In-depth Company Case Analysis of Las Vegas Sands Corporation
Las Vegas Sands Corporation is a large casino and resort company located in Paradise, Nevada, United States. In its portfolio, the company has multiple resorts in America and Asia. The various resorts it owns offer gaming and entertainment, accommodation facilities, restaurants, clubs as well as convention and exhibition facilities. One of the main issues facing this company is its heavy reliance on Asia with regards to financial returns. This a major issue that the management should address if it’s to continue surviving in the market for a long time to come. According to Prentice, C., & Zeng, Z. (2018) China, Singapore and more other Asian countries have experienced a major growth in the tourism, gaming and casino industry over the past few years than ever before. Due to this large growth in Asia’s gaming market in the recent years, it has been reported that there is no company that has benefited from this development as much as Las Vegas Sands (Travis Hoium, 2019). If an economic recession occurs in Asia, the problem is that Las Vegas Sands Company will soon start having a decline in revenue. Losses and closure of some resorts may occur because this company does not have the high-end customers to depend on but its competitors such as Macau Resorts do. According to a 2019 report by The Motley Fool, a financial and Investment advice company, only 12 percent of Las Vegas Sands’ earnings came from the U.S. The rest was earned from its investment in Asia. This heavy reliance on returns from outside the U.S is very risky and it’s a problem that needs to be dealt with by the management. No business can be 100 percent resistant to the effects of recession, Zheng, T., Farrish, J., & Kitterlin, M. (2016).
Another issue facing Las Vegas Sands still lies in the fact that it relies so much on China or broadly on Asia for growth. Currently with the outbreak of coronavirus pandemic from February, 2020 which has since not only affected China but the rest of the world as well, there have been restrictions by authorities on citizens and businesses across Asia and the U.S. This has therefore had a negative impact on the gaming, entertainment and resort businesses in which Las Vegas Sands has largely invested in. In the midst of public health crises, people suffer, lives are lost and businesses are also largely affected especially the tourism, gaming and restaurant businesses (Ying, T., Wang, K., Liu, X., Wen, J., & Goh, E. 2020). Las Vergas Sands is thus not an exception with regard to companies that will record big losses during such periods.
However, Las Vegas Sands being one of the leading firms in its industry, this gives it some strength that can enable it to be immune to some negative conditions in the market compared to its competitors. It can use this strength to protect its market share effectively and be able to penetrate into new markets. This company also holds an impressive track record of integrating some complimentary firms through mergers to boost its business operations, Giesel, G. M. (2017). Its major weakness is its reliance on China for most of its returns on investment. It thus has no control over the flow of earnings because market conditions in Asia may change anytime. Another weakness is that the company has gaps in the product range it provides to customers which gives it a comparative disadvantage with its competitors. (Horner, S., & Swarbrooke, J., 2016). With stable free cashflow, Las Vegas Sands can explore the opportunity to venture into adjacent product lines and expand its revenue. Lastly on SWOT Analysis, Las Vegas Sands faces the threat brought about by new technologies advanced by its competitors in the casino market. This can impact negatively on its market share as well on its revenue.
The following recommendations will help Las Vegas Sands Corporation to reach new heights. First, this company’s management should strive to capitalize on its splendid performance in new markets and be able to penetrate into other gaming markets apart from Asia such as Europe and Africa. This will help the company build a new and larger revenue stream and diversify its risk in the economic cycle of those markets in which it carries out business. The company further needs to invest in new technologies to be at par with its main competitors in the market. Through this it can rest assured that its cashflows will remain consistent for a long time in the future.