Good 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, Robert 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&A portion of the call.
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. Let me please introduce our chairman, Sheldon Adelson.
Thank you, Dan. Good afternoon, everyone, thank you for joining us today. We delivered another great quarter. Hold normalized adjusted EBITDA reached $1.27 billion, an increase of 8% over the prior year. Our Macau operations once again performed exceptionally well with hold normalized adjusted EBITDA growing by 18% to $764 million. Sorry, $754 million. We experienced strong growth in both the VIP and mass gaming table segments, enabling us to again outperform the Macao market while growing our market share of revenue. We also achieved record hotel occupancy at 96% at our Macao portfolio. All the properties at 96%. Our hold to 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 Macao.
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 tourism 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, Four 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 2020 and 2021.
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 diversification, economic growth, and leadership in MICE and entertainment. Now I move on to Marina Bay Sands in Singapore. We continue to generate stable cash flow at Marina Bay Sands with EBITDA of $419 million for the third quarter. 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 Integrated Resort Implementation Bill in Japan earlier this year, we're continuing to pursue what would be a unique opportunity there.
Let's move on to my favorite subject, the return of capital to shareholders. Yay, return of capital. The Las Vegas Sands Board of Directors has increased our recurring dividend for the 2019 calendar year to $3.08 per share or $0.77 per quarter. That marks the seventh consecutive year we have increased our recurring dividends. We also returned $300 million of capital to our shareholders through share repurchase. In conclusion, our cash flow generation continues to be strong and predictable. We are increasing the scale and breadth of our investments in Macau because we have a long-term and unwavering commitment to Macau and complete confidence in Macau's future as Asia's leading regional business tourism destination. We look to the future with unwavering confidence. We have a strong organic growth outlook. We are strategically reinvesting in our existing assets while also pursuing new development opportunities.
We have both the intent and the financial strength to continue to return excess capital to shareholders. With that having been said, I want to thank you for joining us on the call today. We'll be happy to take some questions.
Okay. Kindly press star one if you want to ask a question. First question comes from the line of Felicia Hendrix. Your line is open.
Thank you so much, and good afternoon. Sheldon, I do want to touch on the expansion of your CapEx program in a moment, I did want to start with a different topic because investors have been focused on mainly two 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 into Macau. 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. We've been having those conversations a lot with folks. I was wondering if you or Rob can address both of those. Rob, particularly on the demand side, what are you hearing when you talk to your customers?
I'm most curious if you can segment that out by VIP and mass.
Sure
is the mass player somehow more insulated from the economic ebbs and flows? Regarding the concessions, what can you say to alleviate investor concerns?
Right. As you know, we've been in Macau since 2004. Been there 14 years. We've invested $13 billion. We've seen it all over the years. We've seen visa restrictions, UnionPay issues, junket difficulties, border restrictions, the Great Recession. Here we are in 2018, and we're probably going to deliver over $3 billion of EBITDA. We keep growing, we keep reinvesting. We have a highly diversified business, which is number one in virtually every segment there is, from EBITDA, to mass revenue, to premium mass revenue, to slots, hotels. Our business is stable and strong. We always believed, and we still believe there'll never be another market as powerful as Macau. I think Sheldon referenced in the call, we're going to spend $2 billion 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. More importantly, these third quarter numbers, if you earn a $3 billion 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's the highest sales per square foot we ever had. We're about $2.7 billion. 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 well. These numbers are indicative of a very strong business that's diversified. It's a very large footprint.
We talk about concessions or 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 million square of retail mall. We built millions of square foot of MICE space. 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. We have done that. We are big fans of China, we're big fans of Macau. We've been wildly successful. Our $2 billion statement that Sheldon made in the call to bring London to fruition, and the Four Seasons, and The St. Regis is proof positive. Actions speak louder than words.
Those are our actions. That's what we're doing right now today in the third quarter of 2018. If that's not a firm belief how we feel, I just don't know what else is. Our business, despite the stock market, our business feels very good over there. We're growing in every segment, including the junket segment. I don't have a crystal ball, nor does anyone else I know. We feel very bullish on the market, and we feel very bullish about our license renewal. We understand there's a trade war, and there's issues going on. Over the years, we've seen all that. We've seen, God, in 14 years, what we haven't seen?
