Good afternoon. My name is Angelica, and I will be your conference operator today. At this time, I would like to welcome everyone to the Las Vegas Sands fourth quarter 2018 earnings conference call. All lines have been placed on mute to prevent any background noise. I will now turn the call over to Mr. Daniel Briggs. Mr. Briggs, you may begin the conference.
Thank you. Joining me on the call today are Rob Goldstein, our President and Chief Operating Officer, and Patrick Dumont, Executive Vice President and Chief Financial Officer. Before I turn the call over to Rob, please let me remind you that today's conference call will contain forward-looking statements that we are making under the safe harbor provision of federal securities laws. In addition, we may discuss non-GAAP measures. A definition and a reconciliation of each of these measures to the most comparable GAAP financial measures is included in the press release. Please note that we have posted supplementary earnings slides on our investor relations website. We may refer to those slides during the Q&A portion of the call.
Finally, for those who would like to participate in the question and answer session, we ask that you please respect our request to limit yourself to one question and one follow-up question, so we might allow everyone an opportunity to participate. Please note that this presentation is being recorded. With that, let me please turn the call over to Rob.
Thanks, Dan. Good afternoon, everyone, and thank you for joining us today. Sheldon is not joining us on the call today. He's a little bit under the weather. We met with him yesterday. He's taking some medication that's making him a bit drowsy. He decided this morning to take a rain check on this one. He looks forward to speaking with all of you on upcoming calls. He did, however, have a message for everyone. That's great quarter. Yay, buybacks, and yay, dividends. Now let's go to our financial results. We had a very good quarter. In Macao, our adjusted EBITDA was $786 million. We achieved record mass revenues. We increased our market share of revenue in our most important market. Our growth in Macao is coming from every gaming and non-gaming segment.
Margins in every segment in Macao were stable or growing during the quarter, with the exception of our rolling premium direct business, where our low hold negatively impact our EBITDA. The strong top-line growth in our rolling business of 34.6% for the quarter will positively contribute to our bottom line as hold normalizes in that segment. In 2018, our Macao operations delivered an adjusted property EBITDA of over $3 billion , an 18% increase over 2017. Overall, Macao market showed strength in 2018, growing GGR by 14% year-on-year. Our Macao properties generated 17% growth in GGR over that same period. It is clear the Macao market's evolving, and Sheldon's vision more than a decade ago to create the critical mass of our hotel, retail, entertainment, and MICE offerings positions us perfectly for future growth.
The opening of the Hong Kong-Zhuhai-Macao bridge is a major milestone that will help Macao grow tourism and MICE business in the years ahead. An engineering feat of unprecedented scale, it creates a direct connection between the Hong Kong Airport, one of the largest and most important transportation hubs in all of Asia, and Macao. We couldn't be more excited about our planned $2.2 billion investment in our critical mass of hotel room, retail, entertainment offerings in Macao. We look forward to participating in the benefit from the growing infrastructure in Macao that will continue to increase leisure and business tourism visitation from China. Looking ahead, we believe there's just no better market in the world than Macao with regard to continued deployment of our capital. Look forward to making additional investments in Macao as we contribute to Macao's diversification and evolution into Asia's leading leisure and business tourism destination.
Let's turn to Singapore. We enjoyed a very strong cash flow. However, VIP volumes and hold were lower this year. We still remain capacity constrained at Marina Bay Sands and hope to have the opportunity in the future to make additional investments in Singapore, as that's a very strong market. We simply run out of rooms and gaming capacity there. Las Vegas also had a good quarter, led by strong convention exhibition business. Look forward to adding additional incremental entertainment offerings in Las Vegas and the positive impact of the MSG Sphere at The Venetian, which is under construction and is supposed to open in 2021. Finally, we turn to the increase of capital to shareholders. We raised the annual dividend for the 2019 calendar year. We repurchased $430 million of stock during the quarter. We see meaningful long-term value in the LVS and SCL equity.
We thank you for joining us on the call. Let's now take some questions. Operator?
Yes, sir.
Let's begin the Q&A session. Thanks so much.
You're welcome. If you would like to ask a question, please press star, then the number one on your telephone keypad.
No questions?
We do have a question from Mr. David Katz of Jefferies.
Okay. David?
Sir, your line is now open.
Hi. Afternoon.
Hi.
It is a nice quarter.
Thank you.
I wanted to just touch on Singapore, if I may.
Sure.
Which candidly came in a bit below what we were forecasting. If you could just talk about the different forces on the plus and minus side. I heard your commentary about it being capacity constrained, but just talk about the quarter a little bit and what went well, and what's maybe challenging you or creating opportunities.
Sure. First, let's begin by recognizing this is an iconic destination that's made an awful lot of money for this company. We're very proud of the. It's the definition of an IR. It's exemplary in every way. Its biggest challenge, David, by far, is its capacity constraint, both from a lodging, from a gaming perspective. We just don't have enough slot machines, ETGs, rooms. We have demand, we don't have the supply. We also like to see more entertainment in the region, in Singapore to drive more premium mass play. We've alluded to in the past and continue to reference the frustration in terms of money movement into Singapore. It's very difficult. Our growing business there has been limited for a number of years now. The growth that remains in primarily foreign tourism into the market for the premium mass segment.
