Macau Operations Edward Tracy President and CEO Sands China Ltd.
A Promising Development Opportunity? The Area Between Coloane and Taipa Circa 2002 2
The Original Plan for the Cotai Strip 3
Supply Driven Market ($MM) $7,500 StarWorld (Galaxy) Crown / Altira (MPEL) Grand Lisboa (SJM) The Venetian Macao (SCL) MGM Grand (MGM) The Plaza Macao (SCL) City of Dreams (MPEL) Oceanus (SJM) Encore Macau (WML) Galaxy Cotai (Galaxy) Properties 35 $6,000 Wynn Macau (WML) 30 $4,500 Sands Macao (SCL) May 2004 25 20 $3,000 15 $1,500 10 $0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 5 2005 2006 2007 2008 2009 2010 2011 Macau Casino Gaming Revenue Number of Properties Source: DICJ 4
Macau Operations Highlights We generate more cash flow than any other operator in Macau through our diversified Integrated Resort business strategy We are positioned to enhance our competitiveness and deliver significant organic growth by reinvesting in our properties and realigning our operating strategy to drive increased business from junket operators We are the leading mass market operator in Macau, which enables us to generate superior EBITDA margins The Venetian Macao is the leading mass market property and is a must see destination for visitors to the market The introduction of Sands Cotai Central, opening six months from today, will be the only property to open in Macau for at least the next four years 5
Our Top Priorities in Macau Remain on track and on budget to begin the phased opening of Sands Cotai Central at end of 1Q 2012 Increase competitiveness in VIP junket business by enhancing service levels and creating gaming environments tailored to our VIP customers needs Remodel mid to high end mass market amenities at The Venetian Macao and Sands Macao to grow mass business 6
Sands China Property Operations Adjusted Property EBITDA ($M) and Adjusted Property EBITDA Margin 1 Composition of 2Q11 EBITDA $450 38% $400 379 392 36% $350 $300 $250 $200 $150 307 29.9% 335 341 31.3% 31.8% 33.4% 33.0% 34% 32% 30% 28% 26% Sands Macao 24% Four Seasons Macao & Plaza Casino 10% Venetian Macao 66% $100 24% $50 22% $0 2Q10 3Q10 4Q10 1Q11 2Q11 20% Adj. Prop. EBITDA ($M) Adj. Prop. EBITDA Margin 1. Excludes CotaiJet Ferry Operations 7
Sands China Properties The Venetian Macao Sands Macao Four Seasons Macao & Plaza Casino Total Existing Developments Sands Cotai Central (Phases I&II) Total Hotel Rooms rooms and Suites 2,905 289 360 3,554 5,800 9,354 Paiza Paiza mansions Mansions 19 19 19 MICE MICE (SF) (SF) 1,200,000 25,000 1,225,000 500,000 1 1,725,000 Theater/arena 1,800-seat theater 650-seat theater 2 theaters 1 theater 3 theaters Theater / Arena 15,000-seat arena 1 arena 1 arena Total Total retail Retail (SF) (SF) 1,000,000 5,900 211,000 1,216,900 775,000 2 1,991,900 Number Number of shops of Shops 297 6 83 386 TBD TBD Number Number of of Restaurants restaurants 53 7 10 70 TBD TBD and and food Food outlets Outlets Total gaming Gaming facility Facility 550,000 197,000 70,000 817,000 300,000 1,117,000 (square feet) (SF) Gaming Gaming units: Units: 3 Tables Tables 598 414 118 1,130 530 1,800 Slots Slots 2,161 1,141 191 3,493 2,200 5,693 1. 400,000 500,000 SF of MICE space constructed, of which 126,000 SF expected to be configured for use in Phases I and II. 2. Phases I and II consist of 157,000 SF of retail, with the remaining retail to open only when demand warrants. 3. Average number of gaming units in the month ended June 30, 2011. 8
Unique and Diversified Business Strategy LTM June 2011 Adjusted Property EBITDA LTM June 2011 SCL Segment Breakdown Market Share: 30% 22% 16% 13% 11% 8% Margin: 31% 31% 14% 19% 25% 12% ($MM) $1,600 $1,400 $1,417 $1,200 $1,055 100% 90% 80% 5% 3% 6% 8% 5% 15% $1,000 $800 $600 $782 $608 $547 70% 60% 86% 72% $400 $360 $200 $0 Sands China Wynn Macau SJM MPEL MGM Galaxy 50% Net Revenue Adj. EBITDA Casino Hotel F&B Retail, MICE and Other Largest and Most Diversified Gaming Operator in the Largest Gaming Market in the World 99
