Las Vegas Sands - Earnings Call - Q1 2011

Transcript

Speaker 0

Good afternoon. My name is Marvin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Las Vegas Sands Corporation first quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I will now hand the call over to our host, Mr. Daniel J. Briggs. Sir, you may begin.

Speaker 4

Thank you. Before I turn the call over to Mr. Adelson, we remind you that today's conference call will contain forward-looking statements that we are making under the Safe Harbor provisions of federal security laws. The company's actual results could differ materially from the anticipated results in those forward-looking statements. Please see today's press release under the caption "Forward-Looking Statements for a Discussion of Risks That May Affect Our Results." In addition, we may discuss adjusted net income, adjusted diluted EPS, and adjusted property EBITDA, which are non-GAAP measures. A definition and a reconciliation of each of these measures to the most comparable GAAP financial measures are included in the press release. Please note that this presentation is being recorded. With that, let me please introduce our Chairman, Mr. Sheldon G. Adelson.

Speaker 5

Okay. Thanks, Dan, and good afternoon, everyone. On behalf of our management team here with me today, I would like to thank all of you for joining us. As you can see from our press release, the company had another record quarter, producing $746 million in EBITDA and a record $2.11 billion in revenue. We played a little unlucky during the quarter, and on a normalized basis, we would have been just over $785 million. A solid run rate of more than $3.1 billion of EBITDA per year, which I believe will be a record for any similar company in history. These results amount to the seventh consecutive time the company has increased its quarterly adjusted property EBITDA over the previous quarter.

This trend started at the end of the second quarter of 2009, and since that time, we more than tripled our quarterly EBITDA results from $247 million in quarter two of 2009 to the $746 million we recorded today. I believe that upward trend will continue for the foreseeable future. Why do I feel that way? Let me explain by showing that in Macau, where the property is operated by a majority-owned subsidiary, Sands China Ltd., and continuing to enjoy market-leading EBITDA generation. The Venetian Macao increased its EBITDA by $58.5 million over the same quarter a year ago to reach $228 million and a record 35.8% EBITDA margin. Not only ship drop, which is the mass market tables, rolling volume, that's the VIP business, its slot handle all increased over the first quarter of last year.

The adjusted property EBITDA at Sands Macao was $92.6 million, an increase of nearly 33% compared to the first quarter of 2010. Like The Venetian Macao, not only ship drop, rolling volume, and slot handle at the Sands all increased significantly over the same quarter a year ago. The Plaza Casino at the Four Seasons Hotel, with increases in rolling volume and slot handle, also had its best quarter ever, generating $57.5 million in EBITDA. Our rolling program at Macau showed a continued increase with contributions coming from existing junket business and recently added junkets. We recognize we have the ability to increase our presence in the junket segment, and that will be an area of continued focus moving forward. Our team is working with our existing group of junket operators as well as new junkets in an effort to maximize our position in this segment.

We're also working to adapt our diverse physical products to better suit their needs in creating a differentiated service environment for their customers. With continued initiatives designed to enhance human capital, customer service, and our physical presence, we are well positioned for continued growth in the VIP segment. We're very pleased with our quarter in Macau and not content to simply leave the current cruise facility. We have the largest footprint in the largest gaming market in the world, and we are eager to take advantage of the significant organic growth opportunities in front of us. I have no doubt that we will achieve even greater success with the organic growth opportunities of Macau. We're also looking forward to the opening of sites five and six on the Cotai Strip.

Although we have made significant progress on parcels V and VI, if we do not secure increases in our present construction labor force, as the bulk of the 13.7 million square foot property, the world's largest building constructed at one time, opens over the course of next year, it will profoundly enhance our presence in Macau. We will nearly triple our hotel room inventory with the addition of 6,400 rooms and thus provide the capability we believe is vitally important to growing our market share in Macau. We will also be adding other important non-gaming amenities, which will include more meeting space along with additional retail, entertainment, and dining. The foreseeable future, and it will secure our position as the leading operator in the world's number one gaming market, thereby expanding our footprint in Macau.

In addition, sites five and six too, with thousands of non-gaming jobs, will further help the government in its efforts to diversify Macau's economy. Today, we're just as committed to helping Macau reach its potential as an international leisure and business destination as we were nearly seven years ago when we first touched down in Macau. That's Macau. Now let's talk about Singapore. Let me start by saying that the doors to Marina Bay Sands opened one year ago last week, and in the 52 weeks since that opening, we have made more than $1 billion in EBITDA. That's U.S. The reason I bring that up is not to remind everyone that I had predicted that we would make $1 billion in our first year, though I do take a little joy in that.

I bring it up because it represents just the beginning of what we can achieve in Singapore. We made $1 billion at a property which, for the first several months, was not able to offer its complete set of amenities. In fact, just this past quarter, we opened important visitation drivers such as the Art Science Reveal, a light and water show, and Disney's Lion King. My point is that while we reached $1 billion in the first year, we're still miles away from realizing the full potential of our opportunity in Singapore. Our mass market segment business, while very strong, is still in the early stages compared to where we'll ultimately be in the months and years ahead. The same can be said for retail, food and beverage, and the hotel.

As for our gaming business in Singapore, I recently saw a CNBC story that quoted Royal Bank of Scotland predicting gross gaming revenue in Singapore would rise 25% to $6.4 billion in 2011 and surpass Las Vegas as the world's second biggest gaming market. With only two of us in the market and with our success in the high-margin mass business, which is now exceeding $4 million a day in win, we're strongly positioned to benefit from that additional growth. In the first quarter of 2011, Marina Bay Sands' non-rolling table game drop was $986 million, and slot handle was $2 billion. VIP rolling volume was $10.1 billion for the quarter as our marketing programs continued to take hold. Additionally, room occupancy was 86.3% with an ADR of $285. Our combined retail and food and beverage revenue was approximately $100 million during the quarter.

As I alluded to earlier, we don't see these parts of our business doing anything but continuing to grow. To say we have additional opportunities in Singapore would be something of an understatement. At about $45 million in revenue on a low hold, group business continues to improve. I am very bullish about our prospects in this segment. Based on our existing bookings, we expect to do more than 700,000 group room nights in 2011 with an expectation of 1 million total group nights in 2012. Our results for the first quarter show that the number of rooms sold to cash-paying customers, our average leading rate, and the number of group and convention customers served all increased significantly during the quarter compared to last year. In fact, 97% of our rooms sold in the quarter were cash-plus-price compared to 68% a year ago. One final note on Las Vegas.

Please note that we have brought John Peperello on as the new President of The Venetian Palazzo. John is very engaging and has a deep hospitality experience, which includes having served as Chief Operating Officer of Gate Old Hotels. We're glad to have John join us, and we think he'll be a great addition to our Las Vegas operations. Turning to our operations in Bethlehem, Sands Bethlehem recorded its best quarter ever with adjusted property EBITDA of $22.1 million and an EBITDA margin of 24.3%. The hotel at Sands Bethlehem will open by the end of this month, and we now have plans to open the retail component of the property in the fourth quarter of this year.

