Wynn Resorts executives Tuesday touted the strength in the Las Vegas tourism and convention business in boosting third-quarter earnings and talked about the company’s plans for Middle East resort development and seeking a casino license in New York City.
In the earnings call, Wynn CEO Craig Billings told Wall Street analysts that the company’s Las Vegas resorts set a third-quarter record with $196 million in adjusted earnings. It saw broad-based strength across its casino, hotel, food-and-beverage, and retail products that was well above the third quarter of 2021, despite the difficult comparisons.
“The comparison to the third quarter of 2019 is even more impressive,” Billings said, “with our (adjusted earnings) more than doubling on a 36% increase in revenue.”
Billings said they’re encouraged at the strength they have experienced over the last several quarters, which has into the fourth quarter. Adjusted earnings in October were an all-time monthly record for the property.
“Our forward-remaining indicators remain quite strong despite well-known macro concerns,” Billings said. “Room bookings are pacing at or above pre-COVID levels on substantially higher (adjusted daily rates.) Near term, we expect the normal seasonal pattern to hold for the remainder of the fourth quarter, with some of the usual softness surrounding Thanksgiving, then a strong close to the year in the latter half of December.”
The room and convention business was thinner at the beginning of 2022 due to the omicron variant and over the course of the last month and a half, Wynn has seen the business come back more fully, executives said.
Wynn Resorts President Brian Gullbrants said what’s telling is looking at citywide conventions. The Consumer Electronics Show in 2020, just before COVID took hold, had more than 170,000 people attend, compared to 44,000 in 2022.
In the aftermarket auto show held in October, more than 130,000 people attended, Gullbrants said. “We’re having the most solid year we’ve ever had. We’re going to have our best year ever in group in both room nights and revenue and we’re pacing ahead of that for 2023.”
Billings said Encore Boston Harbor had a strong quarter, as well with record gross gaming revenue. The property had record hotel revenue on the non-gaming side driven by strength in room rates and occupancy.
“These trends have continued into the fourth quarter and (adjusted earnings) consistent with the third quarter,” Billings said. “Looking ahead, we remain excited about sports betting in the Commonwealth, which is expected to kick off early next year. Our retail sportsbook will be a significant opportunity for customer acquisitions.”
Billings noted that Macau continues to be challenging. Market-wide gaming revenue during the third quarter reached only 8% of that in the third quarter of 2019. He said they’ve seen “some encouraging pockets of demand” during the October holiday period, particularly in the direct VIP business. “Long term, we remain excited about the prospects for Macau with so much pent-up demand for travel and tourism in Asia.”
By early 2023, Wynn is expected to announce programming and plans for an integrated resort with gaming facilities on Al Marjan Island, a tourist destination in Ras Al Khaimah, UAE, in a move that will extend the brand to the Middle East and Europe.
Billings said they will be driving pilings for the property by the middle of 2023.
“The more time we spend over there, the more we believe in the non-gaming elements for that market,” Billings said. “It’s a tremendous non-gaming leisure and luxury market. We’re in the late stages of programming in determining what we’re going to build and how it’s going to look. Given it’s a man-made island without any existing development, it’s an incredibly flexible location on which to plan. For example, if you want to move a beach, you move a beach. It’s an exciting project and we sought to maximize the relationship with the surroundings.”
The casino is “shaping up to be somewhat larger than Wynn Las Vegas, but with numerous pockets of energy and compression,” Billings said. Since Wynn will be the only operator, it’s important not to underbuild the casino; instead, they want to maintain that sense of energy. “I think the property is going to be a stunner.”
Billings touched on media reports that the company is teaming with Related Companies to pursue a casino license for a project in Related’s Hudson Yards development in Manhattan.
“We’re always interested in locations like New York,” Billings said. “The devil is in the details when it comes down to what the upfront license payment, taxes, and regulation details end up being. Of course, we’re interested in New York, as has been reported in the press.”
During the earnings call, Billings was asked about Tilman Fertitta, the owner and CEO of Fertitta Entertainment, buying nearly $400 million in Wynn stock. The company owns the Golden Nugget in downtown Las Vegas and Houston Rockets of the NBA. He’s also planning to build a resort on the south end of the Strip.
“What I can say is kudos to him, because he’s done quite well since it appears he has started acquiring during the second quarter when the stock was excessively cheap,” Billings said. “It’s actually right around when we were buying back stock as well. It’s a great recognition of the value of our equity.”