Unique and Diversified Business Strategy The Venetian Macao MICE Attendees 2010 Conventioneers by Region 1 600,000 573,000 (MM) 5.0 4.5 500,000 4.0 400,000 381,000 3.0 300,000 259,000 200,000 2.0 1.4 100,000 1.0 0.8 0 2008 2009 2010 0.0 Macau Hong Kong² Las Vegas (1) 1. DSEC, China National Tourism Administration, Hong Kong Exhibition Industry Association, Las Vegas Convention and Visitors Authority (2) 2. Overnight MICE visitors 10 10
Retail Market Driven by Destination Shopping Increase in Per Capita Shopping Spending $120 $108 $100 $87 $82 $80 $80 $60 $40 $20 $0 2007 2008 2009 2010 ($MM) $1,200 $1,000 $800 $600 $400 $200 $0 Continued Growth of Retail Sales $82 $381 66 315 227 364 336 496 426 589 2007 2008 2009 2010 LTM June 2011 Grand Canal Shoppes $591 $832 $1,015 Shoppes at Four Seasons (1) Source: DSEC, China National Tourism Administration, Hong Kong Exhibition Industry Association, Las Vegas Convention and Visitors Authority 11 11
Dominate the High Margin Mass Business 817,000 SF of gaming space with approximately 1,130 tables and 3,493 slots 1 Fastest growing segment at Sands China LTM as of June 30, 2011 ($MM) VIP Mass Tables Slots Total Macau Market Gross Gaming Revenue $20,679 $6,342 $1,273 $28,293 SCL Gross Gaming Revenue $2,970 $1,582 $354 $4,905 SCL Gross Gaming Revenue Market Share 14.4% 24.9% 27.8% 17.3% SCL Gross Gaming Profit $479 $704 $161 $1,345 SCL Gross Gaming Profit Margin 16.1% 44.5% 45.6% 27.4% We Dominate the High Margin Mass Market Segment with a 25% Market Share 2 Source: DICJ 1. Average number of gaming units in the month ended June 30, 2011 2. Reflects the twelve month period ended June 30, 2011 12 12
VIP Market Strategy ($MM) $30,000 $25,000 $20,000 $15,000 $10,000 $16,725 $14,387 $15,174 Rolling Volume $24,606 $24,479 $23,900 $21,832 $22,051 $20,395 $20,175 Management Initiatives Catered to VIPs Implementing facility enhancements to create gaming environment tailored to our VIP customers needs Increasing level of customer and concierge service to complement VIP experience Increasing investment in VIP Junket rooms at Plaza Casino L2 Increasing marketing and sales efforts in order to attract the best and most profitable VIP customers $5,000 $0 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Our Rolling Play Has Grown 70% Over the Last 9 Quarters 13
The Venetian Macao Premium Mass Renovations Total premium mass area is approximately 38,000 SF Ability to increase levels of play by creating a more exclusive and luxurious gaming experience Prior space had not been renovated since the property s opening in 2007 New premium mass table area with 66 tables New premium slot area with 156 highlimit slots Expected to be completed by Chinese New Year 2012 (January 2012) 14
The Venetian Macao Paiza Renovations Total Paiza area is approximately 130,000 SF Renovations to be done in phases to minimize dislocation from out of service tables Renovations include: Redesigned gaming salons to accommodate VIP preferences Construction of a new VIP porte cochere adjacent to the Paiza entrance allowing for enhanced ease of access for gaming customers Expected phased completion dates are: July 2012 (20% of space) October 2012 (30% of space) February 2013 (50% of space) 15
The Four Seasons Macau and Plaza Casino Level 2 Paiza Expansion Total area of approximately 33,000 SF Expected completion date before Chinese New Year 2012 (January 2012) Currently unutilized space that can accommodate up to 28 Rolling Tables Agreements in place with junket reps to operate the rooms upon completion Gaming rooms were designed in consultation with junket reps to achieve maximum utility from the investment 16
Sands Macao Main Gaming Floor Renovations Total project area of approximately 137,000 SF Plan to renovate the mass gaming floor in phases Expected completion throughout 2012 17