The 300-room hotel will be the largest full-service hotel in Lehigh Valley, and when combined with our additional entertainment and dining offerings, it provides us an excellent flat call for dome on our own East Lake property. Finally, let me close by saying that the company's financial position is the best it has ever been, and we're excited by the various options that give us moving forward. Our substantial cash-generating capabilities and strong financial positioning, coupled with favorable capital market conditions, provide us with a number of opportunities to optimize the capital structure of the company and reduce our overall borrowing costs. There will be more to come on this issue in the months ahead. Mike is here to discuss any operational questions you may have. Rob is here for your gaming questions and can confirm to discuss our current financial conditions. Let's go to Q&A.

Speaker 0

Ladies and gentlemen, if you would like to ask a question at this time, simply press star then the number one on your telephone keypad. Our first question comes from the line of Joe Stauff with JPMorgan Chase.

Speaker 6

Hey, guys. My first question is on Singapore. You'll probably get this a lot after the call, but I think if you look at Singapore adjusted for that unlucky hold and normalized that, the EBITDA result is a little bit less than probably where consensus was. As I go through the pieces and just kind of normalize the hold on the VIP side, I think what would be helpful to all of us is, and maybe Rob, if you can do this, maybe kind of go through what you think the department profit margin is for the various segments, whether it's VIP, mass and flats, room, other, because it looks like expenses overall were much higher than I otherwise would have expected it or even looking at where it's been relative to revenue growth. If you can help us sort of understand those items going forward, that'd be helpful.

If you can give us any sort of sense in terms of April trends in Singapore, that'd be helpful. I have one other follow-up after that.

Speaker 7

Joe, we don't really see a change in the margin in the casino side. We've told it all along. We think we'll be in the mid-50s, actually, for us, 57% to 58% for the mass slot and table combined. Hold percentage holds around 22.5% plus. We see volume growing there nicely. On the VIP rolling volume side, I think we're still in the low 30s. Again, the hold percentage is what it is, but we don't see the margins changing. We've been consistent in our approach toward the commissions, so I don't see a lot of changes there. I don't think there will be a change in April and May or beyond. If anything, I see increasing margins in the mass table and slot as we grow there.

I don't see commissions, I don't see the margin getting a whole lot better on the rolls as well, still being in the low 30s because we're still paying out. Most of the business is on a very high end, and you're paying as high as one fourth. I don't feel we get that much beyond 32% to 33%, but I do see a little bit of appreciation as we grow in the slot table mass side.

Speaker 6

Okay. Sheldon, you said earlier that you're having some early success in Macau with recently added junkets. If you can give us a sense of what % of the roll, and if you want to look at all three in the aggregate in Macau in the first quarter, what % of the roll was junket promoter-related versus the last quarter, that would be helpful. Thanks.

Speaker 7

Joe, I'll take the question. I can go to the more helpful. I just came back from a week over there. Let's be clear. We think we have the best opportunity in the junket segment, roll segment, in general Macau. We were pleased with our numbers as Sheldon referenced on the call. We see opportunity, and we see the best opportunity to improve our operations as Sheldon referenced, with service, with people, with spending more capital in the rooms, etc. Our roll will continue to be probably spread 80/20, 85/15 junket versus direct. We've said it before, and we'll say it again. There's a market for the direct VIP, but the primary market in Macau has been and continues to be on the junket business because of the obvious reasons that we've talked about in the past. Our goal is not to, you know, we won't diminish.

There are certain people who prefer to go direct to us. We're finding a very, very strong business for us in Singapore, but the junket piece is the driver of the roll portion of our business in Macau, and our goal is to keep driving both segments of the roll. I do think on the junket side, we've suffered some decisions in the past. We wanted to adopt this company. We're fixing that. We are working very hard too. We look at our real estate portfolio. We made a decision as a company to be a big player in Macau. We're a deep player in Macau. I think our footprint speaks to that. Our goal now is to grow organically, increase those segments dramatically. I mean, David Sisk and Ed Crashey, myself, and the team over there are really committed.

We just spent a lot of time with all the different people. I think the truth is we're going to grow in the segments. It takes time, and we'll probably see appreciation on the junket as opposed to direct because the direct stays pretty thick. If the junket is where the real growth will reside.

Speaker 1

Thank you.

Speaker 0

Our next question comes from the line of Mark Strong with Morgan Stanley.

Speaker 3

Hi. One question on Singapore and one question on Vegas. On Singapore first, if you look at the pieces of the business you can control there, you know, maybe junkets at this point are outside of your control. As you look forward, how do you see the growth trajectory of that property? Is it really on the mass side, and how do you stimulate those volumes?

Speaker 7

Mark, I'll just speak at the share piece for a second. I think you can see the appreciation in those numbers quarter after quarter. It is magnificent to watch. I think the team there is convinced that we're experiencing 40% growth annually. We think we can, I think that's achievable. It's a two-horse race. We're privileged to be there. It's a wonderful government. It's a wonderful place to visit. I believe our building is iconic and in the right place physically to keep improving. I believe our business is the aspirational place of the two. Honestly, we're getting a lot of new players every day. There's never been, in my mind, I've never seen a place with this much mass table business consistently and slot business. When you see the numbers coming out, you see the growth.

If you look at our growth in the last, just from the second or the third quarter, we were doing $892 million and now at $986 million. We're going from $196 million to $222 million and talking millions, obviously. The slot growth is unbelievable. We go from $1,358 million and winning $80 million to $2,041 million and $108 million. Where does it stop? That's the question, which we can't answer. All we keep seeing is increased visitation. Weekends are phenomenal. I don't think there's any end right now to our ability to keep growing this segment. It is, it's of Sheldon referenced 4-plus million a day. Does it get to 5 million? I think it absolutely does. The question is what the timing. We're in a very risky position.

Speaker 5

The big question is how much more does it go?

Speaker 7

Right. I mean, I don't think it's a big question. We don't see any slowdown here. We see appreciation quarter. I see appreciation quarter after quarter. Andrew McDonnell and that team, Mark Fujano is there now, Jeremy Bock, Eric Person, they've done a terrific job of rethinking that floor all the time. That team is very focused on driving slot and table mass. I think it's going to be, in the world, it may not be on the market like it in terms of mass business with only two players in the market. It's pretty, it's extraordinary. That will be the driver of EBITDA, in my opinion. Sheldon and I have discussed this. Sheldon believes that I think he's absolutely right. There'll be terrific growth from the roll segment, but that will come later as we've discussed and tackled all of our issues there.

