Good afternoon. My name is Sarah, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Las Vegas Sands Second Quarter 20 17 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. You may begin.
Thanks, Darren. Thank you for joining us on the call today. 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, our 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 reconciliation of each of these measures to the most comparable GAAP financial measures is included in the press release. We also want to point out 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 Q and A session, we ask that you limit yourself to one question and one follow-up question, so we might allow everyone with interest to participate. Please note that this presentation is being recorded. With that, let me please turn the call over to our Chairman, Sheldon Adelson.
Thank you, Dan. Good afternoon, everyone, and thank you for joining us today. This was a great quarter, and I'm very pleased with our results. Companywide adjusted EBITDA was US1.21 billion dollars an increase of 26% over the prior year. Adjusted earnings per diluted share increased by 38% over the prior year to $0.73 per share.
During the quarter, both our Macau and Singapore operations performed exceptionally well. Sands China grew its EBITDA by 23% year on year, driven by strong mass gaming revenue growth. And Marina Bay Sands achieved its 2nd best quarterly EBITDA since opening with year on year growth of 38%. I remain as confident as I ever been in our company's prospects. The Macao market is growing and its growth rate has been accelerating for 4 consecutive quarters.
At the same time, the significant new supply that has been added on Cotai since 2015 amounted to over 8,000 hotel rooms and over US13 $1,000,000,000 of additional invested capital has successfully been absorbed by the market. Our Macau operation is experiencing strong growth in mass gaming and non gaming segments. And we have successfully established a new landmark must see destination resort in the Parisian Macau. Our Macau mass gaming table revenue growth rate further accelerated from 18% in the first quarter to 23% in the second quarter. In its 3rd full quarter of operations, Parisian Macau achieved a quarterly EBITDA of US106 $1,000,000 Our strategy was to create a critical mass of interconnected resorts on Guite.
With the completion of the Parisian, we have almost 13,000 hotel rooms and 4 interconnected resorts, over 8.40 stores across 4 shopping malls, 2,500,000 square feet of meeting and exhibition space and 4 performance and event venues, including our Venetian Cotai Arena, which can be utilized either for our MICE business or for major entertainment events. This critical mass of product and amenities allow us to cater to virtually every type visitor. Business and leisure visitors to Magal will be able to enjoy all of this and more under one roof and one destination. Our retail mall portfolio across Asia continues to thrive, which demonstrates the success of our strategy to develop destination retail as a differentiation component in the critical mass of offerings in each of the integrated resorts in our global portfolio. Both Macao and Singapore delivered double digit retail sales growth for the 2nd quarter.
Our annualized operating profit is now well in excess of US0.5 billion dollars Both malls are poised for further enhancements with the TenetMAX. Because of our industry leading investments in Myspace Integrated Resource in Macau and Singapore, we are unique in the absolute scale of our cash flow as well as our dominant share of the industry's cash flow. Scale, diversity and critical mass allow us to outperform our competitors. Now let me give you some additional highlights of our results in Macau for the quarter. Quarter 2 adjusted property EBITDA for our Macao operations was US600 $1,000,000 an increase of 23% compared to the prior year.
Total net revenues increased by 23% driven by growth in mass gaming and non gaming segments. We maintained a strong EBITDA margin of 32.7% as we benefited from revenue growth and ongoing cost efficiencies. Despite the significant increase in Macau's gaming and hotel capacity compared with the prior year quarter, our mass table gaming revenue grew by 23% year over year and our non gaming revenues grew by 22% year over year. We experienced broad based growth across both premium mass and mass segments. Increased patronage and length of stay with hotel accommodation, increased spend at our shopping malls and entertainment events.
Our premium mass business performed exceptionally well with growth of nearly 40% over the prior year. During the quarter, hotel occupancy across our portfolio increased by 8 percentage points compared to the prior year to 86%, with occupied room nights growing by 35% compared to the prior year. The Brazil Macau grew its EBITDA by 29% sequentially to $106,000,000 with solid sequential growth in both gaming and non gaming revenues. Not only has Parisian been successful as a standalone property, the Parisian also benefits our entire Cotai portfolio. The Plaza Four Seasons property in particular has experienced an uplift in visitation and business volume since the Parisian opened and the bridge returned Four Seasons and Parisian was completed.
