Matt Maddox, chief executive of U.S.-based Wynn Resorts Ltd and of Wynn Macau Ltd, says the group will be adding two hotel towers to its Wynn Palace casino resort (pictured), located in Macau’s Cotai district. The plan is to “take that property from 1,700 hotel rooms to over 3,000 [rooms], which is really where we need it to be,” said the CEO during a Wednesday conference call following Wynn Resorts’ third-quarter results announcement.
“We have a 7-acre [2.83-hectare] parcel next to Wynn Palace… and we’ve been working very hard on what could come next and what we have so far is a 1.5 million square foot [139,355 sq metres] facility that we think will be a must-see in Macau,” said Mr Maddox.
The executive said the Cotai property “needs more hotel rooms” in order to achieve earnings before interest, taxation, depreciation and amortisation (EBITDA) of more than US$1 billion.
“On the 7-acre site where we currently contemplated and designed a 671 room all-suite hotel… In addition, on the north 4-acre parcel we were working on a 700 room all-suite hotel that we’ll connect into the north side of Wynn Palace,” said Mr Maddox.
The CEO said additionally that the group would build a large glass structure – dubbed the Crystal Pavilion – on the podium level on the 7-acre site offering several non-gaming features. The structure will also house a “fully immersive” theatre, said Mr Maddox, adding that the company is currently working on creating three shows for the theatre.
He added: “We plan on presenting this concept in the next couple of months working through 2019 on the permitting, finalising the design, getting everything together and beginning construction in 2020.”
The executive did not mention on the conference call any expected capital expenditure or timetable for the opening of these projects.
“It’s really too early. We’ll be providing more detailed capital expenditure estimates in 2019,” stated Mr Maddox.
Macau casino operator Wynn Macau Ltd reported total operating revenues of approximately US$1.31 billion in the third quarter of 2018, up 20.5 percent compared with nearly US$1.09 billion in the prior-year quarter. Casino revenue rose by 19.4 percent year-on-year, to about US$1.131 billion, on the strength of Wynn Palace.
The unaudited results of the Macau unit were filed on Thursday with the Hong Kong Stock Exchange, and prepared in accordance with International Financial Reporting Standards.
Wynn Macau Ltd recorded net profit of nearly US$223.5 million in the three months to September 30, more than doubled compared to a net profit of nearly US$90.0 million a year earlier.
The results of the Macau unit helped Las Vegas-based Wynn Resorts deliver strong third-quarter results. The global operations of Wynn Resorts – including Las Vegas, in the United States, and Macau – generated operating revenues of US$1.71 billion for the July to September period, up 10.2 percent compared to US$1.55 billion in the same period of 2017.
“Operating revenue growth at Wynn Palace and Wynn Macau was partially offset by a decrease of US$65.4 million from our Las Vegas operations,” the parent company said.
Net income for the parent company – on a U.S. generally accepted accounting principles (GAAP) basis – was US$156.1 million, or US$1.44 per diluted share, for the three months to September 30, compared to a net profit of US$79.8 million, or US$0.78 per diluted share, in the prior-year period.
The parent company also announced on Wednesday a cash dividend of US$0.75 per share, payable on November 30.
Adjusted property EBITDA for the group were US$504.4 million for the third quarter of 2018, up 6.6 percent from a year earlier. Adjusted property EBITDA for the Macau unit were approximately US$409.1 million, up 27.3 percent from the prior-year period.
Adjusted property EBITDA increased 63.6 percent year-on-year at Wynn Palace, to US$226.1 million, and was relatively flat at Wynn Macau property on the peninsula.
Palace ramp up
The Wynn Palace property on Cotai generated operating revenues of US$730.6 million for the third quarter of 2018, a 39.1-percent increase from a year earlier.
Third-quarter casino revenues from Wynn Palace were US$625.6 million, up 39.9 percent from the prior-year period. Table games turnover in VIP operations was US$15.53 billion, a 13.4-percent increase from US$13.69 billion for the third quarter of 2017. VIP table games win was 3.01 percent, slightly above the expected range of 2.7 percent to 3.0 percent.
Table drop in mass-market operations was US$1.19 billion, up 37.3 percent compared to US$866.6 million for the third quarter of 2017.
Operating revenues from the Wynn Macau casino hotel property were US$579.6 million for the third quarter of 2018, up 3.1 percent from the prior-year period.
Casino revenues from the Wynn Macau property were US$503.6 million for the third quarter of 2018, a modest 0.9-percent increase from a year earlier. Table games turnover in VIP operations was US$13.97 billion, up 4.4 percent from the prior-year period. Table drop in mass-market operations was US$1.18 billion for the period, a 10.6-percent increase compared to the third quarter of 2017.
On Wednesday, Wynn Resorts also announced that its board had voted Phil Satre as the firm’s chairman. Mr Satre had joined the company’s board as vice chairman in August, with his appointment as chairman expected before the end of the year.
Mr Satre succeeds Daniel Boone Wayson as chairman of the Wynn Resorts board. The firm’s board is now comprised of 10 directors, six of whom joined in 2018, and four of whom are women.
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Analyst at Roth Capital Partners