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Takeaway: Q3 margins were solid but Wynn highlights mass margin pressures beyond Q3. Estimates for most of the Macau operators need to be reduced.

Q3 a beat but conference call downbeat



  • Mass gains offset VIP losses
  • Central govt very aggressive on corruption and misconduct
  • Still very bullish on Macau
  • Wynn Palace:  on target, on budget
  • Non-gaming offerings on new Cotai properties will be much better
  • Massachusetts: just finished casino design


  • Disappointed with market
  • HK protests disrupting business community
  • October 2014:  had perfect storm; lowest hold ever (had held 0.9% at one point)
  • Mass hold % was really high: have no clue on normalized hold - Hedgeye thinks the high Mass hold contributed to the better Macau margins and drove most of the beat
  • Smoking ban:  do have an impact but not major with respective to revenues
  • Mass increasing because of pressure to VIP? Yes.
  • Margin pressure in Macau? Yes. Competition is very intense resulting in either market share loss or margin loss.
  • Very dramatic capacity coming at Wynn Macau hotel: 2 new VIP areas in January 2015.
  • Mass market margins have been constant over last 3 quarters (+/- 100 bps) Have seen premium mass margins stabilize.
  • October:  more margin pressure going forward. 
  • $56mm incremental spend on Phase II Cotai:  1/2 of it due to pre-opening expense (incremental payroll/HR programs). Have protected contingency on construction budget.
  • VIP:  October is clearly worse than in the past
  • WYNN shares Adelson's thinking (LVS):  if they increase promotional allowances and it can add to the bottom line, he will do it even at the expense of lower margins.
  • Last month, WYNN raised Las Vegas rates by 18% to OTAs
  • Las Vegas:  hoping 2014 EBITDA  will be above >$500; want to have the most profitable hotel in Las Vegas
  • Japan:  not sure what will happen. Thinks the Japanese government wants a domestic operator.
  • Direct VIP Turnover was relatively flat YoY in 3Q; VIP collection has been steady.
  • Junkets are cautious and being conservative. People are not spending lavishly. High-end brands (e.g. Louis Vuitton, Chanel) reporting declines.