Afternoon. My name is Donna, and I will be your conference operator today. At this time, I would like to welcome everyone to the Las Vegas Sands Third 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. Sir, you may begin.
Thank you, operator. Joining me on the call today are Sheldon Adelson, our Chairman and Chief Executive Officer 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 Mr. Adelson, 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. The company's actual results could differ materially from the anticipated results in those forward looking statements. 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 and 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 with an opportunity to participate. Please note that this presentation is being recorded. With that, let me please introduce our Chairman, Sheldon Adelson.
Thank you, Dan. Good afternoon, everyone, and thank you for joining us today. We delivered another great quarter. Old normalized adjusted EBITDA reached US1.27 billion dollars an increase of 8% over the prior year. The Macao operations once again performed exceptionally well with whole normalized adjusted EBITDA growing by 18% to 764,000,000 dollars sorry, US754 $1,000,000 We experienced strong growth in both the VIP and mass gaming table segments, enabling us to again outperform in the Macau market, while growing our market share of revenue.
We also achieved record hotel occupancy of 96% at our Macau portfolio, all the properties at 96%. Our whole normalized EBITDA margin increased 150 basis points to reach 35% for the quarter. The Venetian Macao continues to be the iconic must see destination for every segment of visitor to Macau. Gaming and non gaming revenues both grew in excess of 20%, while adjusted EBITDA was up by 30%. The strong financial performance of the Venetian contributes to our unwavering confidence in the future of Macau, which will continue to benefit from enhanced transportation infrastructure and investments in the Greater Bay Area.
We are steadfast in our conviction that Macau will realize its vision and evolve into Asia's greatest leisure and business term destination. Given our confidence in Macau's future, we have elected to meaningfully increase our planned investments in the Macau market. We will increase the breadth and scale of our offerings throughout the Londoner, 4 Seasons Tower Suites and St. Regis Tower Suites. We will also expand our entertainment, convention and non gaming attraction across our Cotai strip portfolio.
These important projects will come online in phases throughout 20202021. We believe these increased investments will allow us to generate strong returns on invested capital in the years ahead, while helping to contribute to Macau's economic and development objectives of the reputation, economic growth and leadership in MICE and Entertainment. Now move on to Marina Bay Sands in Singapore. We continue to generate stable cash flow of Marina Bay Sands with EBITDA of US419 $1,000,000 for the Q3. Both our hotel and our overall non gaming revenues increased by more than 12% over the prior year.
Our retail mall sales per square foot increased by 22% over the last 12 months. Marina Bay Sands continues to serve as a powerful reference site for emerging jurisdictions that are considering large scale integrated resort developments. With the successful passage of the ION implementation bill in Japan earlier this year, We're continuing to pursue what would be unique opportunity. Now let's move on to my previous subject, the return of capital to shareholders. Yay, return of capital.
The Las Vegas Sands Board of Directors has increased their recurring dividend for the 2019 calendar year to $3.08 per share or $0.77 per quarter. That marks the 7th consecutive year we have increased our recurring dividend. We also returned $300,000,000 of capital to our shareholders through share repurchases during the quarter. In conclusion, our cash flow generation continues to be strong and predictable. We are increasing the scale and breadth of our investments in Macao because we have a long term and unwavering commitment to Macao and complete confidence in Macao's future as Asia is easy to reach our business tourism destination.
We look to the future with unwavering customer. We have a strong organic growth outlook. We are strategically reinvesting in our existing assets, while also pursuing new development opportunities. And we have both the intent and the financial strength to continue to return excess capital to our shareholders. With that having been said, I want to thank you for joining us on the call today.
Now we'll be happy to take some questions.
First question comes from the line of Felicia Hendrix. Your line is open.
So much and good afternoon. Sheldon, I do want to touch on the expansion of your CapEx program in a moment, but I did want to start with a different topic because investors have been focused on mainly 2 things over the past few months. First, there's been concern that the trade war related slowing, excuse me, Chinese economy is going to affect demands in the Macau. And then also, the political tensions between the U. S.
And China increases the risk that the U. S. Concession holders have when their concessions come up for rebid. So we've been having those conversations a lot with folks. So I was wondering if you, Rob, can address both of those.
