It will be over a year until Wynn Resorts’ UAE project is finished, but the company still posted mostly positive numbers in Q2.
The top-line takeaways from Wynn Resorts’ second-quarter results released on Tuesday were a six-month delay in the opening of its UAE resort and a $600 million increase in its budget due to ongoing conflicts in the Middle East, but those setbacks largely overshadowed what was otherwise a solid Q2 for the luxury operator.
Wynn posted group revenue of $1.86 billion for the quarter, a 7% increase year-over-year, while its net income more than doubled from $66.2 million last year to $140.1 million this year. Group adjusted EBITDA increased roughly 3% YoY to $568.3 million.
Macau was the standout performer in Q2, especially Wynn Palace in Cotai, as that property’s revenue soared 21% YoY to $653.4 million and adjusted EBITDAR jumped 28% to $201.5 million. Surprisingly, these results were driven by mass market and not VIP, which is typically Wynn’s wheelhouse — Wynn Palace saw its VIP turnover and VIP table games win decrease 32% and 29%, respectively, while its mass market table game win increased 37%.
In Q1, Wynn announced The Enclave, a 432-suite hotel tower at Wynn Palace with an estimated cost of $900-$950 million, which the company said was a response to immense demand. This quarter, Wynn CEO Craig Billings confirmed that construction of The Enclave will begin before year’s end. He also confirmed that Wynn will “begin construction on our long-planned and previously announced event center and theater at Wynn Palace in the coming weeks”. The event center is slated to open in 2028 while The Enclave is slated for 2029.
“Really, we kind of just continue to stick to our knitting [in Macau],” Billings told analysts. “We’re very focused on one particular customer type, and that happens to be the customer type that is driving the market at the moment, and we continue to double down.”
Competition in Las Vegas
In Las Vegas, total revenue was essentially flat at $643.2 million, although casino revenue was up 6.5% to $158.1 million. Segment adjusted EBITDAR was $215.2 million, an 8% decrease YoY.
Wynn is seeing increased competition for high-rollers in Las Vegas, as chief rivals MGM and Caesars take diverging paths — Caesars has struggled in the region and will be taken private by Fertitta Entertainment, whereas MGM is coming on strong, posting Q2 gains in the market.
“We believe the best way to earn and retain the highest value customers in Las Vegas is to continually raise the bar on what we offer them,” Wynn CFO Craig Fullalove said. “That’s what you’re seeing in those numbers.”
Billings was asked about Wynn’s stance regarding a potential Las Vegas NBA franchise, which could be finalised by the end of the year. Wynn has owned a 38-acre vacant plot of land on the Strip across from its property since 2017, which could be used for an arena project. Caesars and MGM are involved in this race as well, as MGM is a part owner of T-Mobile Arena and Caesars is reportedly working on an arena pitch with VICI Properties. Billings said the NBA does not drive the same tourism as the NFL because of its high game count (41 home games versus eight or nine) but was still positive on the idea.
“We would love to see an NBA franchise in Las Vegas…We tend to get the premium end of visitation,” he explains. “We tend to get folks who are affiliated with the league and with the opposing teams when they’re in town, and those are great customers, and they’re good for our business.”
HHR in Boston?
Not much was mentioned about Encore Boston Harbor, which posted a 3% YoY drop in revenue ($209.2 million) and a 12% drop in adjusted EBITDAR ($56 million). Casino revenue fell about 6% on the quarter, mainly due to a 12% decline in table game win.
That said, Billings said Boston Harbor delivered second-quarter records for both revPAR (revenue per available room) and hotel revenue. He noted that “demand in Boston has remained healthy, with slot handle running slightly ahead of last year”.
One development of note is the potential legalisation of historical horse racing in Massachusetts, the slot-like games that allow patrons to wager on anonymised, previously run horse races. Language that would legalise HHR machines at the state’s racetracks was included in an economic bill that passed the Massachusetts House in early July but remains before the Senate. One track that would benefit from the new machines is Suffolk Downs, which is five miles from Encore Boston Harbor.
Positive market reaction
Wynn ended the quarter with cash and equivalents of $1.5 billion, against current and long-term debt of $10.7 billion. The company repurchased $75 million worth of shares during the quarter and has about $326 million left in repurchase authority. Shares closed Wednesday at $101.15, which was a 3% gain on the day, but Wynn is still down about 17% since the start of the year.
In a note to investors Wednesday, Macquarie analyst Chad Beynon maintained an outperform rating for Wynn and a target price of $143. Beynon argued the market is “underappreciating the durability of Las Vegas and Macau earnings” while reiterating a bull case for the UAE resorts despite the setback and budget increase.
“We think Wynn should greatly benefit from 1) 5%+ forecast Macau market growth; 2) luxury positioned assets in Las Vegas; 3) Al Marjan Island (UAE) launch, which may not have competition for several years; and 4) capital allocation strategy, which includes repurchases,” Beynon wrote.
Jess Marquez
Jess has covered the global gaming industry since 2022. A native of Reno, Nevada, he’d like to note that it’s Ne-va-da, not Ne-VAH-da.