Wynn Resorts profit gets boost to $173.8 million in first quarter
Wynn Resorts posted a sixfold increase in profit during the first quarter of 2011 as business boomed in Macau and continued to rebound in Las Vegas.
The Las Vegas-based casino operator reported first-quarter profit of $173.8 million, or $1.39 per share, an increase from $27 million, or 22 cents per share in the same period of 2010.
Net revenue for the quarter was $1.26 billion compared with $908 million in the first quarter of 2010. The company said the revenue increase was driven by a 46.6 percent increase in revenue in Macau and a 24 percent increase at its Las Vegas operations.
At the company’s two Las Vegas hotel-casinos, net revenue totaled $394.6 million. EBITDA, a profitability measure meaning earnings before interest, taxes, depreciation and amortization, in Las Vegas was up 119 percent to $132.1 million in the first quarter this year versus $60.3 million in the same period of 2010.
When asked about the company's recent cost-cutting initiatives, Wynn Las Vegas President Marilyn Winn Spiegel said she “wouldn’t consider it a cost-cutting program but as one that is driven by revenue growth.”
The company went through restructuring as Spiegel moved from Caesars Entertainment to Wynn Las Vegas in February, which included the departure of some property executives.
“We looked at every expense. We looked at payroll, we looked at fixed expenses … they are very stable. More critically though, we had increases in variable expenses because gaming revenues were higher this quarter,” Spiegel said.
Wynn Resorts Chairman and CEO Steve Wynn said the company isn’t concerned with seeing how much it can cut and still get by.
“That’s for people who run a different kind of business than us. This is not Walmart here. This is a place where people expect more, they pay more and they get it,” Wynn said.
During the first quarter of 2011, net casino revenue at Wynn Resorts' two Las Vegas casinos was $194.2 million, up 39.2 percent from the first quarter of 2010. The quarter included the Chinese New Year period, which typically brings in more gambling-focused international visitors.
Non-casino revenue for the quarter totaled $249 million, a 10.8 percent increase from the first quarter of 2010. The company said the increase was driven by higher revenue across all non-gaming segments.
Room revenue in Las Vegas was up 13.4 percent to $88 million during the quarter. The average daily room rate at Wynn and Encore was up 18 percent to $240, but occupancy dipped to 87.9 percent from 89.4 percent during the year-over-year period.
Food and beverage revenue at the Las Vegas resorts increased 10.6 percent to $106.1 million during the first quarter of 2011, primarily because of Surrender nightclub, which opened at Encore in May 2010.
Spiegel said Tuesday that the Las Vegas resorts will be launching a new “Discover Wynn” program in May in which guests who make room reservations can also make restaurant, spa and entertainment reservations.
“It will be a one-stop shop," she said. "We really think that when a guest comes here that we could really serve them for all their needs."
At Wynn Resorts' Macau operations, net revenue for the quarter totaled $865.7 million compared to $590.6 million in the first quarter of 2010. EBITDA at Wynn Macau in the first quarter of 2011 was $272.8 million, up more than 50 percent from $181.6 million in the first quarter of 2010.
The company is turning its focus in Macau to building a casino-resort in the Cotai area of the region. Wynn said the design and development process is almost complete and said he expects it to cost between $2 and $3 billion. He said the company will have a final budget for the project in the next six months
Wynn said the Cotai project will include 1,580 rooms, 900 of which will be suites, and will feature “creative and fancifully” entertainment options similar to the Bellagio fountains and Lake of Dream at Wynn.
“In Macau and Atlantic City, there are a lot of frequent customers who come every two to three months, as opposed to Las Vegas where they come two to three times a year. In Macau, a sustaining show is a bit dicey as a proposition because people can’t see the same show 20, 30 times,” Wynn said.
So instead of a resident show, Wynn said the resort will rotate headliners at the Cotai property as well as offer free entertainment experiences.
Wynn also touched on online gaming during Tuesday’s conference call. Last week, Wynn Resorts announced it had terminated its alliance with PokerStars as a result of a national Internet poker crackdown.
Wynn said there are a number of companies who have approached Wynn Resorts who haven’t violated the Unlawful Internet Gambling Enforcement Act that they would be interested in partnering with if online poker becomes legal and receives the proper licensing.
“It seems to me that every congressman and senator has constituents breaking the law and that’s not healthy,” Wynn said regarding online poker. “The situation is crying for regulations so states and the federal government can get money when they need it. It seems like the intelligent thing to do is sit down and regulate it, but it’s not for me to decide.”