• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here


    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Blockbuster quarter in Macau. Even after normalizing the unexpectedly high Mass hold, the beat was still huge.


  • If there was a recovery underway, it was abandoned by the addition of inventory to Vegas, but in spite of that, room rates are up a little, occupancy is ok, and convention is up a lot.  Indicators are pointing up, but it's still very lackluster and disappointing.  However, 2011 will surely be better than 2010.
    • Well, they also have less room capacity to sell given the renovations
  • The market is Macau is very robust.  Their Cotai project will be the best thing that they have ever done.
  • Had the biggest CNY in Vegas in history with $16MM in table revenues. In China they also had a record night - casino win of over $46MM.


  • In Macau, the credit balance is outstanding with their associates. They reserve 3-4% on their own accounts for bad debt - in 40 years, they have never had exceeded their reserve. They are just as conservative with their junkets. They have never used credit as a marketing tool in Macau or in general.
  • $13MM bad debt provision - $11MM of that was in Macau and that was a function of business volume. So it was purely based on business volume.
  • On a volume basis, direct play, is always 10-15% of of VIP RC. This quarter, it was on the low end. They are adding 24 tables through 2 junket rooms which will open in 2Q.
    • By our math, direct play as a % of RC was 11%
  • The entertainment component of the Cotai project is far and away the best they have ever done
  • Corporate expense run rate level - 3Q is a better run rate - 4Q just had some development activity in the quarter
  • A little more than 50% of the cash is at the parent; rest is at Wynn Macau
  • Signing of the concession in Cotai?
    • Master plan for Cotai specifically includes Wynn's property as well as SJM's and MGM's site. However, they are still waiting for official approval.
  • Opening in Cotai - Late 2014 / early 2015 is Wynn's best guess but needs to wait on the government's approval
  • Everything is up in Macau and Las Vegas in Jan & Feb - and they are being lucky but in their range
  • They will definitely book btw 20-22% of their rooms as convention rooms in 2011 vs. 13% in 2009. Historically it was always btw 20-25%.
  • Competitor's new comping policy - doesn't really make any sense to them.  They have always been the most conservative with their comping policy.  There was a period when LVS and MGM were very aggressive with comping. Invariably, high comping policies end up picking up the "unworthy" and unprofitable customers... sort of like granting too much credit.
  • On the convention side, people relaxed about coming to Vegas
  • Infrastructure improvements to Macau -Hong Kong-Zhuhai-Macau Bridge will be huge for Macau. Left room in their plans to add more additional business that may come from this in the future
  • What was the unusual corporate development activity in the quarter?
    • No comment - would rather fill the call with deals that they have signed not spec.., don't want wild speculation on their call
  • Property growth at Wynn Macau was across the board not just attributed to the one junket added in the Q
  • Japan? No one knows about Japan yet.
  • Areas for growth in 2011:
    • Improvements in domestic business. Just remodeled the entire Vegas facility - spend $200MM in Vegas. Raising rates, and will finish renovations by April. Only 2-3% of their rooms are out of commission in the meantime.
    • First full year of Surrender and the new night club
    • Improved the cost side of F&B and should see the benefit of that
    • Full year of Encore Macau in 2011 also continued to modify their floor to accommodate the premium mass business and new VIP business. 
    • Think that they can do a lot better on the slot side as well. They restructured their slot operation - will be completed in 2 days.
  • Win per unit at the Encore casino in Wynn - 3x that of the general casino. Chinese customer base responds to intimacy.
  • $2.5BN is a comfortable budget for Wynn Cotai. Expect that the government's approval is not very far away
  •  Is credit extension too loose in the Macau market as a whole?
    • It appears that credit for a time was overextended and that some operators have more liberal credit decisions than Wynn's
  • Only holding at 1.9% in Macau in February so far... so that's why their market share dipped
  • Doesn't think that there is a current infrastructure capacity issue today
  • Impact of Galaxy Macau on the market?
    • Thinks it's a very ambitious project that will be well received and should be good for Cotai and the market given the hotel shortage on the weekends
    • Can't wait to see it next month
  • Have 9300 FTEs in Vegas and feel like that's a good number to handle any recovery- they have a pretty fixed cost structure 
  • Would consider developing something in the US in the not so distant future