Again, we just can't create more rooms right now or more gaming on the weekends. That's the frustration. We played a little bit unlucky here and there, and every quarter it oscillates, but the margins remain strong. The primary difficulty in the market is capacity constraint. Very proud of the asset. Looking for the chance to invest more in Singapore and grow more lodging and gaming, perhaps in the future. That's the long and short of it. I can't tell you how frustrating it is to have such a wonderful asset that could grow, but right now is not able to.
Thank you. My one follow-up is Macao related, if I may.
Sure.
For sure, we would all likely agree that the long-term outlook there for that market is quite positive. Just thinking about, say, the remainder of the year and what we would call, we don't want to ask about a quarter, but we can ask about what we call the medium term.
Sure.
There are certainly a lot of inputs that we're trying to process, whether those are macroeconomic or company specific, et cetera. Help us think through what the rest of the year looks like or what inputs we should be contemplating as we model for the rest of the year for LVS in Macao, specifically.
Yeah. I think the best way to look forward in Macao is look backward. 2017, actually, let's go back to 2016. We were hovering around $2.3 billion or $4 billion of EBITDA. I think Wynn was opening, we were opening Parisian. The Studio City property opened up. MGM was on the horizon. A lot of people thought Macao had seen its best days, and we would be share givers, and the market would just dissolve into its competition. We fast forward, we've now grown to $3 billion EBITDA a few years later. We've been share takers in virtually every segment. In fact, in every segment. It's a very simple market to understand. It's a premium mass market driven by scale. The VIP segment will continue to be challenging, I believe. The mass and premium mass will be the driver. I was there last week.
I walked all the gaming floors, drove the bridge back and forth to Hong Kong. It's an extraordinary place, and it's an extraordinary market that's just starting to touch its potential. To think about this for a week or for a month or for this issue, that issue, will probably drive you crazy. If you think about it in the big picture, we've grown our EBITDA back to almost the highest level ever, despite a huge decline in VIP since 2014. I think what we've done there, which is build scale. We're building more rooms today. We're building more retail today. We're building more everything today. We believe that that market will continue to grow. I think the best way to look at our enthusiasm and our focus is our activities. We're underway with The Londoner, The St. Regis, The Four Seasons.
We're strong believers in Macao, and we're investing for long term. Yes, there's always, is there a smoking issue today or a blip in the economy? There's always something to worry about. We get that. Look at this magnificent market the last three years, what it's done. It's absorbed all kinds of capacity and still growing. We're just very bullish, and we're blinded by the extreme size of Macao in terms of the market today, but more important, tomorrow. Look at the rest of the rim. Look what the bridge has done. The bridge is a game changer. It's a magnificent achievement that accesses all of China. All the airports in China can now land in Hong Kong and get to Macao in a car. The boat's not necessary. If you want to take a boat, you can.
Even from central Hong Kong, it's almost as quick just to take the car through the new bridge. The new bridge is an incredible achievement. It also opens up the rim. We're long-term thinkers. We're long-term believers. We don't think there's a market like it in the world anywhere, a better place to deploy capital. We're fervent believers on license in 2000, whatever it is, 2021, 2022. I think you best, from our perspective, look at this as a mass scale market that's room dependent. Those without rooms will have a difficult time growing their share. Mass demands rooms. Non-Guangdong visitation demands rooms. This is a very special place. It's very unique, and we are delighted to be there and investing today. That's the best answer I can give you. If you worry about this Tuesday or next Friday, you'll probably have some sleepless nights.
If you think about it long term, you're going to sleep very well and be very well rewarded.
There's been a lot of commentary about the upcoming year. I think one thing you should look at, and we spent a lot of time on this in the earnings deck, trying to display it in different ways. The infrastructure investment, to Rob's point, going into the area that allows for the bridge to be effective, it allows for tourists from deeper into mainland China to actually access Macao and access the growing tourism and infrastructure that's there, is only improving. If you look, we have page 15 in the slide deck that shows the amount of growing visitation from China into Macao, and you'll notice that the rate of growth is accelerating. If you think about the upcoming year and the upcoming several years, what you'll see is that the infrastructure improvements will allow tourists to take advantage of Macao and grow the mass business. Right?
Grow this very solid high margin mass business as they look to use the non-gaming amenities that our chairman designed a decade ago. You think about that amazing press vision, where he laid out a plan for this non-gaming amenity system that really creates this tourism driver, and that really speaks directly to the mass business. If you look at the infrastructure improvements, again, it's in the earnings deck, you can go through those slides. We view the mass business as a very strong catalyst for growth for the company for this year and for the years to come. There's been indication of that in the past, and we see a very bright future for that segment because of the infrastructure, because of the nature of the business, and because of the tourism desirability of the assets that we and others have built in Macao.
One of the ironies of the market is, for me, is that a couple of years ago, everyone was concerned too many rooms being built, today everyone wants more rooms desperately. The fact is it runs at incredible occupancy. Demand is there. Demand is going to keep growing.
Got it. Thank you for your answers.
Thank you.
Our next question comes from the line of Mr. Thomas Allen from Morgan Stanley.
Hi, Thomas.
Good afternoon. Hey, how's it going? Just quick numbers question. You said, in Macao, your rolling direct business had low hold and that impacted EBITDA. Could you quantify that?
No, we're not going to address it specifically. I think we've put out enough information about the business to throw a number out there. We'll just add to the clutter. I think from our standpoint, Rob will address this further, we have a different margin structure within the premium direct and junket businesses. Sometimes based on the nature of the hold and the difference in hold between those two businesses, our normalization on an aggregate basis doesn't need to happen, but it actually needs to happen on an individual basis. We had this happen a couple of quarters ago. From a margin basis, because of the nature of that structure, it impacts the aggregate margins of the business. That being said, our mass margins are as strong as ever. Right?