Every gaming segment at Plaza experienced strong revenue growth during the quarter and Four Seasons retail sales grew by 7% over the prior year despite the increase in the supply of luxury retail in Macau. This year marks the 10th anniversary of the Venetian Macau. When that opened in August 2007, the Venetian stood alone on Cotai. Its opening mark the first step in my vision to create the Cotai strip. I was absolutely committed then and I remain as deeply committed today to continuing to support Macau's economic diversification and its transformation into Asia's leading business and leisure tourism destination.
Nongaming industries such as retail, mice and entertainment are now well established in Macau and will continue to flourish and grow. Meanwhile, the Venetia Macau has become the most visited integrated resort in Asia, if not in the world. The addition of the Parisian to our Kota Strip development takes our critical mass and diversity of offering to another level. I believe this is the only MICE based integrated resort complex of this scale in the world. We remain fully committed to playing the pioneering role in Macau's transformation into Asia's leading business and leisure terms and destination.
In summary, we regard it as a privilege to contribute to Macau's success in realizing its objectives of diversifying its economy, supporting the growth of local businesses and providing meaningful career development opportunities for citizens, including through our Sands Academy and reaching its full potential as Asia's leading business and leisure tourism destination. We have steadfast confidence in both our and Macau's future success. Now moving on to Marina Bay Sands in Singapore. We delivered an excellent quarter of Marina Bay Sands with EBITDA of US492 $1,000,000 our 2nd highest quarterly EBITDA since opening. The quarter was marked by particularly strong performance in the VIP Gaming segment, where rolling volumes increased by 29% over the prior year as well as our retail mall business.
Retail mall businesses, where tenant sales grew by 11% over the prior year. Normalized EBITDA margin increased by more than 6 percentage points reaching 55% for the 2nd quarter supported by solid revenue growth and cost control. At the same time, Marina Bay Sands continues to serve as the most important reference site for emerging jurisdictions that are considering large scale integrated resort developments. Our pioneering track record, development experience and financial strength puts us in the pole position to take advantage of new development opportunities on the horizon. Now let's move on to my favorite subject, the return of capital to shareholders, Yay dividends and Yay buybacks.
As you may recall, the Las Vegas Sands Board of Directors last year approved an increase in our recurring dividend program for the 2017 calendar year to to $2.92 for the year or $0.73 per quarter. We remain committed to maintaining our recurring dividend programs at both Las Vegas Sands and Sands China And we remain committed to increasing those recurring dividends in the future as our cash flows grow. At the same time, we will remain opportunistic in returning excess capital via our share repurchase program. We repurchased $75,000,000 of stock during the quarter. We look forward to continuing to utilize the stock buyback program to return excess capital to shareholders and to enhance long term shareholder returns in the future.
Our performance demonstrates the resilience and consistency in our cash generation, which reflects both the strength of our business model and the geographic diversity of our cash flows. Our debt to EBITDA leverage ratio remains low at 2.2x on a gross basis and 1.7 times on a net basis. My view of our leverage levels is that we are comfortable with the debt to EBITDA ratio of between 2 times and 3 times on a gross basis before any additional debt related to development opportunities in new markets. As our EBITDA and cash flows grow, our leverage will naturally decline over time. Our industry leading cash flows, geographic diversity and balance sheet strength enable us to continue our recurring dividend and stock repurchase programs, while retaining ample financial flexibility to reinvest in our existing properties and pursue new development opportunities.
In conclusion, our cash flow generation continues to be strong and predictable. The resurgence of growth in the Macau market has continued during the quarter. The structural advantage from our scale, critical mass and product diversity was evident in our strong financial results. We look to the future with confidence. We have a strong organic outlook.
We are in a great position to continue reinvesting in our existing assets and to pursue new development opportunities and we have both the intent and the financial strength to continue to return excess capital to shareholders. Thank you for joining us on the call today. And now we'll take questions.
Your first question comes from the line of Stephen Grambling from Goldman Sachs. Your line is open. Mr. Grambling from Goldman Sachs, your line is now open.
Operator, let's move on.
Thank you. Your next question comes from Thomas Allen from Morgan Stanley. Your line is open.
Hey, good afternoon. So last quarter, I think there was some debate around whether you wanted to target the VIP market in Macau given the strength that we're seeing. Can you just give us updated thoughts post this quarter? Thank you.
VIP market referencing junkets, Thomas, or reinvent when you say VIP, let's define that.
Yes. I mean, I think that there was debate around junkets, exactly. So debate around how much you want to target the junkets given the strength there when you've historically been more of a mass market company.
