The cash cow that is Macau

Research indicates the pockets are only getting deeper for casino companies in China

Richard N. Velotta

Richard N. Velotta

Most of us have a hard time comprehending what a million dollars looks like stacked up in a neat pile on a table.

Likewise, it’s almost impossible to fathom just how big the revenue take is in Macau when Las Vegas Sands Chairman Sheldon Adelson starts talking about his company’s earnings.

It’s staggering. What’s more, it has just begun.

But Adelson diverted attention from his company’s astonishing quarter when he responded on an earnings call to a question about how Las Vegas is doing and why Sands isn’t prospering more here. Adelson said that most of his competitors’ rooms aren’t as high-end as his Venetian and Palazzo suites and charge lower room rates.

Pundits jumped on the explanation, calling out Adelson for suggesting rate collusion and for whining about competitors exercising the same capitalist system he benefits from in Macau.

That’s not the way it went down, but Adelson’s clumsy response took away from the big story in Macau — a blazing casino market that isn’t close to burning out.

Sands has four casinos in Macau. During the second quarter, the Venetian Macau earned $800.6 million in revenue, Cotai Central earned $530.5 million, the Four Seasons Macau earned $242.1 million and Sands Macau earned $287.5 million. That’s $1.86 billion, not counting hotel, retail and entertainment revenue.

And analysts believe there’s more to be made in Macau. At least one said the best is yet to come.

There is one potential stumbling block for Sands: casino licensing renewals in 2020 and 2022. Negotiations are expected to begin by 2015. Most experts believe renewals are a near certainty, with only the term at issue, but others worry the government could try to auction licenses.

Meanwhile, an elaborate network of high-speed trains that link to Macau’s light-rail system are either built or near completion, cutting travel time by more than half. Millions of people will soon be able to easily access the Las Vegas of the East. The Hong Kong-Macau-Zhuhai Bridge, scheduled for completion in 2016, will provide an easy car or bus trip between Hong Kong and Macau, a route usually traveled by boat.

“When that bridge is built, it’ll be, ‘Katie, bar the door,’” Adelson said.

The adage usually means, “Be careful, there’s trouble ahead."

That may not be exactly what Adelson meant, but he’s right about one thing: Macau isn’t done making money yet.

Tags: Business