I don't know what else they can throw at us, 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. 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. Actually, that's a good segue. Oh, sorry.
Mr. Sheldon.
Hi.
Do you mind repeating that, Rob?
I will repeat it, but I was born this group. I meant, all kidding aside, we spent some time preparing for this call, the more I look at our actions, I don't know what else we can do. Our business today is just incredible.
Look at everything we've done.
Yeah.
We spent $13 billion or $14 billion U.S. dollars. That's for new construction.
Right.
Never mind 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?
Yep. The arena, the MICE, the hotel.
We'd like to build another arena.
We'd love to build more. Sheldon has authorized us to keep going. Yeah.
We're putting aside some land that we're going to put aside for placement of a wave pool. Now somebody else has got a wave pool. It's not that unique anymore, I think we can afford to use our land for that.
I also think you should look at Macau. We came there in 2004. The market in 2005 was about $5 billion U.S. This year approached $38 billion U.S. Mass market in 2010 was $6.7 billion. Today, it's $20 billion. You have to invest long-term. You can't let the cycles bother you, or frankly, stock market prices bother you. You've got to stay committed. You've got to hire great people to do great things. We've done that. You've got to follow the advices of the government, and we do that. We just are very positive about this. Again, I think the $2-plus billion investment we're making for the years ahead reflect that sincerity and that belief.
Thank you. 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 a $500 million increase, and then there's some additional projects which are now a little over $500 million. Just 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 Four Seasons 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 good market. The Ritz-Carlton's extraordinary product. The Wynn 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 Macau, but regionally." To keep growing, our goal is to go beyond 3, beyond 3.5 to $4 billion 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. SCC simply trails The Venetian in virtually every segment, and yet it's perfectly located. Now it's got a neighborhood with Wynn and MGM, has 6,000 rooms. It should compete neck and neck like The Venetian. The Venetian is the $1.4 billion, probably going $1.5 billion, maybe $1.6 billion building.
There is no reason why the SCC with double the rooms, and our new Apple Store opened up, our new retail segment is coming online. There's 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 it to be very well done, and execution of these, flawless." Our goal is, yes, we're spending over $1 billion at Londoner, but I believe the returns will be far outsized any other investment in the globe we can make today. This is a dedication to quality, a dedication to diversification, a dedication to Macao, 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.
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 resort model, and that's what we did. We've stuck with it. Every one of our properties is an integrated resort model. People, we used up all the land. Now, we even used up more land than what was allocated to us, and our competitors in Macao don't seem to understand that. I don't want to convince them all to do exactly what we're doing. It's just 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.
Macao 2004.
Macau 2004.
Yeah. Right.
Yeah. I mean, we've been building up the staff, we've been building up the business model.
Yes, we have. Yep.
It works.
It sure does. I know the numbers in the stock market are reflective. You look at this quarter, there's growth in virtually every segment of our business, especially base mass growing to over $700 million with ridiculous margins in our retail business. If that doesn't tell you something good is happening in Macao, our sales per square foot are 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. We remain very committed to what our business is producing and growing it to we want to grow to $800 million and beyond per quarter, $900 million and beyond. We're dedicated to doing that. These investments are simply reflections of that commitment and that belief in Macao.
Thank you.
Welcome.
Your next question comes from the line of Mr. Stephen Grambling from Goldman Sachs. Sir, your line is now open.
Hey, thank you. I guess two follow-ups to Felicia's questions. You mentioned having conversations with the government in Macao. I guess, has there been any color on what the concession renewal process may look like? 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 renewal looks like. There's been a lot of chatter out there, and we listen to the chatter like you do, and we stay firm in our commitment that we're doing all the right things, which Sheldon referenced in terms of non-gaming core assets. When you look at what we have 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 have done everything from 2004 to the current. Even yesterday, our board meeting, when we talked to the board about approving another $2 billion, 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. We can't tell you what the government's thinking is vis-a-vis relicense 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 will make the right decisions as it relates to our licenses on a go-forward basis. We're looking beyond 2022. We are 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's 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 when we raised the $1.350 billion at the U.S. restricted group level, we would deploy that capital to return capital to shareholders, and we've done that. 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. You saw the increase in the dividend. Our board's been very good about that, raising the dividend each year for the last seven years in order to focus on the cornerstone of our return capital program, which is a dividend.