So Rob, particularly on the demand side, what are you hearing when you talk to your customers? And I'm most curious if you can segment that out by VIP and mass because is the mass player somehow more insulated from the economic ebbs and flows? And then regarding the concessions, what can you say to alleviate investor concerns?
Right. As you know, we've been Macao since 2004, been there 14 years, we've invested $13,000,000,000 and we've seen it all over the years. We've seen these restrictions, union pay issues, junket difficulties, border restrictions, the Great Recession, and here we are in 2018 and we're probably going to deliver over $3,000,000,000 of EBITDA. We keep growing, we keep reinvesting. We have a highly diversified business, which is number 1 in virtually every segment there is from EBITDA to mass revenue to premium mass revenue to slots, hotels, our business is stable and strong and we always believed and we still believe they'll never be in a market as powerful as Macau.
I think Sheldon referenced in the call we're spending we're going to spend $2,000,000,000 next couple of years. If there's not a vote of confidence in that, I don't know what that is. We're simply telling you that we believe strongly today, we believe strongly tomorrow. We believe our concession renewal is not a risk. And more importantly, these 3rd quarter numbers, if you earn a $3,000,000,000 in the current run rate, our business looks very good over there.
In fact, if anything, the growth in The Venetian year on year Q on Q, the growth on our base mass business has soared. Our retail business has never been stronger. It's incredible how well we're doing it. It's the highest sales per square foot we ever had. There were about $2,700,000,000
I just
don't know what else we can do to run our business properly and we're doing that. We're doing it very, very well and these numbers are indicative of a very strong business that's diversified. It's a very large footprint. And so we talk about concessions and what we expect, all we can do is what we're told and addressed by the government of Macau. They have asked us over the years to invest heavily in non gaming assets.
Well, we built 13,000 sleeping rooms. We built over 2,000,000 square retail mall. We built millions of square foot of MICE space. We basically we built an arena when people thought that was a crazy idea. I just don't know what else you can do, but do what you're told to do and we have done that.
We are big fans of China. We're big fans of Macau. We've been wildly successful and our $2,000,000,000 statement that Sheldon made in the call to bring Londoner to fruition in the 4 seasons and the St. Regis is proof positive. Actions speak louder than words.
Those are our actions and that's what we're doing right now today in the Q3 of 2018. If that's not a firm belief how we feel, I just don't know what else is. And our business despite the stock market, our business feels very good over there. We're growing in every segment, including the junket segment. So I don't have a crystal ball nor does anyone else I know, but we feel very bullish on the market and we feel very bullish about our license renewal and we understand there's a trade war and there's issues going on, but over the years we've seen all that.
We've seen gotten 14 years what we haven't seen. I don't know what else we can take control of this yet. We're resilient, we're strong, we're making lots of money and we're investing in our firm belief that we'll be there today, tomorrow and for many years to come. And we're very privileged to be in Macau and we're very excited about the future. That's why we're building London and Four Seasons and St.
Regis. That's the best I can do in answering that question.
No, that's helpful. And actually that's a good segue to my sorry.
This is Sheldon. Do you mind repeating?
I will repeat if I was more of this group. But I meant all kidding aside, we spent some time preparing for this call and the more we look at our actions, I don't know what else we can do and our business today is just We
spent $13,000,000,000 or $14,000,000,000 and that's for new construction. Right. Remind the cost of maintenance CapEx, never mind all of the non gaming assets that we've installed and continue to deploy, never mind the what do you call it, the arena?
Yes, the arena, the MICE hotel. We'd like to build another arena. We love to build more. Sheldon has authorized us to keep going.
Yes. We're putting aside some land that we're going to put aside for placement of a wave pool. But now somebody else has got a wave pool. It's not that unique anymore. So I think we can afford to use our land for that.
I also think you should look at Macao. We came there in 2,004. The market in 2,005 was about US5 $1,000,000,000 this year approached US38 $1,000,000,000 mass market in 2010 was US6.7 billion dollars that's US20 billion dollars You have to invest long term, you cannot do cycles bother you or frankly stock market prices bother you. You've got to stay committed, you've got to hire great people, do great things, we've done that And you've got to follow the advices of the government and we do that. We just are very, very positive about this.
And again, I think the $2,000,000,000 plus investment we're making for the years ahead reflect that, that sincerity and that belief.
