The only measure by which to judge the impact of the disappearance of junket operators is activity over the Chinese New Year holiday, during which Wynn Macau saw “meaningful growth in both premium mass and in our own direct VIP program,” according to Ian Coughlan, president of Wynn Macau.
Speaking in a recent earnings call with analysts, over the recent long holiday, the casino operator saw the migration of former junket players, adding, “they have the desire to gamble; they have a desire to come to Macau.”
According to the executive, there is huge pent-up demand at all levels of the business, as family and millennial travel have both increased.
“We’re seeing new customers come to Macau. We’ve seen that again over Chinese New Year. So during the week when we have rooms available at times, there is cash business and rich cash business from affluential customers to come,” said Coughlan.
Meanwhile, the SAR market continued to experience subdued visitation numbers during the fourth quarter, and the gaming operator’s results reflected that in roll, in drop, and volatility of hold.
According to Craig Billings, the CEO of Wynn Resorts, Limited, during the Chinese New Year holiday, turnover per day in Wynn’s direct program was up nearly 175% from 2021 and down only 12% from Chinese New Year in 2019.
“You need to only look at Chinese New Year to remind yourself of the power of that market and the pent-up demand for visitation,” he told analysts in the earnings call.
“Wynn Macau is seeing both strong spend per customer and significant new customer sign-ups in its direct business, highlighting the strength of our market-
leading product and service offering,” Billings, who recently replaced former CEO Matthew Maddox, said.
On the mass side, table drop was up 34% versus 2021, and that drop was 60% of the firm’s 2019 Chinese New Year levels.
The CEO also added that, between the shift to higher-margin premium mass customers and to customers who have more motivations to visit than just gaming, the market is evolving.
Therefore, Wynn is “prepared to adapt and grow our business as we embrace those changes.”
Recapturing
from VIP to mass
Amid the turmoil in the city’s junket sector, which accounts for 75% of Macau’s VIP gaming revenue, equating to around USD3 billion each year, Billings assured that they started a journey of becoming very adept at pitching to mass marketers with the opening of Wynn Palace in 2016.
Expressing confidence in its Macau market and speaking on the demand of gaming customers, the executive noted, “It’s really just a question of how they’re choosing to play, whether they’re playing with roll or they’re playing with cash. We have the best kit in the market. We have the best service in the market.”
He recalled that, following the opening of Wynn Palace, by 2019, more than 80% of its earnings before interest, taxes, depreciation, and amortization (EBITDA) was derived from sources other than VIP.
“We already have what it takes to be competitive with respect to the mass market,” he added.
Previously, MGM China had expressed its goal of capturing a high degree of conversion from the junket market to in-house markets to the mass market as possible amid the havoc in the sector following the arrest of junket moguls Alvin Chau and Levo Chan.
Wynn reports revenue of USD626m in 2021
Wynn Macau recorded USD208.14 million in net losses during the fourth quarter of 2021, representing an increase on the USD179.8 million reported in the quarter prior.
According to the integrated resort’s financial data, despite the downturn, its casino revenues surged by up to 4.7% in the last quarter to USD243.2 million. The data shows that its operations underwent a surge with a 32% year-on-year increase in its total revenue in 2021, recording USD626 million in revenue.
Operating revenue from Wynn Palace was USD194 million for the fourth quarter of 2021, a 12.4% decrease from the USD221.5 million in revenue recorded for the fourth quarter of 2020. The table games win percentage in mass market operations was 22.7%, above the 21.6% experienced in the fourth quarter of 2020.
Meanwhile, operating revenue from Wynn Macau was USD131.7million for the fourth quarter of 2021, a 27.6% decrease from the USD181.9 million revenue recorded for the fourth quarter of 2020. The table games win percentage in mass market operations was 17.4%, below the 17.9% experienced in the fourth quarter of 2020.