We feel very strongly about that and its long-term nature. At the same time, as we have the opportunity 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 that way. You saw the result this quarter. We returned $300 million through share repurchases, and we'll look to be aggressive again in the future as we have the opportunity to do so.
I guess the very quick follow-up on that is what's the upper bound on your leverage ratio, kind of x any major construction projects, let's say, in Japan?
I think we're going to be consistent with what we said both to the agencies and what the Chairman has communicated previously between two and three 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 SCL offering. 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. I don't think leverage is going to go above what the Chairman said. 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. When you look at your Macau business, you'll see on slide 11, the premium mass revenue growth is slowing while the base mass business is accelerating. Does that feel like how the market feels? How do you adjust your strategy to adjust for kind of the current market environment? Thanks.
Right. I think we are two thoughts here. One is we're unique, and we show you the base mass business is growing materially. I think that performance makes us feel very we're doing the right things vis-a-vis base mass. On the other hand, I think we've seen, I wouldn't call it slowing as much as flattening out. The deceleration's obvious in our premium mass business the last three quarters, but I think you have to realize we grew from our premium mass base back in Q3 of 2017 was $499 million. We're now running at $616 million. I guess all trees don't grow to the sky every day. There's got to be some adjustments. We grew from basically $500 million up to $616 million in one 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. Look at our base mass on slide, I think it's 11, growing to $705 million. Again, our margins there are spectacular. Not to make short shrift of the premium mass business, it appears to be flattening out a bit, albeit one year year-on-year 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. Lastly, I feel very bullish about our base mass business. It just keeps getting better and better. Be blunt 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, I don't know, $15 million, 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 we grow in junket. While we recognize the deceleration the last few quarters, we also note the year-on-year growth, and we note the base mass acceleration. If that can keep growing, that's a pretty good place to be. No refuting the comment, but our diversification kind of pushes back on that issue.
Honestly, deep down, we believe base mass and premium mass will keep growing in Macau.
Thanks, Rob. Then just a quick follow-up. Are you willing to talk at all about how October Golden Week went?
No, we don't talk about current quarter. We'll talk to you in three months.
Thought it was worth a try. Thank you.
Good try. We respect that effort. What's next?
Your next question comes from the line of Anil Daswani from Citigroup. Sir, your line is now open.
Thank you. 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.
Just one from each caller.
Yeah, well said.
If you're taking share, that ends up with a net share increase.
Let's be blunt, we don't have a crystal ball to 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. 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 addressed. 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. While we look good on a 24% year-on-year growth and 15% sequentially, the truth is we were 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. We've woken up to the fact that we left a lot on the table in years past. 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. There's a junket business out there. We're seeing it this quarter. We're seeing a future. Keep in mind, our base in this area is not all that high. The growth numbers maybe look a little larger than they should be. Again, we're committed to this segment and growing in 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%. What happened at The Parisian that's sort of dragging the performance there a little bit compared to its peers?
One thing we should 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. To be very honest and complete transparency, we ran into some extraordinary business last year that lifted The Parisian to a number it shouldn't have been at. I think that's part of the story. The other part of the story is, year-on-year, that growing business looks like it's slowed down terrifically. It hasn't. The other thing you should know about The Parisian is that all the rooms, the conversions we've 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 300 fully renovated keys there that I think will be very impactful as we go forward.
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. We like The Parisian business. We underestimate the premium direct demand and the junket demand for it. We really think there's brighter days ahead. We'd like to pass $500 million annualized and keep growing there. We missed it at the opening, and we corrected that. All segments are starting to come in the right direction. Again, the only miss there was the premium direct year-over-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 Joseph Greff from JPMorgan . Sir, your line is now open.
