GGRAsia – Wynn Palace to reap benefits soon re floor rejig: analyst

Wynn Palace to reap benefits soon re floor rejig: analyst

Nov 28, 2016 Newsdesk Latest News, Macau, Top of the deck

Investment research firm Morningstar Inc has given some more commentary on a likely rejig of the main floor at the new Macau casino resort Wynn Palace, stating the venue’s operator, Wynn Macau Ltd, could start reaping benefits soon.

“We could start to see some benefits as early as six months from now, while the full configuration can take up to 18 months. The construction is not expected to cause meaningful disruption – for example, in the form of noise – to business,” Morningstar analyst Chelsey Tam said in a Friday note.

“Wynn Palace’s [mass floor] casino space will be reduced without reducing the number of tables, to create compressed energy,” said Ms Tam in her report. It would include the creation of a casual dining area, she added.

Morningstar had mentioned the main floor revamp – said to be aimed at making Wynn Palace appeal more to mass-market players – in a note from Ms Tam’s colleague Dan Wasiolek, published on Morningstar’s corporate website on November 21.

For her part, Ms Tam noted, referring to Wynn Palace’s promoter, Wynn Macau Ltd, a subsidiary of U.S.-based Wynn Resorts Ltd: “The group is carving out a section on the casino floor of Wynn Palace for construction of a casual dining area, which we expect will match mass customers’ demand better, as hard-core gamblers are more likely to be interested in eating quickly and returning to the gaming tables. Currently there are approximately 200 seats for high-volume dining; this does not appear to be enough.”

She added: “We think Wynn Palace’s ramp-up will increase gradually in the near term, thanks to increased marketing efforts and enhanced connectivity via the bus programmes.”

Morningstar estimated that Wynn Palace’s mass win per table per day in the fourth quarter 2016 “should approach Studio City’s level in fourth-quarter 2015 when the latter first opened and faced connectivity problems”. That was a reference to a mass market focused casino resort 60 percent owned by Macau licensee Melco Crown Entertainment Ltd, and which opened on October 27, 2015

The research house noted there had recently been “aggressive marketing” at Wynn Palace, which it said had increased foot traffic and was likely to help with gaming revenue.

“We have seen a reduction in room rates, with promotional offers as low as HKD1,019 [US$131],” said Ms Tam.

“The property had an occupancy rate of 71 percent in the first 39 days of opening and should be able to build the customer database by filling up the rooms,” she added.

“We have also seen a lucky draw to attract players and free chips for registration as a new member. Baccarat and poker tournaments should be able to raise awareness of the property,” noted the Morningstar analyst.

She also observed that frequent shuttle bus services “should enhance accessibility for the property despite the construction barricades around Wynn Palace”.

The US$4.4-billion Wynn Palace was given an initial Macau government allocation of 100 new-to-market live dealer tables when it opened on August 22. A further 50 tables will be made available in two tranches: 25 tables on January 1, 2017; and the remaining 25 on January 1, 2018, the government has said.

But a number of investment analysts have commented on what they termed a slow ramp-up of gaming operations at the property: particularly in relation to the mass market, a clientele segment for which Wynn Palace was not specifically designed, they said.

Ms Tam recently contributed to one of the discussion panels at the Macao Gaming Show, a trade exhibition and conference for the regional casino industry.