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Wynn Resorts plans $2B expansion in Macau

Wynn Resorts Ltd. announced plans Wednesday for a $2 billion expansion project in Macao, adding nongaming assets like a theater and sculpture gardens.

The Crystal Pavilion complex would sit near the Wynn Palace and include two hotel towers that add nearly 1,300 rooms and suites.

This would be “a significant driver of demand to Wynn Palace,” said Union Gaming analyst John DeCree. “The company could definitely use more hotel rooms.”

The expansion

The first phase of the expansion — estimated to cost $2 billion — includes a hotel tower with about 650 rooms, a 270-degree immersive theater, an Asian gourmet food pavilion, art sculpture gardens, and a glass and steel structure inspired by the shape of a water lily, according to a report from J.P. Morgan.

Grant Govertsen, managing director of Union Gaming in Macao, said while nongaming assets in the Chinese gaming enclave often aren’t as profitable as their gaming counterparts, it’s important for developers to create projects that fit the taste of Chinese consumers and their “growing sophistication.”

“Wynn is known for building (the) best product in Macao, and their Crystal Pavilion project will likely further cement the company’s status as the preferred destination for high-end players,” Govertsen said.

Construction is expected to begin late 2021, with an opening set for 2024. Wynn expects to attract between 7 million and 10 million visitors annually and make between 15 and 20 percent return on invested capital. This would add an additional $300 to $400 million in earnings before interest, taxes, depreciation and amortization, according to the J.P. Morgan report.

The company also is working on a $125 million renovation of Wynn Macao, updating about 400 rooms and suites at the Encore tower, expanding its retail space by about 7,000 square feet, and adding two restaurants near the casino. These projects are underway and expected to be complete by the end of the year, according to a 2019 Investor Day presentation from the company.

Wynn spokesman Michael Weaver declined to comment.


The expansion announcement comes as Wynn is gearing up to renew its Macao license in 2022.

“This type of investment in nongaming amenities will not only help Wynn’s business in Macao but help (strengthen Macao’s) position in the global leisure market and help Macao evolve into more than just a gaming destination,” DeCree said. “All of that should be received favorably by the government in Macao.”

DeCree said he doesn’t believe trade tensions between China and the U.S. will factor into the expansion plans.

“Regardless of trade tensions, it sounds like the project will move forward,” he said. “But we don’t expect any real capital deployment until 2021.”

A second phase will add a hotel tower with about 650 rooms. Timing and costs have not been released.

Missing expectations

Wynn shares fell $3.39, 2.53 percent, to $130.34 Wednesday.

J.P. Morgan analyst Joseph Greff said Wynn’s target to grow Macao gaming revenue 3.5 percent through 2021 growth was conservative.

“Today’s pullback reflects some level of disappointment in the assumption of 3.5 percent annual growth in Macao, and slightly higher (capital expenditure) for Wynn Palace’s Crystal Pavilion expansion,” Greff said in a report.

A Stifel report led by Steven Wieczynski called the 3.5 percent a “glaring outlier” of the forecast.

“Management has very limited visibility into the Macao market (especially around the VIP market) and it does them no good to throw some obscene GGR (gross gaming revenue) growth forecast out there that eventually proves aggressive,” the report reads. “Having said that, we would be willing to wager a large sum of money on the ‘over’ 3.5% growth rate for Macao in the next couple of years.”

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

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