During a conference call detailing first-quarter earnings to Wall Street analysts, Wynn Resorts’ CEO Craig Billings discussed the company’s planned $2 billion resort in the United Arab Emirates and touched on the prospect of getting a casino license in New York City and doing additional development in Macau.
In January, Wynn announced plans for an integrated resort with a casino on tourist destination Al Marjan Island in Ras Al Khaimah, UAE, in a move that will extend the brand to the Middle East and Europe. The resort also includes a 1,000-plus-room hotel, high-end shopping mall, state-of-the-art meeting and convention facility, a spa, several restaurants and lounges, and entertainment. Al Marjan is a set of four islands that has 670 acres extending into the Arabian Gulf .
“We have moved quickly to our design on our project in the UAE, and I grow more excited about the opportunity with each iteration of that design,” Billings said. “The island, which is really a blank canvas for us, presents amazing opportunities to do what we do best, from offshore large-scale water and light spectacles akin to the Lake of Dreams (at Wynn Las Vegas) to a room product that takes advantage of the unique aspects of the beach-side setting. I’m confident we’re going to deliver something special to a market that is accustomed to paying a premium for luxury experiences.”
Wynn’s was the first announcement of legalized gambling in any of the seven Emirates. Caesars Entertainment runs the Caesars Palace Dubai, which doesn’t have gambling.
Billings responded to an analyst question speculating on whether Wynn will be facing more competition in the UAE.
“I can’t really opine what the other Emirates may do with regards to legalization,” Billings said. “That’s in their hands. I would point out that we not only compete, but punch up well above our weight, in the most competitive market in the world in Las Vegas. Our underwriting of that opportunity presumed there would be competition, but I can’t tell you that we know of any now.”
Wynn will underwrite the $2 billion project with 50% debt and 50% equity, of which Wynn’s portion will be 25% to 40%. That’s in addition to a management contract.
As for continued interest in one of three New York City casino licenses up for grabs, Billings said Wynn is interested in “any gateway city that is conducive to the scale and quality of development that Wynn Resorts does. We’re interested in New York and we’re active there. We’re not in a position yet to talk about anything in particular.”
Wynn reported operating revenues were $953.3 million for the first quarter, an increase of $216.7 million, from $736.7 million for the first quarter of 2021. Adjusted property earnings were $177.6 million for the first quarter, compared to $58.9 million in the first quarter of 2021.
Billings said the first-quarter results reflected continued strength at both Wynn Las Vegas and Encore Boston Harbor; both properties set first-quarter records for adjusted earnings.
In Macau, the first quarter was negatively impacted by travel restrictions and other mitigation related to COVID-19, Billings said. Operating revenues at Wynn Palace were $163.3 million, a decline of $74 million from the first quarter of 2021. Operating revenues at Wynn Macau were $135.1 million, a decline of $44.6 million year to year.
Despite that, Billings remained positive on Macau. “Macau is the most fascinating aspect of our portfolio right now. The equity markets aren’t appreciating that, but that’s fine. That happens from time to time.”
Billings said the company was an aggressive marketer with the opening of Wynn Palace and is well equipped to compete with the reopening of Macau to a more mass-centric market.
“We’ve seen throughout the course of COVID new customers come to Macau,” Billings said. “They have different motivations – shopping and leisure. That piques our interest in the future development of what Macau might be from a non-gaming perspective. We’re not under any illusion that we’re talking about a Las Vegas-style non-gaming market. It’s just a very different dynamic there, but the ability to adapt or even lead our business as the market changes, which we have historically done here in Las Vegas, is something I find fascinating and an interesting investment opportunity.”
Ian Coughlan, president of Wynn Macau, said the company has two undeveloped land parcels at Wynn Palace totaling 11 acres. Another 1½ acres are available at Wynn Macau.
“We have three opportunities to build very meaningful product offers for the future,” Coughlan said. “We’re in the process right now of determining what will benefit Macau for the long term. We’re awaiting the tender documentation to see what the government feels is required for the future and we will blend our own needs with that. There’s a great opportunity for us to expand our business considerably in Macau.”
With the two existing properties being 15 years old and five years old and well maintained by reinvestments, Coughlan said Wynn is ready as soon as Macau bounces back. He called it a matter of when.
Billings said the downtown Wynn Macau property in which gaming will be the core has prime real estate in former junket space that will be “incredibly competitive in mass.” At Wynn Palace, they have the opportunity to do some “more unique things and longer-term blue-sky thinking. We’re obviously not making that investment now, but we certainly have the real estate to do it. We will take advantage of that when the time comes.”
