Las Vegas Sands (LVS) Q2 2024 Earnings Call Transcript

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Las Vegas Sands (NYSE: LVS)
Q2 2024 Earnings Call
Jul 24, 2024 , 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Sands second-quarter 2024 earnings call. [Operator instructions] It is now my pleasure to turn the floor over to Mr. Daniel Briggs, senior vice president of investor relations at Sands. Sir, the floor is yours.

Daniel J. Briggs -- Senior Vice President, Investor Relations

Thank you, Matthew. Joining the call today are Rob Goldstein, Patrick Dumont, Wilfred Wong, and Grant Chum. Today's conference call will contain forward-looking statements. We'll be making these statements under the safe harbor provision of federal securities laws.

The company's actual results may differ materially from the results reflected in those forward-looking statements. In addition, we will discuss non-GAAP measures. Reconciliations to the most comparable GAAP measures are included in our press release. We've also posted an earnings presentation on our website.

We will refer to that presentation during the call. Timing for the Q&A, we ask those of interest to please pose one question and one follow-up, so we might allow everyone the opportunity to participate. The presentation is being recorded. I'll now turn the call over to Rob.

Robert Glen Goldstein -- Chair and Chief Executive Officer

Thanks, Dan, and thanks for joining us today. Macao market continues to grow. Total gain revenues for the market grew 24% in the second quarter of 2024 when compared to the second quarter of 2023. In addition, mass gaming revenue grew 29% compared to one year ago.

We remain confident in the future growth in Macao market. I believe Macao market for gross gaming revenue will exceed $30 billion next year and continue to grow year after year. Our business strategy is predicated or investing in high-quality assets and also have scale. Macao is and always has been a deeper competitive market.

Our strategic approach has enabled us to compete very effectively. We have designed our capital investment programs to ensure that we will continue to be the market leader in the years ahead. Our approach allows us to grow fast from the long term and large share EBITDA and generate industry-leading returns on invested capital. Turning to our results in Macao, we delivered solid EBITDA for the quarter despite material disruption at London cell continues to lead the market in gaming and non-gaming revenue and a market share of EBITDA.

We will continue -- we will capture high-value, high-margin tourism over the long term. We have a unique competitive position in terms of scale, quality and diversity of product of offerings. Upon completion of the second phase of the Londoner and our Cotai Arena, our product advantage will be more pronounced than ever. Another strong quarter in Singapore despite ongoing disruption from construction.

The financial results in Marina Bay the positive impact of our capital investment program and the growth of high-value tours. The growing appeal of Singapore is a destination enhanced by the robust entertainment and lifestyle event calendars. As we complete the balance of our investment programs, there will be considerable runway for growth. Thanks for joining our call.

I'll turn it over to Patrick down, and then we'll go to Q&A. Patrick?

Patrick Dumont -- President and Chief Operating Officer

Thanks, Rob. Macao EBITDA was $561 million. We had held as expected in our rolling program, our EBITDA would have been higher by $4 million. When adjusted for lower-than-expected hold in the rolling segment, our EBITDA margin for the Macao portfolio of properties would have been 32.1% or down 80 basis points when compared to the second quarter of 2023.

Context here is important. Our margins at London were directly impacted by the disruption of the Londoner Grand renovation. We closed the casino at 1,500 keys out during the quarter. Margin at The Venetian was 38.2%, and we expect margin improvement as The Venetian Cotai Arena comes back online later this year and as visitation to the market and growth in unrated play in the market both increased in the future.

Margin at The Plaza and Four Seasons was 40%. We are now deep into our Londoner Grand renovation program. We plan the completion of the first tower by year-end 2024 and of the second tower by May of 2025. The Londoner Grand Casino has been closed since May and is scheduled to reopen in December.

As these products come online, between the end of 2024 and the first half of 2025, our competitive position will be stronger than ever. We expect meaningful EBITDA growth and margin expansion in the future. Now turning to Singapore. MBS' EBITDA came in at $512 million.

Our strong results reflect the impact of high-quality investments in market-leading products and growth in high value tourism. Had we held as expected at our roll-in Play segment, EBITDA would have been $64 million lower. Had we held as expected in our rolling play segment, MBS margin would have been 48% or 220 basis points higher than the second quarter of 2023. While we have substantially completed the original $1 billion refurbishment program at MBS, we are still in the initial stages of realizing the benefits of these new products.

Tower gaming at Marina Bay Sands will be offered for the first time at the property in the third quarter of 2024. The next phase of our capital investment program at Marina Bay Sands is scheduled to be completed during the second quarter of '25. This will further support growth in 2025 and beyond. Turning to our program to return capital to state to shareholders.

We repurchased $400 million of LVS stock during the quarter. We also paid our recurring quarterly dividend. We look forward to continuing to utilize the company's capital return program to increase returns to shareholders in the future. Thanks again for joining the call today.

Now let's take some questions.

Questions & Answers:

Operator

[Operator instructions] Your first question is coming from Joe Greff from J. P. Morgan. Your line is live.

