Wynn Resorts set an all-time record for property adjusted earnings in the fourth quarter, bolstered by the Formula One Las Vegas Grand Prix. Wynn executives noted the company will ultimately develop land it owns across the Las Vegas Strip from its two resorts.
“Momentum in the business built throughout the year and we ended on a high note, with $632 million in property EBITDAR, an all-time quarterly record capping off a record year in which we generated nearly $2.2 billion in property EBITDAR,” said Wynn CEO Craig Billings in a conference call with Wall Street analysts.
Billings said the company is more diversified and in Las Vegas, it “continues to distance itself from peers as the leader in luxury. It’s more evident than ever that we’re the go-to spot for the best customers attending citywide events like F1. This year proved that the people who travel to an F1 race are our customers.”
Wynn Resorts highlighted its growing business in Macau, running higher margins than in the past and less reliant on the volatile VIP segment. Their casino-resort under construction in the UAE will further diversify the portfolio and expand the brand to new markets.
As for Las Vegas, the quarterly record for EBITDAR rose 24% over the fourth quarter of 2022 on a difficult comparison.
“While F1 was clearly a contributor, activity at the property was intense throughout the quarter, with revenue per available room, table drop, slot handle, and food and beverage revenue all well above a very strong quarter in 2022,” Billings said. “We had our best October, November, and December in terms of EBITDAR.”
Billings said January looked a lot like January 2023 in terms of revenue, with hotel revenue especially strong. Despite that, January isn’t the high mark for the quarter.
“It’s all about February,” Billings said. “The Super Bowl, Chinese New Year, and for us the best February in our history for group and conventions. Between the Super Bowl and Chinese New Year, we’ve doubled the front money and credit in 2023 and we expect record hotel revenue over Super Bowl. A very active February will set the tone for the first quarter.”
Wynn and Encore Las Vegas generated $270.8 million in adjusted property EBITDAR on $696.8 million of operating revenue during the fourth quarter. That was a margin of 38.9%, up 140 basis points year over year.
Higher than normal table-game hold benefited EBITDAR by about $10 million during the fourth quarter, according to Chief Financial Officer Julie Cameron-Doe.
Fontainebleau Las Vegas, situated just north of the Wynn and Encore, got the attention of one analyst during the call, who asked about its potential impact, since both cater to luxury guests.
“It really hasn’t (impacted us),” Billings said. “I feel great about our business and where we are.”
Billings said the Super Bowl is more corporate in terms of visitation and many of those people won’t go near a gaming table compared to F1. Hotel rates for the two events are similar.
“I would say it’s not going to be as impactful in the casino, though it will be equally if not more impactful when it comes to hotel revenue,” Billings said.
Brian Gullbrants, the chief operating officer, said they’re encouraged by group bookings in 2024 and are pacing for record room nights.
The events calendar for the property looks good, Wynn has created many events besides those that are citywide, Billings said. “We’ve been programming the heck out of this joint for several years now and we built a lot of momentum. That not only helps us from a brand and marketing perspective, but also from room nights and pricing.”
Billings said while the Sphere concert venue to the southeast of Wynn properties doesn’t affect rates, Wynn gets a lot of requests from customers to be on that side of the building to see the spectacle. On the weekends U2 is in concert, Wynn sees an increase in high-quality occupancies.
“You’re talking about the best of the best customers that want to stay with us, because we’re the closest property to the Sphere as the crow flies,” Billings said. “It’s definitely been additive on the margin. It’s incredibly novel and unique and another only-in-Vegas experience. We’re delighted they’re next door.”
Wynn Resorts has a lot of avenues for growth, with a large land bank in Las Vegas, including a parcel across Las Vegas Boulevard. More development is just a matter of time, Billings said.
“There’s a lot we can do here. We’re in pursuit in New York and we have a project coming out of the ground in the UAE,” Billings said. “That’s going to be a very substantial opportunity for us. Some additional states are moving, albeit at a slow pace, that might prove to be opportunities for us. We don’t do every jurisdiction. We’re very selective. And various international jurisdictions like Thailand are also in the process of considering things. We’re always balancing our ability to do what we do so well. We’re always looking at the highest and best use of capital that we can deploy and make decisions accordingly. We’ll certainly make use of that land across the street in Las Vegas. It’s not a question of if but when and we’ll see how things play out in New York and other jurisdictions in determining the timing of the use of that land.”
