GGRAsia – Parisian to generate US$2 billion EBITDA a year: Adelson

Parisian to generate US$2 billion EBITDA a year: Adelson

May 29, 2014 Newsdesk Latest News, Macau, Top of the deck

The Parisian casino resort could generate earnings before interest, taxation, depreciation and amortisation, or EBITDA, between US$1 billion and US$2 billion a year, says Sheldon Adelson, chairman and chief executive of U.S.-based Las Vegas Sands Corp.

The property, located in Macau’s Cotai district, is currently under construction. Sands China Ltd, a subsidiary of LVS, owns it.

Speaking at an investor conference in New York on Wednesday, Mr Adelson added he expects Sands China’s casino resort Sands Cotai Central to match the current financial performance of sister property The Venetian Macao within five years. Sands Cotai Central, across the road from The Venetian Macao, and which opened in 2012, is seen by analysts as still ramping up its performance.

The LVS chairman added Sands China has requested 450 gaming tables from the government for use in The Parisian. The property will also include 3,000 hotel rooms. Mr Adelson said the US$2.7 billion venue is scheduled to open in November 2015.

The project will include several replicas of Paris landmarks, including a scaled version of the Eiffel Tower. “It will be a major attraction” for Macau, he said.

Mr Adelson noted he continues to be bullish about the Macau market. “It is very unlikely that there is any catalyst or anything that is going to happen in the near term, short term or long term” that will disturb the market, he said.

Rather, he highlighted positive developments, including the ongoing transport improvements in mainland China, which have increased accessibility to Macau. Mr Adelson also said that the future Hong Kong-Zhuhai-Macau Bridge will provide a direct connection between Macau and Hong Kong International Airport, the main air hub for the Pearl River Delta. With a budgeted cost of US$10.7 billion, the bridge is expected to open in two years.

Commenting on the casino concession licence renewal process in Macau, Mr Adelson said he sees no major risk for current concessionaires. He said local authorities treasure stability and would not be keen on big changes. “I have no fear whatsoever,” he added.

The current casino concessions expire between 2020 and 2022. The government has signalled it will kick off the concession renewal process in 2015 or 2016.

Mr Adelson added the renewal process should not translate into “significant changes” in the concession rules. He noted the Macau government already posts sizeable annual surpluses fuelled by gaming taxes. Overall the effective tax on gaming in Macau equals 39 percent of casino gross gaming revenue.

Mr Adelson stated there is little room for tax increases, especially due to the high commissions casinos must pay junket operators to bring in VIP gamblers. High rollers account for more than 60 percent of Macau’s casino gross gaming revenue.

Mr Adelson also said LVS is keen on investing on a casino resort in South Korea’s capital, Seoul. It would be located on the site of the 1988 Summer Olympics. He mentioned remarks made by the country’s president, Park Geun-hye, in March in which Ms Park opened the door for the legalisation of casino resorts admitting Korean gamblers.

Korean casinos currently only permit foreigners to gamble, except at Kangwon Land, a difficult-to-access location 150 kilometres (93 miles) southeast of Seoul in Gangwon Province.

Mr Adelson said Japan and Korea would be “complementary” markets, with a crossover of high rollers.