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Earnings Sparkle for Venetian

LAS VEGAS -- Las Vegas Sands Inc., owner of The Venetian, Tuesday reported sterling earnings in the 2003 first quarter and cracked the curtain on the development of its second Las Vegas destination resort.

Sands President Bill Weidner, in a conference call with Wall Street analysts, said his company is actively involved in the planning process and expects to start construction on a new Strip resort early next year.

Although the company would provide few details, Weidner said, "We are in the advance stages of planning for a second Las Vegas destination resort between The Venetian and Steve Wynn's Le Reve.

"Our friend Steve is investing a lot of money in the property next to us that makes the value of our property explode," he explained.

"We are, in fact, looking at how our property is developed in ways that take advantage of the properties around it," Weidner said.

The company also reported some of the best earnings numbers so far among local gaming companies.

Net income for the Sands in the quarter ended March 31 was $13 million, up from $5.1 million the year before.

"The key for The Venetian's earnings, in particular, was the resiliency of Las Vegas. It came through with solid gaming play. It came through in terms of solid convention business. And it's come through in terms of steady slot play, which indicates strong flow through at the property in terms of visitors walking through (the Grand Canal Shoppes)," Deutsche Bank analyst Andrew Zarnett said.

Total revenue was $168.7 million, up from $145.5 million a year earlier.

Adjusted cash flow, or operating income before depreciation, amortization, rent and certain expenses, was $63.6 million, up from $51.8 million the year before.

Casino volumes remained approximately flat and, while occupancy declined to 97.4 percent from 98 percent, the average daily room room rate increased to $217 from $211.

Zarnett said some analysts had not believed three major convention centers could coexist in Las Vegas, but he said: "The Venetian's strong first-quarter results proved the Mandalay (Convention Center's) opening has grown the market."

Las Vegas Convention and Visitor Authority spokesman Rob Powers said the combination of convention centers will prove powerful forces in pursuing new convention business and growing the Las Vegas economy.

"In the past, there have been times when there was demand, but no space available. Now, more business as a whole is being created," he said.

Sands Chairman Sheldon Adelson said that with the new hotel-casino and current expansion of The Venetian - the second tower and added space for meeting facilities, both now under way and set to open in June - Las Vegas Sands will offer 300 meeting rooms, making it the largest convention complex in the world.

"On the good side, we're opening another 65 meeting rooms (in Phase 1A) and when we count everything we've got, including dividing the ball rooms, we have approximately 170 meeting rooms. That takes us way out of the category of competition," he said.

Analysts, however, warned that the The Venetian's performance cannot be extrapolated to other Strip properties.

In particular, The Venetian's performance may not be an indicator for how other properties have done in the first quarter or how they will fare in the rest of the year, said Joe Greff, gaming analyst at Fulcrum Global Partners, an independent Wall Street investment research firm. The Venetian's business model is unusual, Greff said, because of its dependence on the operation of the Sands Convention Center and group business in its hotel.

"It will be interesting to see how the competition sorts out. Mandalay Resort Group, with its new convention center, will be in a position to take market share and The Venetian will be also," he said.

Park Place Entertainment Corp. on the other hand, has been losing market share and the new developments will make it tougher for MGM Mirage properties to gain or retain market share, he said.

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