Las Vegas Sands Earnings: Near-Term Renovation Disruption Supports Long-Term Competitive Advantage

Our main takeaway from narrow-moat Las Vegas Sands’ first quarter is that near-term investments in its Macao properties are causing near-term sales share loss. In this vein, Sands’ Macao revenue grew 42% from last year in the quarter, compared with industry gross gaming revenue growth of 65%. At the heart of Sands’ $1.2 billion ongoing Macao portfolio investment this year was the decision to close its 15,000-seat Cotai arena in January, as it spent the next several months upgrading the facility. As a result, only 12 shows took place in the quarter versus 31 a year ago. Also, the firm is renovating its Sheraton hotel rooms, taking a few hundred keys off the market this year.