Steve Wynn, the chairman of Wynn Resorts Ltd., has said that the company will be moving quickly to build a new hotel on land it has recently acquired on the north of the Las Vegas Strip.
The new hotel is to be called Wynn West and it will contain between 2,000 and 3,000 rooms. The hotel will be located on the 38-acre Alon site that Wynn bought in early December last year for $336 million. At the time, Wall Street analysts thought that Wynn was planning to warehouse the land, where the New Frontier used to be, and make use of it in the future when market conditions were better for expansion.
Wynn said that the hotel will be connected to the Beach Club outside Encore and Wynn Las Vegas through an “air conditioned umbilical hallway” that will run over the boulevard. He also said that he has already built the necessary infrastructure outside of the Beach Club as he knew that one day he would by the plot of land that has stood empty for ten years.
Speaking to analysts in his fourth-quarter conference call Wynn said, “What we are going to do across the street is going to go rather quickly because I have been giving it thought for a long time. I don’t think the design and development period is going to be very long.”
He did not go as far as to give a specific schedule but said that he expected to complete work on the Las Vegas projects in about three years.
Wynn Predicts Economic Boom for Vegas
Wynn said that he believes now is the time to push ahead with development in Las Vegas as he thinks the city, and its casino industry, will flourish over the next two decades as tax breaks simulate an “economic renaissance”.
Additional meeting space is quickly springing up in the city in order to accommodate the many wealthy business travellers. Just this month the Las Vegas Convention and Visitors Authority started constructing a $1.4 billion convention centre opposite the Wynn Las Vegas and Encore that will be finished in three years.
During the conference call Wynn posed the rhetorical questions, “Do you believe that Las Vegas will for the next decade or two continue to be a major destination city in the United States of America and the world?”
— Nathan O'Neal (@NateNews3LV) January 23, 2018
He went on to say that if you believe it will, as he does, then you can invest in the city fearlessly and give visitors the best quality accommodation and the highest level of value.
Last year Las Vegas saw its first yearly decline in visitors in almost a decade. There were many reasons for this including the October shooting that raised concerns about safety in the city and factors such as weaker foreign currencies and major renovation work in many of the Strip’s hotels.
Speaking about his projects Wynn said, “I am going to get those damn buildings up as fast as I can because I want to capture more of the absolutely inevitable visitor and tourist traffic that Las Vegas will experience in the next 15 to 20 years.”
As a sign of his ambitions, Wynn said that his company could have roughly 8,000 of the 160,000 Southern Nevada hotel rooms by the time he has finished his latest project. The rooms will be adjacent to 6 million square feet of meeting space and it is thought that they could command nightly rates of $400 to $500. They are set to be 650 square feet with two bathrooms and an 80” television. The room’s windows will be 27 feet from the door and 24 feet wide.
Work has already started on Wynn Paradise Park, a venue set to include a 47-story, 1500-room hotel located between the existing Wynn and Encore towers off a lagoon 1,600 feet long and 650 to 700 feet wide. Together Wynn Las Vegas and Encore have about 4,800 rooms.
A one-mile long boardwalk and a white-sands beach will encircle the lagoon, which will be built on the existing 130-acre Wynn Golf Club land. It is set to be a bit more than three times the size of the Bellagio lake. Wynn said that he hopes for there to be nightly Carnivale parades of floats on the hourglass shaped lagoon.
Speaking about the Wynn Paradise Park project Wynn said, “We are not competing with Disney. We are creating a new kind of experience that is addressed to the modern era, taking advantage of technology.”
Wynn stressed that he believes that attractions and recreation are the key to attracting the really big spenders that will spend tens of thousands or even millions on gaming.
Speaking to analysts Wynn said, “It is the non-gaming that produces all the fancy gamblers and the high-income type of patrons.”
He also said that he hopes to have rendering for all of the Las Vegas projects in the next four to five months adding, “I am being pretty enthusiastic today about Las Vegas, but this is probably the first conference call” where we have been able to present our whole development plan.”
Both the Wynn West and Wynn Paradise Park hotels will only offer suites. As such they will be more expensive than the original Wynn hotel tower. The property will be a full casino-resort in its own right but will also “piggyback” on the existing property.
Wynn Reaps the Benefits From Macau
In the final quarter of last year it was Macau that provided the biggest boost to the company’s earnings and Wynn said that he thinks there is even more potential on the Chinese gambling enclave.
Speaking to investors he said, “The Macau market is still only touching a tiny percentage of the potential market that is there. Do not bet against Macau. You will be losing your money.”
American financial services firm Morgan Stanley has backed up his belief. Last week the firm said that it expects Macau gaming revenue to nearly double over the coming five years to $60 billion as growing economic prosperity allows more Chinese citizens to visit the enclave. Last year Macau gross gaming revenue reached $33 billion.
Wynn currently has two casinos on Macau and they already generate more than 60% of the company’s total revenue. Wynn Palace, which has been open for just a year and a half, is generating about $4 million of operating revenue a day. Wynn believes that the property will “blow past” an earlier forecast of $630 billion in earnings before interest, taxes, depreciation and amortization.
Because of this, the company is looking to expand Wynn Palace and Wynn said that work has already begun on its design.
Wynn added, “We have been encouraged (by the government) to file our plans for Phase 2, which we are working on now” and said that his Macau leadership team is in Las Vegas were tasked with working on designs.
He also believes that construction work taking place around the Wynn Palace may be restricting business, but he expects that to start subsiding as soon as next week when the MGM Cotai opens its doors on Monday and progress continues towards completing a mass-transit system by 2019.
“All these things are looking very nice for us,”’ he said in reference to the completion of the construction.
According to Wynn the Palace is drawing in customers thanks to the beauty of the design, which took years to complete. The casino now has a 17% market share, up from 9%.
“God lives in the detail in our business,” he said. “Our buildings tend to gain momentum over time. The Palace hotel gobbled up market share.”
In the call he also briefly mentioned his project near Boston Harbor. He said that he expects it to open in May or June 2019. He is also expecting more clarity on building a full-scale resort in Japan in the next twelve to fourteen months.
Impressive Fourth Quarter Earnings
The company reported fourth quarter earnings that exceeded all analysts’ expectations for the period ending December 31.
While revenue in Las Vegas had dropped $6.2 million for the quarter, largely due to the impact of the shooting in October, the results in Macau more than made up for the shortfall.
Overall the company reported net earnings of $491.7 million, $4.77 a share, on revenue of $1.69 billion. In the same period a year earlier the company brought in earnings of $113.8 million, $1.12 a share, on revenue of $1.3 billion. The company also reported a 50-cent-per-share dividend.
Recently Wynn said that he approves of Donald Trump’s tax cuts and said he intends to share the profits from them with his employees. He was the second casino owner to do so after South Point casino owner Michael Gaughan said that all 2,300 of his company’s full-time workers would receive a double bonus.