Wynn Resorts reported an 87.9% increase in third-quarter revenue to $1.67 billion (£1.37 billion/€1.57 billion), as the operator reiterated growth potential in the United Arab Emirates (UAE).
Growth in the third quarter was driven by an increase in sales in Macau, with both Wynn Palace and Wynn Macau experiencing growth. This followed the lifting of Covid measures in the region, allowing VIP and high-value customers to return.
Wynn expects further growth in Macau, but also spoke of growth opportunities in other markets, including the United Arab Emirates. Construction work continues on Wynn Al Marjan Island on the man-made Al Marjan Island in the Emirate of Ras Al-Khaimah.
The UAE venture will cost about $3.90 billion, but CEO Craig Billings says the region represents the most exciting new market opening in decades.
“We believe it is highly unlikely that every emirate will ultimately claim the right to host an integrated resort,” Billings said. “We expect that it will probably be just us over a period of several years, given that construction is currently well advanced.
“We all know the benefits of being first, as we have seen in other markets. After that, it can be a duopoly or a three-way oligopoly. However, given the database advantages we have as a first mover and the fact that we have had great success in the two most competitive markets in the world, Vegas and Macau, I find both market structures to be daunting.
“As I said, this is the most exciting new market opening in decades.”
Macau drives Wynn’s third-quarter sales growth
Looking at third-quarter results, Wynn reported growth across all core metrics in the three months ended September 30. The casino was by far the main source of revenue, with a 170.2% increase due to relaxed restrictions in Macau.
Room revenue increased 46.7% to $289.3 million, food and beverage revenue increased 17.7% to $267.4 million and entertainment, retail and other revenue increased by 32.3% to $142.7 million.
In Macau, Wynn Palace reported total third-quarter revenue of $524.8 million, a year-over-year increase of 597.9%. Wynn noted that both table game win rate (23.3%) and VIP table game win rate as a percentage of revenue (3.4%) were above expectations.
At Wynn Macau, sales also rose by 630.2% after the easing of Covid-19 rules. Again, Wynn said table games win rate (16.5%) and VIP table games win rate as a percentage of revenue (3.5%) exceeded third quarter forecasts.
Success in Vegas, but revenues in Boston are declining
In the United States, the Las Vegas operation generated revenue of $619.0 million in the third quarter. According to the operator, this is 13.7% more than in the same period last year.
The win rate for table games in Las Vegas was 26.0%, which was at the high end of Wynn’s forecast range of 22.0% to 26.0%. It was also higher than the 20.7% recorded in the third quarter of last year.
However, revenue at Encore Boston Harbor fell slightly by 0.7% year-over-year to $210.4 million. This occurred despite the win rate for table games reaching 20.8%, within Wynn’s stated range of 18.0% to 22.0%.
Macau’s reopening leads to higher costs
The full reopening of the Macau market inevitably led to higher costs at Wynn. In the third quarter, total operating expenses were $1.61 billion, an increase of 70.7% year over year. Casino was by far the main buyer with $577.7 million.
Other net expenses were $185.9 million, resulting in Wynn posting a pre-tax loss of $123.3 million. However, this was an improvement from last year’s loss of $206.4 million.
Wynn received $2.7 million in tax benefits but took $3.9 million in non-controlling interest income. As a result, net income attributable to Wynn was $116.7 million, lower than the loss of $142.9 million in 2022.
Additionally, adjusted earnings before interest, taxes, depreciation and rental expense (EBITDAR) increased 205.7% to $530.4 million in the third quarter.
Could Wynn achieve a net profit for the full year?
Looking at Wynn’s year-to-date performance, revenue rose 70.5% to $4.69 billion in the nine months ended Sept. 30. This includes casino revenue of $2.65 billion, rooms revenue of $838.4 million, food and beverage revenue of $757.1 million, and another $443.5 million US dollars from entertainment, retail and other activities.
Operating expenses increased 42.6% to $4.21 billion and net other expenses were $471.4 million. This resulted in a pre-tax profit of $11.0 million, compared to $672.6 million the previous year.
Wynn paid $2.6 million in taxes and discounted $7.6 million in noncontrolling income. This meant the company ended the period with a net profit of $838,000, compared to a loss of $456.3 million in the same nine months last year.
Additionally, the operator said adjusted EBITDAR increased 180.0% year-to-date to $1.48 billion.
“Our third quarter results reflect the continued strength of our overall real estate portfolio,” Billings said.