it that explain what our concession renewal commitments actually are. So it's there in the presentation.

Robin Farley, Analyst

It's always tough to get through all of your slides before the earnings call.

Patrick Dumont, President and COO

I apologize. I think the key thing here is that we're very committed to investing in the Macao market. We think this investment will drive additional long-term tourism value and diversification of Macao's economy. We're very excited to make these investments, and we think these are things that will really help achieve our goals and the goals of the government. So we're looking forward to it, actually.

Operator, Operator

Thank you. The next question is coming from Shaun Kelley from Bank of America. Shaun, your line is live.

Shaun Kelley, Analyst

Good afternoon. Good morning, Grant. So just high-level, as you kind of look through what you're seeing probably real-time, could you give us just your latest thoughts on maybe the pace of recovery here? Do you expect things to be pretty linear or any chance of whether it's COVID or restriction-related setbacks or anything else that could change what you're seeing on the ground? And obviously, Chinese New Year is fantastic. But it would seem like the opening here is just going to continue. Any reason that that would be different from the reality? Or how are you seeing your bookings shape up and the patterns you're expecting to see over the next couple of months?

Rob Goldstein, Chairman and CEO

We're excited to be operational and experiencing strong demand. While it's challenging to predict specific future outcomes, I believe there is solid long-term confidence in the market. The current numbers indicate that this market is poised for a rebound, supported by a robust base of premium customers. Some concerns about liquidity and market resilience may fade over time. While the speed of recovery is uncertain, we're grateful to be open and believe conditions will improve. I don't expect COVID to create significant issues moving forward, even though jurisdictions like China have seen different trends. If current progress continues, we anticipate being in a very favorable position by 2023, particularly in the latter half of the year as travel patterns normalize and regions like Hong Kong and Mainland China bounce back. We see substantial growth potential and are optimistic about the future. We have strong faith in our assets and the revival of international tourism in Macao. Although we won't speculate on the timing or pace of the recovery, our outlook on the long-term prospects for Macao is very positive, and we plan to invest there to regain previous levels of success.

Shaun Kelley, Analyst

Thank you, Rob. I would like to ask Grant a more specific question regarding the labor and staffing situation in Macao. You mentioned the overall margin structure, but do you anticipate reaching the same staffing levels as before COVID? Are you already at that level, or do you expect to exceed it? What needs to happen for that, and what adjustments have you made? Given that many of those employees may have found jobs elsewhere and the market has evolved since then, how do you view the number of full-time equivalents or overall operating expenses compared to 2019?

Grant Chum, EVP of Asia Operations and COO of Sands China

I believe that we have become more productive and efficient over the past few years, so we need to reassess our situation without necessarily referring back to 2019. Additionally, the product mix has changed significantly with The Londoner. We now have a higher-quality, non-gaming asset base to work with. Currently, we are facing a shortage of manpower compared to our full operating capacity and the demand we are experiencing. One of the Sheraton Towers is not operational at the moment, and we are missing 2,200 rooms from our capacity. Our latest hotel, Londoner Court, which we soft opened last year, is not running at full capacity as it is only two-thirds operational due to manpower limitations. We are still lacking the necessary staff to run both our high-end and mass offerings at full capacity, but we will progressively hire to fill these gaps during our recovery. We hope to improve our operational potential within the next few months. There's a clear pattern of demand that will likely compel the entire industry to increase staffing for peak periods. While we don't have exact predictions for the post-Chinese New Year period, early indicators, such as hotel demand, suggest a strong recovery is underway, which will require us to hire more personnel.

Shaun Kelley, Analyst

Thank you very much.

Operator, Operator

Thank you. The next question is coming from Chad Beynon from Macquarie. Chad, your line is live.

Chad Beynon, Analyst

Hi, good afternoon. Thanks for taking my question. In the slide deck, you highlighted principal areas of development being Macao, which we just talked about, Singapore, which we talked about, and New York, which I was wondering if you could elaborate a little bit more on. But the second part of that question is, I know in the past, you talked about other potential opportunities in Asia like Korea or Thailand. Years ago, we talked about Japan. Wondering if those are going quiet at this time. So I guess, firstly, on New York, and then secondly, potential Asian opportunities? Thanks.