For today, the real driver in my mind is the mass business. It is nothing short of great.

Speaker 5

Thank you. It's a combination of the mass and high end. Look, people are calling that property the eighth wonder of the world. The non-gaming aspects of it, the rooms, the retail, the entertainment, the Lion King, we thought was going to be limited, but it's turning out to be a winner. We're extending our contract there. The Art Science Museum is attracting a lot of people. The comments that we get from all over the world are just that it's an incredible one-of-a-kind building. If you think of Singapore as to what Las Vegas was many, many years ago, there are only two properties on the entire strip.

You divide all the money that's taken in with all the properties, the 100+ casinos in Las Vegas, and the 25 or so mega resorts on the strip, and you divide it up into, you reallocate that to only two operators plus a huge community of very high-end players in the back of it, you've got a very, very unique opportunity.

Speaker 3

Thank you. That's helpful. One quick follow-up on Las Vegas. As you look at that balance between your comp and your cash-through mix, it seems like that had a pretty sizable impact on the flat handle side. Did the dial get perhaps turned too far towards the cash side of things, or is that how we should expect that mix to trend going forward as well?

Speaker 5

It seems to me that somebody once said, "If somebody wants to give you some money, don't turn it down. Don't throw it back at them and don't dial." It only confirms the fact that the decision I made to reduce the amount of comps, which was the dogma in Las Vegas, you have to give comps to get people into play. Our slot income, everybody thinks that the practice was to think of the gross income that you have, but nobody looked at the net income. When people were giving out both free play and RFB and comps, it was too costly. If we move from 68% to 90-some-odd %, I forget exactly the number, on cash, that's a good thing. We stopped giving it away and therefore losing money on it, and we converted those into cash. That's a very good thing.

Speaker 7

Thank you very much.

Speaker 0

Our next question comes from the line of Janet Brasher with Sanford C. Bernstein.

Speaker 2

Could you give us a little update on the progress relative to lots five and six? You said that you wouldn't be able to stay on schedule if you don't get additional labor. I'm wondering in particular if there's any, you know, while the government is philosophically supportive of you finishing the project, if there's any impetus from them to help you speed it up or if they'd rather keep the pace of casino development slow and maybe aren't as motivated to help you speed it up.

Speaker 5

I think the government knows it's in Macau's best interest to complete the project as soon as we can. I'd like to say the government has been very helpful and very cooperative with us on the issue of labor. They haven't given us any special treatment, but they're cooperating as much as we can expect them to do. I know that there'll be some people who say, "You talked about getting it ready by the last quarter of 2011. Now you're saying it may be the first quarter." You know, these aren't exact sciences on the estimates of when we're going to get the labor. We're a certain number of days lagging in the schedule, and it is possible that we can make it up, make up a substantial part of it.

In any event, I don't see anybody, any analyst, estimating any contribution to income in either the fourth quarter of 2011 or the first quarter of 2012. It really has no financial impact on anybody's projections.

Speaker 2

Can you remind us what the run rate is you have on labor now, and if you're expecting that to continue even if you do not get additional labor?

Speaker 5

Janet, this is Mike. We have roughly about 5,500 on the site now. We're running about five weeks behind on the December target. We met there last week. We need to pick up another 1,000 to 1,500 employees in some of the specialty areas like mechanical, electrical, plumbing, etc., which is where the problems are. We're still hopeful we can make that target. The reason we're talking about possible slipping is if we don't get that extra 1,500 or so, we would probably have difficulty, we will have difficulty meeting the target. We're gradually increasing. Last week, we got 400 or 500 more. We're hoping as Galaxy opens, we get some more, particularly in that area of the MEP. That's our count at the moment. We track that every week. I'll be there again May 18th and take another look at exactly where we are at that time.

Speaker 2

Mike, this is one follow-up. Have you made a decision about a brand for the project, whether you want to keep your own brand or find another external operator to brand the project?

Speaker 5

You know what? I knew you were going to ask that question. We're talking now to two international brands about licensing that product and running it ourselves. We have proposals in that we are going through, and final discussions are being held with two major international companies, both of which have significant penetration in Asia as well as around the globe. My expectation is within a couple of weeks, I think we'll have an announcement on that basis.

Speaker 7

Likely we will do.

Speaker 0

Our next question comes from the line of Shaun Kelley with Bank of America Merrill Lynch.

Speaker 6

Hi. Good afternoon, guys. I just wanted to ask quickly, going back to Singapore, the VIP side has been an area of big interest for folks. I'm wondering if you guys could give us a little bit more sense of what you've learned by month and any read you have on April, specifically looking at March and April, because one thing we're trying to understand is how much of an impact Chinese New Year had and what kind of the run rate in that business is going forward.

Speaker 5

Chinese New Year was not in April.

Speaker 7

I was thinking first of this year.

Speaker 5

We are undergoing the shorter phase of Golden Week right now this week. What was the question again?

Speaker 7

Just how it is in.

Speaker 5

Trends in April.

Speaker 7

How are the trends in April?

Speaker 5

The trends in April.

Speaker 7

Trends in April.

Speaker 5

Let's see. I think that will significantly increase our continued ramp-up. We'll smile after we release the figures.

Speaker 7

Okay. Then.

Speaker 5

I think that's all I could say.

Speaker 7

I'll say more.

Speaker 5

I'll ask our attorney. Can I say anything more? If we're not giving guidance, I can't say anything more.

Speaker 7

Not good.

Speaker 5

Isn't that good? As people who look at the upside and are optimistic, you'll find that April, in all respects, was an excellent month.

Speaker 7

It's Rob. I don't think that we'll learn, obviously.

Speaker 5

Our properties.

Speaker 7

Before we head into this thing, Singapore, the one thing we all know is obviously Chinese New Year is very powerful in the fall. Obviously, the calendar New Year is critical. I don't think we're seeing a lot in terms of the one thing we learn is holidays are very important. Easter, there's a four-day holiday. Easter Monday, Saturday, Sunday, Friday, which is wonderful. It goes on for four or five days. Same thing in Macau. I think at the end of the day, I'm not sure that, unlike Las Vegas, for example, it's very seasonal. It's the heat in the summer impacts the group business, etc. I don't think on the roll, our roll segment in Singapore, you're going to see significant impact by the calendar. The more I'm there, the more I think it's just simply driven by there's demand every day.

The quarters won't be that much different, in my opinion. The fourth quarter has its holidays as does its first quarter. Perhaps the summer, last year we had a very strong summer. We'll see how this summer holds up. It seems to me that the real key in Singapore is not seasonality. It's just growing the business and finding the customers and then finding us. I get the impression that the growth will be there. It's not driven at this point. It's a new product. It's a new market. I don't think that the calendar or the seasonality is nearly as important as just people buying the property and getting there and liking it. The revisitation is picking up. Sheldon referenced a very strong April, and the visitation is very strong in April.

