Struggles across Macau have continued to bite Wynn Resorts through the year’s third quarter, with US-based operations not able to counter the downfalls experienced in the autonomous region.
Despite reiterating confidence in the region’s future prospects, the challenging market conditions have seen group-wide revenue decline 10.54 per cent to $889.7m (2021: $994.6m).
Citing travel-related restrictions and conditions, including COVID-19 testing and other mitigation procedures, revenue drops of 58.52 per cent and and 69 per cent to $75.2m (2021: $181.3m) and $40.4m (2021: $130.7m) were witnessed at Wynn’s Palace and Macau properties, respectively.
An increase at 14.36 per cent to $544.4m (2021: $476m) at the group’s Las Vegas operations, as well as an uptick of 10.19 per cent to 211.8m (2021: 192.2m) at Encore Boston Harbor were not significant enough to half the slide.
“In Macau, the market continues to be challenging with marketwide GGR in the third quarter, only reaching approximately eight per cent of the third quarter of 2019 levels, and our results have reflected that,” said Craig Billings, CEO of Wynn Resorts.
“Our team has done a fantastic job controlling costs in a very challenging operating environment through a combination of decreases in payroll and fixed opex.
“Long term, we remain excited about the prospects from Macau”
“As a result, despite the nearly two-week closure of casinos in the market in July, our overall EBITDA loss in the third quarter was $66m, which was a meaningful improvement from a loss of $90m in the second quarter even after adjusting for a $7m bad debt credit that benefited the results in the third quarter.
“More recently, we did see some encouraging pockets of demand during the October holiday period, particularly in our direct VIP business, where turnover was actually slightly above the comparable 2019 holiday period.”
Adding: “Long term, we remain excited about the prospects from Macau with so much pent-up demand for travel and tourism in Asia.”
The third quarter also saw net loss fall to $142.9m from $166.2m one year earlier, with adjusted EBITDA up 12.3 per cent to $173.5m (2021: $154.6m).
Billings also reserved space for an interactive focus in the quarter’s earnings call, noting that “our overall EBITDA burn rate declined to $18m in Q3 from $21m in the second quarter of 2022 on the back of strong cost controls and improved marketing efficiency”.
Adding that ambitions moving forward include hopes for a “significant catalyst” in Massachusetts: “So the goals at this point are to launch Massachusetts, and as you said, achieve breakeven and then grow as the market does, particularly in igaming, where again, our brand has currency, and we can ultimately drive the best digital customers to win Las Vegas and Encore Boston Harbor,” he said.
“So we’re not calling the EBITDA breakeven point yet. But I mean, if you look at our numbers, we’re getting pretty close.”
Furthermore, additional detail was also offered regarding an UAE-based integrated resort, with it asserted that “we’re advancing quickly on our planning for Wynn Marjan”.
“…we have an incredible canvas with which to work and design something truly unique”
Work on the foundation of the property is expected during the middle stage of next year, with renderings, programming and plans expected to be made public in the earlier stages of 2023.
Confidently declaring that “we have an incredible canvas with which to work and design something truly unique,” Billings continued: “…the more time we spend over there, and I was just over there recently, the more we believe in the non-gaming elements of that market. It’s a tremendous non-gaming leisure and luxury market. And as I mentioned in my prepared remarks, we’re in the pretty late stages now of programming.
“So essentially determining what we’re going to build, not how it’s going to look per se. And given that it’s a man-made island without any existing development, it’s an incredibly flexible location on which to plan. For example, if you want to move a beach, you move a beach. So it’s a really exciting project.
“And we’ve sought to maximise the relationship of the facility to its surroundings, particularly in the non-gaming amenities like food and beverage wellness and really take advantage of such a unique location.
“Meanwhile, the casino component, where at least for some period of time, we will be operating on our own, which makes it quite exciting is shaping up to be somewhat larger than Wynn Las Vegas, but with numerous pockets of energy and compression.
“And so, striking that balance is important. When you think about a market like that where you for some period of time, will be the only operator, you certainly don’t want to underbuild the casino, but you want to maintain that sense of energy.
“So I think the property is going to be a stunner, and we look forward to sharing more in early 2023.”