Well, obviously, we're mass driven. That's our calling card in the past and I think in the future. That wouldn't preclude though us from participating in the junket segment. Actually, we're redoing all of our rooms and I think we're making a concerted effort to keep pushing hard in the junkets segment. Obviously, the margins in that segment are nominal compared to the mass segment, but we certainly want to be a junket house and have junk attestation for the direct profitability and also the other benefits to the premium mass segment.
So, let's have no confusion. We want to be the junket business for sure in Macau.
Okay, helpful. And then you highlighted a significant increase in occupancy in Macau. How are you thinking about allocating rooms now to kind of drive the highest returns? Thanks.
It's never really changed for us historically. We allocate rooms based on profitability, be it junket, be it premium mass, be it mass or just cash customers. We ran 86% occupancy across the portfolio. We're very pleased by that. And I think the difference to us and most people, I think, reflects our ability to sell 13,000 sleeping rooms and yet still take care of the casino customers.
And I think one thing you should think about with us is we've successfully enhanced our business model and marketing initiatives to adapt to the continued evolution of the Chinese consumer, mobile, social media, e commerce. We successfully leveraged social media product placement and our diverse non gaming offerings to build an industry leading online mobile social media presence in China. I mean, at the Parisian alone, we have 3,600,000,000 digital impressions. The Venetian and Parisian are 2 top most searched Macao properties on both Baidu and Weibo. And when WeChat, we've got more followers than any other Macau companies combined, all the companies combined.
So again, we believe very much in selling hotel toilets because we have a large platform of 13,000 sleeping rooms, but profitability is guided by each segment, be it casino, be it cash sales, be it junkets. So we're open minded to all those segments, but our key is keep our rooms busy, occupied and producing lots of EBITDA.
All right. Thank you.
Your next question comes from the line of Joe Greff from JPMorgan. Your line is open.
Good afternoon, everybody. Hi, John.
Question for you guys. Obviously, the VIP business
was roaring at Marina Bay Sands. What drove that? Is it a different marketing approach? Is it credit? Is it macro driven?
How concentrated? Or how broad based was the rolling chip strength that you saw?
Sure. Well, let's declare, we obviously had a stellar quarter, which was driven by the rolling segment and we had stronger volumes than above average hold percentage, which helped MBS to I think it was our 2nd best quarter in the history of the property since we opened.
That was 7 years ago.
Yes, long time ago. The non rolling table and slot ETG volumes were stable, although they didn't grow, a little bit disappointing. And the lodging component was softer than usual because the Singapore lodging market is softer. But I think this quarter reflects the many opportunities of profit we have to drive our business at MBS. Even taking out ex the large hold percentage, we delivered about $385,000,000 of normalized EBITDA, which sets up the potential for a huge year this year at MBS.
There's nothing new there in terms of marketing strategies. What we are doing is reducing commissions in rolling segment to enhance our profitability, enhance our margins. We successfully keep pushing back on the commissions and testing the waters to see how far we can go. You'll see the enhanced profitability in the rolling segment this quarter. And we played lucky, let's be clear.
We had a lot of luck this quarter, probably about $100,000,000 of increased hold. But having said that, we're very pleased that in a quarter where the usual drivers were absent, we didn't see the big, big, big lodging component. We didn't see the big component coming out of the non rolling spot ETG segment. We still delivered great results and it was all about the very high end and playing a bit lucky. But I would again look at the commission structure and how it's changing.
Think we run about 65, 35 in terms of the composite market EBITDA in Singapore. And so we're very proud of the results there, albeit our traditional drivers were a little absent this quarter.
Great. Thank you. And just kind of a big picture on Macau for Rob, for anybody on the call. How do you think about future investment or reinvestment in your properties, particularly when you think about your principal presence and you think about Sanco Thai Central, What type of retheming or rebranding opportunities do you have to increase market share? How are you thinking about those things now?
Right. It's a good question, Joe. First of all, we are the market leader in Macao, the market EBITDA leader. We once hit $3,000,000,000 of EBITDA there a few ago and our goal is to return to that place again. We will absolutely invest aggressively in all aspects of the account be it SCC, be it The Parisian.
The Parisian had a nice quarter. We think we can do better. It's based on mass volume, and I think it's based on a terrific job of the team there in the digital platform. And we're very pleased with our vast performance at The Parisian, but we believe there's a lot more profitability. It has extraordinary curbside appeal.
