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US – New Wynn CEO to scale back investment on Las Vegas lake project

By - 25 April 2018

Wynn Resorts new CEO Mathew Maddox has said the company will scale down the planned Paradise Park lake project destined for Wynn Las Vegas due to its $3bn budget being unsustainable.

Mr. Maddox said: “I want to take a fresh look at the lagoon project on the Golf course in Las Vegas. The budget was over $3bn which was not sustainable, and so we are taking a hard look at what is sustainable here and what’s going to keep attracting our customer. I don’t want to focus on the mass-market theme park which is really where we were going before on trying to attract more of the mass-market into the lagoon. Instead we will really focus on the luxury customer and so the lagoon is going to be an amenity for our hotel guest. We are going to reinvent daytime activity for the guest in Las Vegas and continue to make Wynn Las Vegas the best place to stay on the Las Vegas strip.”

Mr. Maddox confirmed the move on his first earnings call since replacing Mr. Wynn in February. The company beat high estimates with its first quarter earnings with operating revenue gains of 20.5 per cent year-on-year.

Operating revenues came in at $1.72bn, up $291.8m, from $1.42bn for the same period of 2017. The increase was the result of increases of $213.5m, $65.5m and $12.8m from Wynn Palace, Wynn Macau and Wynn’s Las Vegas Operations, respectively.
Wynn still recorded a loss of $204.3m due mainly to a $463.6m litigation settlement expense.

Referring to the uncertainty over Wynn Boston harbour in Everett, Massachusetts, Mr. Maddox said the Boston market remained ‘a really good opportunity.’ He added though that if regulatory scrutiny in Massachusetts became a ‘contagion’ on the company, he would ‘have to take a hard look at what is best to protect our shareholders and our value.’
Mr. Maddox said his role over the last few months has been to ‘reduce the noise surrounding the business.’

He added that the company’s results had remained unaffected by the controversy of the allegations made against its founder Steve Wynn.

Mr. Maddox said: “We’ve seen no degradation of business. We actually saw strength across the portfolio. I’m not interested in looking in the rear view mirror. I’m only focused on the future. In Las Vegas, the property experienced a record first quarter EBITDA. In fact, overall room revenues for the first quarter were quarterly record for Wynn Las Vegas. We are seeing is stronger bookings for 2018 and into 2019 if you look at the same time last year. So what we are feeling and seeing in Las Vegas is continued strength.”

Casino revenues from Wynn Palace were $568.5m for the first quarter of 2018, a 50.7 per cent increase from $377.1m the same period of 2017. Table games turnover in VIP operations was $15.39bn, a 39.3 per cent increase from $11.04bnfor the first quarter of 2017.

Mr. Maddox explained: “At Wynn Palace, we continue to aggressively take share in the mass-market. Our premium mass was up over twice what it was at this time last year, but demand for mass-market was up over 70 per cent from last year, so we are seeing strength across the board in the mass-market at Wynn Palace. Mass gaming revenues, including slots were almost 48 per cent of our gross gaming revenue and that compared to just 39 per cent in the fourth quarter of 2017. Our VIP volumes remained strong up 39 per cent so everything’s working there.”

Casino revenues from Wynn Macau were $539m for the first quarter of 2018, a 10.5 per cent increase from $488m the same period of 2017. Table games turnover in VIP operations was $17.09bn, a 28.6 per cent increase from $13.28bn for the first quarter of 2017.

Mr. Maddox added: “Wynn Macau continued to maintain its share during the quarter. With VIP volumes up 29 per cent over the year. There has been an onslaught of negativity from the media but we are very strong, and the future is stronger than the past, no matter what the media like to say. I remain as excited as ever about the future prospects of this company.”

Grant Govertsen, an analyst at Union Gaming , commented: “Wynn Macau is experiencing significant growth in cash flows as its Wynn Palace property is making outsized market share gains. Given the recent management turmoil at Wynn Resorts, this move would go far to assure investors that operations remain strong.”

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