But Sands is up
In a conference call with investors last week, casino magnate Steve Wynn said his 1,700-room, 500,000-square-foot Wynn Palace on Macau’s Cotai Strip, which opened in August, has struggled to meet targets because of construction that surrounds the property.
“I didn’t realize how critical the blockade was until I tried to cross the street to the City of Dreams,” a resort property near Wynn Palace, Wynn told investors. “You take your life into your own hands when you try to cross the street with all the traffic.
“All four sides of our property are currently being enclosed by either barricades or construction blockades,” Wynn explained. “It’s tended to isolate our property on all four sides and made access to the Palace temporarily highly encumbered.”
The ongoing construction includes building sites for MGM Cotai, which will open next year, and SJM Holdings’ Grand Lisboa Palace, scheduled to open in 2018. Wynn Palace also adjoins a portion of a new Macau light-rail system, also under construction in the city. The transit line is expected to be completed by 2019.
Wynn Macau Ltd. reported a third-quarter loss of US$8.6 million associated with the opening of the Palace, compared to a profit of US$62.1 million profit in 2015, the firm said in a filing to the Hong Kong Stock Exchange. Net revenues for the quarter were US$682.7, up almost 17 percent year-on-year. Wynn Palace reported net revenues of US$164.6 million; Wynn Macau on the peninsula saw revenues of US$518.1 million, a decline of US$67 million year-on-year.
Ian Coughlan, president of Wynn Macau Ltd, said traffic at the new resort has eaten into visitation at the flagship Macau property. “Pretty much what we perceived was going to happen has happened. There’s been a fairly significant impact on our direct VIP downtown because we have a lot of Wynn players that wanted to come and experience the new property.
“The junkets have managed to backfill downtown Wynn Macau very effectively,” Coughlan continued. “On the mass, we’re less affected. Our customers downtown seem to be very ‘peninsular-downtown’ centric. While some of them have experienced our new property, they’ve been very sticky downtown.”
Morgan Stanley analysts Praveen Choudhary, Alex Poon and Thomas Allen said the “near-term pain of slower ramp at Cotai due to accessibility issues and Wynn Macau facing cannibalization was visible in this quarter as anticipated and may continue in fourth quarter of 2016.”
However, they predicted, “remedial actions taken by management and high operating leverage in the business should ensure strong EBITDA growth in 2017-18.” According to GGRAsia, Wynn Resorts will pay a cash dividend of 50 cents a share on shareholders by the end of the month.
Wynn Palace is a VIP-centric resort, but Coughlan said on the conference call that the company is currently “very focused” on adding to its premium-mass business.
Meanwhile, Bloomberg News reports that Las Vegas Sands Corp., the world’s largest casino owner, reported a jump in profit after opening its newest resort in Macau. Sands’ profit rose to 72 cents a share, more than the 60 cents predicted by analysts polled by Bloomberg. The company saw a 19 percent increase in visitors to its Macau properties in September year-on-year, a boost Adelson attributed to the Parisian. Sands President Rob Goldstein agreed. “People want to see that Parisian theme approach. The Eiffel Tower, that facade has great curb appeal.”
