Wynn Al Marjan to produce annual GGR of US$1.4bln: CBRE

Jun 06, 2024 Newsdesk Latest News, Rest of Asia, Top of the deck  

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Wynn Al Marjan Island, a casino resort project in the United Arab Emirates (UAE) being developed by global gaming operator Wynn Resorts Ltd, is likely to generate annual revenue of US$1.8 billion when fully ramped up, said a Wednesday note from CBRE Capital Advisors Inc.

“In 2023, [Wynn Resorts] management provided an illustrative property earnings before interest, taxation, depreciation, amortisation and rent (EBITDAR) range for Wynn Al Marjan Island of US$450 million to US$600 million,” wrote CBRE analysts John DeCree and Max Marsh.

They added, based on insight collected during a site inspection that took place last month: “We can’t help but get more bullish upon returning from our trip.

“We estimate Wynn Al Marjan Island to stabilise by 2030. However, the property could ramp much quicker given the current lack of gaming supply in the region. We are forecasting stabilised gross gaming revenue (GGR) of US$1.38 billion, net revenue of US$1.8 billion, and property EBITDAR before management fees of US$921 million.”

The Wynn Al Marjan Island (pictured in an artist’s rendering) – being developed in the emirate of Ras Al Khaimah – has been described as a US$3.9-billion venture involving local partners, in which Wynn Resorts is a 40-percent equity investor.

Wynn Resorts’ local partners for Wynn Al Marjan Island are Marjan LLC, and RAK Hospitality Holding LLC.

Craig Billings, group chief executive of Wynn Resorts, said recently that the group’s capital contribution to the UAE project would be around “US$900 million”. The project was as on track to “open in early 2027,”  the company confirmed last month.

Mr DeCree and Mr Marsh said in their note, and following a visit to Ras Al Khaimah on May 9, that construction of Wynn Al Marjan Island was “progressing unabated”, with “five floors out of the ground”.

CBRE also noted that since Wynn Resorts and its local partners had announced the Wynn Al Marjan Island project, investment in Ras Al Khaimah and Al Marjan Island in particular had “spiked”.

“Nearly all the available land on Al Marjan Island is spoken for, and plans for a beach district and central business district are underway, further enhancing the long-term outlook of both Ras Al Khaimah and Wynn Al Marjan Island,” the institution said.

CBRE’s analysts stated that it appeared “consensus was forming around a mid-30 percent property margin” for Wynn Al Marjan Island.

“However, we believe property margins could be in the 50-percent range, based on our expectation for an operator-friendly regulatory regime (including low GGR tax rate), virtually no competitive supply in the region, and an already robust tourism industry with a high propensity to spend,” they said.

“Spacious gaming floor”

Facilities at Wynn Al Marjan Island are due to include a hotel with 1,542 rooms, including 22 private villas on a marina adjacent to the resort. The property will also feature a 7,500-square-metre [80,729-sq-feet] events centre, a 15,000-sq-metre retail venue, 22 restaurants and bars, and a theatre, according to Wynn Resorts.

CBRE estimated that non-gaming revenue could comprise “almost 40 percent of total revenue at Wynn Al Marjan Island”.

The property is also expected to have a “spacious gaming floor,” stated the institution’s analysts.

“Wynn suggested the gaming floor at Al Marjan Island could be 4 percent of gross floor area, which would equate to about 224,000 sq feet [20,810 sq metres],” they observed.

“This would suggest plenty of room for over 3,700 gaming positions,” suggested Mr DeCree and Mr Marsh.

They added: “It’s unclear yet if there will be slot or table caps, but we suspect Wynn will have plenty of space for adequate gaming supply. Our model assumes 275 table games and 2,083 slots as a starting point.”

CBRE forecast in a separate report, also issued on Wednesday, that the total addressable market for GGR in the UAE “could be upwards of US$8.5 billion given the potential significant untapped gaming demand.”

That was on a base scenario of three integrated resorts in the region, respectively in Abu Dhabi, Dubai, and Ras Al Khaimah.

“We believe these three integrated resorts could generate around US$6.0 billion of GGR collectively, depending on location, scope, and operator,” the institution added.

Although legislation to allow gambling has yet to be passed by the local authorities, Wynn Resorts has previously stated the scheme is to include gaming facilities.

Jim Murren, a former chairman and chief executive of MGM Resorts, was in September appointed chairman of a UAE body called the General Commercial Gaming Regulatory Authority (GCGRA). It will be responsible for regulating commercial gaming, and a national lottery.

Mr DeCree and Mr Marsh said in Wednesday’s memo: “We foresee an operator-friendly framework allowing one integrated resort per emirate (at the emirates’ discretion), though details remain in-flux.”

They stated: “Wynn Al Marjan Island in Ras Al Khaimah will be the first UAE integrated resort and is on pace for an early 2027 opening. Abu Dhabi appears to be the likely second mover in the country, with Yas Island a logical location for an integrated resort given its existing tourism focus.”

“In Dubai, ‘The Island’ project at Jumeirah Beach is a logical contender for a possible integrated resort, where MGM Resorts is the development manager and has a non-gaming management contract,” they added.

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