I don't think it's going to be driven by the Asian market demand for gambling is very, very strong, as you all know. I think that's a bigger driver than perhaps seasonality at this point in our experience in Singapore.

Speaker 6

Thanks, Rob. I just wanted to go back to the opportunity for the glass half-full as it relates to junkets in Singapore. You guys have been pretty conservative in terms of some of your interpretation of some of the rules there. I believe the general election has been scheduled now in Singapore. What do you think are the next opportunities, the next pieces to get junkets legalized there, and maybe your thoughts on a timeframe.

Speaker 7

I think first of all, we follow Sheldon's direction in terms of our strict interpretation of the existing laws as we see them. That will restrict our ability to grow as quickly, perhaps, as we might if we were more liberal. I think it's the right approach until the government gives further guidance to adhere to the kind of strict and structured approach to it. Having said that, I think junkets, there's now 31 companies in the queue as we speak. I think they'll grow to 40, 50 by the time the thumb rolls around. It grows every day. There are some very good publicly listed companies in that group. I think it's clear to see the government is going to at some point make some decisions about these applications. We're certainly in the line to be involved with them.

If, in fact, they are approved and licensed, then we'll await government guidance. In the interim, we'll do our job internally. We'll find out dealing with anybody we think is not licensed, not having practices that could be questionable. We adhere very, very strictly to Sheldon's direction and we think the direction of the Singapore government. I think it's going to be a progression, a process. We'll keep you posted on how it turns out. There's going to be some licensing decisions made in calendar year 2011 in Singapore. I think that's pretty clear.

Speaker 6

One last one for Ken. There's been some discussion out there about some potential refinancings for you guys, I think, in the Macau side. Ken, could you give us a little bit of your thoughts about, you know, opportunistically, I think some other operators in Macau have looked at tapping some lower-cost financing recently. Just kind of what you might be considering on that front. That's it for me. Thanks.

Speaker 3

Yeah, sure. No problem. You know, we do have significant opportunities there. I think the market conditions are favorable. We've had some preliminary conversations with some of our lenders, and obviously, I haven't finalized anything yet, but we do have an opportunity to refinance our operations in Macau, which would generate some significant savings from an interest perspective.

Speaker 0

Our next question comes from the line of Felicia Hendrix with Barclays.

Speaker 2

Rob, I have a question for you in Macau. I know you have all talked about and we've all seen and witnessed the strength of The Venetian. Obviously, there's a variety of different scenarios that can occur in Macau after Galaxy Macau opens. One of those is that the environment gets promotional. I was just wondering if you could discuss what your plans would be in such an environment and have you started at all to implement any new marketing programs ahead of that?

Speaker 7

Yeah. First of all, I think we feel, I feel very strongly that Galaxy is a big contributor to the Cotai Strip portion of our business. I think it's going to be very good for Cotai Strip and drive more visitation. That's a good thing. We saw that with City of Dreams. We welcome the Galaxy opening. We're excited about it. I think if anything, Galaxy would be more of a junket-focused player. It will bring mass. I think our belief, my belief more than ever, is we're privileged to be in Cotai Strip with The Venetian. You know, the property is a must-see property. It attracts, you know, a lot of people because it's done great things for a lot of different parts of the market. It's very well segmented. It's a billion people want to stay. It's interesting. The shopping is outstanding. The room count is great.

A diversity of food and beverage, entertainment. I think we're going to benefit greatly by Galaxy. On the junket side, I don't think Galaxy is going to impact us positively or negatively. It's our job to seize the opportunity to just be a better player in the junket portion of our business. That segment has suffered, and I think we need to get better at it. I think the win results point that out, how much opportunity there is there. We'll just simply work on it. I think when Galaxy's opening, I'm a strong believer. It's great for Cotai Strip. It's great for the vision as a company. I think it's great for The Venetian as a mass player. I don't think it impacts the Four Seasons as much. When you walk through The Venetian, it is a force of nature. It is a must-see place.

I think every person that comes to Cotai Strip, a Cotai Strip section of Macau, will make a stop at The Venetian. I'm pretty confident. Walking through last week, it just gets busier and busier. It's reached a different level of importance, I think, in Macau. I think Galaxy is a real positive for us. As to the promotional issues, I think the Galaxy people are going to be focused on making money and watching the margins. I don't think it's going to be an issue. Our team is watching it very closely, Ed and David all over it. I think if we have to react, we will. We got to protect The Venetian. It's a very important part of our Macau strategy, and it is the player on the Cotai Strip.

Speaker 2

Great. Just moving to Singapore, I wanted to get back to the question of margins and some of the costs. Sequentially, the margins, the EBITDA margins were lower. I was thinking it might be seasonality, but you had mentioned that there really isn't a lot of seasonality. There were some higher other expenses in the P&L that we saw. I was just wondering, were some of those maybe some pre-opening from some of the non-gaming things, or is this kind of an EBITDA margin that we should think about?

Speaker 5

I don't think anything. We haven't had any margin compression from any of the operating sides. In fact, those operating margins have actually expanded. Our rooms profit, our food and beverage profit, our retail profit, all those have expanded. I don't know of anything that, you know, something specific for you that you're talking about.

Speaker 2

I wouldn't have expected this sequential decline in EBITDA margin.

Speaker 4

You do have a hold of 2.56%.

Speaker 2

No, that's okay.

Speaker 4

That's what we expected.

Speaker 2

You gave us the adjusted EBITDA margin of 53.2% adjusted.

Speaker 4

That's true.

Speaker 2

Maybe we chalk it up to seasonality.

Speaker 5

No, no, no. Let's see if you can hear me.

Speaker 3

Yeah, Ken, I mean, I think it's predominantly driven by the hold. I mean, I really think that that's the biggest issue. When I'm looking at the margins for, you know, the front, the hotel, and also the food and beverage, as Mike said, they both have expanded. We didn't have a reduction in margins from those. The only thing I could think of potentially is if you have new activities that are opening up that haven't ramped up from a revenue standpoint, then there's the possibility.

Speaker 5

I have the answer. Ken has taken a more conservative approach to the accounts receivable, and he's put aside bigger reserves than what we've had, than what we've wanted to do. We've caved into his conservative approach. At least for this period, that doesn't mean we're going to follow it in the future. He's just put aside more reserves than what we think were warranted.

Speaker 2

Okay. Conservative is good.

Speaker 5

Being conservative is good. I can't say it's bad, but if you ask the question, there's no other reason why that expenses would have been higher. I think that amounted to about, what's the number run? About $11 million?

Speaker 7

The number I thought we had, different reserves. I don't know.

Speaker 5

Excess reserves over what we think, over what the operating people think we should have taken. We caved in to what he said because, as you say, Felicia, it can't hurt us to be more conservative.

