Wynn Resorts Preliminary 3rd Quarter Results

October 13, 2008 1:59 PM Posted by Brian Fey

Damn you're fast Hunter! Yeah, the numbers look ok to me, considering the economy. With 1.7 Billion in cash, Wynn can lose some money for a few quarters if he has too, until things turn around. But once again, looks like Wynn banked money this quarter. It might not be pretty, but money is money, it all adds up.

October 13, 2008 9:08 PM Posted by Dram_man

The YoY figures for Macau are not so impressive to me. Between the the periods they doubled their floor space by opening the other wing. 100% more room with only 40% increase in profit is interesting.

October 14, 2008 9:05 AM Posted by Brian Fey

I guess I just don't get it. You reach a point where the market cannot grow at 30-40% year over year. Things will slow. I know, Wynn did not expect to see their business double at Wynn Macau. Floor space does not equate to volume or profits. Need I remind people, that ealier this year Crown Macau did the most VIP business of any casino on earth, and they have one of the smallest casinos. I am sure Steve Wynn is not too unhappy with his 40% increase in profits in Macau. I think you will hear him say on the call, he is extremely pleased with the performance of Wynn Macau.

BTW...If you think size matters...Venetian Macau has the world's largest casino by a long shot. Ask them how well that's working for them...The same holds true for MGM Grand in Vegas.

"Bigger isn't better, better is better" -- Steve Wynn

October 14, 2008 10:33 AM Posted by David McKee

What Brian said.

October 14, 2008 11:26 AM Posted by mike_ch

Define "better," since Wynn's present vision of better, while certainly executed well, essentially snubs the middle class.

I agree with the start of what Brian said, but this Wynn cheerleading thing always has a side of "why doesn't everyone just follow Steve" and everyone following Steve is why the land value went up as high as it did.

October 14, 2008 4:14 PM Posted by David McKee

I can't speak for Brian, but there's something to be said for concentrating on a handful of quality-oriented properties, instead of trying to be the Starbucks of gaming. The latter course has led to grief for several operators we all could name.

As for the escalation in land costs and the ensuing preponderance of prohibitively (for operator and customer alike) resorts, it's like a merry-go-round: The higher the land goes, the more the operator feels it has to spend in order to justify the cost/generate a return. At present, it doesn't look like anybody's going to try and dismount, unless you count Bill Yung's short-lived plan to demolish most of the Trop and build a 10,000-room grind joint. We went from Stardust land being valued at $15MM/acre to El-Ad spending almost three times that amount for the New Frontier in what seems like the blink of an eye, so I wonder if we're due for a market correction on land values.

Slightly off-topic, the two rides at the Sahara have been closed "for the season." Whaddya think: Economy measure or is Sam Nazarian getting ready to demolish the north side of the property? The latter seems like a long shot in this economy but the rides happen to occupy the space Nazarian has designated for his new hotel tower.

October 14, 2008 5:23 PM Posted by mike_ch

I agree, but I think that means not building everywhere you can build and, in today's economy, focusing on the buildings we already have.

Over the past few years we've seen implosion talk regarding Bally's, Circus, and Tropicana. None of these places seem to me like the absolutely must be blown up and can't be worked with for another five to eight years. Frontier was the only one that desperately needed to get off the stage, Stardust was just fine for another year or two if you ask me and I'm guessing Boyd wish they had kept it around a bit longer. I'd honestly like to see the Riv go before Ballys/Circus/Trop but that's so far resisting.

To use two hotels aimed at the middle to upper-middle class, I think Planet Hollywood is a more enjoyable place to be than MGM Grand. That's a mid-tier example of "bigger isn't better, better is better." On the other hand, that's almost certainly not what Wynn is thinking when he trots out that catchphrase. It seems to me he's not talking about Starbucksing or how many properties you run; he's talking about how his preferred market, the whales, prefer a small place dressed up to the nines catered to them than a giant place that offers everything but forces them to be in proximity to common people in order to support it all.

I've long thought that Wynn has been about sheltering yourself from the herd by scaring them away with high prices that they aren't willing to pay, and the number of people who complain about lower-income underdressed lookey loos wandering Bellagio taking pictures and writing about it on a blog when they get home (cough) being too much a nuisance pretty much confirms it.

Now granted, so long as the customer feels they get their moneys worth (and I feel Wynn accomplishes this with a good percentage of their customers,) then that's okay. You can charge only what 10% of visitors will pay if those 10% are impressed with what they get and become loyal fans.

But you can't have everyone follow Wynn's mold or you end up with two or three hotels in town that you have to be ultra-rich to enjoy.

October 14, 2008 9:20 PM Posted by Mike T

Wynn's present vision of better, while certainly executed well, essentially snubs the middle class.