Thank you. And that is a segue just to my next question, which is a little bit of a housekeeping one. Of the announcement that you made today in terms of expanding these projects, If we spread the numbers correctly, which we did very fast, so we could have made a mistake. But it looks like from what you announced previously, there's slightly under $500,000,000 increase and then there's some additional projects which are now a little over $500,000,000 So maybe you can just touch briefly upon the new stuff that you are adding and why?
I think I'll take that as well. We are spending more money and it's based on a few different reasons. Number 1, we see growth in Macau in all segments. We see our hotel rooms are knocking out numbers we never anticipated. We think there's a demand in that market from all kinds of different things, including quality hotel rooms.
The 4 Cs will benefit dramatically by having a 300 suite facility that plays right to premium mass and to junket. We're going to give that property that additional space. We upgraded our game there. We're building better suites. We're building better lobbies.
We're basically trying to compete in a very, very good market. Ritz Carlton is extraordinary product. The wind product is very good. Our Venetian product is very good. We weren't happy with the level of finish.
We upped our game. We're glad we did it. We're adding gaming space in that building. That same thought process applies to the St. Regis.
We weren't happy with the quality. We went back and said, look at the competition, not just in Macao, but regionally. To keep growing, our goal is to go beyond $3,000,000,000 to $4,000,000,000 in years ahead. To get there, we need great product for premium mass and for the junket business. The Londoner might be the greatest opportunity we could have.
Macau simply is the best market in the world, bar none. And SCC simply trails the nation in virtually every segment and yet it's perfectly located. Now it's got neighborhood with Wynn and MGM, has 6,000 rooms. It should compete neck and neck like The Venetian. The Venetian is the $1,400,000,000 probably going to $1,500,000,000 maybe $1,600,000,000 building.
There is no reason why the SEC with double streams and the kind of our new Apple store opened up, our new retail segments coming online. There is no reason why we can't grow our EBITDA dramatically. We took our case to Sheldon and the Board and they said we believe in this project we want to be very well done and execution of these flawless. So our goal is yes, we're spending over $1,000,000,000 in Londoner, but I believe the returns will be far outsized any other investment in the globe we can make today. So this is a dedication to quality, a dedication to diversification, a dedication to Macau and making sure that our footprint remains the biggest and the best in that market to maximize our growth.
We are growing in every segment every day and we're going to keep growing. And this is a commitment to that quality and to that growth.
You would think that our competitors would see what it is we're doing and try to compete with us. Now right now they can't because they don't have the land to implement the changes that we've made. We started out with a complete, unequivocal integrated resource model. And that's what we did. We've stuck with it.
Every one of our properties has an integrated resort model. And people we used up all the land. Now we even used up more land than what was allocated to us and our competitors in Macau don't seem to understand that. But I don't want to convince them all to do exactly what we're doing because that's sort of counterproductive. However, it should be pretty obvious that if we've been doing it in the past year after year after year since 1988,
'eighty eight. Macau, 2004. Macau, 2004. Yes.
But I mean we've been building up the staff, we've been building up the business model.
Yes, we have.
Yes. And it works.
It sure does. I know that I know the numbers in the stock market are reflective. If you look at this quarter, there's growth in virtually every segment of our business, especially base mass growing to over $700,000,000 with ridiculous margins and our retail business, if that doesn't tell you something as good as happening to Macao, our sales per square foot is spiking double digit in every category. I don't know, it's hard to explain the disconnect between what's happening in the stock market with our business in Macao, but we remain very committed to what our business is producing and growing it. So we want to grow to $800,000,000 and beyond per quarter, dollars 900,000,000 beyond.
We're dedicated to doing that and these investments are simply reflections of that commitment and that belief in Macau.
Thank you.
Welcome.
Your next question comes from the line of Mr. Stephen Grambling from Goldman Sachs. Sir, your line is now open.
Hi, thank you. I guess two follow ups to Felicia's questions. You mentioned having conversations with the government in Macau. I guess has there been any color on what the concession renewal process may look like? And then given your confidence in the forward trajectory, what is the tolerance to consider accelerating return of capital even beyond what you've done and or taking other strategic actions if the stock stays under pressure?
Stephen, it's Rob. We have never had any real conversations with the government in terms of what the concession looks like. There's been a lot of chatter out there and we listen to the chatter like you do. And we stay in firm in our commitment that we're doing all the right things, which is referenced in terms of non gaming core assets. And when you look at what we've done in that area, it's larger than all of our competitors together.