Speaker 7

Felicia, it's Rob. I just want to make sure we're clear on, and I know it's been on the phone, the most important single piece of business in Singapore, which is the non-rolling mass slot and table. The margins remain, you know, stellar. If anything, I think they're going to grow as we get more, obviously, more revenue out of those games we saw. I don't think there's any value, any issue there. I do think the hotel is now running like a Las Vegas 2007 hotel. It's got, you know, running high 80s and high occupancy and high rates. If anything, margins should get better, I think, in the operating side. No question. Even retail too. Yeah, retail. Yeah. I think it's getting stronger. I think we should do better. We should show stronger.

Speaker 2

Right. I know you probably are not going to be able to answer this, or none of us are going to be able to answer this until Genting reports and we parse through their numbers. Do you have a sense at all of what your mass market share was and your VIP market share? Maybe not specific numbers, but did you grow, decline, any view there?

Speaker 5

Generally speaking, I think that our mass market is, everybody says, everybody seems to know, say that Marina Bay Sands is capturing a, I won't say a runaway, but an increasing share of the mass market, and we're quite happy with that. We are capturing a lesser share of the VIP market because I don't want to get into details about the junket reps or anything, but they seem to like to pay higher commissions than what we want to pay. We think that they will come out with higher roll because they're what we call in the trade, we call they're buying the business. We choose not to quote buy the business, although we are being somewhat more flexible on the commissions of what % of the market. Eventually, people will come to the Marina Bay Sands and enjoy playing there.

Even if we pay a little bit less, we have stated in the past, we don't want to get into a commission war. If we get into a commission war, we won't intend, we won't get in it for the purpose of losing. We think that before we get on that horse and gallop into a commission war, we're going to see what happens when the government finishes its investigations and allows or disallows junket reps and how many of them and who they are, etc. We're biding our time until those decisions are made.

Speaker 7

I believe so, also, and it's Rob, again, on that issue. I think it's clear to get that RWS will outroll us significantly. I believe that's been the past. I believe that trend will continue. It's also an issue of how they see the market versus us. I'm going to tell you that it's not because our building isn't equally or better, our people aren't equal or better. I think the truth of the matter is if we choose to compete in that fashion, we can flip that switch on pretty quickly if that's the direction that we're given. I don't think it's a market difference. I don't think it's a building difference. I think it's a people difference. I think our team in the field is as good as it gets on the casino sales side, and our team on the ground is as good as it gets.

If, in fact, we choose to rethink that approach, it wouldn't be difficult to compete with them. I do think our mass business, I'd be very surprised if we're not stronger than RWS by quite a bit. I think our mass business is showing the strength of that building and the consumers voting with their dollars. I think you're going to see a nice movement in our favor of that.

Speaker 5

I'd like to add that in the recent past, since we opened Marina Bay Sands, we have increased the number of salespeople in the field substantially by dozens. We have well over 100 people out there in the field bringing in the higher-end customers, the premium customers that will be considered as the premium direct customers at the lower rates, the VIP customers. This is something we never had before. We couldn't justify 125 or 150 salesmen in the field with only Las Vegas for them to come to. We were staying with the junket reps in the market in Macau because they own such a substantial portion of the market there. Now with Singapore and with Las Vegas and whatever premium direct that we can build up where the junket reps don't have any penetration, this is quite unusual for us. It's not unusual, but it's really unprecedented.

We're going to continue to cultivate the direct sales channels. We think that'll help us significantly in the future.

Speaker 2

Great. Just quickly on Las Vegas, I was just wondering what the ADR group rate you were looking at in 2011 and in 2012, what you were seeing so far?

Speaker 5

Last time I talked to our salespeople, Mike, do you think it began with two?

Speaker 7

It was $180 in 2011 for the group rate, and it's up to about, it's close to $212 so far.

Speaker 5

Eric told me that most of the business began with a two.

Speaker 2

Thank you so much.

Speaker 7

You're welcome.

Speaker 6

Thanks, Felicia.

Speaker 0

Our next question comes from the line of Robin Farley with UBS.

Speaker 2

Great. Thanks. I wonder if you could give a little bit more color around the Singapore margin issue because you mentioned $11 million in excess reserve. If I add that back into your EBITDA adjusted for hold, I'm still getting a margin that's down sequentially and maybe a little less than we would have expected. I don't know if you can give a little bit of color on just sort of sequential changes in margin in some of the segments. I don't know if there was anything non-recurring from, you know, opening costs or something in Q1, or more specifics around those receivable numbers, the reserves, just so we can see how the margin would have looked or maybe what you're seeing that we're not seeing.

Speaker 5

I don't see anything. What margin are you getting to?

Speaker 2

If you're adding $11 million in, it gets you to something along the lines of 52.3% as a margin. Just looking at the downtown sequence.

Speaker 3

I think you need to add it to the hold adjusted EBITDA margin, right? If you add the $11 million.

Speaker 2

Yeah.

Speaker 5

It's not that unusual.

Speaker 3

I just did the math. I came up to a margin of about 55%.

Speaker 2

Did you add back the hold-adjusted revenues into the revenue base as well? Because in theory, you mentioned that's about $30 million in revenues, so you'd have to adjust the base. That might bring the margin down.

Speaker 5

Yeah, let's compare that to any other company in the hospitality or leisure industry. I mean, these are phenomenal numbers.

Speaker 2

These are phenomenal numbers. I guess we're just trying to get to what to expect going forward. I know you won't give guidance on that specifically. All we can do is look at that sequential trend and say, in what direction is this margin moving? Just trying to help us understand what direction it's moving given just the sequential change here.

Speaker 5

We will take out some more magnifying glasses, take a closer look at it, and we'll try to get back to you offline.

Speaker 2

Okay.

Speaker 5

There is nothing that we know of that will impact future trends.

Speaker 2

In the past, you've expressed an expectation that, just sort of generally, without giving guidance, there would be kind of sequential EBITDA growth quarter to quarter in Singapore. Is that still, if that's correctly interpreting what you've said in the past, is that still your expectation going forward?

Speaker 5

I don't understand what you said.

Speaker 7

Yeah, there was noise.

Speaker 2

Can't expect EBITDA to go up sequentially every quarter, as you've said previously, in Singapore.

Speaker 7

It can't go up sequentially every quarter based on seasonality, but it should go up on an annual basis. If you're comparing quarters sequentially, what you want to do is look at the third quarter when we finally get quarter to quarter comparison year over year versus the third quarter of last year to see if it went up that way. I don't know that you can make the judgment that sequentially you're going to go up each quarter versus the last quarter.

Speaker 2

That was a comment that management had made about as you expect to ramp up in year one. That may not be your expectation for.

Speaker 5

Making a billion dollars from the start is not underachieving. It's not underwhelming. It's very, nobody has ever done this before.