I think when you look at the structure of the business, the cost structure of the business, the cost control that we've put in place, our ability to get some operating leverage of the business, that will continue. I think in this particular instance, because of the adjustment methodology and the overall aggregate amount of rolling volume that we've had, you see some margin change because of that mix.
Thomas, we held within the normal range across the rolling segment for the quarter for the company and the portfolio. The mix was not in our favor. As you know, we have a very strong rolling direct business which held under the expected range, and this segment is much more favorable in terms of margin to us. We did hold above the range for the rolling junket business, but conversely, we had a much lower margin in that segment. In summary, we definitely left some money on the table this quarter, significant dollars because we didn't hold within the range for the direct business. It's a shame it wasn't the flip side, it would've been quite a quarter, but it wasn't. The volumes are there. We keep taking share. We keep growing our rolling business. People for years felt we were ill-equipped to compete in that segment.
We just keep growing share. It's sad because it would've been an amazing quarter had we held up. It didn't. I think, again, our focus can't be on the rolling and a point or two of luck. It has to be on the mass side, and that's where we excelled. I think that's where the story resides for us. A quarter here, a quarter there, a point of luck, a point or two of luck isn't going to influence us. Long term, it's about the right assets for the mass, premium mass, and the growth there is extraordinary. Eight quarters we've been amazing.
That's a perfect segue into my next question. Page 14 on the base mass versus the premium mass performance. Obviously, looking at it year-over-year, it looks like base mass is outperforming premium mass. Quarter-over-quarter, you saw some weakness in premium mass in the third quarter, and then that bounced back in the fourth. Can you just talk about kind of underlying trends for those two markets? Which one you think is going to be stronger in the future? Thank you.
Boy, that's a good question. I wish I knew the answer to that. I will tell you they both look awfully good. We had a very strong fourth quarter. We achieved record non-rolling drop and win, 13% growth in premium mass Q -on- Q, despite a lot of new competition. I was in the new Morpheus last week, which is quite a property, impressive hotel. Macao, by the way, just gets to be more and more impressive when you go back there. World-class product. We're looking forward to showing you our new Four Seasons product, which is going to be pretty special. We won't know exactly what the market grew at in Q4 until all the operators have reported. We can say we outgrew the market in non-rolling tables in the first nine months of 2018. We outgrew the market in the full year of 2017.
Our outperformance in premium mass and mass is not about one quarter. Our outperformance has been achieved consistently, cumulatively, for the past seven or eight quarters. We've achieved this despite having the biggest base of business and despite the very intense and very good quality of competition on Cotai. We couldn't be happier about our position in the market. We don't stand still. We intend to get better because the competition out there is just too damn good and the market opportunity is just too damn big. That's why I look forward to executing, completing on The Londoner, The St. Regis, the Four Seasons. Our position's been simple for over a decade. We believe in the mass and premium mass.
Our assets, our arena, our retail, our project, our gaming is positioned to put us at the top of the heap and grow to $6 billion, $7 billion, $8 billion. We believe mass is a $30 billion business. I'm not capable of telling you what the breakout is of premium versus base. We'll take it all, and we have the assets to take it all. I think those who don't have rooms, those who talk about building rooms, are going to struggle. Those who have rooms, especially great rooms like we're building, are going to grow. I think this quarter, we're a few points below the growth, maybe. In the aggregate, our numbers are pretty exemplary, and we're delighted where we're heading.
Helpful. Thank you.
Thank you.
Your next question comes from the line of Mr. Stephen Grambling from Goldman Sachs. Your line is now open, sir.
Thanks. Good afternoon. I guess as a follow-up to the first couple of questions on Macao. On slide 19, you highlight additional investment in VIP in 2019 as you seek to grow faster than the market. I guess, how do you think about that segment longer term? I get the mass component, but just thinking about drivers there and how you want to position.
You know it's a more challenged market, and it's obvious. You can read all the information out there. There's been crackdowns recently. There's all kinds of issues on the VIP. I think we're more confident of the sustainable growth of the premium mass-mass short term, but I wouldn't rule out VIP. This has proven very resilient over the years. I've made the mistake of counting it out a couple of times, and I've been wrong. That market is going to bounce back. Again, the penetration in mainland isn't complete yet. This airport, having driven to the bridge last week and going to the airport, it's just going to change the game for Macao. The physical asset to drive more high-end, not just from China, but throughout the Pacific Rim into Macao is there. Macao is the world-class facility of Asia. There's just nothing like it.
Honestly, there never will be another place like it. It's just too good. It's too far ahead of the competition. I think whatever VIP business is in Asia will continue to mostly go to Macao. We will participate. We've dedicated ourselves to better rooms, better suites, better gaming operations, better relationships, and it's evidenced in our numbers. I would not be comfortable, however, if you are solely dedicated to VIP or if the majority of your income comes from VIP. I think you need diversification in the premium mass-mass to take advantage of this great market. We'll be there. We'll probably be share takers in the near future, again, this quarter. We keep growing the VIP business, but I think it's more challenging in the short term than the premium mass-mass. That's where the strength resides short term and long term.