Joseph Greff -- Analyst

Good afternoon, guys. I'd like to start off on Singapore if we could. I was hoping, can you give us a sense of maybe how players and visitors geographically, how they are performing? I guess more specifically, are you seeing any kind of slowdown from Mainland Chinese visitation or mainland Chinese spend into MBS? And was there any more material trend change toward the end of the 2Q versus maybe what you've seen over the last couple of quarters as that's been sort of a growing segment?

Robert Glen Goldstein -- Chair and Chief Executive Officer

Joe, as you know, in the past calls, we have a diverse customer base in Singapore. We got them all on the region and certainly China is part of that, but we're all over the place, Vietnam, Japan, Korea, Indonesia, Malaysia. So I don't think we saw much different than the past year, except where obviously, your seasonality is in play in Q2. But our business, looking forward, the only thing I would say is impacted is we keep self-inflicting loans by facing our building.

And it's near the end, finally as it feels like a long time. But despite seasonality and despite the difficulties of construction, Tower 3, Tower gaming, we continue to move forward toward $500-plus million quarters and diversity of business tours is very clear to be really the -- where they're coming from. They're coming from everywhere. We've not seen a slowdown in China.

We just simply see the same as we see in the last couple of quarters, which is solid, but it's also solid from all over the region. So Singapore moving forward, I think you'll see a real important transition probably in the early part of Q2 when the building is really fully complete and tower gaming is intact, all the suites are intact. We're really playing the game with one hand behind our back out now, still delivering $2-plus billion run rate. So we feel very good about our prospects in Singapore, probably the most -- not probably, is the largest EBITDA building in the history of gaming.

So -- and it continues to get stronger. We think it's -- we said before, we think that our goal is $2.5 billion out of Singapore. I think you'll see it happen in the upcoming years.

Joseph Greff -- Analyst

Great. And then people have not really asked me a question about Macao. Is Macao self-sufficient or speaks for itself. But Rob, Patrick, maybe you can give us an update on any development opportunities, specifically Thailand, and I'm not sure there's much to add to what's going on in New York.

Patrick Dumont -- President and Chief Operating Officer

So first off, I think the great news is we're very ready to develop new ground of developments in new jurisdictions. We're very excited about it. Rob, the team, I spend a lot of time looking at opportunities for our company to expand and grow new jurisdictions. As you know, we're spending a lot of time in New York.

We're spending a lot of time in Texas. We've been looking at Thailand. I think Thailand is a very interesting opportunity. The market there is very strong for different types of tourism.

And I think depending on the way it's set up and the opportunity that's there in terms of structure, it could be very interesting for us. We love the market as a place to source customers. We think the tourism, our quality here is quite high. If you go and visit, you'll have a great experience there, and we'd love to be part of it.

So if Thailand becomes available, we'd be very interested. But I think it's early days yet. I think we've been spending time there along with the rest of our industry, looking to see if we could be hopeful to that process. And we're waiting and seeing what happens.

Joseph Greff -- Analyst

Thank you, guys.

Robert Glen Goldstein -- Chair and Chief Executive Officer

Thank you.

Operator

Your next question is coming from Stephen Grambling from Morgan Stanley. Your line is live.

Stephen Grambling -- Analyst

Hey, thanks. I appreciate the comments on the Londoner Grand renovation impacting margins in Macao. But can you get back to 2019 levels in the current environment as that comes through and ramps up? Or do we need to see some change either in growth in the market or the competitive and promotional environment to get back there?

Patrick Dumont -- President and Chief Operating Officer

So a couple of things. And I think this is really important to note, the Macao market has always been super competitive from day one, it's been a very competitive market. And we've been very effective in the way that we compete because we have an investment-driven model. So if you go back pre-pandemic, if you go back in 2010, it was a very competitive market.

And in fact, I remember when the premium mass segment didn't exist. And when it started, people -- Rob can reference this as well and some other people in the room can as well. When there was no premium mass segment, it was really rolling volume and mass play. And the market has always evolved over time.

But the one thing that's been consistent is that our company has driven success through investment and through leading and non-gaming amenities. And to be fair, innovating on the gaming side as well. And so when you look at our performance, if you go to Page 14 of the slide deck, you can kind of see what happened in the quarter. So The Venetian Macao did $262 million of EBITDA in the quarter at a 38.2% margin.

And it's missing about half its volume of unrated play. So just with the arena out, which is also a very valuable amenity to drive premium mass performance, look at the strength of the performance of The Venetian. Same thing is true in The Plaza. Look at what the Four Seasons did.

40% margin, $100 million of EBITDA. So when we look at the Londoner, we basically took out an equivalent property like Melco or an equivalent property to win Palace. We took that capacity out of the market for ourselves to renovate it. So for us to put up $550 million in the quarter, in my mind, this is a great result because we know that we have a limiter in place.

We're missing one of a significant portion of what is ultimately going to be one of the best properties in Macao, if not the best property. And if you look at the success of the Londoner right now, if you look at the win fee per day on the table side, the Londoner is the second best in our system. So in Macao -- so when you think about that, the model has been proven and the investment has been validated. Now we're going to open up the better half, hopefully, by the end of the year in major part, certainly, the limiters are going to come off.

So in my mind, this is a very positive investment for us. And we'll get to the margins. We're already doing it in other properties. It's just a function of renovation because we're carrying all the costs now associated with the shuttered casino and 1,500 rooms.