Rob Goldstein, Chairman and CEO

I think we all recognize that there have been discussions about Thailand, and it's certainly on our radar. It's no secret that Thailand is a potential opportunity, and we are looking closely at it. I would love to establish a presence there in the future. Regarding Japan, as you mentioned, that is not currently viable, and there’s nothing significant happening in Korea at the moment. Now, let's focus on New York, which presents an extraordinary and unique opportunity. For the winning bidder or bidders, this will be an amazing chance due to the simple fact that it is a huge market with limited capacity. There are only a few casinos, making it probably the only place in the U.S. where millions of people are served by just a handful of casinos. The revenue per unit there is expected to be exceptional, and the fortunate winner will likely do quite well. The market evidence is clear when we look at the three operating properties under table games. Even with limited room capacity, they are approaching USD 2 billion in revenue from slot machines alone. Our strategy is focused on large scale and quality, as defined by LVS. We're aiming to build not just a casino, but a large hotel featuring a spa, convention space, numerous restaurants, a new theater, and significant entertainment options. This project is designed to be transformative for the community and boost tourism significantly. We are fully committed to this endeavor. If we succeed, it will positively impact the county we are working in, benefiting the local residents and giving them something to be proud of. It will significantly enhance tourism in Nassau. Our bid embodies traditional LVS thinking, incorporating large scale with many non-gaming assets and around 400,000 square feet of new meeting space. New York is uniquely different from the rest of the United States. It has a large population with just a couple of casinos, unlike Las Vegas, which has a huge local market with many casinos. In New York, the competition will be minimal. This is an exceptional opportunity that may not come around again. We have been working towards a presence in New York for several years, and it seems that this might finally be our chance.

Chad Beynon, Analyst

Thank you very much, Rob. And then secondly, I just wanted to ask another one on Macao. Now that you've had some more data in the market, Grant. It seems like there's an even bigger shift toward Cotai versus Peninsula than we've seen in the past. I was wondering if you could confirm that or if that's really just kind of a mix of a reflection of what we're seeing from the different modes of transportation. Wondering if that's a trend that could continue in '23. And then related to that, how are you thinking about your asset and the Peninsula there’s CapEx opportunities? I know that's not part of the big CapEx plan. Thank you.

Rob Goldstein, Chairman and CEO

Grant?

Grant Chum, EVP of Asia Operations and COO of Sands China

Sure. Rob, should I take that? Yes. I haven't seen any data on the division between Cotai and the Peninsula. However, I believe it is clear that Cotai will emerge as the primary hub. Even before COVID, more than half of our mass revenues were already coming from Cotai, and I expect that trend to persist. There are many reasons for this, but fundamentally, the main reason is the cluster of world-class integrated resorts in Cotai. This next generation of lifestyle consumers is looking for these features in Macao as a destination, and the ongoing investments in non-gaming elements will make these resorts even more appealing over the next decade. All of these structural factors will likely continue to shift revenue towards Cotai. Regarding the Peninsula, we do have one asset there and plan to reinvest in it, but the vast majority of our capital will continue to focus on our Cotai properties.

Chad Beynon, Analyst

Thank you very much. Appreciated.

Operator, Operator

Thank you. The next question is coming from Brandt Montour from Barclays. Brandt, your line is live.

Brandt Montour, Analyst

Hey, everybody. Good morning. Thanks for taking my questions. Starting on Singapore. I was curious if you could compare the spend per visitor that you're seeing there to what we saw in Las Vegas in 2020 and 2021. If that's sort of holding up in the same way, if the curve looks different quarter-over-quarter. And then if you want to throw Macao early days into that comparison, that would also be helpful.