Again, I wouldn't count out VIP. It's proven to be very resilient. Again, market penetration, look at the non-Guangdong numbers indicate there's a lot of potential out there in China and the Pacific Rim. If you haven't been there recently and driven to the bridge, the full impact and the full potential of the bridge is only realized once they open that thing up totally functionally to let it do all it can do. It's a very impressive piece of work.
Fair enough. Then maybe an unrelated follow-up, turning to the U.S., I guess there's lots of noise, consolidation talk in the space. I guess, how would you think about M&A as part of your capital allocation framework versus reinvestment in Macao versus expansion of new markets?
It's interesting. There's always a lot of speculation, particularly in our industry, about the opportunity for acquisition. I think if you look at the portfolio that Sheldon designed and built from the ground up, we believe we have the best assets in the business. For us, we think investing in those assets are the best way to create long-term shareholder returns. We've demonstrated that over the years. When our chairman has a vision, it's been proven that it creates tremendous value for shareholders. We've invested in the properties that we have billions of dollars of additional CapEx in order to keep them fresh, keep them relevant, including the junket piece pursuant to your prior question. In our mind, that's the best way for us to grow our business and enhance our return of capital as our cash flows grow.
For us, M&A is not really something that we would look to unless it was unbelievably compelling and we felt would simply augment the strategy and vision of the chairman that we've set out on. From our standpoint, if you look at our balance sheet, look at the strength there, look at the way we handle return of capital, the way we enhance shareholder returns, we're very much geared towards our dividend, which is the cornerstone of our return of capital policy. We're very much geared towards share repurchase. We bought $430 million this quarter because we had the liquidity, and we're confident in our future ability to grow cash flows. Really, we've got our $2.2 billion program in Macao.
When you look at those things and you look at the way we're allocating capital, I think we've made a pretty clear statement about how we feel about the business and about where we want opportunities to exist. We've never really bought anybody, I don't see that changing unless the Chairman has a different view about the opportunities that an M&A transaction may provide. From our standpoint, we've been pretty clear about our strategy, about his strategy, and that's how we intend to execute.
Awesome. Yay, dividends. Yay, buyback.
Thank you. Next?
Your next question comes from the line of Mr. Anil Daswani from Citi.
Hi, good morning, guys.
Sir, your line is now open.
Good morning, Anil.
Thank you. Just wanted to touch base on the premium mass standout performance that you guys had in the fourth quarter. How would you attribute that? Is that driven by the bridge? Is that driven by the new suite, that product that you opened at The Parisian? Is that driven by higher spending? Consequently, how do you think the further improvement in infrastructure with both the opening of the LRT as well as the Hengqin extension of the high-speed rail, are those drivers as significant as you guys have mentioned, do you think, the bridge is?
A couple of things there. First of all, the bridge at this point, we don't think is that impactful. Having driven it last week, it's unfortunately underutilized. There's not enough private car licenses to maximize what's going to be a vast potential. It will be a driver in the future. It's not today. It's more about busing and day trippers. Take that off the table as a driver. What's driving our premium mass business is better product. We have a real mantra around here about getting better the aesthetic appeal of this company. We're getting there. We walked last week to our new Four Seasons suites, our new St. Regis, our new London suites, all being under design and construction. You look what happened at our Parisian property, it's just terrific, the returns on that investment. You just can't do better. Those rooms we've reconfigured, reconstructed, have yielded terrific results.
Parisian's now on a run rate of 130. Who knows where it goes to? Our Venetian core suites for the premium mass are just delivering, wish we had many more of them. It's a suite-driven quality product market, and it's not just about quality of product, it's about quantity. It's great to have a small hotel, just can't get enough. You need more. There's not an operator over there, not a one, that would like to have more top-tier suites, and we're building them, and everybody wants them. I think the evidence of Morpheus you'll see and the success of Wynn is evidence that quality wins and scale wins as well. We have both quality and quantity.
Everyone in Macao knows it, not a hidden secret, but our arena, our Cotai Arena, built back in 2007 with The Venetian, which people thought was pretty funny at the time, is probably one of the biggest drivers of premium mass business in the market. Last week, we had a great Asian entertainer there, packed the city, packed our hotel. Our numbers on Saturday afternoon was incredible numbers for a Saturday. The fact is that's a tremendous asset that people want to see these star entertainers, be it U.S. stars or Asian stars. That is a 40-week-a-year event we have on Friday, Saturday, Sunday, with top-tier stars, top-tier acts, that people covet those tickets. The whole town, if you talk to other operators, will tell you what happens when we bring in these kinds of acts. It makes for a whole different weekend, a whole different agenda.
You can see it on numbers that pop. Entertainment, suite product, quality suite product, quantity suite product. By the way, retail asset, last week walked into Four Seasons, I got knocked over by people trying to get into the stores. It's an amazing thing to watch. It's experiential. These young affluent people come from further away, they stay longer. They want better things in their life. They want entertainment. They want to stay in fancy rooms. They want to buy fancy clothes. They're having a hell of a time over there, and we provide that experience. That is the advantage we have, and we have it both in terms of quality and quantity. That is driving our business. Tomorrow, that bridge will be a big driver for the entire market. Today, that's what's driving it.
Thanks. Just one quick follow-up on Singapore. Do you guys feel that you're losing a touch of market share, or is it the market that you're seeing that's getting a touch weaker?
