The chairman and chief executive of Macau-based casino operator Wynn Macau Ltd, Steve Wynn, says he has no idea of when city-wide casino gross gaming revenue (GGR) performance – as measured in year-on-year terms – will again turn positive.
The firm is opening on August 22 the US$4.2-billion casino resort Wynn Palace, located in Macau’s Cotai district.
“We see what you see; I don’t know the answer,” Mr Wynn (pictured) said when asked by reporters to provide a forecast for a return to GGR growth in Macau’s casino industry.
Some investment analysts have hinted that August could be the first month of GGR increase in year-on-year terms for the Macau market since May 2014. Macau’s casino GGR for July fell by 4.5 percent year-on-year, according to official data. It was the 26th straight month of GGR retreat measured in year-on-year terms.
Mr Wynn was speaking at a press conference on Wednesday in Macau to preview the launch of Wynn Palace. He confirmed at the event that the property would feature around “50 to 60” VIP tables.
The Macau government last week said it had approved 100 new-to-market live gaming tables for the opening of Wynn Palace; all for the mass-market segment. The company would be granted an additional 50 new-to-market tables in two separate phases: 25 tables on January 1, 2017; and the remaining 25 on January 1, 2018.
Wynn Palace will open with approximately 350 gaming tables: Wynn Macau plans to transfer 250 tables from its property on the peninsula to the Cotai property.
Mr Wynn stated during Wednesday’s press conference that the focus of investors and media should not be on the amount of tables at Wynn Palace. Instead, “the focus should be on the amount of people that are here,” he said.
The Wynn Macau boss denied that the firm had applied for 400 new-to-market gaming tables for Wynn Palace. He stated that was the overall table capacity of the property. Media reports quoted Macau’s Secretary for Economy and Finance, Lionel Leong Vai Tac, stating last week that Wynn Macau had applied for 400 new tables for its Cotai property.
Throughout Wednesday’s media event, Mr Wynn highlighted several times that Wynn Palace aimed to cover all gaming segments, including VIP play and the mass market.
He said: “Our strategy is to make this hotel available to anybody, regardless of their income and their propensity to gamble… We cover all the rainbow of demand… Why do we want to turn our back on someone that wants to gamble for a lot of money?”
Rival casino operator MGM China Holdings Ltd is mulling having only mass-market gaming tables at its Cotai resort, which is currently under construction. That property is scheduled to open in the second quarter of 2017.
The Studio City casino resort, majority-owned by Melco Crown Entertainment Ltd, was the first large-scale gaming property in Cotai – and in Macau as a whole – to open without VIP rooms. The venue started operations in October 2015.
On a conference call on August 4, Melco Crown confirmed that the company is in the process of setting up rolling chip operations at Studio City, “including both junket and premium direct VIP offerings”, as it sought to improve the performance of the property.
Mr Wynn said during Wednesday’s preview press event that his firm had positioned Wynn Palace to offer a wide range of non-gaming entertainment.
“A casino is a passive place,” he stated. “Its value as a revenue source depends solely on how many people come through it and what their average per person spend is. What is dynamic in my business is the non-casino stuff: that is what brings people from afar.”
Wynn Palace – which Mr Wynn dubbed as “arguably the most beautiful hotel in the world” – would be themed around flowers, he said. The property features several large-scale floral installations to be changed on a regular basis. “People who come to Macau, they come frequently. So the building has self-change built into it,” Mr Wynn explained.
He also highlighted the many art pieces to be displayed in the public areas of the casino resort. Those include a set of four rare porcelain Qing-dynasty pieces known as the Buccleuch vases and a US$33.7-million steel sculpture by Jeff Koons.
“This hotel [has] a massive collection of Asian and European art,” Mr Wynn said. He added that the total value of artworks on display at Wynn Palace was over US$100 million.
Mr Wynn denied that the reason Wynn Palace had received fewer new-to-market tables than the two large-scale Cotai properties that opened in 2015 was because it did not feature enough non-gaming elements.
