Challenged Macau market plays havoc with Wynn Resorts Q3 results

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Howard Stutz has over 30 years of experience reporting on the gaming industry.

Macau’s weakening gaming revenue trends were reflected in Wynn Resorts third quarter results.

The Las Vegas-based casino operator said Wednesday that steep declines from its three Macau properties led to companywide decreases in revenues, cash flows and earnings for the third quarter.

During a conference call with analysts, Wynn CEO Matt Maddox said the Macau casinos were crushed by poor hold percentages. He added that wagering by mass market gamblers actually rose 8% from a year ago.

Overall company revenues decline 3.6% to $1.64 billion for the period that ended Sept. 30. The dip in revenues came about despite the end-of-June opening of the company’s $2.6 billion Encore Boston Harbor in Massachusetts. For the full quarter, Encore reported $178 million in revenue.

However, Wynn’s Macau three resorts – the Wynn Macau-Encore combination and Wynn Palace – each reported more than 18% declines in gaming revenue compared to the 2018 third quarter.

For the first 10 months of 2019, Macau gaming revenues are down 1.8% and analysts said the region might be challenged to match last year’s $37.6 billion total. Macau recorded two consecutive years of gaming revenue increases in 2017 and 2018, which followed a prolonged slump of three years.

Maddox said signs, however, are pointing toward a positive 2020.

“In Macau, the investments we have made position us well to compete in any market environment, as evidenced by record mass table win in the quarter,” Maddox said in a statement. “On the development front, we are on track to launch the renovated west casino at Wynn Macau beginning in late 2019, further solidifying the property as the peninsula’s marquee integrated resort.”

The Macau results impacted the rest of Wynn’s third quarter results.

Total cash flow was off 21.8% to $360.7 million and net income declined 87.8% to $26.9 million.

Maddox said the first three full months of Encore Boston Harbor has been a learning experience for the company.

“We’re learning how to become more local,” Maddox said. “We’re tweaking out food and beverage offerings.”

Also, Wynn will launch a player loyalty program in Boston, the first time the company has utilized tiered card player tracking and rewards system. Maddox said the program is “essential” for a regional gaming property.”

“We’ve been open for 136 days in Boston. We started with zero names in our database and we now have a database with 250,000 people since the opening. A robust database is necessary in Boston.”

In Las Vegas, Wynn Resorts re-opened the Wynn Las Vegas Golf Course on Oct. 11, after the facility was closed for nearly two years. The company $425 million, 430,000-square-foot convention and meeting expansion at Wynn Las Vegas is expected to open in early 2020.

Maddox said the company is also planning new amenities at Wynn Las Vegas and Encore over the next 12 months.

“We’re spending money to create a fun experience here,” Maddox said. “We see an opportunity to capture (market) share.”

One analyst asked Maddox about the recent sale/leaseback of the Bellagio by MGM Resorts International to real estate investment trust for $4.25 billion. He said Wynn Resorts isn’t interested in a real estate deal for Wynn Las Vegas or Encore Las Vegas.

“We’re getting full value for our real estate,” Maddox said.