So the Londoner impact is really, one half of it is working. You see the performance, you see the slot win, you see the slot performance win per unit. You see the table win performance, you look at the hotel performance and the non-gaming amenity performance. And then you look at the side that's shut and you realize that's the better side, but we're carrying all the cost.

The potential of the future is really there. We feel very strong about the potential for the margins to reach where we need to go. And just remember, pre-pandemic we were at 35% to 36% EBITDA margin on a whole normalized basis business in aggregate. So we're -- we'd like to believe we're in a good spot.

We're competing effectively. We have great assets. We're investing for the future. And when we're done, we're going to have the newest and best products in the market.

So we feel very strongly about the path that we're on. It's just going to take a little bit of time to get that.

Robert Glen Goldstein -- Chair and Chief Executive Officer

The only structural change we need is to get open again. The market is going $30-plus billion next year. We're going to have the 2 most important assets in the market speaking with each other. I mean that strategic, we're going to have Londoner and The Nation over 7,400 keys between them.

The full power of Cotai Arena, all the amenities between those 2. But I think those buildings will be very, very intertwined and give us, by far, $2 billion-plus assets. At Parisian and Four Seasons and Sands keep doing what they're doing, we will be a $3-plus billion and think will get $2-plus billion. I believe that sometime near future, we will have the highest EBITDA creation in this company's history without Las Vegas.

So I'm pretty confident that Londoner will perform and outperform the expectations but also enhances the divination because the back and forth of those 2 buildings, they're very similar, huge retail, huge suite capacity, entertainment, retail, F&B. They just -- they're much bigger and better than anything else in that market for making money. And when those come online next year, these results today, another $150 million out of Londoner all of a sudden, you're looking at $3-plus billion of annualized EBITDA. That's how we view the market.

The margins being what they are, making EBITDA still the most important thing, and we will get there. We will get there.

Stephen Grambling -- Analyst

So maybe as a quick follow-up. On capital allocation, you noted being consistent with capital return. And it sounds like you're confident in a ramp from here in Macao and really growing in MBS, yet the stock is near, the lows during the pandemic. So what's the tolerance to be maybe not as consistent and actually being more aggressive with capital allocation or even rethinking about the leverage profile at least in the near term?

Patrick Dumont -- President and Chief Operating Officer

So I think, first off, we have said this before, we see meaningful value in both equities, where the stock is trading, does it make sense to us. Both on a historical basis and how we view the value of our company and how we look to invest and grow. So we're going to continue to repurchase stock. As you saw we did in the last couple of quarters.

We feel very strongly about the value of our business, and we're going to continue to do it. Look, I think for us, we're very focused on being shareholder friendly. We were a very shareholder-friendly company in the past. We're a shareholder-friendly company today.

We're going to continue to do that. That's our goal. And I think that the nice thing is that as we complete the Londoner, 2 things are going to happen. We're going to have less capex and more free cash flow.

And to be fair, a more productive asset base. And so hopefully, we'll have the opportunity to use that cash flow to return it to shareholders. So we're going to look to do that and continue what we've been doing. But we agree with you think where the stock is today is not reflective of our long-term value.

Robert Glen Goldstein -- Chair and Chief Executive Officer

And also, if we do invest in new opportunities, that's not in the near future. So you're the New York, Texas. Thailand is years ahead. You can find lots of room to invest money if you plan to.

Stephen Grambling -- Analyst

Thank you.

Robert Glen Goldstein -- Chair and Chief Executive Officer

Thanks, Stephen.

Operator

Your next question is coming from Robin Farley from UBS. Your line is live.

Robin M. Farley -- Analyst

Great. Thanks. Two questions. One is, can you share some thoughts on -- there's a lot of concern about tariff impact on the Chinese economy next year.

Just any way to help us think about that broadly how you're thinking about? You have a lot of capex going up and running in the market next year, which should certainly position you well. But just sort of thinking about broader impact There? thanks.

Robert Glen Goldstein -- Chair and Chief Executive Officer

You take tariff impacts on the -- so the U.S., the new president ever he or she may be, I see. I don't think we want to talk about the two reasons. What we don't know what's really going to happen nor do we know the impact. Obviously, China economy speaks for itself.

It's been a struggle this year. And I think it hopefully just gets better, we see more improvement. But the big thing in our business is the 2 million-plus visitors were lacking quarter-on-quarter. They heard us, and that was just today.

I don't think we should comment on politics or what has to happen, we actually don't know. But obviously, the biggest miss for our company, which is both for scale and quality, we lose 8 million annualized business tools that puts us with everybody else. So we'll leave that they are going in the political realm of who's going to do what to who and why.

Robin M. Farley -- Analyst

OK. Fair enough. Thanks. And then I had a question, and you already commented on your interest in continuing share repurchase.

Looking at the rate that you did this quarter, you've been mostly through your remaining authorization at the end of this quarter. Is that -- when we think about like your appetite for continuing beyond that, is that -- if you could just sort of comment on that. Thanks.

Patrick Dumont -- President and Chief Operating Officer

Yes. I think if you look at our prior practice, you can see that we've always been focused on return on capital, both through share repurchases and dividends. And that our board has been very supportive of trying to create shareholder value through return of capital. So as our current authorization gets used up, we'll go back to the board, and we'll have a discussion about how we want to allocate capital.

