Steve Wynn Is Optimistic about Las Vegas, But Macau Represents Real Money
Steve Wynn says he is feeling good about the future of Las Vegas. He admits he was more concerned in the past about where America’s number one gambling city was headed. In fact, Steve Wynn has been one of the last holdouts among the city’s executives. Before now, he had been pessimistic about the Las Vegas Strip. That seems to have changed now.
When talking about Las Vegas, Steve Wynn appeared to be discussing his company’s operations in the city. The discussion began when he was in a conference call with industry analysts about his company’s first quarter results. The discussion centered around the numbers of Wynn Las Vegas and Encore.
Quarterly Revenues Total $380.9 Million
The total revenue for the two gaming resorts equaled $380.9 million. That represents a 1.5% decline from the same time in 2013. The Las Vegas numbers represented only 25% of Wynn Developments’ overall first quarter revenue, which came to $1.51 billion.
While a 1.5% decline in revenues typically causes Wall Street panic with investors, Steve Wynn appeared to be looking at non-traditional guages of success when projecting out the future of Las Vegas. Wynn pointed out the “average daily room rate” and “revenue per available room” as the economic indicators he liked.
Most Profitable Hotel in Las Vegas
Citing the RevPar data, Wynn said, “That makes us the most profitable hotel in Las Vegas.” He suggested the numbers show that Las Vegas is slowly growing into the added capacity it developed in the years just prior to the recession. Wynn added, “CityCenter and Encore opened at the worst possible time in the national economy.”
Gambling was not the only segment of the economy which got caught investing in major upgrades prior to the stock market collapse of September 2008. Still, many of the gaming companies which were building when they should have been entrenching have struggled mightily in the post-2008 economy. Foxwoods Casino famously built on to their resort just prior to the collapse.
The pronouncement by Steve Wynn is significant, because he previously disagreed with many other gambling industry executives who had predicted a rejuvenation for Las Vegas. To have one of the last holdouts make a positive prediction shows that the city’s recovery is significantly underway.
Wynn Macau and Wynn Palace on Cotai
Make no mistake that the future of Wynn Resorts is in Macau, though. Like the Las Vegas Sands Corp., a large majority of the revenues Wynn Resorts now collects are from its Chinese holdings. The opening of Wynn Macau in 2006 and Wynn Encore Macau in 2010 have boosted the company’s stock price and revenue stream significantly.
At present, Steve Wynn is concentrating on the $4 billion resort he is building on the Cotai Peninsula in Macau. When it opens in 2016, the Wynn Palace on Cotai will have 1,700 hotel rooms, a spa, retail outlets, restaurant with theater stages in them, and a performance lake. Part of the extravaganza will be a 25 foot tall Faberge egg. Wynn predicts it will be the “photo op of South China”.
Of the big four gaming companies, three are continuing to build in Macau. Las Vegas Sands, Wynn Resorts, and MGM Resorts all have developments in Cotai. Steve Wynn predicts big success for all three, though he is less optimistic about Caesars Entertainment. Wynn put it succinctly when he said, “They have other problems. Money problems.” At present, Caesars Entertainment is said to have over $22 billion in debt.
Kazuo Okada and Universal Entertainment File Complaint
Meanwhile, Japanese billionaire Kazuo Okada and his Universal Entertainment Corp. filed a complaint against Steve Wynn for defamation, circulation of rumors, and harm to public trust. The filing is a response to a report Wynn commissioned to detail his former business partner’s alleged misconduct in the Philippines.
In 2012, Steve Wynn bankrolled a report on the Universal’s conduct in the Philippines, which included a payment of $40 million to a Filipino consultant in 2010. An ongoing joint investigation by the Philippine government, the FBI, and the Nevada Gaming Control Board is investigating Universal’s interest in the matter. Reuters also reported an offer of compensation by the pachinko machine maker to a former employee, if that ex-employee retracted charges of bribery to the Filipino consultant.
Steve Wynn claimed the latest filing is an attempt by Kazuo Okada to distract the public from his current legal issues.
