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Q4 was disappointing but that may be because expectations – including ours – got out of whack. The story now is Macau post Chinese New Year.

I must say that I’m shocked LVS missed Street EBITDAR projections and that’s with a higher than normal hold percentage.  We were above the Street and are usually closer to actual due to our proprietary Macau data and the fact that the Street doesn’t have Anna.  So what happened?

First, Las Vegas was a disaster.  It looks like Venetian and Palazzo tried to hold rate in a bad environment and occupancy suffered – down to 78% and 85%, respectively.  This lowest occupancy quarter in their history impacted slot volume –  down 31% and – non-gaming revenues which were down 23.7%.  Also, the gaming components are not adding up, indicating that cash back programs to high end players were aggressive as they may be accounted for directly as a contra revenue and not grouped in promotional allowances.  Finally, the YoY cost cutting impact has moderated.

In Macau, The Venetian at $175 million was in-line with our estimate.  Sands Macau, however, was a little funky.  Even excluding the $12 million bad debts hit - $5 million would’ve been normal bad debt expense – EBITDA was way off.  Net gaming revenues were $49MM higher than 3Q09, and hold was 21 bps better, yet EBITDA was $5MM worse.  Either junket commissions were a lot higher or fixed operating expenses climbed $16 million sequentially.

So those are the Q4 takeaways.  Let’s look forward.  Las Vegas looks better.  Better than bad may not be great but at least it appears to be moving in the right direction.  Whether comparisons are just getting easier or the underlying fundamentals are actually improving remains to be seen.

Management said they couldn’t give Q1 commentary on Macau but, wink, wink, “we are smiling, not frowning”.  No doubt.  We know exactly how well they did in January and the casinos are packed over the Chinese New Year celebration.  What happens after remains our concern as we pointed out in our post yesterday, “THE FUTURE BECOMING THE PRESENT IN MACAU”.