It has extraordinary connectivity, the Four Seasons. It's a very glamorous property inside the building, the casino. What it lacks is a better room product to address the premium mass. We're addressing, we're spending aggressively now. You'll see some of that product come on board in early 2018 and by the end of 2018 be completed.
And I think once that's done, the Parisian is going to be a very, very strong competitor and do much better than the 106 this quarter. We're very proud of the product. We made some changes there, which most people do after opening a property. We recognize the enormous appeal to Premium Mass and we think we do a lot better at the Parisian. We're very pleased, as Sheldon referenced, the growth of the Four Seasons that seems to be benefiting both from a retail and gaming perspective from the connectivity to the Parisian and the Venetian.
And we are reinvesting in the Venetian right now. We actually had 500 rooms out of order this quarter. We stood our room count down considerably about 20%, which impacted The Venetian's results. So we're going to spend aggressively in Macau. We are big believers.
We're grateful to be there. It's a magnificent market. We are the leader in EBITDA, have been for years, and the biggest investor in the market, and that won't change. We're going to drive more revenue. And as this mass gaming story evolves, we plan to be a very, very big participant and grow our EBITDA.
And your next question comes from the line of Felicia Hendrix from Barclays. Your line is open.
Hi, thanks and good afternoon. So on the mass side, if we take the mass win estimate that's in the deck on Slide 13, the $4,150,000,000 that and you kind of do a market share calculation based on your mass win, it implies you maintained market share in the quarter and last quarter you grew share a little bit on the mass side. I would just think given your success with Parisian and everything you're doing that your mass share would be growing a bit faster. So just wondering how to think about that. And then also in the deck you highlighted that there was a sequential base mass decline in the quarter.
So I'm wondering if that's something that we need to discuss or if that's just seasonal?
Dan, you want to take that?
Sure. I mean, Felicia, I think the most important thing on the question is on Page 15, which is that grew 22.6% across base and premium mass. So base mass grew 11% in a quarter that doesn't have as much visitation as say the 1st and the third quarter. So it's very nice result for us. And then premium mass, as Sheldon mentioned in his comments, grew nearly 40% for us, 39.3%.
That's what matters. That's what counts. We're growing very, very quickly. We don't have precise information on all the other operators' growth. We'll wait to see what they do.
You saw the results yesterday. We've got very nice market share in mass and our expectation is that we can grow our market share in mass over time because of all the things Rob just mentioned. So we're very, very pleased with the results. It could very well be that the growth rate in the Capital Whole market is slightly less or slightly more than we have estimated. We will find that out in the next couple of weeks, but we know that the growth in the market is very strong, let's say, 18 percent.
We're growing at 22.6%. We're very proud of that and looking forward to continuing to move in that direction. With respect to sequential on SCL base mass, what I'd say is, this is a seasonal business with visitors coming in the 1st and the third quarters, probably more so than the second and the 4th. And as we continue to evolve, I think we'll see good stuff coming. And I'll point to another slide in the deck, which is on Page 12.
If you look at Mainland Chinese visits, that's up 16% year over year in the Q2 of 2017 compared to 2016. If you look at spend per visitor, that number is up 13% and this is just math tables and slots for the visitors coming into the market. So we see a very nice opportunity continue to grow. We expect that base mass business across Macau overall to grow at probably Chinese GDP plus. So if that's the case and we're participating, we've got a very, very nice growth opportunity in the future.
Thanks. That's helpful. And just as a follow-up, can you guys just address the flow through in the quarter in Macau? It looks like it's decreased a tad since last quarter.
I think our margins have been consistent given our cost reduction programs. I think the team over there has done a very nice job taking costs out of the business as the business scaled down in prior quarters. Now that we're experiencing growth, we anticipate to see heightened flow through. From a labor standpoint, we've actually been pretty good. I think some of our cost expansion here has been related to increased marketing to capture some of the market growth.
We're going to continue to invest in marketing as the business continues to grow, because we think that's helpful for the long term. So but as a practical matter, we should start seeing some operating leverage as revenue continues to grow in the market. So I think it's going to be a little there's going to be some cyclicality in our margins just given the performance of revenue. Q1 has Chinese New Year's in it. But I think as you look for the business over the long term, you should see us control our labor costs, control some of our fixed costs and then look over time to increase our marketing spend as we invest in our business, invest in our customers and look to grow revenue and expand margins.
Great. Thanks so much.
Your next question comes from the line of Shaun Kelley from Bank of America. Your line is open.
