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Here are our notes from the WYNN conference call.  We will have analysis in an upcoming post.

 

CONF CALL NOTES

  • Business is slightly better in Las Vegas given the shift in business mix
  • The beach club which just opened is doing great, as is the rest of their night club business which can do north of $150MM of revenues for them at 40+% margins
  • Encore Macau's opening was accretive to their quarter
  • Have 10% of the position in Macau and 17% of the revenue there. Their fair share ratio is 1.62x.
  • Cotai project design is complete, will start foundation drawings in a few weeks, so they are a little ahead of schedule with their development process.
  • Impact of the financial reform bill that President just signed - has the potential to have a catastrophic impact on business

Q&A

  • Vegas: They are starting to improve their rates as they become less dependent on the leisure business and trading it for the convention and group business which is trending at 17-18% of their rooms
    • They are taking 15-16% of the inventory out of commission as well though - so that really helps them increase the rate since they have less rooms to fill
    • Remove 400 rooms per quarter through January and then they will start their suite remodels
  • Asian business in Vegas has decreased but sustained better market share through their cross marketing efforts
  • Wynn Las Vegas will be all spruced up by Spring 2011
  • Hoping that they will have a lot more to show the investor community about their Cotai project either next quarter or 1Q2011
  • Any improvement in spend per occupied room rate in Las Vegas?
    • No - they aren't seeing any improvement
    • Only the nightclub business is doing great
  • When they finished design development in Cotai they noticed that they still had 12 acres left over, so they may do 2 phases. They are right across the street from MGM's site
  • Cash base business is up year over year and continue to see improving trends in July in Vegas
  • Wynn Cotai will be positioned consistent with their existing property- and do what they do best. It will have 1,500-1,600 rooms which will be bigger and more beautiful than anything they have ever built. They will have 500 tables and 1300 slot machines.
    • The extra 12 acres they haven't made any decision on what to do with it.  Their design only use 40 acres not 52.
  • In the convention segment, they are seeing some strengthening going into next year
  • Seeing some lift in food and beverage as a result of the club business, which is why they are adding 2 outlets - L'Cab (Nov 2010) and Lakeside Grill
  • Any impact from recent strength in the Euro?
    • Nothing. They got a small lift when the Euro was around $1.50
  • Ramp up of Encore Macau through out the quarter?
    • Accounted for all the expenses going into the opening.  They had everyone on payroll in 1Q2010
  • Wynn Macau generates 25% of the EBITDA in the market and 40% of the net income
  • Cost of the Wynn Las Vegas room remodel: $99MM + baccarat remodel cost
  • Doesn't think that anyone will open before them on Cotai aside from Sites 5 & 6 and Galaxy
  • Hold % of slots going up in Vegas?
    • They are changing the composition of their floor.  They've been removing some of the 99% payout poker games.
  • The reason the table drop per table is soft in Vegas is because there are so many tables. Customer acquisition costs are up because when their customers can't maintain their buildings and get desperate for customers they become very promotional. Promotional environment in Vegas is continuing into the 3Q.