No one is even close to what we've done. I guess I take solace in the fact that we've done everything from 2,004 to the current. Even yesterday our Board meeting when we talked to the Board about approving another $2,000,000,000 no one flinched, no one even thought twice. The fact that most of that commitment is non gaming, it's really a focus on more hotel, more quality. So we can't tell you what the government's thinking is vis a vis re license your bid process, how it happens.
We just remain confident that we've done all the right things we can do and we remain confident Macao make the right decisions as it relates to our licenses on a go forward basis. We're looking beyond 'twenty two. We're very confident, very comfortable. I'll turn to Patrick on the issue of reinvestment and buybacks. We've been very focused on the return of capital and capital allocation, something the Board focuses on every quarter, our Chairman is very focused on and the management team is very focused on.
As you can see this quarter, we saw significant value in
the equity. And as we described, we raised $1,350,000,000 at the U. S. Restricted group level, we would deploy that capital to return capital to shareholders, and we've done that. And so our intent is to continue to be aggressive in the market as we look to grow our cash flows and as we can return capital in a favorable way.
So you saw the increase in the dividend. Our Board has been very good about that, raising dividend each year for the last 7 years in order to focus on the cornerstone of our return on capital program, which is a dividend. We feel very strongly about that and its long term nature. And at the same time, as we have the opportunities to use our balance sheet, as we have opportunities to use cash flow generated from the business as Macau grows, as other components of the business grow, we'll be more aggressive and look to the equity markets to return capital markets, return capital that way. So you saw the result this quarter.
We returned $300,000,000 through share repurchases and we'll look to be aggressive again in the future as we have the opportunity to do so.
And I guess the very quick follow-up on that is what's the upper bound on your leverage ratio kind of ex any major construction projects, let's say, in Japan?
I think we're going to be consistent with what we said, both the agencies and what the chair has communicated previously between 2 times and 3 times. We're very focused on maintaining our investment grade rating. We think that provides a long term competitive advantage, gives us very strong access to the capital markets and it's worked very well for us as you can see in the completion of the SEL offering. So from our standpoint, we think we have a very strong balance sheet. It gives us a very strong competitive position, allows flexibility for new growth development as well as to return capital.
You saw in the last quarter when we raised the money at the U. S. Level and we're buying back stock now. So I don't think leverage is going to go above what the Chairman said, but we're obviously we may deleverage a little bit as our EBITDA grows.
That's great. Thanks. I'll jump back in the queue.
Your next question comes from the line of Mr. Thomas Allen from Morgan Stanley. Sir, your line is now open.
Thank you. So when you look at your Macau business, you'll see on Slide 11, so the premium mass revenue growth is slowing while the base mass business is accelerating. Does that feel like how the market feels? And then how do you adjust your strategy to adjust for kind of the current market environment?
Thanks. Right. So I think we have two thoughts here. One is we're unique and we show you the base mass business is growing materially. And I think that performance makes us feel very we're doing the right things vis a vis base mass.
We have on the other hand, I think we've seen I wouldn't call it slowing as much as flattening out. The acceleration is obvious in our premium mass business last 3 quarters. But I think you have to realize we grew from our premium mass base back in Q3 of 'seventeen was $4.99 we're now running at $6.16 I guess all trees don't grow the sky every day. There's got to be some adjustments. So we grew from basically 500 up to 616 in 1 year.
You're correct, as you note that the decelerating the premium mass. However, we have again, our diversification, our portfolio enables us to be in a different business here as well. So look at our base mass on the slide, I think it's 11, growing to $705,000,000 again, our margins there are spectacular. So not to make short shrift of the premium mass business, it appears to be flattening out a bit, albeit 1 year year, it looks terrific. Q on Q doesn't look so terrific sequentially.
But I think that business will keep growing. That's why we're investing in quality product suites. I also believe that business will grow as our junket business gets stronger because there's a relationship there. And lastly, I feel very bullish about our base mass business. It just keeps getting better and better.
And we've learned about it, that's our sandbox and no one else plays in it. No one else has the room capacity, the gaming capacity, the retail capacity to compete with that base mass high margin business that's fueled a lot of this quarter's success. This quarter at 754, even if you lost a pivotal weekend, which could have been worth $15,000,000 I don't know what the number would be, but clearly lost EBITDA indicates how powerful our business is. Others have to stay constrained to premium mass and junket. We play in a lot of different places.
