GGRAsia – Wynn Macau losing US$2mln a day, optimistic about rebound

Wynn Macau losing US$2mln a day, optimistic about rebound

May 07, 2020 Newsdesk Latest News, Macau, Top of the deck

The slow business environment in Macau is costing Wynn Resorts Ltd between US$2.0 million and US$2.5 million a day, said the group’s president and chief financial officer Craig Billings on an earnings conference call on Wednesday. Wynn Resorts, the parent company of Macau casino operator Wynn Macau Ltd, reported a loss for the first quarter this year.

“Until the reimplementation of visa schemes and full reopening of transit to Hong Kong, we expect the daily burn rate in the US$2.0 million to US$2.5 million range in Macau, excluding interest and capital expenses,” Mr Billings said.

He added that firm had enough liquidity to face such losses. “In Macau, were had approximately US$1.8 billion of available liquidity at April 30, following withdrawing of our revolving credit facility in February.”

Despite the current negative performance, management at Wynn Resorts and Wynn Macau stated it was optimistic that business could resume once travel restrictions into and out of Macau are eased. The group pointed to domestic tourism volumes in mainland China during the recent Labour Day holiday as a sign of demand for tourism products.

“We saw Chimelong’s resort, just a stone’s throw from Macau, absolutely packed over the main holiday,” noted Ian Coughlan, president of Wynn Macau Ltd. That was reference to themed park Chimelong International Ocean Resort, located next door to Macau on Hengqin island – a piece of mainland territory touted by the mainland authorities as a non-gaming tourism centre to complement Macau.

Mr Coughlan added: “There are people that want to come [to Macau's casinos] and once the border [restrictions] ease, we will have players.”

“The Macau volumes have really not been there” because of travel restrictions in or out of Macau, said the group’s chief executive Matt Maddox. “We would anticipate, as everyone else is, that progress will continue in terms of reopening the borders in a cautious way, resuming tourism in a cautious way,” he added.

Mr Maddox said that the Wynn group’s management was “optimistic about what is going to happen in Macau” amid the authorities “cautious” approach to the border-reopening process. He praised the Macau and mainland China authorities for the way they respectively handled efforts to control the Covid-19 pandemic.

Mr Maddox said Wynn Macau Ltd was well positioned to benefit from an easing of border restrictions, as its properties focused on premium clients, meaning the firm’s business model was not reliant on high volumes of customers.

He said that based on the company’s experience following casino reopening in Macau in late February – after a mandatory, market-wide 15-day closure – the VIP and premium segments had been the ones coming back faster. However, Mr Maddox added, the trend was disrupted by more stringent travel restrictions introduced in March.

“There is clearly pent-up demand for activity,” Mr Maddox said. “I do believe that there will be demand for Macau, without a doubt.”

He added that during the downtime caused by the Covid-19 pandemic, Wynn Macau Ltd had “continued extensive design work” on its Crystal Pavilion project, a new glass-and-steel extension within the grounds of Wynn Palace in Macau’s Cotai district. Wynn Macau Ltd has previously stated it expected construction to begin late in 2021.

During the conference call, analysts also questioned Wynn group’s management about junket liquidity in Macau. Mr Maddox admitted it was hard at this stage to provide forecast on the matter, but he added that “it does seem like the larger junket operators are still okay on the liquidity side.