But the Board has been very supportive of trying to enhance shareholder returns over time.

Robin M. Farley -- Analyst

OK. Thank you.

Patrick Dumont -- President and Chief Operating Officer

Thanks, Robin.

Robert Glen Goldstein -- Chair and Chief Executive Officer

Thanks, Robin.

Operator

Your next question is coming from Carlo Santarelli from Deutsche Bank. Your line is live.

Carlos Santarelli -- Analyst

Hey, everyone. Good evening. Good afternoon. Rob, if you could.

I mean, I know this is probably a difficult question, but if you think about...

Robert Glen Goldstein -- Chair and Chief Executive Officer

Then don't ask.

Carlos Santarelli -- Analyst

I hear you. The question was -- maybe it's not as difficult as I framed it to be. But when you guys think about the rooms that are out of service at Londoner and those customers and recapture in your existing portfolio, whether you're able to recapture them in Venetian, Parisian or elsewhere. What do you think is actually the delta in what you're missing from those rooms being offline, i.e., how much of that shortfall that's being generated there relative to historical periods elsewhere in the portfolio versus how much do you think is just exiting the system and maybe showing up to competitors?

Robert Glen Goldstein -- Chair and Chief Executive Officer

Right. Before I get this question, Mr. Chum, we woke up to this call in the middle of night in Macao, I want to also reference the fact that the disruption aside the carrying labor, we've been in these buildings before when buildings were under construction impacts both Londoner 1 and 2. I want to be clear that the disruption isn't just limited to our current Londoner 2.

Londoner 1, which is a beautiful building, also feels the pain. Grant, will you answer the question about the rooms and the delta and how you see that?

Kwan Lock Chum -- Executive Vice President, Asia Operations & Srutive Vice President, of Global Gaming Strategy

Yes. Thanks, Rob. I think, first of all, yes, the performance definitely was impacted by the Phase 2 renovation on the Sheraton side. But actually, despite that, we referenced the fact that we -- we obviously worked hard to shift the patronage to other properties in the portfolio.

And the team was actually incredibly successful at that. We actually reached the record high in any quarter on non-rolling drop as well as a record high in any quarter on slot handle. So in terms of gaming volumes, I think we've managed to sustain the volumes overall. However, within the mix, I think what you do lose is some of that base mass, which is where Pacifica Casino was primarily positioned.

And also, what you also can see in the numbers is the impact of the loss of the rooms impacting the cash hotel revenues because, obviously, when you have fewer rooms, we are yielding accordingly. And when you lose that cash revenues from the hotel side because you have reduced inventory and we need to shift the customers to other properties on the casino side, that clearly impacts not just EBITDA, but it's a high flow-through segment. Business segments. So it obviously impacts the percentage margin as well.

Carlos Santarelli -- Analyst

Great. Thank you. That's helpful. And if I could, just one quick follow-up.

Sorry, go ahead, Rob.

Robert Glen Goldstein -- Chair and Chief Executive Officer

There's -- do you have a dollar amount on the cash wound sales loss in the quarter.

Kwan Lock Chum -- Executive Vice President, Asia Operations & Srutive Vice President, of Global Gaming Strategy

I'm sorry, Rob.

Robert Glen Goldstein -- Chair and Chief Executive Officer

I was asking if you can give us a number, but the dollar number we lost in cash room sales for the closure of London.

Kwan Lock Chum -- Executive Vice President, Asia Operations & Srutive Vice President, of Global Gaming Strategy

It -- if you look at the actual reduction in cash revenue for -- versus Q1, then you're probably looking at the range of around $15 million, $20 million impact. Although you can't simply add that back because you've also got to consider that's a net impact of shifting more rooms into some customer segments and then having fewer rooms to sell. So it's a net impact that's probably not as high as that. But if you're looking at pure cash revenues, then that's the range of impact.

Robert Glen Goldstein -- Chair and Chief Executive Officer

Sorry, your second question was what?

Carlos Santarelli -- Analyst

Yeah. The second question was just more of a technical question. And I get it, lot could go both ways, but this is the fourth quarter in a row where hold in Singapore has -- on the VIP side has been very strong. And I think when you look at the last 4 quarters, it is close to $30 billion of volume at an almost 4.4% win percentage.

It feels a little bit more structural. And I know in your add-back map, you guys are obviously digging yourselves for a much lower hold structurally. Is there any thought of perhaps changing what that metric is as the normalized hold for that property going forward?

Robert Glen Goldstein -- Chair and Chief Executive Officer

Yeah. It's a great question and one we still have time on. And I think what you should realize -- I think you do realize this, the world is changing in Baccarat for two reasons. Smart tables give a better way of quantifying what the whole percentage should be but also we put games for, I'll call it, prop bets or side bets that changed the whole percentage in baccarat.

And your comment is spot on. We're debating how high we can take it. The team there feels is understated. And you're right, we keep digging ourselves quarter-to-quarter.

And perhaps in the near future, we'll address that because clearly, something is happening here. But again, the smart table opportunity, which we're deep into now, coupled with the game changes, has been a pretty predictable game for many years. Player bankers and tie payer is changing dramatically. We were there a few months ago and shocked to see how much money embed on the prop bets.

