Wynn Resorts set an all-time record for property-adjusted earnings in the fourth quarter, boosted by the Formula One Las Vegas Grand Prix. Wynn executives indicated that the company will eventually develop the lands it owns across the Las Vegas Strip of its two resorts.
“The business built momentum throughout the year and we finished well, with $632 million of real estate EBITDA, an all-time quarterly record that caps a record year in which we generated nearly $2.2 billion,” Wynn CEO said. US real estate EBITDA,” Craig Billings said on a conference call with Wall Street analysts.
The company is more diversified, and in Las Vegas, Billings said, “it continues to distance itself from its peers as the leader in luxury. It has become clearer than ever that we are the venue of choice for the best clients attending city-wide events like F1.” This year has proven “The people who travel to a Formula 1 race are our customers.”
Wynn Resorts highlighted its growing business in Macau, where it has higher profit margins than in the past and is less reliant on a fickle VIP segment. Their casino resort under construction in the UAE will further diversify the portfolio and expand the brand into new markets.
As for Las Vegas, the quarterly EBITDAR record rose by 24% compared to the fourth quarter of 2022 in a difficult comparison.
“Although Formula 1 was an obvious contributor, activity at the hotel was intense throughout the quarter, with revenue per available room, table decline, slot handle, and food and beverage revenues all well above a very strong quarter in 2022,” Billings said. . “We had our best October, November and December in terms of EBITDA.”
January is very similar to January 2023 in terms of revenue, with hotel revenue particularly strong, Billings said. Despite this, January is not the highest level of the quarter.
“It’s all about February,” Billings said. “The Super Bowl, Chinese New Year, and for us it’s the best February in our history for groups and conferences. Between the Super Bowl and Chinese New Year, we’ve doubled our advance funds and credit in 2023 and expect record hotel revenues to beat the Super Bowl. It’s a very active February.” It will set the tone for the first quarter.
Wynn and Encore Las Vegas generated $270.8 million in real estate adjusted EBITDAR on $696.8 million of operating income during the fourth quarter. This was a margin of 38.9%, up 140 basis points year-on-year.
The higher-than-usual backgammon game benefited EBITDAR by about $10 million during the fourth quarter, according to Chief Financial Officer Julie Cameron Doe.
The Fontainebleau Las Vegas area, located just north of the Wynn and Encore, caught the attention of an analyst during the call, who asked about its potential impact, since both cater to luxury guests.
“It didn’t really affect us,” Billings said. “I feel good about our business and where we are.”
The Super Bowl is more institutional in terms of visits and many of those people won’t go near the gaming table compared to Formula 1, Billings said. Hotel rates for the two events are similar.
“I would say it wouldn’t have the same impact in a casino, although it would be just as impactful, if not more so, when it comes to hotel revenues,” Billings said.
Brian Gulbrantz, chief operating officer, said they are encouraged by group bookings in 2024 and are preparing for taping room nights.
Billings said the property’s events calendar looks good, and Wayne has created several events besides the citywide ones. “We’ve been programming this joint for several years now and have built a lot of momentum. This helps us not only from a branding and marketing perspective, but also in terms of room nights and rates.”
Although the Sphere concert location southeast of Wynn’s properties doesn’t impact pricing, Wynn gets a lot of requests from customers to be on that side of the building to watch the spectacle, Billings said. On weekends, U2 performs in concert, and Wynn sees an increase in high-quality occupancy rates.
“You’re talking about the best customers wanting to stay with us, because we’re as close to the property to the Sphere as the crow flies,” Billings said. “It’s definitely been an addition on the sidelines. It’s novel and incredibly unique and another experience only in Vegas. We’re thrilled to have them next door.”
Wynn Resorts has plenty of avenues for growth, with a large bank of land in Las Vegas, including a parcel across Las Vegas Boulevard. Billings said further development is only a matter of time.
“There’s a lot we can do here. We’re working on it in New York and we have a project coming off the ground in the UAE,” Billings said. “This will be a very big opportunity for us. Some additional states are moving, albeit at a slow pace, which may represent opportunities for us. We do not do every jurisdiction. We are very selective. Several international jurisdictions such as Thailand are also in the process of examining matters. We always balance our ability to do what we do well. We are always looking for the highest and best use of capital we can deploy and make decisions accordingly. We would definitely take advantage of that land across the street in Las Vegas. It’s not a matter of if, but when, and we’ll see how New York and other jurisdictions play out in deciding when to use that land.