Wynn expects Cotai Strip resort to be ‘irresistible to our guests’
A 9.8 percent increase in revenue from Macau helped offset an 8.1 percent decline in Las Vegas, causing Wynn Resorts Ltd. to report lower profits in the first quarter of 2012.
Maybe that’s why CEO Steve Wynn chose to whet the appetites of analysts with a few new details about his planned new resort on Macau’s Cotai Strip during this afternoon’s conference call on earnings.
Wynn reported net income of $198.4 million — $140.6 million attributable to Wynn assets — $1.23 a share, on revenue of $1.31 billion for the quarter that ended March 31. That compared with net income of $226.3 million, $173.8 million attributable to Wynn assets, $1.39 a share, on revenue of $1.26 billion a year earlier.
Results missed the average of 22 analysts’ expectations by 2 cents a share.
While Wynn didn’t give details about construction costs on the 2,000-room property that he’s called the single most important project in his company’s history, he said his six years of experience in the Asia market and being able to see what competitors have built in the market would enable him to offer an experience the Chinese have never seen before. Financing, he said, would be up to 30 percent equity.
Wynn received official word last Wednesday that he had received a concession contract for 25 years and the right to renew it for additional successive periods.
“We’re looking to build something that will be irresistible to our guests,” Wynn said in the conference call. “That’s an expensive assignment to take. We’re looking to take it to another level and to make it delicious.”
Wynn said he was withholding details about property design now to keep them away from such competitors as MGM Resorts International and Stanley Ho’s family’s SJM Holdings.
“I’d really love to see them tip their hands first,” Wynn said.
He said he expects to be able to offer more details at the second-quarter earnings conference call in July.
Company officials attributed revenue declines in Las Vegas to lower table games hold.
Average daily room rates in Macau rose 5.4 percent and occupancy was up 2.7 percentage points to 91.3 percent. In Las Vegas, room rates were up 6.4 percent to $255, but occupancy fell 8.2 percentage points to 79.3 percent.
Wynn said occupancy dropped dramatically because the company stood firm on increasing room rates, demanding a higher-spending customer.
“We’re not set up to have people who go to McDonald’s,” Wynn said.
While Wynn is clearly energized to go to work on his Cotai property — he spent several minutes explaining how one of the biggest challenges of the building will be to develop a firm foundation on the reclaimed land — much of the buildup has been overshadowed by his legal fight with former partner Kazuo Okada.
Wynn said at the beginning of the conference call that there were no new developments in his dealings with Okada, but when asked what would happen next, he offered some opinions about the case.
“There’s nothing we can do about frivolous lawsuits,” Wynn said of Okada’s countersuit against him.
“I can just say that his actions gave our board no choice,” he said. “The legal advice we received was tantamount to telling us we had no choice (but to remove him from the board.) What happens next? Your guess is as good as mine.”