Yeah the Wynn is expensive, and so is Bellagio. But they're both well worth it.

October 14, 2008 10:55 PM Posted by mike_ch

Mike T: My post right above yours didn't deny that.

I'm just saying that if you insist Vegas only have hotels like Bellagio and Wynn/Encore, then all you're going to be left with is Bellagio and Wynn/Encore, because regardless of whether you get your money's worth or not, a lot of people aren't willing to front that much cash.

Sometimes, I feel like I'm talking to people who practically never venture outside of those two hotels. *sigh*

October 15, 2008 9:28 AM Posted by Hunter

"Sometimes, I feel like I'm talking to people who practically never venture outside of those two hotels. *sigh*"

That seems like a pretty unfair statement to me.

October 15, 2008 12:19 PM Posted by Jeff in OKC

I'm not sure what "It" is, but Bellagio and the Wynn both have it. Mandalay Bay and Sandy Station, both of which were built to compete directly in that market, don't, IMO. It's not that we never venture off those two, it's that we feel very comfortable there. They connect. Although we don't have a lot of money to spend, Lisa and I find a great variety of penny slots at the Wynn, we can eat for $10-12 bucks each, and feel like we are welcomed there. I think the Wynn is the best at creating that "exclusively inclusive" vibe.
I hope nothing gets torn down for at least 5 years. I like the variety on the strip as it currently is. I think the sense of sameness that people mention about new properties is mostly a function of the era they are built in, kinda like 70's cars or 80's houses. Spacing out the construction periods will give us greater variety.

October 15, 2008 12:59 PM Posted by Tom M.

The last time I was in Vegas (Jul 07), I stayed at Bally's and Palace Station. Now I know that these are not prime time properties but I felt the room quality was very high in both. Both rooms I stayed in had been redone within the previous year and were excellent rooms. Since I don't spend alot of time in the room, I don't get too overworked about the property that I stay in. I stayed at Bally's due to location and Palace Station due to price. I was able to walk around and see all the new properties I wanted to see and did very little gambling. I would like to have the bucks to stay at Wynn or Bellagio, both hotels I really like(at least the public parts), but I don't think that staying there is a necessary part of enjoying Vegas.

October 15, 2008 9:18 PM Posted by mike_ch

Hunter, I know it's not entirely true. I know you, Mike E, Moto, and Detroit have seen plenty of casinos that aren't Wynn or Bellagio.

I was just frustrated, and I was trying to find a way to express the frustration without attacking any specific people in a personal way.

October 15, 2008 9:32 PM Posted by motoman

"....people who complain about lower-income underdressed lookey loos wandering Bellagio taking pictures and writing about it on a blog when they get home (cough) being too much a nuisance pretty much confirms it."

Heh, thanks mike! ; ) Really I know we were also being looky-loos wandering thru Bellagio, on that trip and all previous ones. (Damn, I was afraid that line would come off wrong!)

I did mention that the foot traffic was due to the B's central location, and that WLV would one day catch up (pending north Strip development). In fact in a long, long ago trip report I mentioned that we had not even considered staying at Bellagio when it opened, not because of the old icon it had replaced, but because it seemed way, *way* too exclusive to us at that time. Having wandered over while staying at PH last month, I still felt that way. What shocks me to no end is just how comfortable Wynn feels to a complete poser like me....

Oh, on another topic: Bellagio had lots of $10 Blackjack and even one, handicap-friendly (low chairs) $5 table, even late at night when Wynn typically raises their table limits into the $100s. (The cluster of "dealer stands on 17" tables were all high-limit, however.) I directly attributed the lowball action to the weak economy.

October 16, 2008 7:13 AM Posted by detroit1051

Mike, I may not be qualified to comment because it's been two years since I've been to Las Vegas. On most of the trips between 1998 and 2005, I usually stayed at Bellagio and then split trips with Wynn after it opened. BUT, I've always rented a car so I could check out the entire valley. I'm a typical tourist who likes to live a fantasy life at Bellagio and Wynn because the experience is so different than my life at home. However, I don't think there's a property in town I haven't visited. I've had good times at Golden Nugget, Palace Station, Caesars, Sunset Station, GVR, Red Rock, MGM Grand, Sam's Town, South Point, LV Hilton, etc, etc. I alway take the monorail on each trip to get a feel of the area. I can say the only property I'm too snobbish for is Riviera.
I was looking at some of my old photo albums on Webshots. I've got to come back to see all the new properties. I'm planning that in the 1st Quarter of '09.
http://community.webshots.com/user/detroit1051?start=0

October 30, 2008 2:07 PM Posted by Hunter

Link to the final figures:

http://biz.yahoo.com/ap/081030/earns_wynn_resorts.html

http://www.reuters.com/article/marketsNews/idINN3011843120081030?rpc=44