We play in retail, base mass. And so we and we grow in junkets. So while we recognize the deceleration last few quarters, we also note the year on year growth and we note the base mass acceleration. And if that can keep growing, that's a pretty good place to be. So no refuting the comment, but our diversification kind of pushes back on that issue.
And honestly, deep down, we believe face mask and premium mask will keep growing in Macao.
Thanks, Rob. And then just a quick follow-up. Are you willing to talk at all about how October Golden Week went? We don't talk about current quarter. We'll talk to you in 3 months.
Thought it was worth a try. Thank you.
We'll try. And we respect that effort.
Your next question comes from the line of Anil Daswani from Citigroup. Sir, your line is now open.
Thank you and thanks for taking my question. I just wanted to focus a little bit on VIP. Given the softness that we're seeing in the VIP market, you guys have been very aggressive in expanding and probably have some of the nicest new VIP facilities that we've seen across at The Venetian. Do you see yourselves taking share in this business from the other operators or growing the market in VIP is my sort of first question?
That's a very good question. I don't want to address it.
One from each column.
Yes, well,
share. You're taking share that ends up with a net share increase.
We'd like to think we're growing the market, but let's be blunt. We don't have a crystal ball in other people's numbers yet. I would say this though very bluntly. We have always been the market leaders in premium mass, base mass, slots ETG, EBITDA. We run the table here in terms of leadership and yet our junket business has been really subpar and at times very disappointing.
We've committed ourselves to spending capital to fix those rooms you address. We're very proud of where we're going. These rooms when they get done and they keep happening are going to be spectacular. We're adding more junket rooms. We're adding more junket tables.
We're dedicating more suites to the junket base. So while we've looked good with 24% year on year growth and 15% sequentially, the truth is we are going from a very low base. There's a lot more running room in this company to do a lot better in junkets. We like the junket business. We like our junket partners and we've woken up the fact that we left a lot on the table in the years past.
So, I can't speak to whether grow the market or steal share. I hope it's a little of both and I hope it's a lot more growth in the market. But there's a junket business out there. We're seeing it this quarter. We're seeing the future.
But keep in mind, our base in this area is not all that high. So the growth numbers maybe look a little larger than they should be. But again, we're committed to this segment and growing it.
Thank you. As my follow-up, just a quick one on the Parisian. Obviously, the Venetian has done incredibly well with EBITDA up over 30 percent. What happened at the Parisian that's sort of dragging the performance there a little bit compared to its peers?
Well, one thing we be blunt about year on year is we had an incredible amount of very concentrated high end play at The Venetian in the premium direct business. And to be very honest and complete transparency, we ran into some extraordinary business last year that lifted the pre Easter number it shouldn't have been at. And I think that's part of the story. The other part of the story is, so year on year that rolling business looks like it's slowed down terrifically, it hasn't. But the other thing about that you should know about the Parisian is that all the rooms, the conversions we referenced in the past are now coming online and that is the big driver in the Parisian's future success.
We're going to have 3,000,000 renovated keys there I think will be very impactful as we go forward. And I think that's part of the story that we believe we can grow that. This is 20% inventory in terms of the premium suites. But we like the Parisian business. We underestimate the premium direct demand and the junket demand for it.
So we really think there's brighter days ahead. We like to pass $500,000,000 annualized and keep growing there. We missed it at the opening and we corrected that. So all segments are starting to come in the right direction. Again, the only miss there was a premium direct year on year is somewhat last year's performance was not sustainable and pretty amazing due to very few players.
Thanks for taking my questions.
Thank you.
Your next question comes from the line of Joe Greff from JPMorgan. Sir, your line is now open.
With respect to the increased investment in CapEx at Sanskotai and the Hotel Tower Suites at Sheraton and Four Seasons, do you anticipate any incremental renovation disruption as a consequence? I know in the past you said the initial investment there you thought you can manage around and doing it through seasonally slow period. Is there any change in your thoughts on that front?
Yes, there's going to be disruption Joe, I think at the Londoner. We don't believe very much disruption at all at the Four Seasons because it doesn't exist. It doesn't it's not connected to existing building. So that's not an issue at the same. We don't believe Four Seasons is impactful nor St.
