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As we wrote in our preview on 4/7/2011, we believe WYNN had a big Q1 in Vegas and Macau.  In preparation for WYNN’s Q1 earnings release tomorrow, we’ve put together the pertinent forward looking commentary from WYNN’s Q4 earnings call. 

 


YOUTUBE

MACAU

  • “We’ve been adding junket operators, and we’ve got one or two more coming this spring [2Q].”
  • “With two additional junkets, you could see that ratio [10-15% direct] go to the lower side, for sure. But the direct business is still up, well over 50% for the year, and is continuing to grow. But Linda grows them one customer at a time.”
  • “In Macau, the credit balances outstanding with our associates in the junket business are very large. We, on our own account, reserve 3% or 4% for bad debt.”
    • “Our reserve as a percentage of receivables is 47% right now in Macau, which is very, very comfortable.”
      • Q: How does that compare to the other operators?
        • A: Much higher
  • “And I’m hoping that we can get started in March, or April, at the latest. It’s a landfill, as you know, at Cotai, and so there’s remediation that takes place for the foundation work that adds six or seven months to normal construction time.”
  • [Cotai opening] “I think late ‘14, early ‘15 would be my best guess.”
  • [2011] “Somewhere between 20% and 22% of our room nights will be convention this year.”
  • [Wynn Encore Macau] “There’s actually still room to grow there. So, especially on the weekends, we were always capacity-constrained with our rooms, so adding the 414 rooms and suites really helped us out. Another thing that we’ve done is, as everybody’s mentioned, we’ve added some junkets. And, in fact, we continue to modify our floor, to increase capacity with both our VIP and, especially, also our high-limit mass areas. That’s been extremely well received.”
  • “We actually built spaces [in Wynn Encore Macau] that were smaller on purpose. And you just heard what Matt said, what’s the multiple?....Three-and-a-half times for fourth quarter and two-and-a-half times for the year…. Also, there’s a lot of opportunity in our slot revenue. We’ve restructured our slot operation for 2011. It will be completed here in a few days, and we’re going to have a jump there.”
  • [Cotai] Well, now that the plans are finished, it’s in the hands of Wynn Design & Development to create a construction budget, and that process has just begun, and I’m not quite ready to say, but I think $2.5 billion is a comfortable number for us. We’d have no compunction about spending that kind of money on the facility, with all of its entertainment potential. And so – and as far as I mentioned a few minutes ago, as far as when we get started, that’s up to the government. They’ll tell us. And I expect that it’s not very far away.” 
  • “I would not tell you that our credit has loosened. I would say that our business volumes have increased. We’ve kept our reserve methodology the same throughout, and we’ll continue to do so in the future. We continue to be very prudent about junket partnerships. We have more people interested than we require, and we add very organically. We’re very careful in our due diligence, and the relationships we have with our junket partners are true partnerships.” 
  • “I think if you look at the very peak times that happen in the city over the Golden Week holidays, everybody manages to get in. We’re able handle incredibly high volumes. I think the infrastructure side of things is a bit over talked about. There are good things happening in the next 18 to 24 months. We have the Pac-On Ferry Terminal goes through a considerable expansion. The Gongbei border gate is increasing capacity of daily arrivals by up to 60%. And there’s more ferry services being put online to Macau. So the market seems to be able to handle the additional customer arrivals, so I don’t foresee an imminent problem. And the beauty of Cotai coming on stream in late ‘14, early ‘15, is the monorail system will be up and running from the Pac-On Ferry Terminal around our property on two sides. So the government has reacted. There’s more taxis in the marketplace. Macau is a small city. When it’s very busy, it does get a little bit choked at key times, but that’s the same everywhere in the world.” 
  • [Galaxy Macau impact] “It should be good for the market, too, because the market does not have enough hotel rooms to accommodate the people on the weekends. So I think it will be good for Cotai and good for the market overall.” 

 

VEGAS  

  • “Our room rates are up a little. Our occupancy is okay. Our convention bookings are ahead of last year. I’m saying that these indicators are pointing up. Slots are still weak, but the indicators about visitation and room rate and convention bookings, which are very important for the mid-week period, are pointing up.”
  • “In terms of areas of opportunity for growth in 2011, we’re continuing to see improvements in domestic business, and so we’re seeing lots of opportunity there. Obviously, Matt already talked about the convention opportunities that we have here in Las Vegas. We’re expecting that to really help us on the room side this year.”
  •  “We raised rates – we have just remodeled the entire Wynn facility.  We have between 2% and 3% of our rooms still under remodel. We finish by April, the end of April. And the amount of rooms that are out of order – suites and villas – is down to 2% or 3% now, so it really doesn’t matter a lot.”
  • “We are running at around 9,300 FTEs right now, and we think that is a good run rate, even if business volumes do increase. So our fixed costs right now, we feel pretty comfortable with, and any increase in cost should really be more on the variable side. So that’s the beauty of these hotels with operating leverage, as things get better, your margins get better.” 

 

GENERAL

  • [Corporate expense] “Better run rate is closer to the third quarter – which was, excluding stock-based comp, around $18 million – as a run rate going forward.”
  • “So at 12/31, about half of the cash is at the parent – a little more than half – and the rest is at subsidiaries, mainly Wynn Macau, which was $1.3 billion.”
  • [Q] “I believe you said that it would be a very long time before you would develop anything in the United States again, and I wondered if you still think that’s true.”
    • [A]I don’t still think it’s true. I changed my mind.”