Las Vegas Sands unexpectedly announced today that it would be giving up its bid to build a major urban IR, thus removing a contender that many analysts predicted would become one of the main winners in the contest.
“My fondness for the Japanese culture and admiration for the country’s strength as a tourism destination goes back more than thirty years to the days when I was operating COMDEX shows in Japan and I’ve always wanted our company to have a development opportunity there,” explained Sands Chairman and Chief Executive Officer Sheldon Adelson. “And while my positive feelings for Japan are undiminished, and I believe the country would benefit from the business and leisure tourism generated by an Integrated Resort, the framework around the development of an IR has made our goals there unreachable. We are grateful for all of the friendships we have formed and the strong relationships we have in Japan, but it is time for our company to focus our energy on other opportunities.”
While Adelson himself offered no explanation other than his statement that “the framework around the development of an IR has made our goals there unreachable,” analysts quickly offered more detailed elucidations.
Bernstein Research observed, “The announcement does not come as a complete surprise to us, as the Japan process has gotten bogged down by increasing government requirements and terms that were beginning to look less attractive.”
They specified that “short term of licenses, high tax rate, growing constraints on local play, and financing arrangements” were among the key factors that would have cooled Sands’ previous ambitions to go big in Japan.
Bernstein felt that liquidity concerns arising from the Covid-19 crisis were likely not a major factor for Las Vegas Sands, a firm known to possess a very strong balance sheet.