Regis for the same reason it's not connected to a building. The Londoner will be a long project. It's year 3 quarters. So of course, there's disruption, there's noise, etcetera. You can't avoid that and there's going to be a lot of construction.
So we're not really qualified or quantify how we see that, but we acknowledge there'll be some disruption. But again, I think like all things in life, if you do it properly, the end result with Londoner should rival the Venetian being an incredible product that can make a lot of money for us. Imagine having Venetian side by side with Londoner and creating that kind of EBITDA opportunity. So will there be disruption? Yes.
How much? We have no idea. And we have 2 properties that I think will not be that impactful. So obviously, wait and see.
Great. And then my follow-up is with respect to your focus on the VIP segment in Macau. Do you anticipate investing additional or injecting additional liquidity to the junkets? And then with respect to the 3Q results, I know you don't want to talk about October, but with respect to the 3Q results, how much of the VIP rolling win was a function of your increasing more liquidity to junkets? And are you getting more requests from junkets more recently?
So we don't hey Joe, it's Patrick, how are you? We don't comment specifically about our credit to junkets, but I will tell you that we've been very consistent in the way that we've worked with them over the past couple of years, and we don't see anything changing. So we provided them with significant opportunity to grow their businesses. We provided them with better space, as Rob referenced, and we feel very confident about our credit exposure there as well as the fact that they have the liquidity they need from us in order to conduct operations
Your next question comes from the line of Shaun Kelley from Bank of America. Your line is now open.
Hey, good afternoon, everyone. I think virtually every question is related to and mostly to Macau so far. So maybe just to switch gears for a little bit. Could you just give us maybe the latest high level strategic update on what's going on in Japan? We see a lot of press reports, some renderings crossing different jurisdictions, but just maybe your latest thoughts and kind of how you see the process or any deadlines that are upcoming playing out?
Yes. Sean, I'll just open and then Sheldon will close on Japan because he's doing business there for a long time. We're in the hunt in Japan. We're trying to do our best. It's a long race.
It sure isn't a sprint. We're there quite frequently and we're assessing the value of each of the potential cities and we've been on the ground there for a long time. We hope it materializes as it's been represented over the next year or 2. It's obviously a fascinating market and we're doing our best to get a license there. And that's all I'll say about that because there isn't a whole lot more to talk about in Japan from my perspective.
We've been lobbying there for 10 years. My lobbying arises out of the fact that I have a previous business experience in Japan, particularly in the mice business. I designed and helped to build, advised on the biggest mice facility in Japan before the present site in Tokyo, the big site was conceived. The site that I advised on was called the Macaui Mesa and they took that from the ticked word Mesa from the German meaning of fairgrounds. So there's the Frankfurt messer and there's a Hamburg messer etcetera.
It's
there is everybody in the industry believes that if anybody is going to be selected there, it's no different just. And we even have our competitors come in and see whether or not we can share some opportunities. I'm not sure that we want to share them with our competitors. We may already be sharing with nationals, with Japanese nationals. So if we do that, I think it's all set.
Yes, we do have some partners that are recognized as good partners. We do have some expressions of interest from people that want to go in with us. And they all know that our background, particularly my background in the field of mice is what is flowing our grassroots, they're watering their grassroots. And I think that looks very good for us and we'll see how it comes out. We all know that Japan is not known for working very fast.
And again, a lot of countries aren't known for working very fast. So if we move along with them at their rate of speed, we will then have the opportunity to grow with them at their rate of speed. So I think what we ought to do is we ought to wait is a happening that will happen on next month on November something that will be the World Expo. And if the World EXFO is awarded to Osaka that the federal government in Japan will provide the capital for infrastructure that is lacking in Osaka. So if you look at all if you add up all the pieces together, I think we look very good and I'd like to make a bet on likelihood of wood.
Great. Thank you very much. And then maybe just as a follow-up and switch gears again to kind of get your latest thoughts on Las Vegas. There's been a lot of concerns around the operating pricing environment there. I think your RevPAR was slightly negative, but it's also a very, I think, well known that it was a tough convention quarter or event quarter in the market.
So what's kind of the outlook that you're seeing in Vegas right now? That's it. Thank you.
Yes, I've heard something about that. Vegas had a tough 3rd quarter, especially in the group and mice segments and we participate in that as you referenced to RevPAR. 4th quarter was better. It looks actually pretty good And we believe we'll go back to over 800,000 room nights dedicated to the convention space in 2019. There was a blip in the Q3.