Patrick Dumont, President and COO

Yeah. I think it's really hard to compare between markets. The key thing to note is that it's really all about pent-up demand, consumer tourism experience and the products that we offer. The nature of those assets for high-quality tourism is not really fair to compare between markets. The price points are different; the consumer behaviors are different. It really doesn't look the same. What is thematically similar is the pent-up demand story. As I said before, Rob's seen it in his career in other locations. We experienced it here in Las Vegas in a very strong way. We saw it in Singapore in a very strong way, and it's still in effect, and we're starting to see it in Macao now. It's coming on strong. So I think it's really the nature of consumer behavior as opposed to the specific price points in each market.

Brandt Montour, Analyst

Okay, that's great.

Rob Goldstein, Chairman and CEO

It's important to consider what Singapore's market gross gaming revenue is compared to Macao. Macao could reach a gross gaming revenue of $25 billion to $30 billion and has historically been higher. Singapore simply lacks the capacity. Las Vegas has a robust non-gaming segment, making direct comparisons nearly impossible. The significant factor is the scale of visitors in Macao, particularly from Mainland China, and the accessibility to a large market is substantial in Macao, along with its diverse product offerings. The contrast between the Peninsula and Cotai is notable; Macao has immense capacity and excellent products. That market is so significant that when it returns to full capacity, it becomes challenging to find comparable areas. The power of that market is significant.

Brandt Montour, Analyst

Okay. Okay. Thanks for that. And then on Slide 22, the long-term commitments in Macao slide, on the capital, the left side of the slide, I was curious, looking at your plans for the next 10 years if you think you're going to be able to achieve return levels commensurate to recent projects that you've done in that market and you've enjoyed in that market?

Rob Goldstein, Chairman and CEO

Yeah, we sure do. We forget; you're talking to a bunch of people who have been doing business in the isles for 20 years, and we've seen the returns. We've seen what non-gaming can do. Our theaters, our retail, our entertainment has driven billions and billions and billions of dollars of EBITDA, and they will in the future as well. We have no concerns whatsoever about investing and getting a solid return on non-gaming commitments. All they do is drive more visitation to the market. They are additives to the market, certainly going to drive more business right now. We look at this as a 10-year starting commitment and going beyond that. Our commitment to Macao is as long as we can be there. So we have no hesitation to invest or show the market a very considerable return. Just look at what we've done in the past. I mean, on our current assets, mostly non-gaming. The lion's share of our investment in Macao is non-gaming; the great majority. It's worked out pretty well for us. So we think in the next 10 years, we'll continue that trend, and we're very happy and very committed to Macao.

Brandt Montour, Analyst

Excellent. Thanks so much, everyone.

Rob Goldstein, Chairman and CEO

Sure. Thank you.

Operator, Operator

Thank you. The next question is coming from Ben Chaiken from Credit Suisse. Ben, your line is live.

Ben Chaiken, Analyst

Hey, everyone. Just a quick one for me. Historically, capital return has been really important to you guys. Obviously, Macao is just beginning to ramp, and there's a lot of areas to invest. But how are you thinking about the dividend these days? Is that still important? And if so, how should we think about timing of that?

Patrick Dumont, President and COO

Yeah. If Sheldon were here, he would say, yay, dividends. I think someone put us on hold in Macao.

Daniel Briggs, Senior Vice President of Investor Relations

Sorry about that.

Patrick Dumont, President and COO

So as I was saying, if Sheldon were here, and we miss him dearly, he would be saying, yay, dividends. I think Las Vegas Sands is a growth company. We're back to growth. We're a development company. We do large-scale developments in key markets. But most importantly, we're also a returning capital company. I think as our business returns and as we see normalization of cash flows, we're going to look to start the dividend again and be very shareholder-friendly. But at the end of the day, we're very focused on the strength of our balance sheet and new development. You've heard Rob talk about New York; it's very exciting. There are other things that hopefully we'll get a chance to do in the near term. And opportunistically, I think we'll continue to deploy capital where the highest returns are. And as part of that, the dividend will be fundamental to our shareholder return strategy. I think we're going to wait and see where operating cash flow ends up, and we'll make some assessments at that point.

