In preparation for WYNN's 3Q earnings release tomorrow, we’ve put together the recent pertinent forward looking company commentary.
WYNN MACAU ACCEPTANCE OF LAND CONCESSION CONTRACT FROM THE MACAU GOVERNMENT IN RESPECT OF THE COTAI LAND (09/11/11)
- Palo Real Estate Company (owned by Wynn) and Wynn Macau to develop ~51 acres of land on Cotai. The resort will contain a five-star hotel, gaming areas, retail, entertainment, food and beverage, spa and convention offerings on Cotai.
- Palo will pay a land premium of MOP1.55 BN and rental fees of MOP6.17MM to the government. The first payment towards the land premium will occur in the form of a down payment of MOP500,000,000 (approximately HK$500,000,000 or US$62,500,000) and the balance will be paid in 8 additional semi-annual payments beginning six months from the date the Land Concession Contract is published in the official gazette of Macau.
- Palo will lease the Cotai Land from the Macau Government for an initial term of 25 years, with the right to renew the contract
YOUTUBE from Q2 earnings call
- [Wynn Macau margin] “With increasing volumes, the margins are definitely going up, and on the VIP side, with our increasing individual program win, we’re seeing higher margins in VIP. We’re also seeing higher margins in the mass casino as we’re winning more in the mass casino. And it’s really across the board. So the 30% to 32% EBITDA margin for Wynn Macau feels very comfortable for us, we’ve been there for about three quarters in a row now and that’s about what I would expect.”
- “Basically, it’s the same customer. We have less equipment on the floor so that’s what’s going to drive up the win per unit….Quarter over quarter, we’re 12% down in equipment and 40% up in win. And the market obviously grew a lot. We just got our fair market share."
- “July, based upon our expectations, was going to be the worst month of the year. And we were going to experience soft midweek occupancy, and the weekends were going to be better, but July was the black hole. August, as conventions pick up with Magic show and the others around the end of the second week or the second week of the month, then we build momentum and we head into October where we’re sold out at much higher room rates, as you noticed, this year. And so we’ve been surprised in July by a better occupancy than we had thought. But what was surprising about it was that it showed up in the last two or three days, really late bookings this year in July. We’ve been picking up an extra 5 or 6 points of occupancy and in some cases, we went to full occupancy. It surprised us.”
- [July] “had much higher rate over last year”
- “October is going to be a dynamite month. We don’t have an inch of convention space that we can still sell.”
- “Domestically, we’re seeing the same business in ‘11 as we did in 2006 and 2007. The big increase in 2011 has been our international business, because our brand is growing in China, people are recognizing Wynn, so when they travel to America, the place they go to is Wynn. So we’re seeing a much broader market internationally….China represents over 75% of the international mix change.”
- “I think we have 11 or 12 villas that are being finished next month in the month of August. But we just finished $100 million worth of remodeling and another $100 million of additions and improvements.”
- “We’ll also have more rooms available because we were doing the remodel in most of ‘10….that’s 400 or 500 rooms here.”
- “So for 2012, we’re tracking on pace with where we were in 2011 for room nights. We’re obviously pushing a little rate. But we think it will be a good convention year in 2012….upside would be from price.”
- “If we were ever given the chance to be in business in Singapore, we’d be thrilled and delighted to bring our best work there.”
- “Wynn Resorts has debt of zero, and has had a debt of zero for several years. And we intend to keep it at zero. We have all the capacity to do any deal we want. See, by having a lot of cash in the parent, we can go to a new jurisdiction, infuse a subsidiary with a prudent amount of equity, make an intelligent loan that has got a reasonable ratio to the project cost, have low interest rate with long maturity, so we don’t get in the kind of trouble that our neighbors up the street have gotten into trouble on a couple of occasions.”