Inside Asian Gaming

inside asian gaming September 2014 14 Steve Wynn Chairman and CEO Wynn Resorts As of 30th June, Wynn Resorts had plowed more than US$1 billion into the Cotai megaresort that founder and Chairman Steve Wynn has called “the single more important project in the company’s history”. Wynn Palace, priced at $4 billion and slated to open on Chinese New Year 2016, “represents everything we’ve learned,” he has stated. That’s saying something coming from the man behind The Mirage, Bellagio, Treasure Island, Wynn Las Vegas and Wynn Macau. The son of a Maryland bingo parlor operator, a graduate of the famed Wharton School of Business, Steve Wynn parlayed a small stake in a long-gone Las Vegas hotel into the empire that was Mirage Resorts. Like Jay Sarno and Benny Binion before him, like his contemporaries Kirk Kerkorian and Bill Bennett and Anthony Marnell and Sheldon Adelson, he is, and always has been, a showman first and foremost, one with a genius, like theirs, for seeing Las Vegas as more than it could see itself. Dolphins, white tigers, an exploding sidewalk volcano, nightly pirate ship battles, Picassos, Rembrandts, Renoirs, Cirque de Soleil, 100-foot sprays of water dancing under colored lights to the strains of Andrea Bocelli—he’s the man who wove them into the landscape of the Strip and into the way millions of tourists and holidaymakers around the world would come to perceive Las Vegas. He was a pioneer on the finance side too. The funding of The Mirage was engineered by the famous Michael Milken (or infamous, depending on your point of view), and its success transformed high- yield “junk” bonds into the go-to vehicle for a generation of casino developers in the US, for better or worse. More recently, though, and perhaps above all, he’s been a seminal figure in the commoditization of luxury, which is the heart and soul of the integrated gaming resort as we know it today, and certainly the story of Las Vegas as well. Such was Steve Wynn’s renown by the turn of the century, even as far away as China, that he would be the only non-Chinese operator to win one of Macau’s three casinos concessions. It was the vision that seduced them. Mr Wynn’s shareholders, however, know the legend has never been stymied by that. It’s always been carried through into design and execution. The ultimate compliment paid to him are the multiples his companies command, the confidence they inspire with a strategy that refuses to cut corners with a luxury niche that enables Wynn properties to succeed consistently at portraying themselves as “boutique” alternatives in spite of their obvious size and scale. His hotels will play poker on the Strip with three or four percentage points of occupancy in exchange for room rates that run at more than double Strip averages. There are a lot of moving parts involved in making that profitable, and it takes operational savvy to pull it off, and Steve Wynn, an old hand at competing in the toughest casino markets in the world, is as savvy as they come. He’s added more prudent financial management to his arsenal, too, since relinquishing Mirage Resorts to rival Kirk Kerkorian all those years ago, and his skill at identifying and nurturing talented management is more in evidence these days than ever. This is serving him particularly well right now at his Macau hotels at a time when VIP volumes are falling market-wide and growth in high-margin cash play is slowing and competition on the capacity-constrained peninsula is intensifying in response to the Cotai boom. Wynn Macau and Encore at Wynn Macau are consistently Michelin- and Forbes Five Star-rated and neither is going to be budged from its position at the top end of the market. Indeed, he continually reinvests in making them better, shuttering dozens of precious table games and scores of rooms over the last 18 months, and taking the hit in revenues, and Wall Street and Hong Kong are unfazed. They love it when he gets ambitious. When you’ve got lightning in a bottle you don’t look away, and the Wynn Macau complex generates upwards of 70% of Wynn Resorts’ revenues and more than 65% of its EBITDA. “You know that we are primarily an Asian company,” he told investors at one point last year. “Thank goodness, and God bless that, and we intend to stay an Asian company primarily.” Wynn Palace is how he plans to do it, and from that standpoint it’s easy to see why he describes it as “the single most important project in the company’s history”. For all that, though, not much is known about it. It’s a sizable footprint, 51 acres. Corporate filings, however, describe only “a fully integrated resort … containing a 1,700-room hotel, performance lake, meeting space, casino, spa, retail offerings, and food and beverage outlets”. Mr Wynn has colored in some additional detail on earnings calls, describing the overall theme in terms of “flowers, floral things,”