Despite a year in which a worldwide pandemic disrupted the company’s casino and tourism business on two continents, Wynn Resorts CEO Matt Maddox says he can now see the proverbial light illuminating at the end of the COVID-19 tunnel.
On Thursday, at the outset of his company’s fourth quarter earnings conference call, Maddox said all of the company’s properties in Las Vegas, Boston, and Macau were cash flow positive during the last three months of 2020.
Wynn Las Vegas and Encore had $21 million in cash flow during the quarter with $14 million of the total coming in October. But new COVID-19 capacity restrictions kicked back in, “and we saw a real decline in business after October,” Maddox said.
Still, the CEO told analysts Wynn Resorts was “in the best position it’s ever been in” since before the pandemic to convert revenues to cash flow when business returns.
“And it will come back,” Maddox said, adding that Wynn’s Las Vegas properties have booked some 170,000 convention and meetings related room nights starting in July through December.
“Of course, there will be cancellations,” Maddox said. “There are still more questions than we have answers for” in reference to the size and safety to host medium to large conventions and meetings.
He used the term “green shoots” in describing the interest for visitors to return to the Strip, and he believes in the notion that Americans are ready to travel once again.
Maddox noted the two Wynn properties are at 50% occupancy this weekend for Super Bowl LV, the best hotel occupancy rate since October. Although, Wynn, like Strip resorts, can’t host Super Bowl parties due to occupancy limitations.
COVID-19 disruptions during 2020 caused Wynn Resorts to lose more than $2 billion during the year after earning $123 million in 2019. The company’s total revenues declined 68.3% to $2.1 billion in 2020, compared with $6.61 billion in 2019.
The coronavirus-related declines began in Macau during the Chinese New Year holiday and moved to the U.S. in late March when casinos closed throughout the U.S. Wynn reopened its Las Vegas properties in early and Encore Boston Harbor didn’t return until July.
The business disruptions allowed Wynn to make changes at its properties in Las Vegas and Macau during 2020. Several restaurants were changed out at Wynn Las Vegas and will open once there is enough visitation and dining capacity restrictions are lifted.
“We have a 400,000 square foot convention area that has never been used,” Maddox said. We will be ready when business returns.”
In Macau, several villas have been converted into entertainment venues for premium mass-market customers, which Maddox believes will be the customer base that revives Macau.
“I don’t expect the VIP market to snap back,” Maddox.
Meanwhile. Booking cycles for the upcoming Chinese New Year were disrupted by new virus outbreaks in China.
In the fourth quarter, Wynn’s companywide revenues were $686 million, a decrease of 58.5% compared to $1.65 billion in the 2019 fourth quarter.
As for the company’s operating segments, Las Vegas fourth quarter revenues declined 53.2% to $172.5 million, Wynn Palace on Macau’s Cotai Strip saw a decline of 62.5% to $221.5 million, Wynn Macau was down 65.4% to $181.9 million, Encore Boston Harbor saw a 38.6% to $103.9 million.
The company’s net loss in the quarter was $269.5 million.
Wynn’s total long-term debt at the end of the year was $13.07 billion and the company’s cash totaled $3.48 billion.
Meanwhile, Wynn Interactive – the company’s online gaming and sports betting business – is currently operating in New Jersey, Colorado, and Michigan. The company has submitted license applications for Indiana and Virginia and has received a conditional license in Tennessee.
Wynn owns 72% percent of Wynn Interactive, which operates the WynnBet mobile and online sports wagering app.
Maddox said Wynn Interactive will have new opportunities in 2021 and the slow rollout was a positive for the company because it will give Wynn an opportunity to make improvements to the app.
Shares of Wynn Resorts, traded on the Nasdaq, closed $108.69 Thursday, up 27 cents or 0.25%.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
