Steve Wynn
Executives at Wynn Resorts on Thursday reported earnings higher than analysts expected, announced breaking a 4-year-old casino win record and hinted about redesigning the traffic flow at the company’s Encore property.
The company showed improvements in net revenue at both its Las Vegas and Macau properties, with virtually all categories up in Las Vegas. That includes room revenue, which showed a double-digit percentage increase compared with the fourth quarter of 2010.
Wynn reported earnings of $190.5 million, $1.52 a share, on revenue of $1.34 billion for the quarter that ended Dec. 31. That compared with earnings of $114.2 million, 91 cents a share, on revenue of $1.24 billion.
The average of a survey of 23 analysts earlier projected earnings of $1.29.
In a conference call with analysts, Wynn Resorts chairman and CEO Steve Wynn said the company’s 2011 casino win of $776 million was a state record for a single Nevada licensee, beating the previous high $764 million, set by Wynn in 2007.
Casino win was just one of several categories where the Las Vegas property excelled.
For the fourth quarter, casino revenue was $145.8 million, 4.7 percent ahead of the same period in 2010, and table game drop was $594.5 million compared with $564.8 million a year earlier. The casino’s 23.3 percent win percentage was within the company’s expectation of between 21 and 24 percent and higher than the 22.5 percent reported in the fourth quarter of 2010.
The slot machine handle of $660.1 million was 5.4 percent below the 2010 quarter, but the net win was up 0.9 percent due to a better hold in 2011.
On the noncasino side, revenue was up 6.8 percent to $246.6 million, with room revenue up 11.7 percent to $85.3 million. The average daily room rate was up 6.3 percent to $250 a night, but occupancy was just 79.1 percent compared with 81.8 percent the prior year. During the fourth quarter of 2011, 1 percent of the property’s rooms could not be used because of renovations. The company said 9 percent of the rooms were unavailable due to renovations in the fourth quarter of 2010.
In other categories, food and beverage revenue was up 5.3 percent to $103.2 million, retail sales were up 1.7 percent to $22.3 million and entertainment revenue climbed 2.5 percent to $20.7 million.
Meanwhile, Macau had a net revenue increase of 9.1 percent over the fourth quarter of 2010, to $995.5 million. Casino win beat company expectations in both the VIP and mass markets, and the company had higher average room and occupancy rates compared with the fourth quarter of 2010. Macau occupancy was at 94.2 percent for the quarter, and the average room rate was $322 in U.S. dollars.
Other noncasino revenue streams were up 14.6 percent to $106 million with strong performances in all categories.
For the year, revenue increased 14.2 percent in Las Vegas and 31.2 percent in Macau for a combined 25.9 percent revenue increase for the company to $5.27 billion.
Steve Wynn said despite the company’s successes in Macau, the competition was getting tougher as operators learn from each other. But Wynn, who opened his first property in China in 2006, said he had an ace in the hole.
“Our competitors have done some beautiful work,” Wynn said. “Galaxy, (Las Vegas) Sands, City of Dreams, SJM (Stanley Ho’s Sociedade de Jogos de Macau) are really terrific. Everybody gets smarter and everybody gets better.
“But I have a smile on my face because we’ll be the last to go at Cotai (Macau’s Cotai Strip, where Wynn is in the process of finalizing the scope, timeline and budget for a new resort). Maybe we’ll have some new moves to show because we’ll go last in Cotai.”
Wynn also hinted that the company was looking at a makeover to realign traffic flow at Encore because he didn’t expect resorts to be built across Las Vegas Boulevard from Encore anytime soon. He said Encore was designed for a west-to-east flow with the belief that the Plaza Las Vegas would be built on the former Frontier site and Boyd Gaming would complete its Echelon project.
Construction on Echelon, at the former site of the Stardust, was shut down in August 2008 and the Plaza proposal never got off the ground.
“There’s little likelihood, considering the political and economic environment that we’re in, that we’re going to see any robust development across the street on the other side of the Strip,” Wynn said. “The changes we’re looking at would be exciting and work to our advantage.”
He said plans could include an entertainment venue on the south side of his property to draw traffic through the building.
“The performance we have had with the record gaming win is all the more remarkable considering we don’t enjoy the pivotal central location that Bellagio has,” Wynn said.
Wynn also briefly addressed a legal dispute with Kazuo Okada, a longtime business partner who is suing the company to review financial records involving the company’s pledge of $135 million to the University of Macau.
Okada wants Wynn to invest in his company’s effort to build a casino property in the Philippines.
“We’ve enjoyed Mr. Okada’s participation in this company all these years — I think it’s been about 12 — and we wish him well,” Wynn said. “We have a sharp disagreement with our colleague with regard to the Philippines. We have expressed our conviction that it was not an appropriate opportunity. He has not enjoyed that disagreement. The decision was unanimous among our board members and he finds that stressful.”
Okada’s Universal Entertainment Corp. broke ground last week on the $2 billion casino complex which would include three hotels, a convention center, a glass-domed man-made beach and villas at Manila Bay. Okada hopes to open the development in 2014.
Wynn also announced that the company’s website had been redesigned and went live Thursday.