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In preparation for the WYNN Q2 earnings release on July 29th, we’ve put together the pertinent forward looking commentary from WYNN’s Q1 earnings release/call and subsequent conferences.

Wynn Las Vegas Pre-announcement

On July 21st, Wynn Las Vegas pre-announced their results ahead of a new issue and tender for their 2014 notes.  For 2Q2010, Wynn Las Vegas reported net revenues of $318 million and Adjusted property EBITDA of $65.1 million.

  • “The EBITDA decline in the second quarter of 2010 is primarily attributable to higher healthcare and other employee benefit costs, customer acquisition expenses, as well as repairs and maintenance costs to preserve the property's overall quality.”
  • “Table games drop decreased 1.8% from the comparable period in 2009 to $485.9 million and hold percentage declined modestly from the 20.7% reported last year to 20.0% in the current quarter.”
  • “Slot machine win of $41.1 million was 1.8% lower than the comparable period in 2009.”
  • “Wynn Las Vegas achieved an ADR of $197 for the quarter, compared to $218 in the second quarter of 2009. The property's occupancy was 92.6%, compared to 86.6% during the prior year period, generating REVPAR of $182 in the 2010 period (3.2% below the second quarter of 2009).”

 

Post Earnings Conference Commentary

  • “Unfortunately, the market in Las Vegas is not so good. So outperforming here hasn’t really meant a whole lot. And our tone has been from the beginning of the financial crisis, in 3Q08, pretty much the same: we think that things are not getting worse in Las Vegas, particularly this year. We think summer is going to be tough and for us to make any real forecast of any recovery right now is premature. It’s not the right thing to do. This market’s been bombed with new supply and there’s another high-end hotel opening in December.”
  • “For us to make any call on Las Vegas right now on a turnaround would be premature. I don’t think anybody is really seeing that. You can point to 4 or 5 good things, yeah, we’ll have more convention room nights booked than we did before. But in the end, everybody’s rates have been cut in half and to retrain customers to get that leverage back, it’s going to take a long time.”
  • Macau:  “May looks like an unbelievable month, maybe the best ever.  I don’t think that’s news to anybody in this room. What might be news is that Encore has been very well received. It opened April 21.... We expanded our total VIP capacity by over 40%, and it has been very well received.”
  • Cost of room renovation at Wynn Las Vegas: “I can tell you it’s less than, just in terms of scale, it is less than $100 million.”
  • Las Vegas:  “The summer, I think, is going to be tough, as I said. I think a lot of people had maybe hoped that the summer would be better, but hope doesn’t seem to pan out in this town. People have been hoping that things will get better for years. Convention business, like I said, the lead volumes are up, bookings are up, all those things are back. So there are small; they’re encouraging signs but in terms of rate, increasing rate and things like that, we may have a slight increase. That’s plausible. People are saying by the end of the year.”
  • “What I would say is that City Center has impacted the market in terms of rate and occupancy. Without a doubt they have. It’s more capacity and they’ve been leading with price. They are priced lower than Bellagio and lower than Wynn and it’s hard when more product comes on and it’s a nice product. It’s fine. Our customers have continued to prefer Wynn, is what we’ve seen.”
  • “We haven’t cut our service levels like we could have. We’re running 9,300 FTEs here. That’s a lot. I think ARIA just announced they wanted to go to 6,000. That’s a big difference. Maybe they can, maybe they don’t need as many people to offer the same level of service. I don’t know, but – oh, it’s at 60% occupancy too.”

 

1Q2010 Earnings Release/Call

Vegas

  • [About rate in Las Vegas] No, we’re not seeing any real improvement in rate going forward, it’s fairly stable. Our feeling is that with the growth in capacity that we absorbed in the early part of the first quarter, that’s impacted rates city-wide, certainly for us, and we don’t see that really changing through the summer.”
  • Why slot handle was so weak?
    • A: “The comp was a bit tough because we were going up against the opening of Encore where we had a tremendous amount of novelty and local traffic that came through the building and so we benefited from that. And then we are…nearly done with constructing our new Beach Club which basically closed down the whole front of Encore which has impacted what walk-in traffic we were able to generate off of the strip… And that comes to an end in four weeks (end of May).” 

Macau

  • “So we’re going to build on Cotai… We will build the destination resort and that will complement the other things that we’ve built in Macau up till now. But …it wouldn’t open until 2014.”
  • Q: “What happened with controllable costs in Macau during the quarter?”
    • A: “I think it’s a little over $1 million a day run rate versus 990 or so in the fourth quarter.”