The Las Vegas facilities of casino operator Wynn Resorts experienced four times the growth of its Macau operations in the second quarter of 2014, but Asia still accounted for over two-thirds of Wynn’s total cash flow. Overall revenue rose 6% to $1.41b while earnings rose 9.8% to $425.7m and profit gained a hefty 57% to $203.9m.
Wynn’s Las Vegas operations saw revenue rise 12.5% to $451.4m thanks to improved gaming results and a 7.3% rise in room revenue. Vegas table game drop rose 14.8% while table win improved 5.9 points to 27.4%, well above the expected range of 21-24% and the 21.5% win recorded in the same period last year. Slots handle at Wynn’s two Vegas casinos fell 0.8% but win rate rose to 3.2%.
In Macau, Wynn revenue rose 3.2% to $960.6m despite an 11.7% decrease in VIP table game drop. Macau has faced significant hurdles to growth in recent months, yet Wynn’s mass market tables reported a 43% rise in win to $311m. Slots win rose 14.1% thanks to handle rising 24.4% to $1.5b. Occupancy at Wynn Macau rose nearly three points to 98.4%, further evidence that while the VIPs may be temporarily AWOL, the mass market continues to come to play.
On a post-earnings call with analysts, Wynn boss Steve Wynn (pictured) said his company was having “the best July ever in the history of Las Vegas.” Steve claimed his Vegas properties were “pushing $50m this month,” a total he’d never experienced “in my business career, 40-odd years in gaming.” Steve wants Wynn to be “the first company to break through calendar year of over $0.5b of profit in Las Vegas,” a goal that will require Wynn to do $37m a month over the last six months of 2014. Wynn Las Vegas president Maurcie Wooden said Wynn’s Vegas properties were experiencing gains across all segments, not just via “additional Far East customers coming here during that period.”
Wynn also addressed some of the VIP drag in Macau, saying “everybody sort of overreacted” to talk of corruption crackdowns and increased restrictions on the use of UnionPay devices. Wynn said some of the “smaller, more thinly capitalized junket operators” had experienced slowdowns in June “but the bigger junket operators did just fine.” Wynn said business in Macau had ‘ticked back up again’ putting Wynn on track to have “probably the best July in the history of Macau.”
Wynn suggested the under construction Wynn Palace would be open in time for Lunar New Year celebrations in 2016. The $4b resort is one of several new mega-facilities slated to open on Cotai in the next couple years, which led one analyst to ask whether the addition of new supply might create some dilution in demand. Echoing Sheldon Adelson’s comments about the size of the Chinese gambling market, Wynn suggested that “demand for our product may be a hell of a lot more elastic than you might think.”
While Steve was effusive with praise for his Macau rivals like Las Vegas Sands, Melco Crown Entertainment and Galaxy Entertainment Group, a moment of minor discord emerged after Steve used the word ‘inexorable’ to describe the Chinese economy. This led a Nomura analyst to offer Steve “this week’s award for the Gary Loveman prize for vocabulary,” which Steve rejected on the grounds that he was “not sure I like” the Caesars Entertainment CEO, saying he’d prefer to win “the Sheldon Adelson prize.”
Steve also repeatedly left the leaders of MGM Resorts off his Macau honor roll, except to say that Wynn outperformed the competition because “we grind on the details” while noting that “the guys that have worked for MGM won’t work for me.” Draw your own conclusions.