Portfolio of Kimberly Johans

A collection of articles created during my stint as a journalist at The Macau Daily Times

Wynn Macau plays key role in huge revenue jump

Posted by Kimberly on August 8, 2007

By Kimberly Johans
Published in The Macau Daily Times
August 08, 2007, page 5 (900 words)

 

The opening of Wynn Macau was a key reason for the Las Vegas-based company’s impressive second quarter figures, which show a 151.5 percent rise in revenue.
Net revenues for Wynn Resorts for the second quarter of 2007 were $687.5 million, compared with $273.4 million in the second quarter of 2006.
In addition, the gaming company has swung back into the black after posting an adjusted net income of $100.8 million or $0.92 per diluted share for the quarter, reversing a loss of $4.9 million, or $0.05 per diluted share in the same quarter last year.
Shares in Wynn Resorts rose 6.3 percent or $6.33, to close at $107.39 on earlier this week prior to the release of the quarter figures; they spiked in after-hours trading following the earnings release, to 9.4 percent or $10.11, to $117.50 per share.
Wynn Macau posted net revenues (after discounts and commissions) of $352.5 million in the second quarter of this year with operating profits of $92.7 million.
Their adjusted property EBITDA includes $3 million to $4 million of expenses associated with the expansion.
A staggering total of $9.3 billion changed hands in the casino’s VIP rooms for the period, of which the casino’s table games win percentage (the amount it holds) was about 3.3 percent, above the expected range of 2.7 percent to 3.0 percent.
As a measure of comparison, Wynn Las Vegas’s operating income increased to $63.42 million from $22.14 million, while for Wynn Macau, the operating income rose to $53.22 million from an operating loss of $20.48 million last year.
As well, Wynn Las Vegas recorded a 97.0 percent room occupancy rate for the second quarter of 2007, as opposed to 95.7 percent at the time time last year.
Wynn Macau posted an 86.2 percent occupancy level. No figures were available for the same period last year.
The revenue per available room for Las Vegas is reported as being $301 for this year’s second quarter as opposed to Wynn Macau’s $222 per room for the same period.
The report also focused on Wynn Macau’s expansion suggesting that the casino will open approximately 20,000 square feet of additional gaming space and one restaurant in the second phase in the third quarter of 2007.
In a conference following the release of the quarter figures, Chief Executive Steve Wynn blamed “sloppy communication” as the reason why the public believed that Wynn Macau was delaying its full expansion because of concerns about the numerous casino openings and the new visa travel restrictions.
He said that the delay was due to the need for a more up-scale expansion “that we had learnt would be more responsive to the type of trade we’ve attracted there, which can pretty much be described as the top end.”
He added that “we’re not backing off at all, as a matter of fact we’re pressing ahead.”
The company expects to open an additional 20,000 square feet, increase the gaming tables from 248 to 380 and add 1,200 slot machines from the initial 443 by Chinese New Year.
Mr Wynn also suggested that the company have set aside the 52 acres of land on the Cotai Strip for future development.
As for the Diamond Suites, he stated that they are still in the design phase, but have put out a broad project budget of “about $560 million to $600 million and a time-line of opening in early 2010.”
He added that there would be over 400 villas and suites, with none of the rooms being “typical.” Also included will be two VIP casinos that will hold about 15 tables each and two new restaurants as well as more retail stores underneath the tower.
He added, “that won’t be ready for quite some time, while we do some deep foundation work and all the land-fill.
“But all the rest  of the expansion that we’ve already built will be open and fully operational  with the staff that we’ve been carrying since last winter by January. We’re right on schedule.
“We’re setting sail with that program against all competition in the market and feeling very good about it,” he said.
When pressed about the effects of the visa restrictions, Mr Ronald Kramer, President of Wynn Resorts expressed concerns but said that it was still too early to really say what the impact was going to be.
He added that there had been very little impact in the current quarter, suggesting that the company was still looking at the outlook in the market, particularity as additional restrictions are due in August and later this year, but that “clearly there’s been no immediate impact of those restrictions.”
Finally, Mr Wynn likened Macau to Atlantic City, pointing out similarities in their proximity to big population areas, the fact that people are able to reach them easily for an evening or a day and that the average stay is much shorter.
He added that Las Vegas’ current profile is a mix of 45 percent gaming and 55 percent non-gaming revenue but that while Macau will change its profile, this sort of mix won’t be seen right away.
With the Venetian soon to open later this month, it will be the best demonstration of how close that mix may get.
“If there’s ever a chance, we’ll see it first [there], because in our current facility, we can never match the non-gaming offerings that are being presented at the Venetian,” he said.

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