From our perspective, it's a blip. We don't have the scale like some people do as far as rooms, but pretty confident 4th quarter resurrects and next year looks like a more typical 2019 solid MICE business, solid rooms business. So not much concern in Las Vegas. We're going to run $400,000,000 $450,000,000 of EBITDA very comfortable with our business here.
Thank you very much.
Dan, can I make a quick note on one call, I'm jumping here? On one question was asked about The Parisian, I failed to mention that we have 600 rooms out of commission this year for renovation. So this quarter, about 20%, 25% of our room inventory was off the market and it certainly has an impact on our Parisian business. So just want to note that. I think it was Anel Deswani who made the comment.
So I missed that and I apologize. Next question.
Your next question comes from the line of Robin Farley from UBS. Sir, your line is now open.
Great, thanks. It looks like from some of the detail in the slides that the budget for the Londoner maybe almost doubled you last put numbers out for it. Can you give a little bit of color on what's that that's just a pretty significant incremental spend?
Robin, it's just the same story we mentioned earlier. I think we looked we jumped into the Londoner and it was so compelling to begin with when we first looked at it because look at what the Londoner does or the current SCC as opposed to the Venetian and it's somewhat confusing to see if a hotel makes about $7,000,000 to $7.50 where Venetian is going to go double that. So we started, we put a plan together. The more we delved into it, the more opportunity we saw to spend more money intelligently and create a product that could compete with The Venetian. And our goal is to create bookings.
We want to see 2 buildings in the trough, dollars $1,203,000,000,000 $4,000,000,000 side by side. We invest in things from an entertainment perspective, enhanced room perspective and we convinced ourselves that this is a great place to invest capital. It's really that simple. We saw it and the Board saw it yesterday and Sheldon saw it, we first saw that the opportunity to make this product much, much stronger is there, 6,000 keys centrally located right across the Venetian in every category from retail, base mass, lot ETG, junket, premium mass, we can grow considerably. Our retail sales are I think are 25%, 30% we do at The Venetian, which is crazy.
Venetian is a 2 $20,000,000 retail environment and we're seeing cross street 60, if that goes up 100, that's pretty that's a big consideration. Everybody likes that building as far as the rooms. They don't like the physical, the external and the casinos are somewhat confusing. It lacks an identity. The Londoner will give it a very clear identity and we believe when it's done, it's going to be a force to be reckoned with the same things as the Venetian.
So hence, we decided to invest more capital and everyone in this team from both executive board position has reviewed it and agreed with that And that's the simple answer.
Okay. No, I was looking for if there was some maybe a specific feature or something just with that budget increment, but it sounds like
it's No, there's a lot of good there's a St. Regis feature, there's an entertainment feature, there's a retail feature, there's incredible there's some ceilings are being ready. It's just when you get we get done with that thing, I think the theming will be pretty extraordinary. We're hoping the results that accompany the EBITDA results will be extraordinary too. There's not one there wasn't a problem, it was just a commitment to spend more capital and make the place much more impressive.
Okay, great. And then if I could just follow-up on a topic that in terms of VIP trends, maybe if you could just give us your take on what is it that maybe drove some of the more recent period to not look as strong? And how do you is that something that you how do you feel about that as a kind of long term versus immediate term when those trends might turn?
When you say VIP, are you talking premium mass, are you talking junk, how are you thinking about that?
I mean really VIP more than the premium mass business, which I realize is only 8% of your EBITDA in Macau, but just
looking at kind of Yes. Unfortunately, well, we're a little different in that we did grow sequentially and year on year strongly. And so we're perhaps our visibility to the IP is a little different than others. We see growth in those segments, but we've been a laggard and we're replacing that approach with a much more aggressive one. And so we're seeing VIP trends continue to grow aggressive double digit and we're thrilled about it.
I can't speak to our competitors, but I think again our dedication in capital and suites and gaming capacity will fuel We believe we have a lot of running room left in VIP, a lot of running room and not because we've I think we just have done so weak performance relative to competition. So our hats off the competition, but we're going to join the party and try to do a lot more business in that VIP segment. We see the benefit in that segment to us is both the profit we make, but also the residual effect, the spillover effect into premium mass and other categories. So I can't speak to the rest of the we don't see problems in the CALP for us. I can't speak to other companies.
