This is a follow up to my previous article Las Vegas Sands Hasn't Folded Its Hand Yet
Last month, I traveled to Las Vegas to visit and observe Las Vegas Sands (NYSE:LVS) (Venetian), Boyd Gaming Group (NYSE:BYD) (Orleans, Coast Casinos), and several other properties on the strip. Given that the first weekend of the New Year is traditionally a very busy one for Vegas, I decided it would be the perfect time for a follow up. I opted to stay at the Venetian for this trip to get a better inside look at the customer experience and staff attitude as the hotel hosted the New Year's crowds.
On January 1st, I arrived at the Minneapolis airport and, as I checked in, inquired how full the flight was. As someone who has flown to Vegas over 30 times, I've found it to be oversold about half the time. I was told that my flight was full, but not oversold.
I arrived in Vegas around 5pm and jotted down observations as I made my way from the airport to the hotel. The train ride from the Northwest Airlines terminal to the main terminal was about half capacity, less crowded than expected. The car rental agency was not busy either but did have small lines. I picked up my rental car and navigated my way to the Venetian through the traffic on the strip (which was busy, as usual).
When I arrived at the Venetian, the front entrance was so crowded I had difficulty finding a valet. Once finally inside the hotel, I was greeted by an enormous check-in line mired in a maze of ropes and poles. Apparently the Venetian expects guests with the means to stay anywhere to wait in line to get to their rooms. I periodically did head counts of guests waiting in the check-in line during the course of my stay.
I had booked a suite on the concierge level, so I was mostly able to avoid the lines. I approached the concierge desk to check in, but found the staff busy helping other guests. I was, however, offered a drink and a place to sit while I waited my turn. The check-in procedure itself was quick, painless, and included a brief tour of the lounge and other amenities the hotel offers.
My suite was ok, but not quite what I consider a suite. It was a large room with a few stairs leading up to an elevated level separated by a half-height rod iron fence. For entertainment, the room had two very large flat-panel TVs, which were very nice. There were apparently extra fees for internet access, however. I'm not sure if this is a simple oversight by the hotel or if they actually expect their premium guests to pay for internet service, but the Venetian is the first hotel I have encountered that does not offer internet free of charge to concierge level rooms.
The quality of service that the concierge staff provided was above and beyond my expectations. Their attention to detail, as well as their professionalism, revealed the staff members to be of the highest caliber, the gold standard that other hotel staffs should strive to reach. Granted, I'm not a very demanding customer, but every request I did make was met with an effortless, can-do friendly attitude.
I did a walk through of the canal shops, finding them busier than they were during my tour in November, but by no means impressively busy. I also did several head counts during my walk-throughs of the casino floor and found them to be weekend standard busy, as usual. Both the machines and the card tables appeared as they normally do on the weekends, though the craps tables seemed to draw lighter crowds than I'm accustomed to seeing. I also did several checks of the large poker room and found that it usually had a waiting list, even late at night. The sports book was very full, impressing me with how many people were crowded into the room. The reward player sign-up location had a considerable line each time I checked, except late at night.
The tables games had what I would consider to be a relatively high "smile ratio." While walking through casinos, I note the number of smiling versus non-smiling dealers. In most casinos on the strip, I typically see over 20 dealers not smiling for every one that does. In off-strip casinos, so few dealers smile that it's easier count the few that are smiling instead. The Venetian scored relatively high in this regard, rating 10 non-smiling to 1 smiling dealer during my random samplings of the staff working the tables during my walk-throughs. For comparison, the best ratio I have observed was at the blackjack tables at Harrah's. In their section where the dealers dress in street clothes, loud music playing in the background, I noted every third dealer smiling at the customers.
My dining experience at Woo's Chinese restaurant left something to be desired, as the staff seemed unable to adequately accommodate its guests. For my dining guest and I, over an hour and thirty minutes elapsed between being seated and getting our check, and the restaurant was only half full. It took so long for the guests at the next table to have their order taken that they left the restaurant after finishing their complementary water. Following our meal, the waiter took it upon himself to assume a 15% tip and add it to the bill, which I found presumptuous to say the least. My experience at The Grand Lux Cafe was, in contrast, very good. The staff was friendly and attentive and the service was quick.
On Sunday morning at 6am, I checked out of the Venetian. Once again, working with the staff on the concierge level made this a very easy and pleasant experience. In the course of my stay I asked guests staying in regular rooms what their thoughts were and uniformly they stated that they were also satisfied with their experiences and the standards of the hotel and that they were indeed enjoying their stay.
In total, my first hand observations were consistent with my previous analysis. I believe the LVS stock is being incorrectly priced below its true value. Furthermore, LVS announced this week that funding for Singapore is complete and revenue is expected to appear by first quarter 2010. I may travel to Macao to check progress on construction and assess the impact of the Chinese restrictions on visas, which were not firmly in place during my last visit. Sooner or later, the Chinese will see the error of trying to micromanage such things, but the wait could be a long one.
Although LVS has seen its lows and it may be a bumpy ride up, I feel bullish in my risk versus reward analysis. I predict the price will more than double by the start of 2010, with most of the gains occurring in the second half of 2009. The very recent price action suggests the market also believes that LVS will weather this storm and emerge with nice gains for those willing to chance the possibility that LVS will fail. I intend to write put options against a fall in prices, as well as accumulate more of this stock during dips. I think the upside potential outweighs the risk of failure, especially with Singapore coming online.
Disclosure: Long LVS.