Speaker 2

Well, absolutely.

Speaker 5

Nobody has ever done it before. There is nothing, Robin, in our expectations that will cause a speed bump. In the nature of human and commercial activity throughout time immemorial, you know, you get peaks and valleys. Any month, any week, any quarter could be up or down for a whole variety of reasons that are unpredictable.

Speaker 7

Yeah. Robin, let me just say this. Sequentially, we have gone up every quarter. For the second quarter of 2010, third quarter of 2010, fourth quarter of 2010, and now on an adjusted basis, we've gone up every quarter on an EBITDA basis, normalized basis so far. Are you asking the question as to whether we'll continue to go up sequentially? I think a lot of that depends on seasonality. If you're dealing with a Chinese New Year or you're dealing with a Golden Week or whatever, at the levels of occupancy and the levels of play that we have, which go up, it still makes it somewhat difficult on a sequential basis to compare us based on how many holidays, how many situations. That's all I'm saying. Theoretically, we have gone up practically in the last four quarters, every quarter.

I remember you started with a very low base, and now we're getting to a much higher base.

Speaker 2

Yeah. Okay.

Speaker 6

Robin, we were at 54.6% last quarter, December 31. She's talking about March. She's talking about March. We're at 54.6%. When we run through the numbers, we get to something very, very close to that on a hold-adjusted basis for this specific quarter. It might be slightly down. We talked about the $11 million charge. There's nothing whatsoever in our business that makes us believe that margin is going to decrease on a percentage basis unless we grow the rolling business at a higher rate than we're growing it at right now as a percentage of the mass business and the hotel and the retail, which will all grow margin.

Speaker 7

Because your margin on the rolling is a 31% margin. If you grow the rolling business, you're going to end up, if your margin may go down, but your EBITDA is going to go up.

Speaker 6

Exactly.

Speaker 7

You are also going to grow the mass. The mass business will continue to hopefully move in the direction it's going in. Those margins should stay in the mid-60%, and that should provide the fuel to drive the whole property on its own itself. It shouldn't diminish. It should increase.

Speaker 2

Okay, that's great. Thank you very much.

Speaker 0

Our next question comes from the line of John O with CLSA.

Speaker 7

Hi. Just a question on Singapore again. The whole adjusted EBITDA for this quarter was about $311 million. If I recall correctly, in the fourth quarter call, Sheldon, you kind of mentioned that January was a pretty strong month with EBITDA of around $110 million. How should we go about thinking about the contribution of EBITDA from February itself, which is the Chinese New Year impact?

Speaker 5

I don't know. I don't have the figures in front of me, but you know just recognize that there are peaks and valleys in everything in nature. Nothing goes straight up. Nothing goes straight down.

Speaker 7

It's important to think about the play was there and the hold wasn't on the high end. That's that, that when the mass margins, it's just a 20% to 30% run. Had we held the luck here if February had been much stronger than it was? The volumes were fine. The luck wasn't there, you know, on the rolling side.

Speaker 5

I just want to point out that we picked back up from $8 million roll to $10 million roll from the fourth quarter of 2010 to the first quarter of 2011. We've come back to where we were at the highest quarter in 2010. Look, this is a market that's going to continue to grow. There is nothing predictable, nothing predictable whatsoever that will have a negative impact on %. What really counts is how many dollars you could put in the bank, and the teller at the bank doesn't qualify his acceptance of your deposit based upon the % of margin that you experienced. He just says, "Give me the money. I'll put it in your account. That'll be there." There is nothing predictable out there. We don't see anything that will change any of the trends.

I'd like to say that we all feel, quite decisively and unequivocally, that this is a very unique market in the world. The South Asia and all and the contributions from what may not be considered Southeast Asia, like China, like Japan, like Korea, have been contributing a lot to our high end of the market. We see no reason why that won't continue to grow. We continue to see people coming out of the woodwork at all levels, at the initial $100,000 level and at the $5 million and $10 million increase levels. They come out of the woodwork, some of them we didn't know before. Some of them we had been trying to get as customers, and we're achieving that now. We don't see any crop of any significance coming into our future in increasing the business.

When you're talking about there are people saying, give or take $1.5 billion EBITDA coming out of Singapore, you're talking about very substantial amounts of money. Pretty soon, Singapore will deliver more EBITDA than the entire Las Vegas Strip has done. We have great opportunity organically and great opportunity for expanded growth.

Speaker 7

Okay. Just a follow-up question on receivables. Maybe if you can just help us by giving us a bit more guidance on how we should be thinking about casino receivables in Singapore. I see that rolling chip volume has recovered, as you've said, pretty nicely in the first quarter. How should we be thinking about credit standards, and also how are you treating provisions going forward? If you can share the amount of casino receivables in Singapore as well, if you have it by any chance.

Speaker 5

I'll answer the first part. I'll leave it up to Ken and Rob to answer the second part. The fact that we're doing that RWS is giving, is probably going to have a lot more roll, maybe twice the roll that we had, sort of indicates to you two things, vis-à-vis how they get the roll. Number two, how conservative we are on granting credit. We want to be conservative. We don't want to come up with any big surprises on the negative side because we gave out too much credit and too recklessly. We're extremely conservative on granting credit. We're extremely conservative on collecting credit and on putting aside reserves. We're in this for the long term. We're not in it to make profit, to create a tremendous impression for one quarter and forget about the future.

This is where we're riding a very solid horse here, and we want to keep that horse going. We're feeding it. We're grooming it. We're taking care of it. We expect that it'll just continue to grow on a prudent and conservative basis.

Speaker 3

Yeah, it's Ken. We've got about, from a receivables standpoint, on a gross basis, about $360 million of receivables. We've got about a 13.5% reserve against that, which I think is conservative, as Sheldon had mentioned before. I don't see that necessarily changing much. I think we've done a very good job with regard to being conservative with regard to granting credit. We've done a very good job with regard to collection of accounts outstanding. We think that we're really in good shape from a receivables standpoint, though.

Speaker 7

Ken, just to double-check again, $360 million, that's in US dollars, right?

Speaker 3

Correct.

Speaker 7

That is purely just for Singapore.

Speaker 3

That's correct.

Speaker 7

Would you also be able to share with us the number for Macau?

Speaker 5

Happy to. Yeah. Macau is mostly junket rep that turns over every month, every 30 days.

Speaker 3

Yeah. It's a different environment because of the fact, as Sheldon mentioned, the junket receivables turn over very rapidly. We've got, in total gross receivables, casino receivables from Macau, we've got about a $260 million balance.

Speaker 5

That could change tomorrow significantly.

Speaker 3

is a 27% reserve against that balance.

