Wynn Macau Ltd says it plans to spend the capital expenditure commitment of its promised US$2.2 billion Macau investment between now and 2032 as soon as possible in order to drive stronger returns.
The investment plans of Wynn Macau were discussed at length during parent company Wynn Resorts’ 4Q22 earnings call on Thursday, coming just a month after the local subsidiary’s new 10-year gaming concession officially came into effect on 1 January 2023.
While the concessionaire has committed to investing US$2.2 billion over that 10-year period in both capex and opex, Wynn Resorts Chief Financial Officer Julie Cameron-Doe said the capex component would be utilized sooner rather than later “as quickly as possible so that we can start to drive strong returns from it.”
That will include spend of anywhere between US$50 million and US$220 million in 2023 alone.
“The limiting factor is really the approval that we need locally to break ground and build anything, so it’s really not in our hands,” Cameron-Doe said. “That’s why we’ve given such a wide range because from our perspective, we’re pacing towards getting through our D&D and designing everything, but we have to go through government approvals for anything that’s construction related. So the range we gave was US$50 million to US$220 million.”
Notably, Wynn did not provide any comment on the potential resurrection of a previously proposed US$2 billion expansion of its Cotai integrated resort, Wynn Palace – which was to include a 650-room hotel and “Crystal Pavilion” when announced back in 2019 before COVID-19 put these plans on hold.
But it did outline some non-gaming opportunities that were likely to be beneficiaries of short-term capex spend, satisfying the Macau SAR Governments push to develop more non-gaming attractions.
“Our future non-gaming investments include a new site set to be home to a unique spectacle show, innovative food halls and an events and entertainment center,” Cameron-Doe said. “We believe these investments play into our strength as we have a demonstrated track record of introducing innovative non-gaming investments that drive increased tourism and ultimately, strong shareholder returns.”
Wynn reported a US$59.1 million EBITDA loss from its Macau operations for the three months to 31 December 2022 but reported a strong rebound since Macau’s borders reopened on 8 January.
According to CEO Craig Billings, mass table drop reached 95% of 2019 Chinese New Year levels during the recent Golden Week holiday while direct VIP turnover was 40% higher than pre-COVID CNY levels.
“Importantly, we estimate that our hold-normalized GGR market share during the month of January was consistent with 2019 levels, despite all the changes in the junket environment, defying the expectations of those who continue to incorrectly believe that we are solely a VIP focused organization,” Billings said.
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