“Wynn Resorts, fresh off a record-setting month in July for adjusted earnings in Las Vegas, said convention bookings are the best ever for the second half of the year and that the COVID-19 resurgence has produced few cancellations thus far.
During a second-quarter earnings call Wednesday, Wynn CEO Matt Maddox said that the delta variant of COVID-19 “is throwing a little bit of a curveball right now, but that will be short term and will subside. What is clear is people want to have fun. They want to go to Las Vegas.”
Analysts have been worried that growing COVID cases and hospitalizations in Las Vegas and across the country, along with Nevada imposing a new mask mandate, could hurt the tourism and convention business.
Wynn Las Vegas reported $133.2 million in adjusted revenue on $355.1 operating revenue during the second quarter. Casino slot handle was 37% above 2019 levels, while table play was 3% below 2019. The 37.5% margin for the quarter was a record for Las Vegas and it didn’t slow into the third quarter.
Maddox said July recorded the largest adjusted earnings for a month since the property opened in 2005. “Could the second quarter be a peak?” Maddox asked. “I think that’s very short-term thinking. I think the second quarter is not a peak. It’s a preview of what’s to come. We have all been able to streamline our expense structure and understand how to yield our properties better. The ability to generate significant adjusted earnings out of these assets is quite clear.”
Maddox cited that strength as coming before conventions and international travel have returned, which will further enhance Las Vegas. In the past, international play was about 20% of the business, he said.
“As we see conventions and more international play from around the world come back, I’m very confident that we will continue to see growth in our results in both Las Vegas and Boston,” Maddox said.
Wynn Boston Harbor reported a record second quarter as well, with adjusted earnings of $46.9 million and a 28.4% margin. The property’s new signups for the Wynn Rewards program were up 70% in the second quarter compared to the first quarter.
As for group bookings, Marilyn Spiegel, president of Wynn Las Vegas, said August is the first month they’re back to their “normal run rate,” and that the second half of the year will have the most group bookings in its history.
“We’re in good shape right now,” Spiegel said. “We’ve just had a handful of cancellations and the largest group comes in next week. For 2022, we’re above pace from 2019 and the same is true in 2023. The pace of leads has also been accelerated.”
Most group bookings typically happen during the first and second quarters, but with the onset of COVID-19 at the end of the first quarter of 2020, schedules were pushed back to the first half of 2021, then to the second half of this year, Spiegel said.
In February 2020 ahead of the shutdown of the industry from the pandemic, Wynn opened a $423 million, 430,000-square-foot convention center that’s an extension of the Wynn meeting and convention space. It more than doubled meeting space at the property.
“We’re quite optimistic about the group business, especially with our new asset, which we didn’t have a chance to use when we opened it and COVID hit in 2020,” Spiegel said. “We feel very good about the group business coming back, but that all depends on the future of COVID in our lives.”
Combined for Wynn Resorts, North America had $133 million in adjusted earnings with Las Vegas leading the way.
“What was great about the second quarter was each month was stronger than the last,” Maddox said of Las Vegas. “In fact, June’s adjusted earnings were double what we experienced in April. Our occupancy continued to grow week over week and the strength across all segments was apparent from our nightclubs and hotels to our restaurants and gaming volumes.”
Maddox said they’ve been able to get occupancy up to mid-90 percent on the weekends and the 80s during the week. But he said it wasn’t about filling rooms. They focused on rates.
“We were getting over $500 adjusted daily rate over the weekend,” Maddox said. “We’re continuing to make sure we have the right customers here and achieve the right results.”
Wynn received a lot of negative publicity over a fight that broke out over Labor Day weekend at Encore Las Vegas and went viral.
In a review of Macau, Wynn made $67 million in adjusted earnings in the second quarter and Maddox described it as “two steps forward and one step back.”
A small outbreak in Guangdong suppressed volumes in June, but July was starting to get closer to April and May, which “indicates there’s pent-up demand in the region to go to Macau.”
Another new outbreak in the region has led to travel restrictions in recent days, Maddox said. The good news is the Macau government acts quickly and decisively to remedy problems.
Maddox said he doesn’t know how long it will last, but the government’s ability to test millions of people has helped in the past. The region has also seen accelerated vaccination rates that will help stabilize and normalize it by the end of the year.
David Katz, an analyst at Jefferies Equity Research, said the earnings call had mixed takeaways because of Macau.
“While the North America performance shows promising results, the performance in Macau is more questionable in the face of rising COVID cases as local authorities are swift to enforce lockdowns,” Katz said. “VIP levels from pre-pandemic may not return (in Macau, where) VIPs are converting to direct customers.”
Deutsche Bank had a similar view. “The report and call can be summed up relatively succinctly. Domestic trends in both Las Vegas and at Encore Boston Harbor remain very strong, with elevated spend levels and cost savings driving outsized adjusted EBITDA results, while Macau remains stuck in neutral. We don’t think we heard anything from management tonight that will meaningfully change the view on the resumption of normalized operations in Macau, with management acknowledging an uncertain timeline, while noting encouraging trends that resemble pent-up demand at certain times.””