I don't know. We're very comfortable with our performance over there. I look at profitability more than market share. We're fixated on making money here. If we could extend more credit or do more things to create more market share and profitability, I'd be in favor of that. We feel we're maintaining our market share, and more important, our margin and profitability. Again, our focus over there is trying to figure out how to get more capacity like Macao. Wish we could build a couple of The St. Regis or a couple of Four Seasons properties because I have the demand in the foreign markets around Singapore. I have outsized demand. I have outsized MICE demand. I just need more rooms and more slots and more of everything to take advantage of it.
Thank you.
Thank you. Appreciate it.
Our next question comes from the line of Mr. Joe Greff from JP Morgan.
Hi. Good afternoon, guys.
Hi, Joe. How you doing?
My first question on Macao relates to your mass customer behavior within the fourth quarter. Was there any or much of a difference in behavior, say, at the beginning of the quarter versus the end of the quarter? Where I'm kind of going with this is, am I being overly optimistic that maybe the average mass player exhibited more confidence throughout the quarter? Then I have a follow-up also related to Macao.
Joe, I can't give you color there. I don't see that in our numbers. I don't see an elevation or a decline. I think it's pretty consistent. I'm not sure I can give you a good answer other than that. We don't see a whole lot of differentiation from October through December.
Okay. Sticking with Macao, since the smoking ban earlier this month on the VIP side, can you talk about what sort of impact you're seeing?
Sure.
You're the first guy to report, so you're the first guy to sort of talk about it. Thanks.
Right. We were there last week. We spent a long and a very productive week, and we walked up all the properties and hours of the properties and looked at everything. My belief is this smoking issue is a small speed bump to this market. It's a speed bump that will disappear. Areas that had smoking previously may suffer because the smoking room has now become the new predictor of where you're going to gamble. Example, if table A had smoking, but table B didn't, but has a smoking room attached to it now, B will be larger than A's performance in the future. Between all the smoking rooms we're seeing in the market, most of the bars are open already, and most of the market was very well ready for smoking. Plus the outdoor space, which all of us have in some buildings.
If you're really worried about it, you shouldn't be. This is a short-term issue we'll resolve without material impact. The smoking rooms, the outdoor space, the demand to gamble, I know everyone's worried about January, but we walked around Macao last week, and if that's reason for worry, it looks pretty good to me. Smoking will dissolve and disappear. I think those who take it seriously should move on and find something else to worry about. It's not going to be a long-term impediment.
Great. Thanks, Rob.
Thanks, Joe.
Our next question comes from the line of Mr. Chad Beynon from Macquarie. Sir, your line is now open.
Hi. Thanks for taking my questions. First on, sticking with Macao, your retail segment, I guess both in Macau and Singapore, it appears that the sales per square foot increased in the fourth quarter. That's evidenced in one of your slides and then also in the slide that you talk about turnover rent. This is different than what we've heard from some of the luxury retailers that have reported and highlighted some weakness in Macau, Hong Kong, and Southeast Asia as well. Could you maybe just elaborate on this and if this could potentially affect 2020 base rents or turnovers, just some more color on the strong performance. Thanks.
You're looking at the slide. I'm not sure how much color I can add except business is booming. I walked through The Venetian last week. I don't know if we had a sale going or something. It is truly incredible to see the people there. My sales per square. What mall does these kind of numbers? We did $1,746 a foot. The Four Seasons is now back at $58, heading for $6,000. Honestly, I went to The Four Seasons mall. I didn't understand it. The amount of people on a Tuesday afternoon, Wednesday, it's just extraordinary. I don't know what you're hearing. We're awfully happy with our retail numbers across Asia. Again, this is decline, bring more declines. Extraordinary.
Tenants want more space. Our retailers are extremely happy with our numbers. Our retail team has done a hell of a job over there. I think it's clear sailing ahead. We see no decline. If anything, its strength goes to strength. Maybe it's about, again, scale. When you walk through The Venetian and The Four Seasons, you have this incredible assortment of tenancies that cumulatively give you the most amazing indoor shopping experience. The faces of the people there, young, affluent. I made a comment to one of our team members. The Chinese consumer looks so sophisticated, so fashionable, frankly, so affluent. They're buying. They're buying with both hands. We couldn't be more pleased with our retail performance. I don't see any slowdown. I think it's going to keep booming. Chinese New Year is ahead.
It's very positive, very exciting because our portfolio retail just gets better. Keep in mind, that's one of the reasons they stay with us, they eat with us, they go to our entertainment facility. We've got this ecosystem of shopping, eating, entertainment, gambling. It all works in tandem. When you see it on the ground, like last week, we were there for four or five days, it's pretty exciting to watch. It's not going to change my opinion. That success in our retail is here to stay.
Great. Thank you. My follow-up, just when you're speaking with your junket partners and talking to them about how they're handling credit during this China slowdown and trade war situation, did you see anything more pronounced in the fourth quarter with maybe some of your junket partners pulling back on credit extension? When the trade war is resolved, do you think that could be maybe a positive with some more credit coming into the market?
It's really tough for us to comment on global macro versus the activities of our junket partners week to week. It's very hard to make that connection and sort of add any commentary there. What I would say is that we've been pretty consistent over the last year with the way we work with our junket partners in terms of player credit extension and any sort of credit that we have extended to them. What I will tell you is we've been investing in the segment. I think we've been reestablishing and strengthening the relationships that we have with our partners over many years. We've been investing in their spaces, investing in amenities that service those spaces, and investing in the team members that help service them. We feel like the segment is a powerful one. We think it's something that has a lot of opportunity.
