Macau casino closings costing Wynn Resorts $2.4 million to $2.6 million per day
The government mandated closure of Macau’s casinos in reaction to the coronavirus outbreak is costing Wynn Resorts a “burn rate” of $2.4 million to $2.6 million a day, primarily as payroll for its 12,200 employees in the Chinese gaming market.
The shutdown impact on the company was the primary discussion topic Thursday on Wynn’s fourth quarter conference call. CEO Matt Maddox said the company’s two resorts complexes – Wynn Macau and Encore and the Wynn Palace on Cotai – are still operating hotels and a couple of restaurants for the few remaining guests at the properties.
Wynn executives said business interruption insurance won’t cover the losses the company is sustaining during the closure because the action has to relate to a physical event, such as hurricane or fire.
Still, Maddox said the company agreed with the Macau’s government-ordered shutdown as an attempt to halt the spread of the Coronavirus, which originated in the central Chinese city of Wuhan and has so far killed at least 565 people and infected more than 28,000.
“We are focused almost solely on the health and safety of our employees, our customers and the Macau community at large,” Maddox said. “We commend Macau and China for the quick and decisive action.”
The 15-day government-mandated closure began Wednesday after two local residents, both casino employees, were confirmed to have the virus. The city had 10 cases as of Tuesday.
Maddox said it’s still too early to determine when the properties in Macau will reopen. Wynn executives said 2020 was set up to be “a great year” when the virus began to spread just as the country was celebrating the Chinese New Year Holiday, often considered the busiest time in the gaming enclave.
Macau gaming revenue fell 11.3% in January and visitation was down more than 80% during the holiday after the government curtailed transport links with mainland China in an effort to contain the virus.
Maddox expressed optimism that the Macau market would rebound once the virus was considered controlled and Chinese citizens began getting back to more normalized activities.
Meanwhile, Wynn Las Vegas President Marilyn Spiegel said the company’s Strip resorts may be seeing some uptake in their business because of Asian customers who were in town for the Chinese New Year festivities but are unable to return home.
In the quarter that ended Dec. 31, Wynn said its overall revenues declined 2% to $1.65 billion, with almost $1.12 billion of the total coming from the company’s Macau properties. Revenues declined 5.1% at Wynn Macau and Encore and 20.3% at Wynn Palace.
During the quarter, Wynn Resorts reported a net loss of $72.9 million, compared to net income of $464.9 million in 2018, which included a net tax benefit of $390.9 million related to U.S. tax reform.
The company’s two Las Vegas resorts saw revenues decline 6.3% in the quarter, while Encore Boston Harbor, which opened in June, reported $169.3 million in revenue
For all of 2019, revenues were $6.61 billion, a decrease of 1.6%.
Maddox says the company’s loyalty program in Boston is beginning to take hold, while casino leaders adjusted some of the areas that were considered soft at the property, such as slot machine hold play. He said the company is still projecting a two-year ramp for Encore Boston Harbor, which cost $2.6 billion.
In Las Vegas, will begin remodeling 2,700 rooms at Wynn Las Vegas, which opened in 2005. The activity is expected to begin as the 430,000-square foot expansion to the property’s convention facilities opens this month. Maddox said the convention center expansion and the reopening of the redesigned Wynn Las Vegas golf course cost a combined $425 million.