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Wynn has major plans for Macau

30 Apr 2010

By Howard Stutz
LAS VEGAS, Nevada -- Wynn Resorts Chairman Steve Wynn didn't back away from the idea of moving the casino operator's corporate headquarters from Las Vegas to Macau, and he said Thursday that he and the company's chief financial officer would spend more time in China.

During a question-and-answer session with analysts and investors to discuss Wynn Resorts Ltd.'s first-quarter earnings, Wynn said he would be adjusting his schedule to increase his presence in Macau, where the bulk of the company's quarterly revenues are being produced.

Because Wynn Resorts is now listed on the Hong Kong Stock Exchange and the company is making plans to build a third casino in Macau, Wynn said his activities need to reflect and show respect for the company's dependence on Asia.

"I don't intend to uproot everybody who works for me, but it's becoming appropriate that I spend more of my time in Macau," Wynn said. "I intend to begin the process to switch that schedule."

Last week, during the run-up to the opening of the company's $600 million Encore Macau, Wynn told media in China he was considering moving Wynn Resorts' corporate headquarters to Macau because the bulk of the company's business is coming from Asia. Wynn also criticized the economic policies of President Barack Obama, saying they had hurt American business development.

On Thursday, Wynn said plans for a resort on the Cotai Strip region of Macau would include a corporate headquarters. However, the earliest that project could open would be 2014.

"I think that shows a respect for our company's position in Macau," Wynn said.

Wynn Resorts' first-quarter earnings reflected the influence of Macau.

The casino operator said its net income in the quarter that ended March 31 was $27 million, or 22 cents per share, reversing a net loss from a year ago of $33.8 million, or 30 cents per share. Analysts polled by FactSet Research expected the company to earn 17 cents a share during the quarter.

Company revenues in the quarter were $908.9 million, compared with $740 million a year ago. The company said the increase was driven by a 31.6 percent growth in revenues at Wynn Macau and a 9.3 percent revenue increase from the combined operations at Wynn Las Vegas and Encore Las Vegas.

"The numbers speak for themselves," Wynn said.

In Macau, net revenues were $590.6 million in the first quarter, compared to $448.7 million in the first quarter of 2009. Nongaming revenues at Wynn Macau increased 45.7 percent to $62.7 million, driven in large part by retail revenues, which were up 91.3 percent to $30 million. Several high-end stores opened at the property.

In Las Vegas, the company's net casino revenues in the first quarter were $139.5 million, up 18.8 percent. Noncasino revenues were $225.2 million, a 1.4 percent decrease, driven primarily by lower hotel revenues. Entertainment revenues of $18.2 million, up 42.2 percent, were due primarily to the performances of country music star Garth Brooks, who began performing at Encore Las Vegas in December.

Macquarie Securities gaming analyst Joel Simkins said Wynn's results in Las Vegas reflected the lowest hotel room rates the company has had since opening Wynn Las Vegas in April 2005. Some of the rate decreases, Simkins said, were due to the addition of the 4,004-room Aria at CityCenter, which opened in December.

"Although we believe Las Vegas faces a protracted recovery, Wynn's first-quarter results demonstrate that the explosive growth in Macau can more than offset the current weakness in Las Vegas," Simkins said. "In Macau, as long as Beijing remains supportive of the gaming industry's growth, we see continued upside for the market long term and recognize Wynn's position as a brand-name destination for VIP players."

Encore Macau opened April 21 with 410 hotel rooms and four villas. The gaming expansion gave Wynn 467 table games, which includes 246 high-end VIP tables, 210 mass market gaming tables and 11 poker tables, and 1,224 slot machines between Wynn Macau and Encore.

Wynn didn't go into too many details about his plans for the Cotai Strip, other than that he wants to create a destination resort on the 51-acre site .

Wynn shed a little light on why the company withdrew from a planned $600 million casino project in Philadelphia. The company "backed away from the deal because the stars didn't line up for us." Wynn said he might consider bidding on the gaming license if Pennsylvania gaming regulators revoke the current owners' agreement.

Wynn also told analysts not to "read anything" into his recent trips into regional casino markets, including St. Louis. While considering the Philadelphia deal, Wynn said, he and his management team decided to visit regional casinos "as detached observers."

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