No different than the Super Bowl. We know just about the winning team, you've got every 3,000 side bets, which drives the per way up. We believe that's in play in Singapore. We're not ready today, but we're coming close to a decision this year perhaps to address that very issue because you're right.

The team would argue something in play. It's not simply better fortune, it's just better mathematics and the best be made and the ability to assess those mathematics through smart table, et cetera. Pat, do you want to add to it?

Patrick Dumont -- President and Chief Operating Officer

Yes, sure. It's the right question to ask. We've been following this for a while. Some of it depends on what Rob said or it depends on what Rob said, which is the additional wagers that are available on the game mix that we have on the floor at the time.

But it's also -- you have to understand propensity. And so you have to observe empirically what people are going to do before you could make that decision. So you'd argue that our theoretical is higher than this. But we're going to continue to look at it, and we'll make adjustments as necessary when we think the statistics warrant it.

But you're right, it is a very significant adjustment and one that we're going to continue to look at. But our game mix has changed. The availability for, as Rob calls, and prop bets, but really high-vol bets are on the floor now in a very different way than they have been previously, both pre-pandemic and even a year ago. And there -- the patron uptake is very high.

And so that is adjusting the way that mix in the floor is being exhibited through gaming win. And so we're going to continue to take a look at it, and we'll make adjustments when we feel that it's appropriate. But it's a very good question to ask. There's more there, buddy.

Carlos Santarelli -- Analyst

Thank you.

Carlos Santarelli -- Analyst

Thanks, Carlo, as always.

Operator

Your next question is coming from Shaun Kelley from Bank of America. Your line is live.

Shaun Kelley -- Analyst

Hi. Good afternoon, everyone. For Grant or the team, I just wanted to ask, can we get a little bit more color on just what you think is happening in sort of underlying visitation to the market? I think you captured it well in your Slide 19. But we saw our noted a bigger sequential deceleration than we typically see in the second quarter.

And my question for you is twofold. Just, one, what's driving that? Is it macro? Is it something you're seeing or hearing out there? And I guess, just as importantly, is it continuing at all into Q3? Or what's your expectation for this pattern to possibly continue? Thanks.

Robert Glen Goldstein -- Chair and Chief Executive Officer

Grant, you want to take that one?

Kwan Lock Chum -- Executive Vice President, Asia Operations & Srutive Vice President, of Global Gaming Strategy

Yes. I think you're right. The visitation recovery rate has actually reduced. So that's actually taking account of seasonality when you compare the visitation recovery versus second quarter of 2019, we're about 79%, but we were as high as 90%, 85% to 90% in the past 6 months in the past 2 quarters.

So clearly, there has been, I think, more than just a seasonal slowdown. And that's particularly prominent in the visitation outside of Guangzhou. So that does impact, I think Rob referenced it earlier. It does impact, I think, the base mass business, especially that I'm ready to play.

We don't know exactly why, but I think that is a clear feature of this quarter, and it does feed into, as we said, the base mass segment.

Shaun Kelley -- Analyst

Thanks, Grant. And then just as a follow-up, I think you also talked about -- I mean, obviously, I think you mentioned a number of times that the market is always competitive, always promotional. Could you just talk about your own promotional allowance or cadence this quarter? Was it a little higher? Did you need to reinvest a little bit more? I think on our math, that was possibly the case? Or is it all just mix? Just kind of how did you see it play out? And kind of what do you -- how much you're reacting to versus how much are you kind of letting -- kind of letting go on market share just because it's not your game?

Patrick Dumont -- President and Chief Operating Officer

One thing, I just want to say one thing, and then I'll turn it over to Grant. So just note that the visitation is very important. And you referenced Slide 19 and the fact that there's 2 million visitors missing that were here pre-pandemic. We are geared for scale.

And that scale is very high margin for us because of the volumes. And so our mix looks different and our margins look different and our reinvestment looks different because of the shift of business between nonrated and rated play. That's a very important thing when you look at our results and you consider what we're doing today, the mix of business has changed for us pre-pandemic and post-pandemic, so that's one thing. The other thing is, I would also like to highlight that if you look at the margins of our overall operations, they're consistent with prior performance.

And when that unrated play returns and the volumes return of premium mass play, that our margins should improve. So yes, we look at reinvestment rates, but we also look at the total business. We like to understand how much money we're actually making on net. So when you look at the business overall, our margin performance and our competitive positioning is actually quite good given where things are.

But I'll turn it over to Grant for some additional detail.

Kwan Lock Chum -- Executive Vice President, Asia Operations & Srutive Vice President, of Global Gaming Strategy

Yes. Thanks, Patrick. Yes, I think it's a mix shift. Firstly, the business mix point that Patrick referenced.

And secondly, because we were closing Pacifica Casino and getting ready for that, yes, there is, for a period of time, a high level of reinvestment as we prepare for that shift, which, as I talked about earlier, we did so very successfully, especially into the Parisian, but also the other properties. So those are the main factors affecting the reinvestment and the overall margin mix. But I think even though there are fluctuations from quarter-to-quarter, day-to-day, even in terms of tactical, I think we're very clear on our strategy which is that we will compete on the quality and the scale of our asset base. And of course, at this point in time, we're hampered because we have a number of our key assets out.

