Steve Wynn troubled by access to new resort in Macau
As good as revenue generation in Macau was for Wynn Resorts Ltd., Steve Wynn says it could have been even better if customers would have been able to access his newest property easier.
Wynn told investors in a conference call Wednesday that Wynn Palace, the 1,706-room resort with a 500,000-square-foot casino that opened in August, is stuck in the middle of multiple construction zones, hampering visitation to the $4.4 billion development that he calls “the most magnificent hotel we’ve ever built.”
“I didn’t realize how critical the blockade was until I tried to cross the street to the City of Dreams (another resort property near Wynn Palace),” Wynn said. “You take your life into your own hands when you try to cross the street with all the traffic.”
Riding the opening of the new property near Macau’s Cotai Strip, Wynn Resorts reported an 11.4 percent increase in revenue for the third quarter.
The company reported a net loss of $17.4 million, 17 cents a share, on revenue of $1.11 billion for the quarter. The loss was attributed to interest expenses and a decline in redemption note fair value. The results compared with net income of $96.2 million, 95 cents a share, on revenue of $996.3 million in the third quarter of 2015. A survey of 11 analysts anticipated earnings per share of 78 cents for the 2016 third quarter.
The company also announced Wednesday that it would pay a cash dividend of 50 cents a share on Nov. 29 to shareholders of record on Nov. 17.
The government of Macau is building a transportation system similar to light rail and one of the first stops on the route from Macau’s airport and ferry terminal is in front of Wynn Palace. Crews are building a transit station as well as a viaduct for the vehicles along Wynn Palace’s periphery. In addition, MGM Resorts International’s Cotai property construction site, scheduled to open in the spring, is across the street from Wynn Palace and the site for a project by Stanley Ho’s SJM Holdings is next door.
Wynn wasn’t critical of the work — and once everything is completed, Wynn Palace will have an easily accessible property. But he said the construction has produced challenges that have set the company’s marketing plan for Wynn Palace back.
“We want to be able to expose it to the people, but they have to be able to get there,” Wynn said. “Right now, that’s kind of a challenge.”
“The more progress they make,” said Ian Coughlan, president and executive director of Wynn Resorts Macau, “the more painful it is for us.”
Wynn explained that the company typically doesn’t provide a lot of detail about a new property until a soft opening. Once the doors are open, the company goes about tweaking areas of the property based on customer response.
Then, the marketing machine goes to work. Wynn said the construction delays have slowed that phase of the operation.
Still, casino revenue for the 40 days Wynn Palace was open for the third quarter was $146.7 million. In Las Vegas, net revenue was $427.1 million for the quarter, a 3.9 percent increase from $411.2 million for the same period of 2015.
Also during the conference call, Robert DeSalvio, president of Wynn Boston Harbor, updated that project and said workers have begun pouring foundations and excavating three stories of dirt below ground level for underground parking for the $1.6 billion resort being built in Everett, Massachusetts, outside Boston.
DeSalvio said construction began Aug. 3 and onsite steel deliveries are expected in December to build back-of-the-house and central utility areas for the resort scheduled to open in mid-2019.
The 629-room luxury hotel project has 325 workers on site and is on schedule, DeSalvio said.
Wynn also said he began some of the preliminary design work for his $1.5 billion Wynn Paradise Park project, the 38-acre lagoon and beach to be located on the current Wynn Golf Club course in Las Vegas.
Wynn said he is not concerned about the potential slowdown of cash flow from Macau to finance Paradise Park because some of the convention amenities could be built adjacent to Wynn and Encore and begin generating revenue before construction of the nongaming amenities even begin.
Wynn stock fell 6.1 percent, $5.87, to $90.65 a share in after-hours trading after closing at $96.52 in a light day of trading.
Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.
