Wynn’s $4.2 Billion Casino in Macau Is Seen Off to Slow StartBy
Analysts cite sluggish casino floor, flat Macau VIP business
Steve Wynn cautious on whether turnaround afoot in Macau
Wynn Resorts Ltd.’s $4.2 billion Macau resort is drawing lackluster numbers of new tourists and may be taking business from local rivals, said analysts who are tracking activity in the casino’s first few days.
The part of the casino floor catering to mass market customers at the Wynn Palace “felt slow” relative to other recent openings, Union Gaming analyst Grant Govertsen said in a research note Monday. The new casino has led to a marginal increase in mass-market customers in Macau, while the VIP business in the Chinese enclave remained flat, according to Kenneth Fong of Credit Suisse.
Premium customers at the new resort could mainly be coming from Wynn’s older casino on the Macau peninsula, analyst Praveen Choudhary of Morgan Stanley said in a note dated Sunday.
The Wynn Palace, the most expensive property yet from billionaire Steve Wynn, opened on Aug. 22 amid a slump in gambling in Macau. Betting in the former Portuguese colony has fallen by 36 percent over the past two years after a government crackdown on corruption on mainland China prompted a sharp drop in business. Wynn and other casino operators have said they believe new casinos will attract more tourists to the region.
A spokesman for Wynn Resorts didn’t return a call seeking comment, while Wynn Macau Ltd.’s spokesman didn’t immediately respond to a request for comment.
Wynn Macau shares rose 1.8 percent to HK$11.28 in Hong Kong trading, while the city’s benchmark Hang Seng Index gained 0.9 percent. Wynn Resorts climbed 0.5 percent to $91.15 at 9:54 a.m. in New York. Shares of the parent company and the Macau unit have dropped more than 6 percent since the casino’s opening.
The 1,700-room resort features floral sculptures that move and a $100 million fountain show. A spa offers a $450 facial using gold leaf and crushed diamonds. Walk-in traffic may be impaired by light rail construction in front of the resort, Govertsen said in his note. Visitors are balking at the cost of a gondola ride to the resort and the long walk around the lake to get to the entrance, he said.
Unlike competitors such as Las Vegas Sands Corp. Chairman Sheldon Adelson and MGM Resorts International Chairman Jim Murren, who have said they believe a turnaround is under way in Macau, Wynn was more cautious in an interview before the new casino’s opening.
“The last two places that opened did not cause the market to grow, did they? No. Will this one? Good question,” Wynn said. “We’ll get an answer to that in September or October. I’m anxious to see it myself.”
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