But when those assets come back online, really from Q4 this year into 2025, we absolutely intend to be competing on that basis because at that point, we not only have, I think, scale we always had, but the sheer quality of product that we'll have at that point at scale, I think that will be the fundamental difference from what we had before, and we intend to make full use of that in terms of competing for the market.

Shaun Kelley -- Analyst

Thank you, everyone.

Robert Glen Goldstein -- Chair and Chief Executive Officer

Thanks, Shaun.

Operator

Thank you. Your next question is coming from Chad Beynon from Macquarie. Your line is live.

Chad Beynon -- Analyst

Good afternoon. Thanks for taking my question. On Singapore, which has been consistently strong for several quarters, it appears that there's still some quarterly volatility. I think last quarter, we talked about some big events in the first quarter that drove non-gaming and obviously, VIP play.

As we think about the back half of the year, can you help us kind of square what seasonality should look like? And if there are any big events that are booked on the calendar in Singapore that could drive additional non-gaming or VIP business? Thanks.

Patrick Dumont -- President and Chief Operating Officer

So a couple of things. So typically, 2Q is our trough quarter in the year. And so you saw that in Singapore this quarter. As a practical matter, we were also out keys because of the renovation in Tower 3.

So across the back half of the year and into Q1 of next year, all of that stuff is going to come back. So the limiters are going to come off. And so if you look at the tower gaming that we're adding, you look at the additional salons that are coming back online, some of the renovated gaming areas that are coming back, we're finally going to hit full stride of that building. So even though we put up this quarter and last quarter, which are, I think, the two highest of all time, we have more room to go.

We're not operating with full capacity. And so right now, when we look at Singapore, we see strength in the market, we've geared ourselves to focus on high-value tourism, which is coming into Singapore at a very high level. We are the premier place to visit from an amenity standpoint, entertainment, food and beverage, and we're benefiting from it. And our hospitality is now second to none, which we spent a lot of years working on, and we're finally there.

So we're going to start to see this asset continue to grow and outpace. In terms of the calendar up and coming, I can't point to anything other than Formula One that would be sitting in the category you just laid out. Formula happens every year. It's a great event.

It's something that's good for Singapore. Our patrons really enjoy it, and we look forward to its success. But in terms of calendar, unless Grant has something in mind, I can't think of anything other than that right now that's worth mentioning.

Kwan Lock Chum -- Executive Vice President, Asia Operations & Srutive Vice President, of Global Gaming Strategy

Yes, that's the main one, yes.

Robert Glen Goldstein -- Chair and Chief Executive Officer

This market is so powerful and getting better by the day. And in the past Q2 is one of the weakest quarter in seasonality. But still, what's happening in Singapore is almost unheard of in our industry. I mean everything is coming together and converging that thing, and we're doing these numbers again with capacity constrained.

When that goes away, and the market will continue to thrive, whether it's F1 or Taylor Swift or whoever is coming next, those events are very additive, but that place as a market just becomes more and more designed by the day you see by the visitation and the quality of visitation. So our building will speak for itself.

Chad Beynon -- Analyst

OK. Appreciate it. And then I'm going to ask you to put on your economist hat again, not looking out to future years, but this year, obviously, the ARR cut could bring some more money back into consumer pockets in China. Just wondering in prior cycles, how long that usually takes for it to trickle down.

Obviously, we've seen a nice little improvement in some of the July foot traffic. I don't think it would happen that fast. But is this something if it's kind of working in terms of some stimulus, you could start to see it in the third or fourth quarter here? Just in terms of spend per play trends. Just wondering if you could kind of opine on what we've seen in prior cycles? Thanks.

Patrick Dumont -- President and Chief Operating Officer

So this is a fascinating question. One thing I'll tell you, this was the highest volumes we ever had in premium mass and slots in a quarter. So clearly, like something positive is happening. I think if you said that the economy was frothy and doing incredibly well that we'll be doing better.

I think that might be a fair statement. You can say that. But in terms of timing or specific economic actions, there are so many different things that can happen that may influence it. We have no idea.

I mean, this isn't anything that we can comment on or have a view on other than that we're hopeful that there will be further economic growth and further beneficial economic activity around the Greater Bay area. And hopefully, we will be the beneficiaries of that. But in terms of specific comments around timing or things of that nature, it's not something we can really do.

Chad Beynon -- Analyst

Thanks, Patrick. Appreciate it.

Patrick Dumont -- President and Chief Operating Officer

Thanks, Chad. Thank you.

Operator

Your next question is coming from Brandt Montour from Barclays. your line is live.

Brandt Montour -- Analyst

I just wanted to follow up maybe with Grant or anyone on Shaun's question about visitation. And maybe just thinking about what's going on there? I know that you don't have a crystal ball for the future. But in the 2Q, do you think macro was the biggest factor? Is there still infrastructure friction there with flights to non-Guangdong, particularly? Or is there something else that you think is at play as well?

Patrick Dumont -- President and Chief Operating Officer

Yes. Thanks, Brandt, for the question. Yes, I don't have specific reasons why we have a slowdown in the recovery rate for non-Guangdong. I think what you can say is there is a segment bifurcation here where the premium segments are still doing incredibly well.