“That is not true,” he said. “The table allocation had to do with the cap.”
Secretary Leong had stated last week that the government’s decision on the table allocation for Wynn Palace was made based on “consideration of several factors”, including the new non-gaming features to be offered by the property.
The Macau table cap scheme, effective since 2013, is designed to limit compound annual growth in the number of new live gaming tables to three percent until December 2022.
The number of new-to-market tables granted to Wynn Palace is considerably lower than the 250 gaming tables allocated to, respectively, the opening of Galaxy Macau Phase 2, developed by Galaxy Entertainment Group Ltd; and to Studio City.
“The government has seen the hotel now – yesterday and this week,” Mr Wynn stated on Wednesday. “They are suitably taking note of what it has.”
He added: “But again, in some cases, the notion of diversity and non-gaming has been misunderstood. Non-gaming is hospitality; diversity is the offerings of the hotels and the diversity that they offer in terms of choice. A hotel is not diverse if it puts up a roller coaster.”
One of the main features of Studio City is a figure of eight-shaped roller coaster.
“We must not confuse amusement parks with family attractions,” Mr Wynn said. Instead, Macau and neighbouring Hengqin Island should work as “a unit”, with the latter offering rides and attractions for families with children, he suggested.
Mr Wynn also highlighted that his firm had no interest in entering a price war on room fees, at a time when three additional large-scale casino resorts are to open in Cotai over the next two years. “Macau isn’t about price; Macau’s about experience,” he said.
The Wynn Macau boss stated he expected the ratio of gaming to non-gaming revenue to “change dramatically” in Macau over the next few years. That was being positively affected by an increase in the amount of non-casino facilities available, the entrepreneur said.
He added: “We had a tremendous, swollen, abnormal [VIP gaming revenue] number in past years because of the junket activity. That has been reduced significantly… It is an adjustment in both directions: gaming revenue at the very top end goes down, and non-gaming revenue across the board goes up.”
No break-even estimate
On Wednesday Mr Wynn provided neither a forecast for when Wynn Palace might reach break-even, nor for other financial indicators of the property.
“The return on investment? I expect it will be fine. And I will find out what that is after we open,” he said.
Further land is available for development – a total of 11 acres (4.5 square kilometres) divided in two plots – at the Wynn Palace plot.
“At some point, we will take advantage of that, maybe sooner than later,” Mr Wynn said. He hinted at using part of the available land to build a botanical garden.
Some investment analysts have noted that the location of Wynn Palace – it does not border any of the main feeder roads on Cotai – could pose a challenge when it comes to attracting customers; particularly of the walk-in sort. Macau’s under-construction light rail system will have a stop in front the property; however, the project has been plagued with delays and is currently scheduled only to start operations in 2019.
“They are a little late with the light rail; they are a little late with the bridge,” Mr Wynn said. The latter was a reference to the Hong Kong-Zhuhai-Macau Bridge, which will span the Pearl River Delta and is due dramatically to reduce the travel time by road between those places.
“But the point is that they are building the light rail and they are building the bridge… They will get done with it, sooner or later,” he added.
Mr Wynn also took time to comment on the upcoming U.S. presidential election, to say he was not supporting any of the candidates, respectively Donald Trump and Hillary Clinton.
Earlier this week, Jim Murren, the chairman and chief executive of the U.S.-based casino operator MGM Resorts International, announced his endorsement of Democratic Party candidate Ms Clinton. It was reported to be the first time Mr Murren – a registered Republican supporter – had publicly endorsed a presidential candidate.
MGM Resorts is the parent company of Macau-based casino operator MGM China.
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"If the [Macau casino] concessions are put up for bid, there will also be a lot of giant Chinese companies, some having nothing to do with gaming, which would like to take over these enormously successful casinos”
Professor emeritus at Whittier Law School in California, in the United States, and a visiting professor at University of Macau