Hi, good afternoon. Rob, just wondering if you could maybe give us a high level view on how you characterize the promotional or competitive environment right now in Macau. We should be getting close to lapping some of the new supply additions from last year, including your own. But any changes or tweaks to the landscape there? Or is everything fairly steady?
I think things are pretty steady there, Sean. I think we and the last time I'm confused a little bit by our growth in the mass, Felicia's comments about base mass and premium mass indicates to me we have healthy growth in both those segments and we have healthy margins, frankly, at 33% or so, I'd take it any time. As far as the competitive environment, I think it's obviously a very competitive operating environment, but from our perspective it revolves around the base premium mass segments. So we've not seen unreasonable competitive pressure. I think it's actually very reasonable.
We did see some, obviously, price cutting on the hotel side a few quarters ago and even that's bouncing back, ADRs are improving. And so I think the market there is rather rational and reasonable and measured, and I think it will continue as long as we keep seeing these double digit increases in revenue and people aren't chasing the customers. I think that environment remains very reasonable working and we're very happy with the environment.
And maybe just as a quick follow-up, I think I called earlier maybe in the prepared remarks that normalized EBITDA margins in Singapore were 55% this quarter, but I'm not sure if I answered the word normalized. So is that a number like a solid number or how should we interpret that?
Yes. Yes. It's a solid number.
It's a solid as a Rob number.
How do you say it's 55% unsolid?
You don't.
I don't know. Yes, as
we addressed, Singapore had an unusual quarter because we did have large volumes relative to the past year or so in the rolling. And obviously, when you hold well, that skews things a bit. But I think if you step back, even with the rather soft lodging market and a softer non rolling table segment in the market, we did pretty well. Margins held up pretty well. And again, I think the power of MBS is evident this quarter by the fact that we had less traditional drivers, yet we had the high end emerge and we held lucky.
So I think margins like that are reasonable and you can believe in them long term.
Sean, this is Sheldon. You got to remember that there is no reason for it to reduce the traffic and reduce the productivity at Marina Bay Sands. It is arguably the most beautiful building in the world. If you want to have an argument, I'll engage in that. Well, I said arguably.
It is the most visited, it's one of, if not the most visited hotel in the world. There's nobody that goes to Singapore that doesn't see the hotel, that doesn't want to go up to Skypark and look out over Singapore. It's just so attractive and so magnetic to people who come to Singapore. I don't see any reason why the Marina Bay Sands has been open for 7 years and we've done good and we continue to increase. Our mall is considered one of, if not the most beautiful mall in the world.
And while all the other malls are going down in sales, we're going up. So there's no reason for it to go down, particularly when people who come to Singapore, everybody who goes to Singapore goes to see the Marina Bay Sands.
Sean, I think one other thing to note is the margin that you're seeing there is based on the operating leverage of the business. So that if Murray Based Sands continues to develop a better mass business over time, if we continue to have the VIP growth that we're seeing, eventually we'll continue to scale and you'll see some margin expansion in that business.
I can tell you, I'm involved in development and expansion. And I can tell you, I was in Brazil recently and people had gone from Brazil to Singapore to see the Marina Bay Sands just for that purpose. People from everybody in Japan knows what the MBS is. And most everybody from Japan that has any interest in the potential Japanese integrated resort, Everything they do is covering Marina Bay Sands.
So a reference, Sean, there's one more thing about Marina Bay Sands and about how we think about that asset. Obviously, we're very proud of it. A reference point for an exemplary IR anywhere you go in the world, be it Asia, South America or the U. S. And on Page 24 of the deck, I think one of the reasons why is we've invested aggressively in world class entertainment.
If you look at that list of acts from the Rolling Stones, Michael Buble, to Elton John, to Alice Smith, Diana Ross, etcetera, Asian acts, all kinds of top tier K Pop and J Pop sports, boxing, theatrical, it's a pretty impressive place. We are the touch point in that part of the world for entertainment in Singapore, coupled with the views Sheldon referenced. As we travel to new jurisdictions, we're very proud of the fact that it seems to be the place that everybody talks about as what they want to have in their backyard. So be it entertainment, be it mice, be it retail, we reinvest heavily and want to keep this superb asset looking like it looks and leading the way. So,
I'll take it.
Thank you, everyone.