Speaker 7

Correct. That'll change every day. Okay. Finally, any quick updates on the hotel, the Shangri-La Hotel, which dropped out from flights five and six? Any announcements? If you could share with us some of your latest thoughts on your plans for that. Yeah. John, I'm hoping to Janet for sure before. You may have missed the answer. We're in the final stages of negotiation with two international brands, one for the Shangri-La and one for the traders' site. Most likely, that'll be completed in the next couple of weeks. We've had all the visitations and have all the material in on our side and on their side. We'll probably have an announcement by the end of this month, I would say, to give us a little leeway to do the negotiations we have to do.

We will then have five and six represented by three major international companies, all with heavy presentation in the Chinese market. That's our goal there. We will manage those two properties ourselves. The Sheraton properties, they will manage as previously done. There's been no change in that scenario. Okay. Perfect. Thank you.

Speaker 3

Thanks, John.

Speaker 0

Our next question comes from the line of Larry Klatzkin with Klatzkin Advisors.

Speaker 5

Yeah. Great results. Just looking forward. You're finishing your Macau property. You're getting a hotel open in Bethlehem. You know, what's next? Shelby, Florida, looks like it's still there, slowing down. Massachusetts, there's possibilities in Asia. Can you talk about where you might be going next? We're hoping that, notwithstanding all the tragedy that's occurred in Japan, we have some reason to believe that they understand they've got to do what they can to accelerate or to reinstate their reputation as a good tourist destination. That may be a blessing in disguise, vis-à-vis liberalization of the gaming laws and allowing IRs to be put in. Of course, everybody says we're the leading candidate there. I heard that Steve Wynn recently said that he didn't think that Japan would be a very good place to attract people to. Bear in mind, Japan, for time immemorial, has had these issues.

There have been earthquakes and tsunamis there forever. We just had a team of people over to Spain. We are continuing to lay the groundwork for that. We have constant meetings about planning and programming. That is how much space we're going to allocate to each of the properties. We've talked to builders. We're in discussions with both the governments and land acquisition, both in Madrid and Barcelona. It's not a Spanish development per se. This will be a development where the primary market is all of Europe, Western Europe, the former Warsaw Pact countries, Western former Soviet Union countries, even into Moscow and St. Petersburg, down to the Middle East, Turkey with 85 million people, and North Africa. Nobody's talked about North Africa. There's a lot of haves there, and there are far more have-nots. We hope that North Africa will help to fatten up the market there.

It's for 700 to 800 million people in the catchment area. It's not just Spain. We're moving forward on that. We're not ready to break ground. We don't have the grants and incentives finalized yet, but we're in heavy discussion.

Speaker 7

As far as Asia goes, Taiwan doesn't have the transportation system they need. That just doesn't work.

Speaker 5

What?

Speaker 7

Taiwan.

Speaker 5

Taiwan. As far as we know about Taiwan, Taiwan is still considering the islands in the Taiwan Strait. Based upon my age, we used to call it the Formosa Strait. I'm not sure that we want to go to Kinmen or Tematsu. Prudence would have us look for some sort of assurance from the Chinese government that they'll keep the visa flow open. Since Taiwan is not yet a Special Administrative Region as they are, I'm not sure what the attitude will be from China in keeping their visas big and open. Without some sort of assurance, it will be a tough decision to make vis-à-vis the islands. We are advocating keeping it on the Taiwan mainland. Although there's only 24 million people there, it will be a phenomenal, very, very self-supporting IR in Beijing and Kaohsiung.

Speaker 3

Okay. That's great. How about Massachusetts and Florida?

Speaker 5

We're still looking at those. If Massachusetts allows three full casinos, Rhode Island is considering converting their two flop bowls into full-fledged casinos. The two, the Mashantucket Pequot and Mohegan Sun at Connecticut, are still there. It all depends where they allow them. I think with three, there might be too small of a market up there. We may not justify the kind of money that we'll have to spend to show our best, to flex our muscles the best. Florida, it all depends. It's still up in the air. Some committee.

Speaker 0

Failed to pass it, or a committee failed to pass it. I think it's being put over to next year. The same thing in Texas. We don't have any approval yet in either Texas, Florida, or Massachusetts, but we're keeping a close eye on that. The big, big activity, I think the United States is getting too diluted in terms of too many casinos in too many states. I remember the days when there were too few casinos in too few states. Now the pendulum has swung the other way. There are too many casinos in too many places, too many casinos with slots, and the possibility of internet gaming that could potentially have a negative impact on the brick-and-mortar casinos.

Speaker 4

All right. Thanks, Sheldon. I mean, I look forward to your next big project.

Speaker 0

Thank you. We're very excited about it. We're gearing up. We're staffing to do this project in Spain.

Speaker 4

The last question would be, I don't know if I might have missed you answering this, the apartment sales in Macau?

Speaker 0

Again, we don't have anything final. We are leaning upon what the Macau government wants to do. I'm sure we're not leaning on them. We're relying upon them. We're not doing anything to do it. We're not taking any steps except to tell them how good it's going to be. I hate to repeat it, but we have reason to believe that the possibility of approval may be closer than further.

Speaker 4

Good. I look forward to it. Thanks, Sheldon.

Speaker 0

Next time, you should be first. You always were first, Larry, when you had to press the star button or whatever. Hopefully, you get back to that.

Speaker 5

Our next question comes from the line of Steven Kent with Goldman Sachs.

Speaker 6

Wow. I guess I just wanted to go back to an earlier question by Mark Strun, who talked about the impact of, I think he was trying to get to in Las Vegas, that maybe the cash customer activity and the decrease in promotional activity may have impacted the hold in some way in that market. On Singapore, similarly on the hold percentage, is it that Resorts World is, as you said, is buying business? Is that impacting your hold because it's reducing the length of play?

Speaker 7

I mean, it's relative. In Las Vegas, it has absolutely no impact on the hold percentage. We just have a wonderful amount of Asian business, and they just kept winning. It's that simple. They're not, more than you said before, the promotional activity had no impact whatsoever. As far as Singapore, what RWS does doesn't impact our hold percentage at all as far as our business. We didn't hold that on locking. We missed by 20%. It's not hugely significant. It obviously impacts the EBITDA. Again, there's no impact whatsoever on RWS activities on hold percentage. You have lots of business. They play many hours. One of the great benefits of the Asian customers, they tend to stay and play a long time. They just stayed and played and stayed lucky. That's the simple fact in Las Vegas as well as in Singapore.

Speaker 0

It's the principle of the law of averages that the hold percentage is a matter of luck.

Speaker 7

One thing you should know is, we've been doing this for Las Vegas for better than a decade. Our cumulative hold % in Las Vegas on Asian bottom of play exceeds 27%. If you're patient, and sometimes you play lucky, and sometimes you don't, at the end of the day, we're pretty confident. The volumes in Singapore and the volumes in this company, it's pretty obvious at the end of the day, it'll work out just fine.