We've grown in this segment the last couple of quarters. I think from a credit standpoint, we've always been very prudent and been very measured, and I think we'll continue to do so. I think we have a good dialogue, and it's an active dialogue with them because there are ebbs and flows. It's not something that we can look to a global macro economic effect and make any connection to. It's really sort of dealt with on the ground as we operate the business, dealing with competitive forces in the market.
Okay. Appreciate it. Thank you very much.
Thank you.
Thanks, Chad.
Next question comes from the line of Mr. Shaun Kelley from Bank of America Merrill Lynch.
Hi, good afternoon. Just wanted to kind of go back to the sort of mass customer segmentation, and what you guys are seeing there. In one of the slides, you guys kind of show a very modest decline in mass spend per visit, and I think you noted a pretty big uptick in day trip visitation. Can you just give us sort of your outlook for what kind of customers you guys are seeing in the market? Is this sort of the new normal? Is this being driven by infrastructure and some of the changes there, sort of what's driving it? We continue to see, obviously, very healthy visitation numbers into the market. Is this sort of the new norm, or do you guys expect this to kind of balance out or change over time?
Shaun, it's Dan. If you look at page 15, I think, and Rob referenced this earlier, Guangdong Province, that first line, 10.5 million visitors from the adjacent province. Plus you've got visitors from Hong Kong. The bridge makes it easier for people to get over and back over time. It runs all night. You don't have to worry about a boat. At the bottom of the chart, you've got 14.7 million visitors from Guangdong. The issue that the market is going to have is without more hotel inventory, all the hotel rooms will be taken up by wealthier and wealthier people, which is great for premium mass.
Yeah.
It also causes a squeeze, effectively, where people can't find a room if they're just coming over. That makes a great market. In the base mass, it makes a great market in the premium mass, and for the future, to get to $30 billion of mass revenue in Macao, more hotel inventory must be built. The market will continue to evolve. The customer set will evolve. What's crystal clear is that without more hotel inventory, there won't be enough capacity for everyone who wants to come. That creates the opportunity for us on both sides of the previous charts on page 14. They're both going to continue to get better and better over time. The growth is great in both places, and we're very happy to have day trip visitation. We're very happy to have premium mass visitation. We're happy when Chinese people get wealthier.
There's no way that any of this won't continue as long as more hotel inventory gets added to the market. If no new hotel inventory ever gets built, the market becomes more top-heavy, which would be unfortunate, and it would limit growth. We don't expect that to happen. We expect more hotel inventory to come in.
Shaun, that's right. We'd love to build more rooms today if we could, in non-gaming hotel rooms. We would love to be investing more money in Macao. We've made that clear to the government. We are such staunch believers in the need for more sleeping rooms for every segment, MICE, leisure, gaming. Dan's point is so evident. When you're there in January and you can't get a sleeping room, it's clear everybody needs more sleeping rooms in that market.
Thank you very much. Just as a quick follow-up, switching to Vegas, any color you can provide on just sort of the cadence of how you guys are expecting RevPAR to play out as we think through the balance of the year, just sort of what you're seeing on the kind of convention side and convention mix? It looks like 4Q was quite strong, but we saw a bigger volatility in the market broadly in 2018 than we're used to. Just sort of, kind of the health and maybe, again, cadence of what you're expecting to see there.
We had a tremendous quarter. It was a great result from the room revenue side. We're very pleased with our operations there. Our revenue per occupied group room night, incredibly strong, and we see that continuing. So far, things have been very good. As you know, we don't give RevPAR guidance, but very pleased with the progress that we've made in the Las Vegas market. Rob will probably talk a little bit about some of the group room night expectations. As a practical matter, I think we're very pleased with the operations team here. They've done a great job growing different segments of the business, including our baccarat drop, which we're very pleased with, but again, is highly volatile, and some of the non-baccarat business, which we believe we can invest in the future to grow. From a standpoint of Vegas, it's been going well.
We're very pleased with the quarter, and we think some of the tailwinds will be helpful for us coming up.
Team here, Shaun, is very bullish on 2019 on group volumes and feel very strong about how the market's progressing. No fears for 2019. Strong group market. We like to win a bet occasionally in the casino.
Nice.
Other than that, our lodging, if you walk around this town in January at CES and the SHOT Show, what's happening, it's a pretty impressive place, Las Vegas, especially in January. We feel very good about our prospects in 2019 as well as the entire Las Vegas marketplace.
In terms of our Venetian Palazzo property, we've done a lot of reinvestment the last couple of years. If you've been here, you've seen some of the results. We're very happy to, a new casino floor space that's been renovated. We've got a lot of new restaurants on offer. We've made significant investment in the rooms and other spaces. We feel that it will continue to make the property competitive and position it well for future growth in the market.
It's probably a lot warmer than New York, too. Thanks a lot, guys.
That's the rumor, yeah. Next question.
Our next question comes from the line of Ms. Felicia Hendrix from Barclays.
Hi there.
Hi, Felicia.
Hi. Some of you also sound sick, so I hope everyone is well, too.
Sounds sick? Gee.
No, that's me.
Oh, that's Briggs. He always sounds that way.
No. Yeah, Rob, look, you've talked a lot on this call about what you've been seeing in mass and VIP, on the VIP side, you outperformed significantly. I just wanted to continue to dissect that a bit. Just wondering, on the VIP side, given that outperformance, were those on plan for you, or did they surprise you as well? I'm also wondering, is the strength there the driver for the decline in EBITDA margins in the quarter?
