Wynn results suggest high-end business steady on the Strip
18 July 2012
The first financial results for the Las Vegas Strip for the second quarter are out — and they suggest business remained steady in the high-end segment.
The numbers were issued by Wynn Resorts Ltd., which overall posted revenue declines in Macau and Las Vegas.
Competition increased in Macau while gamblers in Las Vegas played luckier during the quarter versus the second quarter of 2011.
But drilling into the Las Vegas results shows that Wynn Las Vegas and Encore on the Strip more than held their own in their high-end market during the quarter amid indications that consumers overall continue to limit spending in the face of economic uncertainties.
Wynn Resorts said the resorts, which have a combined 4,750 rooms and suites, generated room revenue of $96.2 million during the quarter, up 5.6 percent from the 2011 period.
The average daily rate was up 5.6 percent to $254, though occupancy dipped from 89.2 percent to 87.6 percent.
While the Las Vegas casinos played unlucky, they were busy. The amount wagered at their table games grew 7.6 percent to $575.6 million while slot play increased 3.2 percent to $707.8 million.
Food and beverage revenue increased 9.8 percent to $138.4 million thanks to strengths in the nightclub business.
Still, second-quarter net revenue at the resorts fell 11.6 percent from the 2011 quarter to $345.6 million.
A big chunk of the decline was attributed to baccarat and other table games winning just 15 percent of the amount wagered, down from an expected range of 21 to 24 percent and well off the 27.6 percent won in the 2011 quarter. Baccarat tables alone won just 9 percent of the money wagered during the quarter.
Net slot win was flat, Wynn said.
Wynn Resorts CEO Steve Wynn said Tuesday that this type of volatility at the tables is something he doesn’t like to see, though it’s not something the casinos can control.
''In April, for the first time in 45 years, I saw baccarat go minus (against the casino) for the month. But on the other hand, last year I saw a 37 percent hold (won by the casino),'' Wynn said. ''Those are the kinds of swings that can take place.''
''Last year (during some months), all we did was win. And that makes me uncomfortable because I really don’t like the customers to bump into such terrible bad luck.''
''This business is about amusement — self-indulgence on a very special level. The people who come here and do these things are here because they like that more than they like the money. 'They like the game. It’s their hobby. It's an indulgence, like some people buy bottles of wine for $20,000. These are people who like to gamble.''
''What's best for them is to have the normal ups and downs and normal swings. They don’t expect to win, but they like to get lucky once in a while and have fun.''
Factoring out lucky play by gamblers, the Wynn results in the second quarter for Las Vegas are in line with statistics from the Las Vegas Convention and Visitors Authority showing visitation to the city so far this year has been stronger than during the corresponding period of 2011.
The LVCVA last week said visitor volume in May grew 2.4 percent from May 2011 while hotel room occupancy was up 0.5 percentage points to 86.6 percent, and the average daily room rate was up 3.7 percent to $112.43
Overall, factoring in declines in win by Wynn’s Macau tables and slot machines, Wynn Resorts on Tuesday said net revenue in the second quarter was $1.25 billion, down from $1.38 billion a year earlier.
The company earned $138.1 million or $1.37 per share during the quarter, up from $122 million or 97 cents last year. For comparison purposes, the 2011 quarter included a one-time charge against earnings of $107.5 million for a charitable contribution made by Wynn Macau.
With second-quarter earnings season under way, Las Vegas Sands Corp. plans to announce results July 25 and MGM Resorts International reports Aug. 7. Caesars Entertainment Corp. has not yet set a date for its earnings announcement.
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