And you can see, I think it's on Slide 18 on the pack. Actually, this is the highest spend per visitor arrival since the COVID recovery began of any quarter. So clearly, at the premium end, the strength of spending is very high. But at the same time, I think, the lower price points in terms of, say, the slot performance is also incredibly strong.

So those two factors drove record high volumes in our non-rolling drop and soft handle. But in the middle, especially the base mass tables, especially unrated, that is highly correlated to the strength of visitation and it just wasn't as strong this quarter, even if you adjust for seasonality. So I think we can explain how the segments have performed. But we don't know exactly why the visitation base isn't recovering as fast in the middle in terms of that base mass visitation.

Brandt Montour -- Analyst

Great. And then on the disruption, the renovation projects, if we were to try and gauge the level of disruption from these projects in the third quarter versus the second quarter, I know you lose the casino floor for a whole quarter versus half a quarter. Can you maybe give us some finer points on what else is going to be offline in the third quarter versus the second quarter, room count, et cetera?

Patrick Dumont -- President and Chief Operating Officer

Yes. You go ahead, Grant.

Kwan Lock Chum -- Executive Vice President, Asia Operations & Srutive Vice President, of Global Gaming Strategy

Yes, the disruption will actually increase from a room perspective. So we're operating around 2,500 keys at Sheraton in the second quarter on average over the quarter, and we expect to be down to about 1,300 on average across the third quarter. Obviously, higher number of keys in the first half of the quarter and finishing up with fewer keys. And as you said, we will have a full quarter of Pacifica Casino closure versus 60% of the quarter in the second quarter.

So yes, the disruption impact will actually increase during the third quarter.

Brandt Montour -- Analyst

Perfect. Thanks, everyone.

Patrick Dumont -- President and Chief Operating Officer

Thank you.

Operator

Your next question is coming from David Katz from Jefferies. Your line is live.

David Katz -- Analyst

Afternoon, everyone. I wanted to go back to the repurchases and just take a little bigger picture look, right? Just thinking about the factors, obviously, the stock and where it is, is one of them. But when we look at your capabilities, there are some maturities out there. In the future, there's obviously the issue of the float at the current run rate that shrinks the float and that's a consideration that some companies think about.

If you could just sort of walk us through how you're thinking about those other issues in view of all of them, that would be helpful, please.

Patrick Dumont -- President and Chief Operating Officer

So all very good questions, all things we talk about all the time, consider with the board and we think about frequently. I think the key thing for us is we always look to invest for growth. So when you think about capital allocation, our primary conversation is how do we grow this business. We had a question earlier about new jurisdictions.

We're looking at them. If you look at our Las Vegas sale, the fundamental driver of that was our ability to reallocate capital to faster-growing markets and new growth opportunities. And I think our investments in Macao and Singapore will prove out and that will ultimately allow us to grow those businesses, create additional cash flow, which ultimately will be used for either new growth or shareholder return. And so when you look at our balance sheet, we think being investment grade is incredibly important.

We think it provides us with a strategic advantage. It reduces our cost of debt capital, which impacts our overall cost of capital and makes the financing of new projects more efficient and creates better returns for equity. And also to be fair, we think when we go to new jurisdictions, it puts us in a more competitive position because we have the financial capability to execute the projects we're proposing. And so all of these things are very helpful for us as we look for our business.

When it comes to capital return, I think the idea of shrinking the share count of something we've talked about previously, where we think there's a benefit to doing so. We think there is a positive gearing toward share repurchases. We've been very aggressive over the last couple of quarters. We like to continue to shrink the share count over time.

And to be fair, we're also a dividend payer. We think that's helpful to shareholder returns. As a S&P 500 member, we think it's good to have the dividend as well. So I think we have the free cash flow to continue to return of capital.

We're very happy about that given our investment opportunities. We have the balance sheet strength, be able to develop new jurisdictions. And so I think you're going to see a balance between growth and our ability to return capital over time. I think the nice thing is when we're done with the Londoner and we're done with some of the other -- with these major innovation projects in Singapore, given the growth that we're seeing, we'll have the ability, hopefully, to return more capital.

And we'll have the ability to increase our program and benefit shareholders. So you'll see us do that over time as our business continues to operate and grow. And so I think the idea of shrinking the share count, I think we're in a good position to do it. I think we have a lot of liquidity out there in the market.

We have a very strong ability to execute. So I think we're in good shape in terms of our program and the way that we approach it.

David Katz -- Analyst

Thank You. Appreciate it.

Patrick Dumont -- President and Chief Operating Officer

Thank you, David.

Operator

Thank you. Your next question is coming from Dan Politzer from Wells Fargo. Your line is live.

Dan Politzer -- Analyst

Hey, good morning or good afternoon, everyone. Thanks for taking my question. The first one on Singapore, the ADR was very impressive. Trends there seen overall, pretty good despite subdued visitation.

Can you talk about -- are you starting to see the benefits of the existing capex that you put into the ground so far? And should we think about any disruption as it relates to Tower 3 that is leading up to the completion next year?

Robert Glen Goldstein -- Chair and Chief Executive Officer

Thank you. Yes, obviously, the money we put into the building thus far has done very well. You see results are -- when you look into a $2 billion-plus run rate, we're still under construction is more to do. Tower 3 is disrupted because we don't have the product from the room tower gaming isn't there.

