CEO of Wynn Resorts Ltd. Steve Wynn was in Macau yesterday ahead of the official opening on Monday of Wynn Palace, the company’s second local property.
Speaking to reporters, Wynn described the new property as the “most beautiful” in the world, and said that its diversity of offerings has already begun to reverse earlier government opinions that the operator had not been doing enough to develop their non-gaming segment.
“[This is] arguably the most beautiful hotel in the whole world,” he said yesterday. “And it’s not in London, Paris, New York or Rome, it’s in the People’s Republic of China, in the Special Administrative Region of Macau. The most beautiful hotel in the world sits here now, for all the world to come and see.”
“It’s unlikely that we will see a hotel of this scope […] in our lifetime again,” he added.
Wynn admitted yesterday that he couldn’t predict when the USD4.2 billion (MOP33.5 billion) property will break even or start generating profit. Wynn Resorts’ Return On Invested Capital (ROIC), a measure for determining how long after opening a resort begins to cover its costs, peaked in 2013 at about 50 percent, meaning that it took two years of operations to cover the initial investment.
Hong Kong-based gaming analyst Aaron Fischer told the Times earlier this year that most industry observers say the ROIC is still falling in Macau but will probably stabilize at around 20 percent in the future. If this holds true for Wynn Palace, it can be expected to start generating profit within five years.
Mizumi main dinning hall
However, Steve Wynn thinks that the property’s success will depend solely on what he regards as the secret ingredient to a vibrant hospitality offering.
“It can be the prettiest hotel in the world, but honestly, that’s something that only money and good taste can buy. To be the best hotel in the world – that’s another story altogether,” he said.
“In the hospitality business there are only two words that matter: ‘Guest experience’. To the extent that people come to this hotel, have a good time, leave, tell their friends, and come back again.”
“They’ll even pay more money to offset the increase in costs of business over a period of time. What gives a business a franchise [and] what makes it endure is guest experience; all the rest is irrelevant,” added Wynn.
Gaming analysts believe that Macau needs to diversify its entertainment, leisure and tourism offerings if it is to adapt to the “new normal” of President Xi Jinping’s anti-corruption climate. The local government has identified a number of areas for diversification, including cultural and creative industries, conferencing and exhibition events, and family-friendly entertainment.
“The policies of the central government are only tangentially important to us because we’re in the middle of delivering a service,” Steve Wynn said in an interview with the Associated Press earlier this week.
“In the long run, the economy of China is going to affect all my customers and their ability to recreate, but on a day-to-day basis, it’s not part of our script, it’s far away from us compared with the demands of the moment,” he added.
According to Wynn Resorts’ media representatives, unidentified government officials visited the resort on Tuesday afternoon ahead of the press. Steve Wynn, when asked yesterday about the government’s report on the state of Wynn Macau’s effort to diversify its offerings, stated that the earlier evaluations no longer apply.
“Nobody had seen the hotel, or understood it, when those comments were made,” replied Wynn.
“They [the government] are no longer of that opinion,” he continued, adding that authorities are satisfied with the operator’s latest offerings.
Still, the billionaire was quick to emphasize that Wynn’s diversification will not necessarily follow in the footsteps of other operators.
He said the Wynn brand is not about roller coasters and bungee cords – an unsubtle jab at other operators – despite Wynn Palace’s installation of cable cars.
“I don’t think that’s what they [the government] mean by ‘diversification’,” he explained. “The people who want to go on rollercoasters and bungee cords are not the same people who go on vacation or [those that come] for conferences and meetings.”
“That’s not what the great cities in the world are like; that’s not what family entertainment is about,” he added. “We mustn’t confuse an amusement park with family attractions. Family attractions are things that people enjoy with their clothes on and without endangering their lives or increasing their pulse rate.”
Wynn pointed out that such forms of entertainment currently exist on Hengqin Island, a convenient location for Macau tourists.
All the same, Wynn yesterday emphasized that the secret to Macau’s future success nevertheless lay in the diversity of “the menu of offerings in the city.”
“There are hotels on Cotai and on the peninsula that have a host of different types of offerings; food and shopping and environment. This menu of offerings here in Macau is what represents the diversification of tourism in this city,” he said, stressing the three areas in which Wynn has sought to diversify.
With regard to gaming, Wynn Palace is expected to have a total of “about 50-60” VIP gaming tables out of a total of around 350 at the resort.
However, Wynn said that he really doesn’t care much about this as “casinos are passive places” and “they have no power.”
“Its [a casino’s] value as a revenue resource depends solely on how many people come through it and what their average per [capita] spend is. What’s dynamic in my business is the non-casino stuff [because] that’s what brings people from afar to come and experience a place,” he insisted.
“It’s better to have fewer tables that are fully busy than a lot of tables that are just sitting there,” added Wynn.
Wynn then returned to the idea of guest experience as the leading factor in drawing tourists to resorts, and claimed that employees at Wynn Palace currently “represent the best” of guest experiences.
“There were six to eight applicants for each job,” he claimed. “So the people here represent the best; like getting into a good college, they are all proud of themselves for being selected [and] there’s plenty of enthusiasm about getting started [in this] new beginning.”
The resort, which according to Wynn is his 13th to date, has been in the works for around six and a half years.
“The construction process was long and complicated because of the landfills and other things,” he explained. “We do all of our design and architecture in-house here; myself and a group of wonderful colleagues that have worked together for around 35 years.”
Wynn Palace will open to the public from Monday at 8 p.m.
On pricing: Wynn Palace ‘built for everybody’
Steve Wynn said the difference in price between the cheapest rooms at the Wynn Palace and the cheapest rooms in the territory is “very tiny.” According to the resort’s website, the cheapest room on a weeknight amounts to HKD1,988, while an ‘economy’ room at the nearby Galaxy Macau would cost HKD1,103 (sale price) and a basic room at Hotel Royal on the peninsula is priced at HKD713 (early bird price). “This place was built for everybody,” he promised, “just as every other hotel that I have ever [built].”
Wynn holds back from Pansy Ho sale comment
Steve Wynn declined to respond to a question about Pansy Ho’s recent trade of part of her stake in MGM China for a greater grip on Las Vegas-based parent company MGM Resorts International. “I don’t think I can make an intelligent response [on the matter],” he said. Wynn also refused to comment on whether Ho’s decision could reflect her long-term opinion on the health of Macau’s economy. Instead, Wynn proposed that the exchange might be a strategy to diversify Ho’s business portfolio, as MGM Resorts International has stakes in many more properties and businesses than its China-based subsidiary.
‘Better to have fewer tables that are fully busy’
Signaling their resolve to rein in gambling growth, Macau’s regulators last week granted Wynn 150 new gambling tables; 100 up-front, the rest over the next two years, less than the 250 given to other new casino projects.
Wynn said he was satisfied with that number. “It’s better to have fewer tables that are fully busy than a lot of tables that are just sitting there for a few shifts and aren’t used,” he told AP.
The new resort will have a total of 350 tables at its launch, including 250 existing ones shifted from Wynne’s first Macau casino. Some 50-60 will be for high-spending VIP gamblers, the rest for mass market customers, Wynn said during the press conference. He did not specify whether the VIP tables would come from new or existing tables, saying instead that “the tables all merge together.”
No Comments