Good afternoon, everybody. With respect to the increased investment in CapEx at Sands Cotai 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 could manage around and doing it through seasonally slow periods. Is there any change in your thoughts on that front?
Yeah, there's going to be disruption, Joe, I think at The Londoner. We don't believe it'll be very much disrupt at all at the Four Seasons because it's not connected to an existing building. That's not an issue. We don't believe Four Seasons is impactful, nor is The St. Regis for the same reason. It's not connected to a building. The Londoner will be a long project. It's a year and three quarters. Of course, there's disruption, there's noise, et cetera. You can't avoid that. There's going to be a lot of construction. We're not ready to qualify or quantify how we see that, but we acknowledge there'll be some disruption.
Again, I think like all things in life, in this, if you do it properly, the end result with The 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 EBIT opportunity. Will there be disruption? Yes. How much? We have no idea. We have two properties that I think will not be that impactful. I'll just wait and see.
Great. My follow-up is with respect to your focus on the VIP segment in Macao. Do you anticipate investing additional or injecting additional liquidity to the junkets? 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? Are you getting more requests from junkets more recently?
We don't. Hey, Joseph, it's Patrick. How are you? We don't comment specifically about our credit to junkets. 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. We provided them with significant opportunity to grow their businesses. We provide them with better space, as Robert 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 successfully. We're not going to really change anything that we're doing at this time.
Great. Thank you.
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 mostly to Macau so far. 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. Just maybe your latest thoughts and how you see the process or any deadlines that are upcoming playing out.
Yeah. Shaun, I'll just open, then Sheldon will close on Japan because he's been 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. 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 two. It's obviously a fascinating market, and we're doing our best to get a license there. That's all I'll say about that because there isn't a whole lot more to talk about in Japan from my perspective. Sheldon.
We've been lobbying there for 10 years. My lobbying arises out of the fact that I have 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 Makuhari Messe, and they took the word Messe from the German meaning of fairgrounds. There's the Frankfurt Messe, and there's a Hamburg Messe, et cetera. Everybody in the industry believes that if anybody's going to be selected there, it's going to be us. We even have our competitors come up to us and seeing whether or not we can share some opportunities. I'm not sure that we want to share them with our competitors since we may already be sharing with Japanese nationals.
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. They all know that our background, particularly my background in the field of MICE, is what is flowing our grassroots. They're watering our grassroots. I think that looks very good for us. We'll see how it comes out. We all know that Japan is not known for working very fast. Again, a lot of countries aren't known for working very fast. 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.
I think what we ought to do is there's a happening that will happen on next month on November something. That will be the World Expo, and if the World Expo is awarded to Osaka, the federal government in Japan will provide the capital for infrastructure that is lacking in Osaka. 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 winning.
Great. Thank you very much. Maybe just as a follow-up and to switch gears again, to get your latest thoughts on Las Vegas, there's been a lot of concerns around the operating, in particular the hotel pricing environment there. I think your RevPAR was slightly negative, but it's also very well-known that it was a tough convention quarter or event quarter in the market. What's the outlook that you're seeing in Vegas right now? That's it. Thank you.
Yeah, I've heard something about that. Vegas had a tough third quarter, especially in the group, in my segments, and we participate in that, as you referenced to RevPAR. Fourth quarter looks 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 third quarter. From our perspective, it's a blip. We don't have the scale like some people do as far as rooms, but pretty confident fourth quarter resurrects, and next year looks like a more typical 2019 solid MICE business, solid rooms business. Not much concern in Las Vegas. We're going to run $400 million-$450 million of EBITDA. Very comfortable with our business here.
Thank you very much.
Dan, can I make a quick note on one call? I can jump in here. On one question that was asked about The Parisian, I failed to mention that we have 600 rooms out of commission this year for renovation. This quarter, about 20%-25% of our room inventory was off the market, and it certainly has an impact on our Parisian business. Just want to note that. I think it was Anil Daswani who made the comment. 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 since you last put numbers out for it. Can you give a little bit of color on what that's a pretty significant incremental spend?
