Wynn Earnings Call Tidbits – Q4 2014

As regular readers know, I think Steve Wynn’s quarterly conference calls are a great way to get a candid look inside the mind of the best hospitality operator in the business.   Although I don’t own $WYNN stock (or the stock of any of his competitors), I still enjoy listening to his candor on the quarterly calls.    This call started out a bit boring, but some classic Wynn-isms later on made it worth recapping.   Let’s get to it (Transcript from Seeking Alpha):

Things in China are tough:

“The effects of the changes in China have had a negative effect on all of the top end business, whether that means retail top-end like Rolex and Louis Vuitton or whether we’re talking about the high-end gaming in junkets and the VIP sections.”

Wynn reached one of his milestones for Las Vegas though:

“In Las Vegas, I mentioned in our third quarter announcement that if we had a legitimate November, December, we’d be the first company to exceed $500 million in profitability probably not only in the history of Las Vegas, but also in America. And in fact, we did do $515 million in EBITDA in Las Vegas, which was encouraging and we’re very happy about that.”

This was the most negative I’ve ever heard Steve Wynn sound about Macau, and also announced that their builder suggested that there may be some delays in the Cotai project:

“But China remains a big question mark. We have more questions and answers, thousands of our Macau employees are anticipating promotion and a better life, because of Wynn Palace, a break away property by any measurement, which up until now has been on budget and on time. But we were notified by our builder last night that because of a problem in the timing of our construction labor permits that they thought they were going to miss the Chinese New Year next year as the opening and they would be late with regard to that date that we have used in these calls.”

While Steve Wynn has spent a lot of time in the past praising Chinese business-friendly policy and ranting about American political/business issues, it seems he’s no longer so sanguine:

“But I do believe that for all Chinese business men, there is at the moment a bit of uncertainty as to what the future will hold, because so much of everything in China depends upon the policy of the Central Government. We have learned in the last 12 years, the way to behave in China and that is to listen very carefully to what the leadership says and to do our best to be helpful, and to conform with the program as we are their guest.

In my history in China starting in 2001, I was very lucky to be instructed by Former President Bush on how to behave there, and that was to be helpful and to understand that culture.”

Then from the Q&A:

re: Wynn Everett (Boston):

“And to be in Boston, Massachusetts and in the metropolitan area in Everett and have almost four million people where we’re the only game in town is scintillating.”

I liked this data point:  massive application for the casino license/project:

“We worked very hard to compete for the right to operate in Massachusetts as you know and it was expensive to do that process and time consuming very and we had a 1,800 pound application when we finally finished.”

Wynn then gets into a discussion about how his building have always been about much more than just a casino, but I don’t understand his points on casino revenue vs. non-casino revenue.  It looks to me like the casino revenue is clearly greater than the non-casino revenue, contradicting what he says here.  Maybe he’s talking about Vegas only, which isn’t broken out in this earnings release? (emphasis mine)


“…we have broken the record for casino revenue at the Mirage, we broke the Caesars pre-existing record for casino revenue than we broke the Mirage record at Bellagio and that we broke the Bellagio record at Wynn in the we broke the Wynn record when we opened Encore.

What’s interesting though, even though we’ve gone into the $800 million range, never in the history of our company, has our casino revenue met or exceeded our non-casino revenue.  That is to say the reputation of this Company, its status today is based upon the fact that we did not focus completely on gaming but recognize that gaming was a result and not a cause that although it was a productive cash register in the building, that the real attraction on the power of the energy of our – vitality of our enterprise, was directly related to its non-casino experiential, entertainment and hospitality aspects.”

Later, it’s Classic Steve Wynn (emphasis mine):

“At the end of this consideration, you and I and everybody else on this call, have to ask ourselves, is there a commonality and humanity in terms of aspiration? Is China so different than America? And my answer to that question based upon these 40 odd years of dealing with Asian customers more than anybody else probably in the last 30 years staring with Maurice and talking to them constantly both here and at home in Macau. Is that aspirationally all folks are the same.  When they go on vacation, they want to live bigger and better than they can in their normal discipline lives.”

He continues:

“Folks may look differently and talk a different language and their menu maybe different, but in terms of what they want, it’s all the same. And everyplace in the world, we’ve given people what they want in this ever more mobile society the moving middle class of the world, they have responded to the same amputation with similar enthusiasm.”

Responding to a question about the target market for the new Cotai Wynn Palace, Steve is succinct (emphasis mine):

“My target market hasn’t changed at all:  we’re after everybody. It has been the story for 40 odd years. We are looking for everybody, who have the funds and the desire to experience the highest end kind of treatment that they can get.”

Wynn responds to another question about Vegas by noting that potential development across from their properties should be great for WYNN, and adds

“So my feeling about Las Vegas, it’s still the destination of choice worldwide. Otherwise, why would all the Asians come here as they do on Chinese New Year? Why were they all here on New Year’s Eve? They filled – over 2,000 of them filled our ballroom to watch Bruno Mars. And then they shopped and eat and gambled and enjoyed themselves to the hilt.”

Wynn says he raised Vegas room rates 18% in August (emphasis mine):

“Yes, I decide to raise the prices. Pricing is always one of the art forms of any business. Pricing blackjack, pricing rooms, pricing everything, it’s always – you don’t want to price yourself out of the market, but you don’t want to miss the opportunity to take an increase, especially do you think you’ve got the kind of demand and reputation that will allow you to do it. We’ve been able to do that so far. The business of business is not about homeruns, it’s about bunts and singles. And you build the reputation, you create a platform for a business, they can sustain pricing increases over a long period of time because of consistency.

Wynn continues to pontificate about the importance of consistency, which you can read in the transcript if you so desire.

Robin from UBS got in a question, but Steve didn’t even have the energy to yell at her…

Wynn Earnings Call Transcript – Q4 2104

Wynn Q4 2014 Earning Release




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