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Las Vegas Sands dominates hotel market in Macao

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Hotel occupancy levels

Las Vegas Sands’ (LVS) hotel operation contributes ~10% to its overall revenues. In 2014, the company had hotel occupancy rates between 83% and 99%. During the three months ended December 2014, LVS’s occupancy rates strengthened across Sands Macao, Marina Bay Sands, and Sands Cotai Central when compared on a year-over-year basis.

The Venetian, Four Seasons Hotel Macao, and the Las Vegas hotels experienced a year-over-year decline in occupancy levels.

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The above chart shows that Sands China Ltd. (or SCL), a subsidiary of LVS, currently dominates the hotel market in Macao with 9,277 hotel rooms representing ~38% of Macao’s current four- and five-star hotel rooms. This also represents 56% of Macao’s competitor hotel inventory, which includes companies such as Galaxy Entertainment Group, Melco Crown Entertainment (MPEL), Wynn Resorts (WYNN), SJM Holdings, and MGM China (MGM).

Now let’s take a look at LVS’s hotel inventory position relative to the market at the end of 2017.

LVS’s hotel inventory position

The above chart shows that LVS’s Macao hotel inventory could represent 35% of Macao’s current four- and five‐star hotel inventory by 2017 and 44% of its peers’. The chart also shows that MPEL’s and WYNN’s hotel inventories will more than double from current levels. SJM’s and MGM’s hotel inventories will more than triple from current levels.

This shows that Macao has a lot to offer casino patrons in the near future. It should also be noted that since LVS has the largest number of rooms, it would employ comparatively more people. As a result, LVS would create more jobs for the economy, which could drive economic growth for the nation.

Investors can get access to these companies through ETFs such as the VanEck Vectors Gaming ETF (BJK). BJK has more than 40% exposure to these companies.

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