Morningstar | Update
Sands China is a strong contender in the Macau gaming sector with a strong presence in mass, retail, and non-gaming facilities and in Cotai. We estimate more than 85% of the group's gaming tables are in Cotai, a popular tourist destination with a critical mass of world-class integrated resorts that continue to take market share from casinos in the Peninsula. Sands China used to place lower priority of the lower-margin VIP segment, and this has changed. The group is committed to expanding and refurbishing the VIP gaming areas in the Venetian and Plaza with phased completion throughout 2018 and 2019. However, we think the downturn in 2019 and 2020 will put pressure on premium demand and hurt the return on investment for the new VIP areas in the near term. Sands Cotai Central will be renovated, expanded, and rebranded to the Londoner with phased competition throughout 2020 and 2021. We think the Londoner will help defend its market share from its biggest competitor, Galaxy’s phase 3 and 4 that are expected to open in 2020 and 2022, respectively.We are confident that the Venetian and the Parisian are both thematic properties that will drive tourists to visit and gamble and drive traffic to the group’s interconnected properties in Cotai. By the end of 2022, Sands China will have 13,178 hotel keys, or 39% of Macau casino operators’ total room count, which will be by far the highest. This large hotel customer base will likely visit the group's casinos and nongaming areas. The high room count will also allow Sands China to give complimentary rooms to VIP, premium mass and even mid-mass gaming customers, enticing them to stay overnight and gamble more. As the largest integrated resort operator, the group's meetings, incentives, conventions, and exhibitions businesses can drive traffic to its casinos during weekdays, when there are fewer tourists. Sands China's possession of a large amount of nongaming facilities makes it more likely to successfully renew its gaming license, as the government specifies that a major consideration is a focus on helping Macau to diversify from gaming.Sands China and its subsidiaries are principally engaged in the operation of casino games of chance or games of other forms, the development and operation of integrated resorts which contain not only gaming areas but also meeting space, convention and exhibition halls, retail and dining areas and entertainment venues and other ancillary services including ferry operations and other related operations in the Macao Special Administrative Region of the People's Republic of China.
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