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From the presentation that just ended.

 

LAS VEGAS COMMENTARY

  • Current operating environment in Las Vegas?
    • Supply and demand environment that are out of balance hence putting pressure on rates
    • Still doing good volume but at materially discounted rates than 2 years ago
  • $200/night is still a reasonable but difficult rate to maintain given the competition.  However, they have reduced their expenses as well – despite the lower gross margins on rooms
  • 2010 group nights will definitely be better than 2009 – what’s on the books now is already better than 2009
    • Political rhetoric is over and Vegas is no longer a shunned location
    • Not at all worried about the group business in 2010 & 2011
  • The whole market is seeing more group activity than last year - the problem is getting that business at the rates that they used to have, and that’s not going to happen in 2010 and not in early 2011.  Although 2011 rates are up a little from 2010
  • Are there incremental opportunities to cut more costs here and in Vegas?
    • There are always opportunities, but the low hanging fruit is gone
    • Have 6500 employees in Vegas (casino/hotel level) – so think that they are pretty efficient given that they have 7,000 rooms

MACAU

  • Take on political climate in Macau
    • Government of China has been very vociferous in supporting MICE and tourism business in Macau
    • As far as Visa & financial restrictions, expect that there will be some restrictions to allow for absorption.  Already said that they want Macau’s growth will be a few points above China’s GDP (~15%)
    • Feel like they are perfectly aligned with the government’s policy
  • Have had some success at growing direct play at FS.  However, junkets often try to steal that business
  • Their real success will hinge on a good balance btw VIP and Mass

OTHER

  • Balance of VIP/Mass play in Singapore given the junket restrictions?
    • They are building their business based on the assumption that they will have no junket business.  
    • Will build their business on direct play and bussing programs (Malaysia for example)
    • Don’t think that many junkets will apply for licenses
    • Don’t know the mix right now, but Singapore is very accessible by flights
    • Piaza club (100 tables) Mass floor (600 tables) Slots (1500)
  • US entity is still very highly leveraged, what are the long term plans?
    • $5BN debt in the US restricted group, and $4.5BN of cash… they can meet covenants as long as they have > $3BN of cash in the bank
    • Once Singapore opens they can see what the cash flow/cash needs will be they can make a decision

Q&A

  • Strategy in PA?
    • Disappointed with the numbers so far.
    • They will put in the tables games (80 tables) at a cost of $16-17MM. Projecting roughly a $25MM benefit from tables that open in the fall
    • No plans to start the hotels again until they can see justification from table games.  Will be using a newly opened Hyatt nearby for table players
    • Will have improved results in Bethlehem, slot facilities take about 17 months to ramp
  • RevPAR in Vegas for 2010 & 2011?
    • Guess is that in 2010 RevPAR will be down – but depends on what people put in for their “casino rooms” but that’s a fudged number since it includes comps.  Cash rooms will have lower rates
  • Will finish Sites 5 & 6 on Cotai with $500MM more equity