Robin, it's just the same story we mentioned earlier. I think 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 $700, $750, where Venetian's going to go double that. 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 be with The Venetian, and our goal is to create bookends. We want to see two buildings that are $1 billion, $2 billion, $3 billion, $4 billion, side by side. We also love the geographic location with Wynn right behind us and MGM.
The more we got into it, the more we saw compelling opportunities to 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 when he first saw it, that the opportunity to make this product much, much stronger is there. 6,000 keys, centrally located, right across from The Venetian. In every category, from retail, base mass, slot, ETG, junket, premium mass, we can grow considerably. Our retail sales I think are 25%, 30% we do at The Venetian, which is crazy. Venetian's a $220 million retail environment, and we're seeing crushing at $60 million. If that goes up $100 million, 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 in the same vein as The Venetian. Hence, we decided to invest more capital. Everyone in this team from both an executive board position has reviewed it and agree with that. That's the simple answer.
Okay. I was looking for if there was maybe a specific feature or something just with that budget increment, but it sounds like it's-
There's a St. Regis feature, there's an entertainment feature, there's a retail feature. There's some ceilings that are being raised. When we get done with that thing, I think the theming will be pretty extraordinary, and we're hoping the results that accompany the EBITDA results will be extraordinary, too. There wasn't a problem. It was just a commitment to spend more capital and make the place much more impressive.
Okay, great. Then if I could just follow up on a topic 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 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? You talking junket? How I think about that?
I mean, really VIP more than the premium mass business, which I realize is only 8% of your EBITDA in Macao, but just looking at.
Yeah. Unfortunately, well, we're a little different in that we did grow sequentially and year-over-year strongly. Perhaps our visibility to VIP is a little different than others. We see growth in those segments, but we've been a laggard. We're replacing that approach with a much more aggressive one. We're seeing VIP trends continue to grow aggressively double-digit, and we're thrilled about it. I can't speak to our competitors, but I think, again, our dedication to 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. Not because I think we have done so weak performance relative to the competition. Our hats off to competition, but we're enjoying 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. I can't speak to the rest. We don't see problems in Macao for us, and I can't speak to other companies. For us, VIP looks like a considerable growth segment, and we dedicate the capital and the gaming space and the tables, and of course, the suites to accompany that. We're growing our business aggressively in that segment.
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. Yeah, we also recognize it's not there yet. It's in its infancy. The impact, we shouldn't think about that for a bit. I think it's unequivocal that the potential of that bridge to drive more people into Macao is terrific. For us, as the biggest footprint, it's more terrific than others. I think we're very excited at the bridge. It's an extraordinary architectural feat. I've been watching it for years, and I'm always amazed by it. To see it actually open is exciting. 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 till it really kicks in. 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. Again, for us, base mass is a big business. We're at $700 million a quarter in tables. We're at $150 in slots and growing. We like to see it grow our base mass into a $1 billion-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. Then just one quick follow-up. With respect to Marina Bay Sands, obviously first quarter, 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, I got to take a moment just say that I think it's a misunderstood product and is 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 quarter after quarter. We wish we could make more money, but we're capacity constrained, unfortunately. That is the number one. It's a $1 billion of contribution plus. 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 million, $70 million. Again, retail business is always a high margin business. The outlier is the VIP business.
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. 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. I guess we're proud of Macau. We've got the margins at roughly, we think they're exceptional, a $1.5 billion, $1.6 billion, $1.7 billion property is hard to find. Not many of those around. We're thrilled with that business. We wish we could have more ability to grow it. We wish, but we can't raise rates a whole lot more. We're winning the 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 $1.6 billion, $1.7 billion. As Sheldon says, it's a living.
Understood.
We're trying. I think our mix is the only thing in 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 and rolling. Great business. We just need to get more of capacity.
Understood.
It's just like the joke where two guys are on a rowboat, somebody falls out, and the other guy yells out, "Phil, where are you? Where are you?" He couldn't see him in the dark. He said, "I'm here." He said, "Are you okay?" He said, "I make a living.
Well, it's like that. We do. Yeah, we're thrilled with MBS. It is what it is.
Thanks, guys.
Thank you. Appreciate it.
That concludes our conference call. Thank you for participating. You may now disconnect.