Ben Chaiken, Analyst

Got it. Thank you.

Operator, Operator

Thank you. And the next question is coming from Steve Wieczynski from Stifel. Steve, your line is live.

Steve Wieczynski, Analyst

Yeah, guys. Good afternoon. So Rob or whoever wants to take this, I mean, if we look at visitation in Macao over the last, let's call it, week or so around the start of Chinese New Year, it does seem like it has been pretty strong. And I guess, is there any commentary or color you could give us about the spending patterns of these folks that are coming to the market? Meaning, are these folks gambling as much as they did before? Or is some of that spending being pushed more into the non-gaming side of the floor? And maybe it's just too early to tell. But I think with how high Chinese savings levels are right now, I'm just wondering if you can provide any color around that.

Rob Goldstein, Chairman and CEO

Yes, they are spending in retail and gambling, and it seems like the right customers are showing up. Historically, the most enthusiastic gamers and retail spenders are the first to return during recoveries. We're seeing strong evidence of this in Macao, which has a very solid audience. The market numbers will reflect this, and it's gratifying for those of us who endured a tough three years to witness this return. The question now is how many more customers will come following this initial wave. Visitation from Mainland China has been somewhat mediocre compared to previous levels, but we expect stronger numbers from Macao. We're very optimistic about this. I believe they're not just choosing between gaming or retail; they are engaging in both while dining and shopping. This behavior is typical in recovery situations, where those eager to shop are actively buying and enjoying life again. The Chinese are similar to Americans who used to visit U.S. markets for enjoyment. Hopefully, this positive trend continues as we begin to reopen after the last three years. Grant, do you have anything you'd like to add or any issues to address that I haven't covered?

Grant Chum, EVP of Asia Operations and COO of Sands China

No, I agree with your observation. The nature of these reopenings is attracting high-quality customers first, which we are currently witnessing. We noticed this trend in Singapore back in April, where there was a stronger recovery in Southeast Asian spending compared to the recovery in tourist arrivals. Macao seems to be experiencing a similar situation, although it benefits from greater accessibility not only through international flights but also by land, sea, and domestic flights connecting through Southern China. We need to monitor how the pace of visitor recovery compares to revenue recovery. So far, the patterns observed during the Chinese New Year seem to support this trend, showing stronger revenue alongside increased visitation.

Rob Goldstein, Chairman and CEO

I believe Grant's last comment highlights an important point regarding the air-dependent market in Singapore. Airlines are essential for access, while reaching Macao is primarily done via vehicle or other means. This gives Macao a significant advantage, especially as the population overcomes the virus situation and gains confidence. There are no obstacles to the potential for massive growth in visitors coming from China, which is very encouraging. Additionally, we are pleased to see that spending is increasing across the board, and we feel fortunate about this trend. We hope it continues to escalate moving forward.

Steve Wieczynski, Analyst

That's great color. That's it for me, guys. Really appreciate it.

Rob Goldstein, Chairman and CEO

Thank you, as always.

Operator, Operator

Thank you. The next question is coming from Cassandra Lee on behalf of David Katz from Jefferies.

Cassandra Lee, Analyst

Hi. This is Cassandra on behalf of David. Happy Chinese New Year to everyone. Yeah, I think a lot of my questions have been answered already, so I hope it's not getting repetitive. You've mentioned cost issues in all markets, especially in energy wages. So could you discuss to what extent are those permanent? And where we might be run rating in terms of EBITDA versus 2019 levels today?

Rob Goldstein, Chairman and CEO

We're not going to talk about EBITDA for now, except for the information you've seen from Singapore. I believe energy is a significant factor and can fluctuate greatly. It doesn't follow a single trend, as you know, while wages seem to be an ongoing concern globally. I expect to manage that; I don't anticipate a significant drop in wages. Our resorts and our limited capacity to increase prices suggest that we can raise prices while maintaining our margins. This will be our approach in Singapore and Macao. I don't expect wages to decrease much. Grant mentioned efficiencies, which are crucial. We have a substantial workforce, in the tens of thousands, in Macao. Being more efficient and improving our operations should be beneficial. However, it seems we will all have to adjust to higher wages being a part of our structure for the time being, both in the U.S. and Asia. Patrick?

