he firm, controlled by billionaire Sheldon Adelson, last year stopped work on its us$ 12 billion, 20,000-room complex of hotels and casinos on Macau’s Cotai Strip amid near-frozen credit markets, dwindling revenue and the risk of defaulting on some loans.
Las Vegas Sands, which also shelved the us$ 600 million St. Regis Residences in Las Vegas and other projects in Pennsylvania, raised capital and cut worker hours and jobs to trim more than us$ 470 million in costs.
“It should be expected that Macau’s casino operators will continue to adjust their workforce structure to address a softer Macau tourism market,” Jonathan Galaviz, a partner at Las Vegas-based consultant company Globalysis Ltd., said by e-mail today. “It’s positive to see the company taking proactive steps to reduce unnecessary labor costs.”
Las Vegas Sands’ Venetian Macao, the biggest casino resort in Asia, faces the prospect of increased competition when Melco Crown Entertainment Ltd. opens its us$ 2.1 billion City of Dreams in the Cotai area. The job cuts, which will reduce Las Vegas Sands’ costs, constitute “a response to the opening of City of Dreams,” said Gabriel Chan, a Hong Kong-based analyst at Credit Suisse Group AG. “We are more positive about growth in Macau but given there is more competition in Cotai, if the top line is not growing, you will have to cut costs.”
Las Vegas Sands fell 6 % to us$ 10.26 yesterday in New York trading, trimming its gain this year to 73 %. The company lost 94 % of its market value in 2008. Galaxy Entertainment Group Ltd. led Hong Kong-listed casino stocks higher today, climbing 9 %. Melco International Development Ltd. and SJM Holdings Ltd. rose 3 % .
“Macanese workers will be not affected that much; it will affect the expatriate population more so,” Leven said. “Some of those people are transferred to Singapore, some are no longer required, and some are redundant.” Some the company’s workers in Hong Kong will also be affected by the job cuts.
Adelson repeated he’s in talks with potential investors in Las Vegas Sands’ operating Macau casinos, saying the investment may be “public or private,” without elaborating. The casino operator is also evaluating bids for two shopping malls in its Macau properties.
He said discussions are continuing with construction companies that have expressed interest in investing to finish building phases five and six, which include Shangri-La and St. Regis hotels, apartments, a casino and mall. Macau, the only place in China where casinos are legal, is the world’s biggest gambling hub.
Many of the workers employed on Macau construction sites are from China, which resumed sovereignty over the former Portuguese colony in 1999. The job cuts will add to an unemployment rate that reached 3.8 % in March, the highest in more than two years, ahead of the July appointment of a new chief executive for the city of 500,000 people.
Additional staff for Singapore will be hired closer to the opening of the company’s casino there, Adelson, Las Vegas Sands CEO and chairman, said in the joint interview in Las Vegas yesterday. “At this stage of the game, when we need to tighten the belt, then we should have just-in-time employees, plus a little bit, plus a cushion,” he said.
The company wants to reduce Macau staff to between 13,000 and 14,000 until more are needed after construction resumes, possibly this year, Adelson said. Las Vegas Sands stopped building halfway through phases five and six.
The operating Macau properties “have matured to the extent where you now know what you need to effectively operate,” Leven said. “When you open new properties, generally speaking you run on the high side of staffing and requirements because you don’t have really a knowledge of what the volumes will be in all the areas, so you have to make adjustments and it’s not unusual, after opening six or eight months to be able to right size.”
Job cuts in Las Vegas are “largely completed,” Leven said. The company is overhauling other “processes” in the U.S. to cut spending further, he said. The casino operator “expects to do better” than the us$ 470 million cost cuts it has targeted, and about 90 % of the savings may be permanent, Leven said. Sands is “managing to the levels of business that we have, as opposed to the levels of business that we used to have.”
Las Vegas Sands raised us$ 2.14 billion in November, partly from Adelson and his family. Adelson also injected u$ 475 million on September 30 to avoid violating the terms of some U.S. loans and triggering defaults that auditors had warned could force the company into bankruptcy. PricewaterhouseCoopers LLP removed a “substantial doubt” warning November 17.
William Weidner, Las Vegas Sands’ COO for 13 years, left the company in March after conflicts with Adelson.