But for us VIP looks like a growth segment, a considerable growth segment and we dedicate the capital and the gaming space and the tables and of course the suites to accompany that. So we're growing our business aggressively in that.
Okay. Thank you.
Sure.
Thanks. Your
last question comes from the line of Carlo Santarelli from Deutsche Bank. Your line is now open.
Rob, quickly, in terms of the bridge opening, I haven't heard you guys kind of discuss it much. But could you talk a little bit about maybe some of the benefits that you see coming from that besides the obvious, but levels of magnitude in terms of what you think that could potentially do, whether that help comes more on the VIP side, the mass side, premium mass side or a mix?
I think we all believe I think I speak for the industry or maybe at least for this room, but we believe it's a mass phenomenon. It's going to drive a lot of mass. We also recognize it's not there yet since infancy. So the impact, we shouldn't think about that for a bit. But I think it's unequivocal that the potential of that bridge to drive more people into Macau is terrific.
And for us as the biggest footprint, it's more terrific than others. So I think we have a we're very excited about the bridge. It's extraordinary architectural feat. I've been watching it for years and I'm always amazed by it and to see it actually open is exciting, but it's early yet and the impact is negligible for this quarter and probably for next year. It might kick in, who knows if it's 18 months away or whatever it's going to be, it really kicks in.
But I think we all believe it's more of a mass based phenomenon because it feeds our rooms, it feeds our retail, it feeds our base mass. And again, for us, base mass is a big business. I mean, we're at $700,000,000 a quarter in tables, we're at $150,000,000 in slots and growing. So we'd like to see it grow our base mass into $1,000,000,000 plus a quarter. That bridge is going to be the catalyst to get us there.
We are huge fans of it and we can't wait to see it ramp up, but that's not happening today.
Great. Thank you. And then just one quick follow-up. With respect to Marina Bay Sands, obviously, Q1 tremendous margins, last two quarters margins under pressure a little bit. I know you guys obviously have lapped some of the commission stuff that you did on the VIP side, but is there anything else that's kind of influencing the margins there?
Is that just really boiling down more to business mix on a quarter by quarter basis?
Business mix is always important at MBS, but I got to take a moment to say that we I think it's a misunderstood product and there's our profit drivers there. Our first driver there as you know is base mass and that's premium mass slot ETG. It runs 60 plus percent quarter after quarter. We wish we could make more money, but we're capacity constrained unfortunately, but that is the number one, it's a $1,000,000,000 of contribution plus. And so that's the number one thing.
The other business that drives like crazy, of contribution plus. And so that's the number one thing. The other business that drives like crazy is hotel, food and beverage, which runs consistently 95 with again, extraordinary good margins. Our retail business, which is $160,000,000 $70,000,000 again, retail business is always a high margin business. The outlier is the VIP business.
And what's ironic as I go back and do some work in what we're doing there, the team there has effectively grown the margin by double from a 15%, 16% business to a 30% plus business. The struggle there is growing the top line. And so as you know, we've struggled there and we're going to keep struggling. It's not a growth business in terms of the rolling business. But I guess we're proud of Macao.
We've got the margins at roughly we think they're exceptional, dollars 1,500,000,000, dollars 1,600,000,000, dollars 1,700,000,000 properties, hard to find, not many of those around. So we're thrilled with that business. We wish we could have more ability to grow it and we wish we can't raise rates a whole lot more. We can't win. We're winning in slots, something like normal slots are up to $800 a unit.
I just don't know what else we can do at Marina Bay Sands, but we'll take a 1,600,000,000,000,000 dollars It's as Sheldon says, it's a living. So we're trying. But I don't I think our mix is the only thing that knowing that those four segments that is vulnerable to margin pressure is the rolling piece. We're consistent every other business from retail, hotel rooms, food and beverage and base mass rolling. So great business, we just need to get more capacity.
This is just a joke,
2 guys are on a rowboat, somebody falls out and the other guy yells out, Phil, where
are you? Where are you?
You can see him in the dark. He said, I'm here, I'm here. He said, are you okay? He said, I'll make a living.
Well, it's like that. We do we're thrilled with MBS, but it is what it is.
Thanks, guys.
Thank you.
And that concludes our conference call. Thank you for participating. You may now disconnect.