Wynn Resorts is navigating a complex financial environment with notable strengths and challenges. The company reported robust growth in Macau, where revenues increased by 18% at Wynn Palace and 21% at Wynn Macau year-over-year, driven by strong casino performance. Similarly, Wynn Las Vegas demonstrated resilience, with room revenues rising 8% year-over-year, supported by an 8% increase in average daily rate (ADR) to $555. These positive developments are bolstered by the initiation of a $1 billion share repurchase program and the reinstatement of quarterly dividends at $0.25 per share.
However, Macau's Adjusted Property EBITDAR growth did not keep pace with revenue increases, reflecting margin compression caused by elevated gaming taxes and operating costs. Additionally, Wynn Las Vegas entered a non-prosecution agreement that involved a $130 million forfeiture. The company's significant debt burden of $10.6 billion, combined with exposure to geopolitical and travel-related risks, adds further complexity to its financial outlook.
Below are key drivers of Wynn's value that present opportunities for upside or downside to the current Trefis price estimate for Wynn Resorts:
For additional details, select a driver above or a division from the interactive Trefis split for Wynn Resorts at the top of the page.
Wynn Resorts is a leading developer, owner, and operator of destination casino resorts. It operates and, with the exception of certain retail space, own 100% of Wynn Las Vegas and Encore at Wynn Las Vegas, which also refers to as Las Vegas Operations. And, through approximately 72% ownership of Wynn Macau, it operates two integrated resorts in the Macau, Wynn Palace and Wynn Macau (collectively, Macau Operations).
We believe that Macau VIP gaming operations are the primary source of value for Wynn Resorts because:
Macau offers significantly higher gaming revenues as compared to the Las Vegas Strip. Macau gaming revenues are approximately five times higher than the Las Vegas Strip. For instance, before the Covid-19 pandemic, in 2018, gaming revenues on the Las Vegas Strip were $7.24 billion as opposed to about $37.6 billion in Macau. This significant difference is due to the very high demand for gambling in Macau, which is also the only place in China where gambling is legal. A lot of tourists from nearby countries visit Macau for gambling.
The casino business is divided into two categories in Macau: VIP gaming and mass-market gaming. VIP gaming offers high volume but a lower casino hold percentage, while mass-market gaming offers a high hold percentage. Wynn has established a premium casino image in the region, helping the casino attract more and more VIP players. It is in the design stages of developing the next phase of Wynn Palace. It currently expects that the next phase at Wynn Palace will incorporate an array of amenities such as theater and expanded event space, food and beverage features, and other non-gaming offerings.
Wynn is recognized worldwide as a premium brand resort. It has a sophisticated style and offers exquisite luxuries to its customers. It mainly caters to high-end gaming customers, and the company does not intend to shift its focus from its existing global image. Its premium offerings include an array of amenities and indulgences, including private lagoons and waterfalls, an exclusive shopping promenade featuring renowned designers, and an 18-hole golf course designed by Tom Fazio and Steve Wynn as well as a tranquil spa and salon. The nightly entertainment includes the magical Lake of Dreams and the provocative water show 'Le Reve.' The company has been targeting VIP gaming customers and has been successful in its business model.
Wynn is reinvesting in Wynn Palace Phase 2 for long-term Macau growth and diversifying geographically with Wynn Al Marjan Island in UAE to reduce reliance on existing markets.The Company has a 40% equity interest in Island 3 AMI FZ-LLC, an unconsolidated affiliate, which is constructing Wynn Al Marjan Island in Ras Al Khaimah, United Arab Emirates. It is anticipated to be completed and open to the public in 2027, featuring an over 1,500-room hotel, luxury villas, a high-end shopping mall, a state-of-the-art meeting and convention facility, an exclusive spa, more than 20 restaurants and lounges, 225,000 square feet of gaming area, a wide array of entertainment choices including a nightclub and a beach club, and other amenities.
