Wynn CEO hoping to open Strip properties in May, will continue worker pay

Wynn Resorts Ltd.’s CEO said it’s likely the company’s two Las Vegas properties could open later this month.

With the first phase of the state’s reopening plan set to begin next week, CEO Matt Maddox said he believes Wynn Las Vegas and Encore could reopen as part of phase two, assuming the environment is safe for customers and employees. He had previously said he hoped to reopen by Memorial Day.

“Given all the occupancy limitations that we will have self-imposed, it could very likely be both of the assets open, but with occupancy restrictions,” Maddox said on an earnings call Wednesday. “We do anticipate, as we get closer to an opening weeks from now, that there will be pent-up demand in the leisure segment.”

The casino operator, which operates resort-casinos in Las Vegas, Massachusetts and the Chinese territory of Macao, reported $953.7 million in revenue for the first quarter of 2020, down 42 percent from the same period last year.

Extending employee pay

Wynn’s Las Vegas properties, have been closed since March 17. Encore Boston Harbor has been shut down since March 15. And all casinos in Macao, including Wynn’s, were forced to shut down for 15 days in February.

The company had $2.89 billion in cash and cash equivalent as of March 31. Under current conditions — no revenue and full-pay for employees in the U.S. — Wynn should have enough liquidity to last until at least the third quarter of 2021. Under “worse-case” conditions, the company is burning about $7.8 million globally every day.

Despite the large volumes of cash burn, Maddox revealed Wednesday that Wynn would continue paying all salaried, hourly and part-time U.S. employees through the end of the month, including tip compliance rate or distributed tips or tokes for tipped employees. The company had previously said it would pay the more than 15,000 Wynn and Encore employees through May 15.

A Wednesday statement said Wynn is investing close to $250 million in payroll expense.

“Making sure that your team members feel safe during these times is a corporate responsibility, and I also believe it’s a great investment,” Maddox said. “I’m not sure how much longer we can continue this practice. … But what I know is when we do reopen … I want our team members to have a smile on their face. It’ll be underneath a mask, but it’ll still radiate through.”

Reopening plans

When Wynn’s Las Vegas properties do reopen their doors, guests can expect operations to look different.

Last month, the company laid out an updated health and sanitation plan, which includes the use of thermal cameras, altered floor layouts and masks worn by all employees.

Maddox added Wednesday that “large mass gathering places,” such as nightclubs, convention areas and shows, will not be opening immediately, but he does want to open “most” of the properties’ restaurants.

“We’re going to have a very safe environment, but we are going to have an environment I think a lot of people will want to come participate in,” he said.

While the company usually focuses on the premium market, Maddox warned that Wynn’s base is going to be nearly “nonexistent in the first few months after we reopen.” Instead, they expect to see pent-up demand from the leisure market, particularly from the drive-in markets and value-oriented casino customers.

Maddox said he wants to focus on these markets and try to capture “a disproportionate amount of that market of people coming to Las Vegas.”

Demand will be low, but he said he also expects to see low supply among operators.

“I don’t know how many resorts are going to reopen (early on), but it’s certainly not even close to the entire Las Vegas Strip,” Maddox said. “It’ll be a slow ramp.”

Macao’s return

Maddox remains optimistic about the Macao market’s recovery.

During the 15-day casino closure in Macao, the company was burning between $2.2 million and $2.6 million of cash each day. In a roughly 3 week time span after reopening on Feb. 20, Maddox said cash burn dropped to $800,000 a day, and guest volume picked up to about 25 percent of what it had been in the previous quarter, led by the VIP premium segment.

The market still faces challenges, including traveler quarantines, border restrictions, a limited number of seats per table game and more.

But Maddox said the company remains excited about Macao’s future as the reopening of the boarder continues, and is continuing to design and develop for upcoming Crystal Pavilion expansion project.

“I do believe there will be demand for Macao, without a doubt,” he said. “I am also very happy that we’re in the business of the premium and high-end, which requires less people and more revenue. … I believe that will definitely be the segment that comes back first in Macao.”

Wynn shares closed down 0.5 percent Wednesday, to $79.25 a share.

Contact Bailey Schulz or bschulz@reviewjournal.com or 702-383-0233. Follow @bailey_schulz on Twitter.