Q3 a beat but conference call downbeat
STEVE WYNN COMMENTS
- 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
Q&A
- 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.