* Buyers hold room pricing power in Las Vegas
* Sands’ profitability “still in pretty good shape”
* Will consider debt options after Singapore opens (Adds comments, background, byline, share price)
By Deena Beasley
LOS ANGELES, Jan 28 (Reuters) - The number of tourists and business travelers coming to Las Vegas has picked up, but the supply of hotel rooms has also gone up and casino operators hold very little leverage in terms of pricing power, a top executive at Las Vegas Sands Corp (LVS.N) said on Thursday.
“We are going to continue to do business, but it will be much more price-oriented than what it would have been two years ago,” Michael Leven, the company’s president and chief operating officer, said during a webcast investor conference.
He said Sands recently booked a group of rooms for April at a rate 70 percent below what the buyer would have paid two years ago.
MGM Mirage (MGM.N) late last year opened its massive CityCenter resort complex — adding some 6,000 luxury hotel rooms to the Las Vegas Strip.
“We are not worried at all about (the volume of) group business in ‘10 or ‘11,” Leven said. “Our problem is getting that business at the kind of rates we used to have — that is not going to happen in 2010, or early 2011.”
The COO said he expects Las Vegas revpar — a combination of room revenue and occupancy rates — to drop this year compared to 2009.
He also said the Las Vegas-based company’s cost structure is much different than it used to be after several rounds of cost-cutting driven by the recession and debt crisis.
“We think our profitability is still in pretty good shape,” Leven said, noting that Sands, with its ability to accommodate large groups and conventions, can make money on high margin businesses like food and beverages.
Sands owns the Palazzo and Venetian resorts on the Las Vegas Strip, a casino in Pennsylvania and two casinos in the Chinese gambling enclave of Macau, The company will open a gambling resort in the city-state of Singapore this year.
Sands, which last year spun off part of its Macau business in an initial public offering (Sands China Ltd (1928.HK)), is “very bullish on Macau” because the company is aligned with the Chinese government’s goal of promoting the region as an international tourism and convention destination, Leven said.
He expects China to target Macau growth “a couple of points higher,” than the government’s goal for gross domestic product growth of 10 percent to 11 percent.
Sands’ U.S. operations remain highly leveraged, but Leven said the company is in no danger of breaching loan covenants as long as it has $3 billion in the bank. He said Sands currently has $4.8 billion — leaving a cushion of $1 billion even after it spends another estimated $800 million in Singapore.
He said lenders have offered to ease covenants in exchange for higher interest rates, and Sands will consider all its options after the Singapore resort is up and running.
Shares of Sands fell 2.3 percent to close at $15.86 on the New York Stock Exchange — up an astonishing 1,400 percent since March, but still well below a late-2007 high of more than $144.