Well, I think we alluded to earlier the mix on our rolling business, both direct and junket, was very strong. As you know, our rolling business direct is very strong there, and our margins are much higher in that piece of the business. We played lucky on the wrong side of the equation.
Oh.
Junket played strong. The rolling direct played very weak, and it cost us real dollars. As far as our commitment, we've always been a believer that's an important component. It's not the driver. It's a small portion of our overall profitability, but we enjoy the growth, and we believe it's important to keep competitive. We've done a very good job creating a better aesthetic in the junket rooms and the rolling rooms. We built these suites, which we have plenty of. The entertainment, honestly, is an unfair advantage. It drives amazing amounts of rolling business, direct and junket. I think we just continue the course. We will be subject, though, to the market's ups and downs as it relates to money flow and all the challenges that the market faces. We can't work around that.
Our base business of premium mass remains the money part of our EBITDA, the strong part. We're happy to participate in junket growth. No, it's a plan. The team over there has been very, very focused on trying to get more competitive with the right spaces, with the right junket arrangements, and it's paying off. Frankly, we had the advantage anyway with the entertainment, the suites, all the good stuff we have. Why not just deploy it further into that segment and add to our profitability? As part of our entire EBITDA ecosystem, it's helpful. It won't drive our business to $4 billion. That's where the premium mass comes in. It was a planned strategy.
It wasn't luck solely, and this quarter was unlucky, but it will bounce back, and I think you'll see some very good news ahead in the future in 2019 for our rolling business.
Okay, just staying on that, I know you gained a lot of share in VIP year-over-year, but quarter-over-quarter, it looks like it's down about 100 basis points. Is there any way to tell this early in the game who might have taken some share? Again, I know the overall market, VIP number that you put in the deck is a guess.
Yeah.
Yeah.
Yeah. The problem, I think, the world, trees don't grow straight to the sky. There's some ups and downs and, yeah, there's a little blip there. Overall, look at the performance the last couple of years. I look at the last two years and what staggers my imagination, I sat with rooms of people who told me we would be under $2 billion of portfolio EBITDA by 2019. We'd lose share, and we'd be falling apart, and the world comes to an end. Here we are sitting on a $3 billion a year, 18% growth, material impact in all segments. I just couldn't be more proud of our team, our focus, and we just keep growing in the right direction.
For those of you who are in this for the long term like we are, I think you'll be very well rewarded down the road of our performance. We are in the right place, right time, right assets, and we'll take on all comers in terms of segmentation, junkets included, rolling direct. Very bullish. A blip by 100 basis points I wouldn't get too excited about. Yeah.
Okay.
Not material. Yeah.
Thank you.
Okay.
Our next question comes from the line of Mr. Robin Farley from UBS.
Great. Thank you. Rob, you mentioned earlier in the call, you were kind of talking about growth, you said The Londoner's underway. I wonder if you could just give a little bit more specifics about the timing-
Sure.
and potential disruption. It seems like it would be hard not to have it, just to sort of manage expectations about it. Thanks.
Sure. No, very fair question. First of all, I want to make sure everyone understands, we've developed about 70 million sq ft at LVS over the years between all of our different properties. I read some notes, people are concerned about what's happening in The Londoner. Don't be concerned. It's going to be a magnificent success story that will be opening probably late 2020. It's underway already. It's a big challenge. We're taking a 1,200-room hotel and making it into a 600 rooms, all-suite hotel into The Londoner. There will be some disruption, Robin. We'd be silly to say there wouldn't be. It's a weird process in that we're making progress in the design approvals. We're continuing labor. We're making progress on our quotas. The government support is there.
I think the truth is that we're going to have an interesting process here whereby we're still running a major casino there under the SCC umbrella while we're developing Londoner. We'll still have Dragon Palace open the entire time. We will open The St. Regis before the Londoner opens up. It will be a work in progress for the next 18 - 24 months. There will be disruption. I'm not prepared to quantify it. I just can't. We will not lose a table game or a slot machine in the portfolio. We have the ability to transfer assets in the SCC as well as onto other gaming floors if need be. I think some of the people on our team are pretty astute, and I think we're able to move our assets around to make sure we maximize them.
I'm pretty confident that the disruption is going to be not as bad as other people anticipate. I'm also more confident that at the conclusion, people who are kind of making these comments about, "Gee, how can you take away a property making $800 million?" Well, when it makes a whole lot more than $800 million, perhaps long-term investors will recognize there is no better way to invest our capital than the SCC transformation in Londoner. Someone referenced earlier, Patrick, about M&A. There is no M&A that compares to this transaction. The return on this invested capital will be breathtaking. I think those who are questioning that should look back at The Parisian, which has now passed 20% return on invested capital. Look at The Venetian, now steamrolling towards $1.4 billion, $1.5 billion.
I think someone's got to pay a little attention to our past successes and give us some credit for Londoner. Yes, there'll be some disruption. We recognize that. Perhaps that EBITDA will transfer along those gaming assets to other properties in the portfolio and limit that disruption. In the end, if you're a long-term thinker and you want to make money for the long term, this is a game changer for us. We're going to take a property that's been subpar and make it the equivalent to a Venetian-style property, except we'll have twice as many sleeping rooms and fully themed and fully authentic London style. I think the result is going to justify the investment and the time and the effort. The disruption, we'll have to wait and see how bad it gets. We're pretty confident that our team there is pretty astute.