I mean, we're doing very well there. But again, I reference we have one hand tied behind our back and trying to get through it. So the road ahead still looks very positive to us. We think $500 million, $550 million, $600 million a quarter is in reach in the near future.

And as we referenced earlier, once the entire building is complete in '25, I do see better numbers than ever on Singapore. It's a very rosy picture in Singapore. And yes, the capex we employed there is paying off very well. And we think it's going to continue to be even stronger in time.

And as for ADR, while it's relevant, our cash sales are not the drivers. The driver is our casino business, especially our non-gaming casino drop on the table side. But it's a very positive picture. The disruption is real for the balance of the year into Q1 and Q2.

But once that burns off and we have Tower game open and full suites, I think you'll see Singapore just continue to be stronger and stronger.

Dan Politzer -- Analyst

Got it. And then as far as it relates to the Macao property portfolio, obviously, there's a lot of capex going into Londoner. As it relates to the other properties there, is there anything that we should be thinking about as you start to wrap up Londoner later this year? Or should we expect 2025 to be pretty much disruption-free there?

Robert Glen Goldstein -- Chair and Chief Executive Officer

Yes. Good point. Londoner will wrap up again in '25. We should note that we are going to undergo -- there was a misunderstanding perhaps the one call about what happens if venetian.

We are going to rehab some of the rooms of Venetian because we always do. But it's typical, you won't see it in the numbers of the building will be hidden from the public view by doing the 4x4 traditional way you approach these things in our industry. So we will undergo a renovation of the room product at Venetian next year at the closure of Londoner renovation. Four Seasons pretty much is done.

And then we'll sit and see what we want to do it in those things in Parisian and perhaps some Sands, but nothing beyond that should think about for the time being.

Dan Politzer -- Analyst

Got it. Thanks so much.

Sure. Thanks, Dan.

Operator

Thank you. Your next question is coming from Steve Wieczynski from Stifel. your line is live.

Steven Wieczynski -- Analyst

Hey, guys. Good afternoon. So Grant, you've been asked -- Grant, you've been asked a question on visitation twice now. I'm actually going to try to ask it a third time.

So if we look at Slide 20, it shows that the group visitation was, I think about 1.3 million visitors in May and June so far. So I want to ask more about kind of what's going on with the group side? And just trying to figure out maybe has it -- do you think Macao has essentially gotten maybe too expensive? And is pricing certain groups out of the market? And I hope that kind of makes sense.

Kwan Lock Chum -- Executive Vice President, Asia Operations & Srutive Vice President, of Global Gaming Strategy

Yes, thanks for the question. I think the two groups is a broader supply chain issue and the change in consumer habits, not just applicable to the Macao market, but to all the key markets that were significant to group markets prior to COVID. I think the other aspect that I should have mentioned, perhaps I could get Wilfred to give his perspective as well. Actually, during this period, we also have a series of significant announcements on policies that would boost visitation over time, even though in this current quarter, the impact may not be prominent, ranging from individual business scheme expansion to other types of visa relaxation.

So I think we need to bear that in mind that things are actually moving extremely positively on the policy side to support future growth in visitation. Wilfred, maybe you want to add to that?

Wilfred Wong -- Executive Vice Chair

Sure. I think the government, both at the Macao level and at the national level is monitoring the situation. And that's why you see the recent announcement that there's an additional 10 cities that people that qualify for IVS. And if you look at Macao traditionally, about 55%, 60% of the visitors use the IVS scheme.

And this time, they added 10 cities, which has close to 60 million population. So you're increasing that catchment area. And I think the other measures such as a faster and nationwide application for business Visa will also benefit Macao. So it will take time for these policies to be promulgated, fully promulgated and known in these cities.

So we are expecting some positive impact in the months to come.

Steven Wieczynski -- Analyst

OK. Great. Thanks guys. That's all for me.

Appreciate it.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Daniel J. Briggs -- Senior Vice President, Investor Relations

Robert Glen Goldstein -- Chair and Chief Executive Officer

Patrick Dumont -- President and Chief Operating Officer

Joseph Greff -- Analyst

Rob Goldstein -- Chair and Chief Executive Officer

Joe Greff -- Analyst

Pat Dumont -- President and Chief Operating Officer

Stephen Grambling -- Analyst

Robin M. Farley -- Analyst

Robin Farley -- Analyst

Carlos Santarelli -- Analyst

Carlo Santarelli -- Analyst

Kwan Lock Chum -- Executive Vice President, Asia Operations & Srutive Vice President, of Global Gaming Strategy

Grant Chum -- Executive Vice President, Asia Operations & Srutive Vice President, of Global Gaming Strategy

Carlo Santarelli. -- Analyst

Shaun Kelley -- Analyst

Chad Beynon -- Analyst

Brandt Montour -- Analyst

Grand Chum -- Executive Vice President, Asia Operations & Srutive Vice President, of Global Gaming Strategy

David Katz -- Analyst

Dan Politzer -- Analyst

Steven Wieczynski -- Analyst

Wilfred Wong -- Executive Vice Chair

Steve Wieczynski -- Analyst

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