Wynn Resorts CEO Craig Billings touted second-quarter results, as the company announced that construction is underway on its resort on Al Marjan Island in the United Arab Emirates that he called a “must-see” tourism destination.
“What a quarter,” Billings said in his opening statement to Wall Street analysts on Wednesday. “Who would have thought six months ago that we would be run-rating $2.2 billion of property EBITDAR?”
Peak annual property EBITDAR for the company was $2 billion in 2018, but Billings said Wynn today is more diversified, with the addition of Encore Boston Harbor, a business in Macau running “structurally higher margins into a resurging market,” and a business in Las Vegas “that is more relevant than ever,” while producing nearly double its 2018 EBITDAR with much higher margins.
Billings singled out the start of construction at the Al Marjan project that’s scheduled to open in 2027 and is modeled more like its Las Vegas properties, with the importance of non-gaming amenities, than its properties in Macau and Boston.
Wynn Al Marjan Island is a $3.9 billion integrated beachfront resort in Ras Al Khaimah in the UAE. It’s 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.
“We have a substantial growth opportunity in the UAE, the most exciting new gaming market in decades,” Billings said. “We’ll bring our A game to this development. Our 40% equity ownership and management license fees will drive a very healthy ROI for Wynn Resort shareholders.”
Billings said they have everything they need to operate gaming there, though there’s confusion about individual Emirates versus the UAE as a whole. While there may be discussions of legalization at other Emirates or the federal level, Billings said he expects to obtain their license imminently.
“There should be no concern that a legalization process needs to occur for gaming to occur on that property,” Billings said.
Wynn Las Vegas delivered $224.1 million in adjusted property EBITDAR during the second quarter, up 3% on a hold-normalized basis on a difficult year-over-year comparison.
“The strength was all over the place,” Billings said. “The casino, the hotel, restaurants, retail — you name it. All supported by a consumer that seems more than willing to continue spending on unique luxury experiences.”
Billings said they have customers who skew toward luxury, but the company continues to monitor when higher interest rates and inflation might begin to have an impact.
“So far, so good,” Billings said. “In fact, drop, handle, and revenue per room are all up year over year in July and that’s before we get into the latter potion of the year with a number of tailwinds from citywide programming.”
Billings said daily room rates have risen “pretty meaningfully” since reopening from the COVID shutdown in 2020. They’ve held those rates and continue to have a rate premium on the Strip. “We’re feeling great about our business.”
Wynn reported that room bookings are up year over year, 2023 will be a record for group bookings, and 2024 is pacing ahead of that.
In Las Vegas, table-game win percentage for the second quarter was 22.9%, within the property’s expected range of 22% to 26% and below the 24.6% in the second quarter of 2022.
At Boston Harbor, Wynn generated $69 million in EBITDAR, an all-time property record. They generated record gaming revenue in the casino, led by strong growth in slot handle and the addition of retail sports betting earlier in the year.
Table-game win percentage for the second quarter was 22.3%, above the property’s expected range of 18% to 22% and above the 21.9% experienced in the second quarter of 2022.
On the non-gaming side, Encore Boston Harbor delivered strong hotel revenue with both daily rates and occupancy, Billings said.
In Macau, Wynn generated $246 million in EBITDAR, 72% of pre-COVID levels. Hold was a mixed bag, as it held high in the VIP business that was offset by low hold on the mass table side.
“We saw strength across the property with several components of the business above 2019 levels,” Billings said. “In the casino, mass table drop increased 4% versus the second quarter of 2019, despite portions of Wynn Macau’s casinos being closed for renovation during the quarter. The quality of our products and services, the relaunch of our loyalty program, and our robust non-gaming events calendar all helped drive 14.2% market share in the quarter, consistent with our shares we exited in 2019.”
On the non-gaming side, retail revenue continues to be strong, with tenant retail sales increasing 47% versus the second of 2019, Billings said.
“Looking forward as you have seen, market-wide gross gaming revenue in Macau has been impressive, building through the second quarter. The strength has continued through the third quarter with a mass drop per day in July exceeding what we experienced in each month in the second quarter and reaching 120% of daily mass drop in 2019. In July, we also continued to experience robust hotel occupancy and very healthy tenant retail sales.”
Billings said Wynn is deep into the design and planning process for concession-related capital-expenditure commitments that will help diversification goals and be additive to the business.