Your next question comes from the line of Robin Farley from UBS. Your line is open. Thanks. I just want to
ask a little bit about return to shareholders based on your opening comments. But it looks like you did less share repo in Q2 than you did in Q1. So I don't know if you could give any color on how you think about that.
Sure. I think our as we said previously, the return of capital cornerstone is really our dividend. That's really what our Chairman and our Board focuses on in terms of long term sustainable growth, And that's really the focus of our return on capital program. We use share repurchases to modulate return of capital to our shareholders. So then we feel we have some excess cash and we feel like providing additional return to our shareholders, shrinking our share count will go out and repurchase shares.
In this particular quarter, we chose to purchase $75,000,000 In the future, we hope to do more, but that's what we did this quarter.
And that was just a function of literally like liquidity in the quarter or just thinking about that versus Q1?
I think it's really just a
view on the outlook. I think we tend to think about our cash flow growth, tend to think about the liquidity that we have, to think about a whole host of factors that kind of go into the mix and we make repurchases based on our long term view. So across the year, we'll look at it more in that concept than we will particular quarter to quarter. So I think the way we kind of look at it is going back across the year and saying what was our total return of capital, how are our shareholders treated and that's the context that we really
consider it.
Okay. That's great. Thanks. And then just one other very minor question, but are you still actively looking to maybe dispose of non core assets? Just wondering what your current
opportunistic about. I think our Chairman has set up a very effective model where we reduce our cost of entry by ultimately selling down assets that are considered non core either in total or in part. And it's something that we'll always continue to consider to enhance shareholder returns. But at this time, we don't have anything to report specifically, although the Chairman has said all along that this is part of his core fundamental strategy for the business and that's something we hope to follow over time because it does create an unbelievable return environment.
Okay. Thank you.
Your next question comes from the line of Harry Curtis from Nomura Instinet. Your line is open.
Hey, good afternoon everybody. Just a couple of quick clarifications. Following up on Joe's question in Macau, can you walk through the projects or the property improvements that you're planning and give some general price tag on what you're planning to do this year and next in Macau?
So Harry, it's Patrick. Nice to hear from you.
I think if you turn
to Page 35 in our earnings presentation, you kind of see that we provide a forecast for our CapEx expectations for the entire portfolio. And then there's some details there regarding maintenance CapEx, some investments that we plan to do in existing properties, things that are specific to the Parisian and then some other. And I think the key thing to note is that the $500,000,000 maintenance that we intend to spend, although we haven't spent it in years past as our property portfolio needs room refresh, needs high limit space changes, needs junket room adjustment, we intend to spend that money. I think we have a very motivated team in order to grow the business. I think we're working hard to identify areas of investment, areas of change that could be helpful.
And I think we're actively pursuing that in Macau and Marina Bay Sands here in Las Vegas and in Sands, Pennsylvania. So I think the key thing here is, I don't know if we can call it a specific list of projects because they are numerous. But what I would like to highlight is we have a history of investing in our properties of making the changes necessary to support earnings and cash flow growth. And we've had the spending history that shows that we do it. And so if you look at these next 3 years, you'll see there's a significant commitment made to both capital expenditures to provide growth as well as capital expenditures to make sure our assets are kept to where they need to be to continue to produce the cash flow that allows our return on capital to happen.
So I'll turn it over to Rob or to the Chairman to see if they have any additional remarks. But I just want to highlight Page 35 lays out the amount of expenditures that we spent historically, the way we've deployed capital and the way that capital intends to be spent in the future on a general basis. I don't know if there's any specific projects that we'd like to highlight now, but I'll turn it over to Rob.
Yes, Harry, a few things just to think about. We referenced the Parisian. We're in the midst of converting and just in sweet product over there. It will come online in Chinese New Year's and throughout the year. Otherwise, the Parisian we're adding a restaurant or 2 in the gaming floor.
We just finished redoing all the rooms and suites in the Four Seasons. We're making changes to all of our junket rooms. We're having 100% of the junket areas, obviously adding all the new smoking rooms like our competitors for 2019 finish date. The Venetian, we're right now rehabbing another 500 rooms on top of the 500 we did last year. We're rehabbing the entire casino floor.
We constantly are adding restaurants. Right now, about 11 restaurants in Macau are being changed out for new product or rehab. I can't stress enough how much we recognize we're in highly competitive markets with very, very good competitors. I was in Macau last month, and you walk through the new products and even the older ones, and they're very, very good. So we're aggressively spending money all over Macau.
