Global gaming operator Wynn Resorts Ltd will fork out about US$900 million for construction of Wynn Al Marjan Island, a casino resort project in the United Arab Emirates (UAE). That is according to an estimate made by Craig Billings, group chief executive of Wynn Resorts, which is also the parent of Macau casino operator Wynn Macau Ltd.
“The total budget [for Wynn Al Marjan] is around US$4 billion. Budgets [can] move here and there, but no substantial movement” in this case, stated Mr Billings on the group’s Tuesday conference call to discuss the first-quarter earnings released the same day.
“Our capital contribution will be, [in] round numbers, US$900 million; that heavily depends on the construction [project] leverage,” he added. “So, we’re in the midst of figuring that out now. But you can figure something like 50-50 debt to equity, and then we would be 40 percent of the equity.”
In the first three months of 2024, Wynn Resorts contributed US$70 million of equity to the Wynn Al Marjan project, “bringing the total equity contribution to date to approximately US$160 million,” said on the call Julie Cameron-Doe, Wynn Resorts’ chief financial officer.
On Monday, Wynn Resorts stated in a release that the UAE project was on track to “open to the public in early 2027”. It is being built in Ras Al Khaimah, part of the UAE, in the Middle East.
Although legislation to allow gambling has yet to be passed by the local authorities, Wynn Resorts has previously outlined thst the scheme is to include gaming facilities.
On Tuesday’s call, Mr Billings said regarding the casino legalisation process: “There are regulatory requirements… before we can open the doors. And so we expect that we will meet those regulatory requirements and receive the necessary approvals in due course.”
Thailand opportunity
The CEO also said the group was “actively considering greenfield development opportunities in New York City and potentially, Thailand”.
“In Thailand, it’s early days and we have yet to see the regulatory and licensing structures,” observed Mr Billings.
He added: “Thailand is already a major tourism destination with significant tourism infrastructure and a world-class service culture. So, we will continue to closely monitor advancement of the legalisation process.”
In late March, Thai lawmakers supported a study recommending casinos be permitted in large entertainment complexes proposed for that nation.
Thailand’s Ministry of Finance is leading work to examine the feasibility of legalising casino resorts in the country, with the likelihood of a report being submitted this month to the cabinet.
Regarding Thailand, Mr Billings said the group would “need to understand if the regulatory structure, the licensing structure, and the bidding structure are all going to be consistent with other jurisdictions that are considered best-in-class”.
He stated: “I think it will be a competitive process … we are very confident in our capabilities given the strength of the portfolio as it exists today and the talent that we have in this business.”
Wynn Resorts has also affirmed it will be a contender for one of three downstate New York licences. “Despite the elongation of the request-for-application submission process in New York, we remain intrigued by the prospect of a Wynn resort in Manhattan,” said the CEO.
Macau strength
The executive said that in Macau, the casino firm “continued to punch above” its weight in terms of revenue per hotel room, “generating meaningful market share and substantial discretionary free cash flow”.
“The strength in our business has continued into the second quarter,” he added.
According to the CEO, the group’s “mass drop per day in April increased 30 percent versus April 2019, and on the non-gaming side, our hotel occupancy was 99 percent”.
“We were also pleased with results during May Golden Week, particularly in light of unfavourable weather in the region. In the casino, mass drop per day increased 30 percent versus the comparable 2019 holiday period and approached levels seen during the last Chinese New Year,” stated Mr Billings.
The executive also said the company reinvestment in terms of players “can move 50, [or] 75 basis points in any given quarter, depending upon what we are trying to achieve”.
Mr Billings said the company had “began initial demolition and construction work” on a second concession-related project, the so-called Destination Food Hall.
“We are well into design and planning for our other major concession related capital expenditure commitments, including our new event and entertainment centre,” he added.
Wynn Resorts’ management expects capital expenditure related to its 10-year concession commitment to the Macau authorities “to range between US$350 million and US$500 million in total between 2024 and the end of 2025”.
Ms Cameron-Doe said the Macau business had opex [operational expenditure] of US$2.63 million per day in the first three months of 2024, “still well below first-quarter 2019 levels, and only up 3 percent sequentially”.
“The opex increase is well below the 10 percent increase we’ve had sequentially in operating revenue,” she added.