Speaker 0

We cut back on the comps at the slot end of the market by raising the threshold. We haven't eliminated the comps. The thresholds for people who qualify for the comps were too low. I raised them up to the point where they're profitable now, where their profitability was questionable before. The percentage of hold is not on the, it doesn't impact the slot hold. It impacts the table game hold. The comps, the increase or decrease in the allowance for comps, doesn't have any effect whatsoever on the hold number. Besides, hold can only be adjusted by the law of averages. That's all. There's no other way to, if there was any other way to increase the hold, believe me, we'd be out there chasing it.

Speaker 6

Yeah, Sheldon, I mean, it's also length of play, as you've pointed out over the years in the past and your competitors have pointed out. That's why I'm asking, is either one of these activities reducing the length of play? I guess the answer is it's not.

Speaker 0

No, absolutely not. There's no way that we would cut back on comps whether there's the potential for somebody who's going to play a long time, for a short time, or where the threshold of probability of theoretical win is.

Speaker 6

They might go to another casino if you're not offering them the same amount of.

Speaker 0

No, no, no. We're offering the same. The point, Steve, is that we went down too far on the threshold. That's all it was doing. It was almost completely on the slot side and not on the table.

Speaker 7

Steve, and this hold is all dock driven, and these guys aren't impacted by it at all. We have no comp issues on the high end at all. The Asian customer coming to Las Vegas didn't suffer at all as far as any decisions. It's not impactful. It's not even related.

Speaker 0

The big decision on comps to the Asian background player is, did they get a 5,000 square foot suite or a 9,000 square foot suite?

Speaker 6

Okay, thanks.

Speaker 0

Or did they get Grant Chum 82?

Speaker 5

Our next question comes from the line of Cameron McKnight with Buckingham.

Speaker 4

Good afternoon. How are you?

Speaker 0

Good. How are you?

Speaker 4

Good. Just very briefly on Singapore, Sheldon. I mean, the mass market trends that were evident in the result, I thought, were pretty strong with mass revenues per day up 7% sequentially. Can you give us some brief thoughts on the depth of that market and whether you're finished penetrating the mass market there, or you think that the market overall has got more to run?

Speaker 0

Mike is saying that he got some figures at only 3.0%.

Speaker 7

Oh.

Speaker 0

Oh, Singaporeans.

Speaker 7

You're talking about Singaporean income. You're talking the market in general, right?

Speaker 4

No, Singapore mass market.

Speaker 7

You're not saying Singaporean. You're saying the Singapore market for us. I think, yeah, the point is, look, the numbers aren't staggering. If you look at the slot, we've gone from, let's look at the first quarter, the year first quarter, which was Q3 2009, excuse me, 2010. From the slot, we won about $79.5 million. Then we jumped to $96.7 million. We jumped to $108 million. You know, can we get to $120 million next quarter? I believe we can. I believe it's just going to keep going. We've got the penetration in that market. We don't know because we don't have a big debt market we can get to. I think it's safe to say, talking to Andrew and Mark and the guys who run that business every day, we have total confidence that the growth is ahead of us.

Is it going to be 5% to 6% per quarter, 8%, 9% per quarter? I don't know. The growth isn't over. On the net table side, it's even more, I think it's even more compelling there in terms of, we're seeing the growth there tends to be, both from the Singaporeans and visitors, as that building gathers more strength and becomes the preferred place, the place we want to go to. I think our table business will continue to ramp. The good news is the hold percentage stays very fat, probably in the 22% to 23% range because, to comment earlier on Steve's call, they play an awful long time. They don't leave the table. The appetite for extra strategies is very, very small versus the American customer. I think our table business will ramp up. Again, that's a growth to cumulatively these people.

We believe the market can grow easily. We can see $180 million, $190 million next year as a cumulative mass slot on the table. I don't believe that's the number. That's my personal belief. It can grow to $180 million, $190 million next year in 2012. I don't think it slows down. If anything, as you see Singapore visitation, which is off the chart, 26%, 28%, we're the beneficiary of that visitation. We're at the heart of the town and the Marina District. We've got this wonderful building. We've got the Chanel River, the Disney Show. The retail is superb. The restaurants are just spectacular. Why wouldn't we keep getting our fair share of ever-growing double-digit growth in the visitation? I think we're going to dominate the mass table and slot market for a long time. We're very fortunate to be there. It's a wonderful problem to have.

Speaker 4

Fantastic. One final follow-up, if I may. Rob, what was the, can you talk to the percentage of table drop in Las Vegas that was accounted for by high-end background play in the quarter?

Speaker 7

Yeah, we ran roughly, you know, our business breaks out. One reason on the call, we talked about how to break it out. About $280 million, roughly, of our drop was from baccarat driven of that 90+% Asian style play. I mean, we're an Asian town in baccarat business here, as are the better hotels in town. You know, we continue to get more than our fair share, I think, in terms of, because of our presence in Asia. It's just, it's so simple. Sometimes you play lucky. You know, a lot listen to the Wynn call. They played very lucky. It was great. They held 30%. I can guarantee that the majority is driven by high-end baccarat. We didn't play lucky, but we had the business. We'll continue to have the business. When it's all said and done, we'll hold our 27%, 26%, 28% on that segment.

I'm not really a bit concerned, and nor should you be.

Speaker 4

Fabulous. Thanks very much.

Speaker 7

Thanks, Steve.

Speaker 0

Thanks, Cameron.

Speaker 5

We have reached the allotted time for questions. I'll now turn the call back over to Sheldon G. Adelson for closing remarks.

Speaker 0

I can, the only thing I could say, this is Sheldon. The only thing I could say is that we're extremely excited about being the most successful company in the history of the lodging, hospitality, gaming industry. The expectation is that we'll hit $3 billion plus in EBITDA this year. Some people are saying that we might hit, some of the analysts are projecting we'll hit $4 billion. I can't make any comment about in 2012. I won't make any comment about that, but I will say that we feel quite confident that the $3 billion mark will be breached. We'll expect to go somewhat over that. Again, without providing guidance, we're very optimistic. You know, one month of low hold doesn't make a year. Think about having the entire Las Vegas Strip resident in two casinos, and we split that up.

When the Singapore government rightfully does finish its investigation about Jack and the Rabbit, we'll see how that comes out. In the meantime, we're being very conservative, but we earned $1 billion in EBITDA in our first 12 months. I want to remind some of you guys that some of you were projecting we're going to make $300 million. I think the average or the consensus was about $500 million. We made $1 billion. We still weren't ramped up. There isn't anything in the future that anybody could see that will cause a diminution of this rate of growth. We're very happy about it. I want to thank everybody for their vote of confidence in us. We look forward to the current quarter giving you an even more profitable quarter. Thank you for calling, and that's the end of the call.