Singapore has seen a welcome bounce-back from Covid-19, but its recovery won’t be complete until international air travel fully resumes.
That’s the word from Rob Goldstein, chairman and CEO of the Las Vegas Sands Corp., which operates Marina Bay Sands (MBS), one of two integrated resorts in the market. “The biggest thing we’re seeing is that airlift is opening up but that also continues to be the most challenging part of the Singapore recovery,” Goldstein said on the company’s recent second-quarter earnings call.
“Unlike the U.S., where airlift is back, Singapore is still a place you need to fly to, and the airlift story continues to hamper recovery,” Goldstein continued. “The US$300 million-plus quarter is a pleasant upside to what we thought we would do (in earnings), but there’s a lot more room to run as this market opens up into Japan and Korea and places like that.” Currently, he said, “We’re really quite dependent on the closer-in foreign markets.”
So far this year, the top five source markets for Singapore tourism are Indonesia (282,000 travelers), India (219,000), Malaysia (139,000), Australia (125,000) and the Philippines (81,000), for a combined 56 percent of all arrivals, the Straits Times reports.
“Chinese monthly visitation numbers are still less than 50 percent of what they were pre-pandemic,” observed Goldstein, “so although we’re delighted by Singapore and the numbers reflect that, there’s reason to be more optimistic in the months ahead.”
Data from the Singapore Department of Statistics shows that monthly passenger volume at Changi Airport has grown every month since February, but as of May, those rates are still only 46 percent of 2019 levels.
Unlike Marina Bay Sands, which reached almost 94 percent occupancy in the recent quarter, other hotels aren’t faring so well, which compresses the whole market, Goldstein pointed out. “Even the luxury brands haven’t been able to get (back to) 100 percent. Some are running at 40 percent to 50 percent capacity, because they don’t have adequate personnel, and that feeds into MBS.
Other luxury hotels provide “lots of sleeping rooms that we benefit from,” the Sands chief said. “They come to shop with us, eat with us, gamble with us, so we’re not getting that lift and that could be very impactful down the road. We’re very happy with the spend levels we’re seeing and the occupancy rate we’re getting, but we’re not getting that extra lift from the people who don’t sleep in our hotel.”
Las Vegas Sands is relying hard on Singapore for its bread and butter right now. Earlier this year, the company sold its Vegas assets to concentrate on Asia, offloading the Venetian, the Palazzo and the Venetian Expo for a combined $6.25 billion. But Macau, which is now emerging from its latest Covid lockdown, has been compared to a “ghost town,” with casino revenues at a near standstill.
Sands’ second-quarter results from MBS included $319 million in cash flow, and revenue spiked more than 107 percent to $679 million. But the company absorbed a net loss of $414 million, with Macau revenues down 56.7 percent to $367 million.
“Nobody has any clue how much longer China will continue down this path in search of zero Covid cases,” Stifel Financial gaming analyst Stephen Wieczynski told investors after the earnings call. “This could drag on for another year for all we know.” Beijing’s “zero-Covid” approach shuts down borders and businesses every time new cases are identified.
By contrast, and to its benefit, Singapore has adopted a policy of living with Covid. “We expected the Singapore recovery to accelerate in the second quarter, but the gaming revenue recovery at Marina Bay Sands has been much better than expected,” said CBRE analyst John DeCree after the earnings call. “We still see plenty of room for further recovery at Marina Bay Sands.”
“At current levels, Singapore operations account for 55 percent of Las Vegas Sands’ market capitalization,” said J.P. Morgan analyst Joe Greff. “Our sense is that when we point this out to investors, they are surprised it is that high.”
The Singapore Tourism Board expects international tourism to reach between 4 million and 6 million arrivals in 2022.