MBS room rehab across the board, a casino update refresh, and we just finished a new slot room there. So there's no place we aren't spending money and it goes throughout, be it nightclubs, be it restaurants, be it casino floor. We're aggressive reinvestors. We love the products we own, and we're going to be spending money throughout this year next to rehab a lot of places. So no lack of capital expenditures.
That's very helpful. And then my follow-up question relates to Marina Bay Sands. A couple of curious curiosities. In your press release, it shows that mall revenues were flat quarter year over year at $40,000,000 Yet, I think it was reported that last year that it was about 64,000,000 dollars Was there some kind of an accounting change year over year? I might have missed it.
I don't have that. Harry, I'm not sure what we're referring to. Give us a chance to get back to you.
Okay. That's fine.
Yes. We're showing occupancy at 97%, rents about $14.80 a foot and it looks to me like the operating profit is about $35,100,000 for
the quarter. So we're looking if you turn to Page 26 on our earnings deck, we have the Asia retail mall portfolio with operating profit and operating margin as well as mall revenue. Maybe you could direct your question to that section to that page and maybe we can answer it.
Yes, this was just specific.
On Page 9 in the release, we've got mall revenue at $40,000,000 in 2017 $40,000,000 in 2016?
Correct.
So you're saying a year ago we had $60,000,000 in the mall revenue?
That's what we show, but we've known to be wrong.
Let's shake
it down together.
Let's shake it down together.
We've not Harry, it's Rob. We've not had any significant changes in Murray Bay Sands. It's pretty flat year on year, but I don't think we we'll get some detail on that, but I don't believe we had a $16,000,000 quarter last year.
Oh, I
mean that he's thinking about gross versus
No, because the tunnel runs about 30% about 90% margin. I don't think so. We'll come back. We'll clean up, Bart. We'll come back to
Harry directly. Yes, Harry, what you see both on Page 26 and Page 9 of the press release is accurate. So I'm not sure what you're referring to, but if you have any questions, please follow-up with Dan.
I will. And just staying in Marina Bay Sands for the last question is, on the rolling chip volume, in the Q1, it was I just want to make sure I've got these right. It was $8,900,000,000 in the first quarter and $8,700,000,000 in the second quarter. So it's sequentially pretty stable. Is that a fair statement?
Yes. In other words, if you look back a year ago, it was $6,700,000 a year ago in Q2 of 'sixteen, so a nice growth year on year, but Q on Q it's flat. And obviously Chinese New Year's fell in Q1, so it's a nice stable run rate of $35,000,000 to $36,000,000 Yes.
Yes. So that was where I was going is do you think that we're in a more stable environment now because historically that rolling chip volume has been quite volatile?
Yes, I think it's been stable last year or 2. As you know, it's fallen off strictly from the early days when there was belief we could do $50,000,000 or $60,000,000 But I think currently running in the $35 plus 1,000,000 range. I think that's realistic. As you know and I think it bears repeating that this is a highly concentrated segment that a couple dozen players can make a difference in a quarter. But we feel like we're running at a more stable rate the last three quarters, we've been in the 8.2%, 8.9%, 8.7% range.
But bear in mind, a year ago, we dropped down to 6.7%, so a big increase year on year. But this market, especially in Singapore, is just like Las Vegas, 10, 20 people can make a difference. And so I would caution you always to keep in mind, it's volatile and concentrated.
Got you. That's very helpful again. Thank you. Sure. Thanks.
Your next question comes from the line of Stephen Grambling from Goldman Sachs. Your line is open.
Can you hear me now? Sorry about that earlier and thanks for letting me back in. Sure.
I'm glad you're back.
Thank you. So sticking with Singapore, can you provide any update on the thoughts around monetizing the retail real estate there and provide any color to how that may play into your capital allocation strategy going forward?
Right now, still very early on, nothing really to report on the process. Although I will tell you that I think as we said previously that the Chairman's strategy all along when he developed these large scale integrated resorts that are MICE based and have a lot of critical mass that a part of that critical mass will be non core components. And those non core components are integral to resort, but also have monetization capabilities. And so we'll look to in the future monetize those assets as pricing allows and as the Chairman feels comfortable in order to enhance our shareholder returns. So while we have nothing to report specifically at this time, we're optimistic, we're hopeful for the future.
We realize the value of the mall that's sitting there, as the Chairman said earlier. It's a great property. It's the most iconic mall in the world. It's probably the most valuable mall in the world on a per square foot basis. And we're looking forward to the opportunity at some point in the future.