That's our take on Londoner.
No, I appreciate that. Just one clarification, it's not questioning whether you'll get a return on the investment. It's just literally trying to think about what expectations should be for this year. When do rooms start coming out of service, and kind of what percent of rooms will that be?
Right.
Just to think about maybe that's when we'd see some impact.
Post-Chinese New Year, we'll start. By the way, the St. Regis will open up its porte cochere to the public to open that building up and have access to the casino that way. Post-Chinese New Year, you'll start seeing the Four Seasons is going to open up in the fall of 2020. Londoner, the transformation from the current Holiday Inn, and really starts happening in March and April, the full transformation. It will be down for the 12, 14 months, whatever it's going to take to transform it. The most of the property, again, the Conrad remains intact. The St. Regis Hotel remains intact. We are building a new St. Regis behind the current St. Regis, that is under construction. Dragon Palace remains intact till the end. Again, there's different dates.
The one thing that does come down, we completely close the Holiday Inn 1,200 keys post Chinese New Year. Reopen them probably late in 2020. That's the biggest single thing.
If you keep in mind too, Robin, that those 1,300 hotel rooms flag Holiday Inn are the least productive hotel rooms that we have in the entire portfolio. They are great for families. They're great for people to come over. The product that we're creating is going to be even much more productive. The same way that we saw at the Parisian, taking smaller rooms out and creating larger suites. We expect to see the same kind of accretion. We're not losing that much when we take those hotels out of service on the gaming side in particular.
Right.
There's a big benefit that we get, and you get a small kind of degradation, you get a big outsized benefit once you're completed.
What I don't know, Robin, is what's going to happen around the property as we start tearing things down and the facade on the Strip there. That's going to be disruptive and all that, we have alternative ways of accessing the building. We're going to wait and see how we run this thing. We have a lot of confidence. The team there is really skilled at wanting to transfer people. Again, we have a lot of other properties we can move the demand to. Hopefully we can limit disruption as we build this thing for the future.
Okay, great. Thank you very much.
Thank you.
Our last question comes from the line of Mr. Carlo Santarelli from Deutsche Bank.
Hey, guys. Thank you. Rob, just quickly on kind of better understanding the VIP strategy right now. In terms of where you're seeing the majority of the growth, both on an absolute basis, obviously revenue up significantly this period. Are you seeing it more through the junket channels or more through your direct channels? If I recall, and I'm not sure you're going to provide color on this, but if I recall, I think your direct mix maybe used to be closer to 30% several years ago. Is that roughly the same, and where is the growth coming from?
You're right the first time. I'm not going to provide a breakdown, but I appreciate the question. The answer is both. We're getting strong premium direct play, I mean premium rolling direct, and we're also getting strong junket. Our junket partner has been terrific. It's coming both ways. I think that the point is we're number one in premium direct in the market and growing. The truth is, it's a very simple equation, it goes back to the same old story, assets. When you have the best entertainment in town, when you have these magnificent shows they want to see, when you have these junket rooms that are getting better and better. More important, again, there's a problem over there. There's just not enough sleeping rooms of quality for these high roller type customers, be it direct or through junket.
As you know, because you understand this as well as anybody, the junket business has evolved where the customers dictate where they want to stay now. The old days of the junkets being in command of where people gamble, that's over. The better products, the better properties, the better entertainment facilities, the better retail places attract the customers. We're getting a lot of that business from both direct and from the junket partners. As you know, they feed off each other, and they complement the non-rolling piece as well. Again, our ecosystem with retail, entertainment, too many suites for anybody else. I mean, we just have much more product than anybody else. As a result, we're going to keep growing that.
The only downturn, as you know, is the macro frustrations in the market as it relates to that segment, and that we can't overcome. Assuming the business is there, the economy is healthy, and the customers are showing up, we're going to keep getting an outsized share of that segment. The same we'll get an outsized share of everything else. I think the short-term views on Macao have always been a mistake. This is a market fueled by product, by quality, and by scale, and we have that in spades. I think as long as that holds up, along with our stellar management team, we're going to continue to be a very strong force in Macao on the road to $4 billion.
Great. Thank you. I just want to be mindful of the time, in terms of your buyback activity in the quarter, could you just talk a little bit about the thinking that went into obviously accelerating your pace of spend? Is that, hey, we find the valuation attractive, we have obviously a very strong balance sheet. What was different in the 4Q with respect to your approach to the buyback relative to prior quarters in the year?
I think, yes to your first two statements. I think we had raised the liquidity earlier on in the year, for the purposes of returning capital. We felt very strongly that we have a lot of growth potential. We're investing $2.2 billion, as Rob has been laying out in The Londoner as well as other high potential projects in Macao and the Four Seasons and The St. Regis. We see a lot of long-term value in the equity here. It's plain and simple. The Chairman sees a lot of long-term value. The company believes that it will continue to return capital in a meaningful way. We have the liquidity, we want to take advantage of it.
That's the nature of the repurchase that you saw in this last quarter, and we'll look to be aggressive again in the future because we feel very strongly about our returns and the potential in the investments that we're making. That's a result of that.
To put it succinctly, yay, buybacks.
Yay, buybacks.
Understood. Thank you, guys.
Thank you very much. Appreciate your time, Carlo.
Thanks very much, everyone.
Thank you all for participating.