Wynn unveils name and design of new UAE resort

April 27, 2023 4:25 PM

Wynn unveils name and design of new UAE resort

  • Buck Wargo, CDC Gaming Reports
April 27, 2023 4:25 PM
  • Buck Wargo, CDC Gaming Reports
  • UAE
  • Commercial Casinos

Wynn Resorts has announced the name of its new $3.9 billion integrated resort in Ras Al Khaimah in the United Arab Emirates. It will be called Wynn Al Marjan Island.

The company on Thursday also unveiled the vision of its first-ever beachfront resort, whose design is inspired by the tranquil seascape of Al Marjan, a group of four man-made islands, 50 minutes from the Dubai International Airport.

The 115-acre resort site overlooking the Arabian/Persian Gulf is being developed with local partners Marjan LLC and RAK Hospitality Holding LLC. Construction work began earlier this year with a scheduled opening in early 2027.

“For its first project in the Middle East, Wynn will create a serene and stylish setting that takes inspiration from the stunning sea views and brings the relaxed ocean setting into its modern world-class hotel,” Wynn officials said in a press release. The brand’s “high-design opulence will be reflected in its approximately 1,500 lavish rooms, suites, and villas,” all in a tower that rises 1,000 feet from the base of the island.

The entertainment options include a casino, 24 restaurants and lounges, spa, high-end shopping, events center, theater, nightly laser and light shows, and other amenities.

The resort will be similar in size to Wynn Palace in Macau with 5.6 million total square feet: 120,000 square feet for retail, 100,000 square feet of meeting space, and the casino that will occupy 4% of the gross floor area.

“The same geometric configuration of the curved shape of the beach on the island is echoed through the structure, creating majestic views of the beach, sea, and horizon,” the company said. Every diner in the restaurants lining the beach-facing promenade will enjoy views of the sea.

“We’ve spent the past year on Wynn Al Marjan Island, carefully considering its unique location,” said Wynn Resorts CEO Craig Billings.”

Wynn will be the first legalized gambling in any of the seven Emirates. Caesars Entertainment runs Caesars Palace Dubai, which doesn’t have a casino.

During an audio presentation released this morning, Billings discussed Wynn’s Las Vegas operations having a broad revenue base that’s disproportionately non-gaming, in contrast to the gaming-first market in Macau.

“As we’ve studied the opportunity in the UAE, we’ve grown increasingly convinced in the customer’s willingness to spend on luxury hotel, food and beverage, wellness, and entertainment experiences,” Billings said. “I expect Wynn Al Marjan Island to be much more akin to our Las Vegas operations driving meaningful non-gaming revenue.”

This will mark Wynn’s first new resort since Encore Boston Harbor and Billings said it will be “unmistakably a Wynn Resorts product. Existing Wynn customers will feel right at home.”

Wynn’s success over the last 20-plus years has been driven by the design and development of large integrated resorts in destination markets around the world, Billings said.

“This development will further diversify our portfolio, while meaningfully extending our brand,” Billings said.

Wynn Resorts has a 40% equity ownership in the joint venture. Wynn said it’s the first instance of the company getting “paid for what we know” with attractive management and license fees, akin to a luxury-hotel management agreement.

“We expect the combination of our 40% equity ownership, along with the management and license fees, to drive a very healthy return on invested capital,” Billings said.

Wynn and its partners are in active discussions regarding adjacent parcels and Billings expects additional hotels on the island will “act as a powerful feed to Wynn Al Marjan Island.”

Julie Cameron-Doe, chief financial officer, said the project will drive strong long -term return to shareholders. The project will be funded with debt and partner equity contributions, 40% from Wynn and 60% from partners.

The project is expected to generate $450 million to $600 million of adjusted property EBITDAR, which implies $300,000 to $400,000 of annual EBITDAR per room, Cameron-Doe said.

“This compares favorably with other high-end tiers, including our own properties in the U.S. and Macau,” Cameron-Doe said. “Overall, this implies low- to mid-teens EBITDAR return on estimated project costs. For Wynn Resorts, we expect the combination of our 40% share of partnership distribution along with attractive management and license fees to drive ROI above project-level returns.”

Carl Santarelli, an analyst for Deutsche Bank, put out a note to investors today reiterating previous comments that the project is worth $10 to $14 per share.