China Infrastructure Development High Speed Rail China is in the process of developing the world s largest high speed rail (HSR) network What is China Doing? By 2020, over 250 cities and 700 million people will be connected by HSR The HSR grid can support train speeds of up to 350 km/h, increasing travel efficiency and decreasing travel time Creating new urban transportation hub cities and city clusters designed around their connectivity through the HSR 21st century equivalent of America s Interstate highway system The Economist Why is China Doing It? How is China Doing It? China s rapid economic growth has created geographic imbalances in the pace of economic development and urbanization and the regional distribution of wealth (coastal/southern region vs. central/western region) The HSR will enhance economic growth and sustainability by: Connecting less developed areas with developed economic clusters Improving market access and economic productivity Encouraging population and workforce mobility Enhancing logistical efficiency US$300 billion investment to: Upgrade conventional rail lines Constructed high speed rail lines Construct the world s first high speed commercial magnetic levitation line 18
China s High Speed Rail Connecting More of Mainland China to Macau Wuhan Guangzhou High Speed Rail Wuhan is the capital of Hubei Province and the most populous city in Central China with ~10 million people Wuhan is a major transportation hub and known as the economic hub of Central China HSR reduces travel time to Guangzhou from 11 hours by bus to 3.5 hours by train One of the most successful routes with 75 80 trains in each direction each day Guangzhou Zhuhai Intercity Rail Rail line connecting Guangzhou to Zhuhai, where the Gongbei border gate to Macau is located Guangzhou is the largest city in Guangdong province and is a key economic and transportation hub Reduces travel time from Guangzhou to Zhuhai from 1.5 hours by bus to 45 minutes Expected completion in 2012 Future link to Macau Light Rail System Source: Union Gaming, LVS 19
Macau Hong Kong Zhuhai Bridge Reducing the Travel Time from Hong Kong to Macau Source: Hopewell Holdings 20
Macau Market Hotel Room Growth Led By 5 Star Hotels 25,000 Hotel Rooms in Macau Market 20,000 15,000 10,000 17,490 1,384 2,378 4,009 19,259 1,416 2,365 4,343 20,091 1,368 2,397 4,338 21,676 1,370 2,411 4,327 5,000 9,719 11,135 11,988 13,568 0 5-Star Occupancy % 2008 2009 2010 YTD2011 5 Star 4 Star 3 Star Other 74% 70% 79% 81% 4 Star Hotel Rooms Are Underrepresented Relative to 5 Star Hotel Rooms in the Marketplace Source: Macau DSEC 21
Sands Cotai Central
Sands Cotai Central Cotai Strip, Macau Land area of over 1.6MM SF adjacent to a tropical garden of 480,000 square feet Integrated resort of ~13.7 million SF (upon completion of all Phases), which will significantly expand our footprint on the Cotai Strip Phase I will open at end of Q1 2012 and will feature: Phase III Phase I Phase IIA Phase IIB Mass gaming floor with ~200 gaming tables Paiza Club encompassing ~40 private gaming rooms and ~100 gaming tables 600 Conrad 5 star hotel rooms and 1,200 Holiday Inn 4 star hotel rooms Portion of over 1.2 million SF of retail, entertainment, dining facilities and MICE space Phase IIA will open in Q3 2012 and will feature: Additional mass gaming floor with ~200 gaming tables 2,000 Sheraton branded hotel rooms Additional amenities Phase IIB will open in Q1 2013 and will feature: 2,000 Sheraton Towers branded hotel rooms August 26, 2011 Phase III is expected to include a fourth luxury St. Regis branded hotel and mixed use tower 23
Sands Cotai Central 8/26/11 24
Sands Cotai Central 25
Sands Cotai Central Parcel 5 Mass Casino 26
Conclusion Integrated Resort model and world class assets serving the largest, most vibrant gaming market in the world Further realization of the intrinsic value of existing portfolio of assets Additional revenue generation facilitated by new product offerings and increased market penetration in the VIP business Enhanced optimization of hotel assets, including 5,800 hotel rooms at Sands Cotai Central Yielding up in hotel business with a broader product offering Vast opportunity to generate additional EBITDA and expand margin through organic growth and the opening of Sands Cotai Central 27
Thank You