During Wynn Resorts’s third-quarter earnings call on Thursday, CEO Craig Billings said that the company’s $3.9 billion resort-casino on Al Marjan Island in the United Arab Emirates won’t face competition for years after it opens in 2027 and ultimately may have only one or two competitors in the marketplace.
“On the back of several regulatory developments in the UAE, I’ve noticed increased chatter about the opportunities,” Billings said. “We believe it’s highly unlikely that every Emirate will ultimately avail themselves of the right to host an integrated resort. A whole bunch of reasons for this are related to cultural nuances, population density, and varying degrees of need for additional visitation. Our view is it will likely be us alone for a multi-year period, given we’re well underway on construction. We all know the advantage of being first. After that, it may be a duopoly or oligopoly of three, but I find either market structure undaunting, given the database advantage of being first and the fact that we have very successfully operated in the two most competitive markets in the world – Vegas and Macau. As I’ve said before, this is the most exciting new market opening in decades.”
In a conference in September, MGM Resorts International CEO Bill Hornbuckle said MGM is keeping its options open for a potential casino license at its planned hotel-only project in the UAE by setting aside 150,000 square feet that could be used for gaming or retail.
Former MGM CEO Jim Murren was recently named chairman of the UAE gaming authority as Wynn awaits the licensing process.
“The regulations are in draft form and we expect the regulations will be passed and a two-step licensing process – the issuance of a provisional license and a final license,” Billings said. “I expect that would happen soon. The process is moving along. They’ve appointed leadership for the regulatory body there and that’s really good for the market. It eliminates a lot of questions and creates certainty for financing sources, which allows us to move forward with the construction financing relatively quickly.”
The Wynn project is being developed with local partners Marjan LLC and RAK Hospitality Holding LLC. The project will be funded with debt and partner-equity contributions, with 40% from Wynn Resorts and 60% from partners.
“Much of the hotel-tower foundation is complete, with nearly all of the piles supporting the 1,500-room tower in the ground,” Billings said.
The resort will be similar in size to Wynn Palace in Macau. The 115-acre site provides options for long-term development. Out of 5.6 million total square feet, 4% will be devoted to the casino, 120,000 to retail space, and 100,000 to meeting space, with 24 restaurants and lounges, a spa and wellness center, a theater hosting a production show, and other amenities.
Billings highlighted Las Vegas’s third-quarter earnings with $220 million of adjusted property EBITDAR on a “difficult year-over-year comp.” It was aided by high hold, but Wynn is looking at estimated increases with its new agreement with the Culinary Union.
“Activity at the property was frenetic during the quarter, with hotel occupancy, restaurant covers, casino visitation, table drop, and slot over what was a very strong third quarter of 2022,” Billings said. “As a result, we produced third-quarter records in gross-gaming, food-and-beverage, and hotel revenue with 10% year-over-year growth in revenue per room. We continue to be at the top of our game in Las Vegas.”
To start the fourth quarter in Las Vegas, October was strong with gaming revenue and revenue per room growth.
Looking ahead, Wynn has strong group demand for F1 next week, CES in January, and the Super Bowl in February. “While it’s an increasingly complex world with inflation, rates, and geopolitics, things continue to feel pretty good around here,” Billings said.