Patrick Dumont, President and COO

I think the key thing is that by the nature of our business, we have resiliency in the face of inflation. As Rob mentioned, we have a lot of flexible pricing, hotel rooms, gaming pricing, the way we operate food and beverage, that we operate all of our non-gaming amenities. These are not long-term contracts. We have the ability to go with the market. So while there are some structural increases around wages, around inputs that we use, at the same time, we have the ability to price because of the unique nature of our products, the experiences we offer, to be fair to the positioning of the products that we have. We've invested a lot over many years in both markets; that's why they're so strong. So in our mind, inflation is a real thing we have to take into account, but we have the ability to work through it and actually grow the margins of our business over time.

Cassandra Lee, Analyst

Great. Thank you. And shifting to New York, how do you share or disclose publicly what kind of investments you expect to make if you win the gaming license versus if you don't?

Rob Goldstein, Chairman and CEO

Yeah, the current thought in our heads is about $4 billion to $5 billion. Again, this is not a regional casino. This is a full-blown resort. With MICE, entertainment, retail, restaurants, it's the real thing. It's not meant to be a small-time investment; we're going all the way in and building something transformational that drives tourism. We think it will be the biggest, in terms of the casino business, the biggest revenue generator.

Cassandra Lee, Analyst

Great. Thank you so much for taking my questions.

Rob Goldstein, Chairman and CEO

Thank you, appreciated.

Operator, Operator

Thank you. And the last question today will be coming from Dan Politzer from Wells Fargo. Dan, your line is live.

Dan Politzer, Analyst

Hey, good afternoon, everyone. Thanks for taking my questions. I guess, first on Macao. I know VIP was historically about a quarter of your total business. To what extent, if any, have you seen this customer return, and in what form has it been more of a credit, a direct VIP type customer? Or is this customer showing up in premium mass?

Patrick Dumont, President and COO

One thing to note is the VIP contribution was much lower than that. Let’s call it, high single digits, low double digits historically. We've always been mass and premium mass driven. On a contribution basis because the margins in premium and VIP and, to be fair, the junket business were always structurally much different than they were for our mass business. We've always been led on a contribution basis by our mass play and our premium mass play. You can tell that by our asset base and how we speak to our customers and the type of tourism we attract. That being said, I do want to turn it over to Grant for some additional comments.

Grant Chum, EVP of Asia Operations and COO of Sands China

Thanks, Patrick. Not a lot to add. All of our rolling business currently is in the premium direct program, and I think the second point is premium mass is recovering much, much faster than premium direct. I think that's what we're seeing right now.

Dan Politzer, Analyst

Got it. And then just a follow-up on the New York investment, the $4 billion to $5 billion you mentioned, I mean, should we expect a commensurate return on that type of project that you've seen in your Asia-based investments? Or given the high-density population, the spend curve per unit, is there reasonable to think that there could actually be upside to that kind of 20% historical return?

Patrick Dumont, President and COO

I think for us, we're very focused on return on invested capital. So Rob and the rest of the team really look everywhere that we can to try to best deploy capital in the highest return outcomes. We'd be interested in New York if we didn't think the returns were there. We think it's a very strong potential opportunity. For us, it's going to be about the jobs we create, about the tourism we drive about the investment in the local community, the relationships that we have. In every market that we're in, we're typically the largest trade partner with small and medium enterprises. We're looking to develop deep community routes, so we can support the community and really show this industry is something that can benefit everyone. We're very excited about it. We think the returns are there; otherwise, we wouldn't be interested.

Dan Politzer, Analyst

Got it. Thanks so much.

Operator, Operator

Thank you. And ladies and gentlemen, this concludes today's conference call. You may disconnect your phone lines at this time. Have a wonderful day. Thank you for your participation.