Hopefully, we'll get that chance.
Thanks. And then on the Slide 30, you put down principal areas of future development interest. And if we maybe look at South Korea and Japan specifically, can you provide any updates there? And what are some of the key factors that would make you maybe more or less interested in either one of those areas?
We've always been shooting both those locations. I think that's no surprise to anybody. We're cautious. I think in Korea at this point, there's nothing really to talk about. We have been actively involved in trying to make ourselves known in Japan.
We've been there several times quite a bit, and we're hoping that process goes well and hoping it will be considered for a license at some point. We're very bullish in Japan and very much hopeful that the process completes sometime later this year. We'll just stay tuned and see what happens. We're hopeful.
Bob keeps going to Japan because he found a great pizza Right.
It's true.
If you want a great pizza place in Tokyo, e mail me.
And then I guess
the other follow-up on South Korea.
Pardon me?
You want to talk about South Korea, your thoughts on South Korea.
Well, there's been nothing they recently had an impeachment and the lady was indicted, the former lady President. And they put a new President in, but there's no indication what he's whether he's interested or not. I think that from having gone to Korea, South Korea many times, I think what they're waiting I think what will move that along will be the implementation bill in Japan that we hope will pass this before the end of the year, but it's possible it could be delayed. And I think that once they pass that, remember they have 17 casinos there and only 1 allows Korean nationals. And it's about 3 hours drive away from the biggest city from Seoul.
I think they've got bigger problems now with North Korea than looking at integrated resorts to attract more tourists. So we don't know. There's nothing new about Integrated Resorts being restructured in South Korea. The most likely I've heard that Bangkok in Thailand is reconsidering IRs, But it's very gratifying to know that everybody who talks about IRs in Japan is referring to one thing or more about Marina Bay Sands. So it is an absolute must reference site.
It certainly puts us in the number one position to be the top candidate for a win. So we don't know. There are different opinions as to whether or not our base loss of so many seats in the diet, the Japanese parliament,
We don't know
whether or not that hurts the move, but Patrick and Rob were just there last week and they say that it doesn't seem to have any effect and they're still moving along and they hope to guess. I don't know why, but they're going to pass the bill for gaming addiction first. I don't know what that has to do with anything, but they said they got to pass that first. And we're hopeful that it will pass the forthcoming month in August.
Fair
enough. Thank you. I'll shoot Rob an email on that sushi pizza.
No, sushi is just pizza, great pizza.
I eat pizza in Italy, the home of the pizza.
And your next question comes from the line of Carlo Santarelli from Deutsche Bank. Your line is open.
Hey, everyone. Thanks for taking my question. Just quickly, if you guys obviously not a material piece of your business, but if you guys could comment a little bit on what you're seeing in Las Vegas right now and kind of how you're assessing current trends?
I think, Carla, this quarter was disappointing in terms of the lodging component, which is more and more important in Las Vegas. But George Mark Antenna, who runs the building tells me that the summer looks better to him. Group business is picking up considerably. And he thinks the second half of it will do well, both from a he thinks the FIDT business picks up and the group business will be strong. So we're hoping for more there.
Obviously, we didn't have as good a quarter as hoped for after a stellar Q1. But George says the summer looks good, the group business is accelerating, the FIT business as well is accelerating, so let's hope for the best in Las Vegas.
Great. Thanks, Rob. And then if I could just go back to one point you made, I just want to make sure I heard it right. You talked a little bit about MBS and kind of what you're doing on the VIP side. And did I hear you correct in saying you're obviously no junkets in the market, so every relationship is direct.
Your rebates or commissions to your VIP customers, you've been kind of pulling back on them a little bit. So even on normalized hold going forward, your margin profile within VIP should be improved?
Exactly correct. We continue to cut back commissions, our second bite of the apple, and you've identified it perfectly, yes.
And just is there any kind of in terms of departmental margin improvement that you would expect to see from that?
Yes.
No, sorry, that you could quantify, I meant. I apologize.
No, I don't want to quantify it, but I think you'll see improved margins and improved profitability in that segment. We think we have a showcase property that people want to come to and we are the market leader there by I guess by 65 to 35 And we believe that we can perhaps reduce commissions and get better margin. That's the thought process. I want to quantify what that will mean, but it will be improved margins, improved profitability MBS.
Great. Thanks so much.
And this concludes today's conference call. Thank you for your participation. You may now disconnect.