Wynn Palace location challenging pre- light rail: Nomura
Attracting foot traffic to the soon to be opened Wynn Palace (pictured) is likely to be “challenging” until a light rail system serving Cotai is completed, said a note issued on Friday by Japanese brokerage Nomura.
“Attracting walk-in customers could be challenging,” said the brokerage, referring to the US$4.2-billion Wynn Palace, which is likely to open in the third quarter, although the developer Wynn Macau Ltd and its parent Wynn Resorts Ltd have not yet confirmed a date.
“Macau is hot and muggy. It could take 20 minutes to hoof it [walk] from the Venetian [Macao], for example, to [Wynn] Palace. When the light rail system opens, the location will not be a challenge, but that won’t be until 2019,” wrote the Nomura team.
The commentary followed conversations Nomura had in Las Vegas with senior executives of Wynn Resorts – including Stephen Cootey, group chief financial officer.
The casino firm mentioned that it would have shuttle services linking to Wynn Palace from the Border Gate checkpoint – the main crossing point between Macau and mainland China – and from Macau’s two ferry terminals.
Wynn Macau is to the east of the Cotai Strip, a cluster of casino resorts on a Macau land reclamation area that has become the focus for mass-market tourism in the city.
A light rail station – part of a multibillion U.S. dollar public infrastructure system – will eventually serve Wynn Palace and link it with the new Pac On Ferry Terminal at Taipa, and Macau International Airport, as well as with other casino resorts on Cotai.
The construction of the Taipa section of the rail system has suffered several delays; it was more recently slated to start operating this year, but is now likely to be operational only in 2019, Macau’s Secretary for Transport and Public Works, Raimundo do Rosário, told the city’s Legislative Assembly in December.
Nomura said in its Friday note – again citing conversations with management – that the Wynn Macau firm had hired “roughly 200 casino hosts from competitors and plans to increase media spend in China” before Wynn Palace opens.
The brokerage suggested the launch of the property would be in August, but neither Wynn Macau nor Wynn Resorts has given any guidance on the opening date, after several previous revisions of the timetable for launch.
“Less iconic properties like MPEL’s City of Dreams and LVS’ Sands Cotai Central are most at risk of share losses as new, swanky casinos open,” noted Nomura, referring respectively to Melco Crown Entertainment Ltd’s first Cotai property, and to a Cotai property developed by Las Vegas Sands Corp, the parent of Macau casino operator Sands China Ltd.
“We believe each could lose at least 100 basis points of share over the next 12 months to [Wynn] Palace, The Parisian, and MGM Cotai,” added Nomura, referring respectively to a US$2.7-billion French-themed property from Sands China due to open this autumn on the Cotai Strip, and the US$3.1-billion second Macau property from MGM China Holdings Ltd – which is currently slated to open in the first quarter of 2017 – ; as well as to Wynn Palace.
A note on Friday from brokerage Sanford C. Bernstein Ltd, said the opening of MGM Cotai might slip into the second quarter of 2017.
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