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Las Vegas Sands (NYSE: LVS) saw its inventory almost halved due to the coronavirus pandemic, which caused the inventory market to collapse last March. However, its inventory was already declining rapidly due to the effect of the pandemic on China, the country of origin of COVID-19.
The casino operator generates more than 60% of its profits in Macau, the only position in China where it is legal to play, so your fortune depends more on how your activities work than on The Lockdown in Las Vegas.
Macau has recently begun re-broadcasting tourist visas and Beijing is beginning to meet its requirement to wear a mask in public, but this may not yet be enough to attract players to casinos. Gross monthly gaming revenue decreased by 80% in 2020 after 4 consecutive months of revenue falling 90% or more.
Sands generated $98 million in cash this quarter, up from $3.3 billion a year ago, and a profit of $555 million turned into a $804 million loss this time. Like Macau, even reopened casinos in Las Vegas are suffering to attract players, so new blocking orders can be devastating.
The question is whether the tourism industry can recover. Macau and Las Vegas are destination cities and hotel operators such as Sands, MGM Resorts and Wynn Resorts rely on consumer selection to visit.
While Las Vegas Sands has $3 billion in money and equivalents in the bank, it also has approximately $14 billion in debt. Fortunately, the first $1.8 billion worth of bills doesn’t expire until 2023, so the new blockades, while certainly destroying the casino’s finances, probably wouldn’t happen.