Access headaches at new Palace casino leave hefty dent in Wynn Macau’s quarterly earnings

Casino posts US$8.6 million loss for the three months, compared with US$62.1 million profit last time

PUBLISHED : Thursday, 03 November, 2016, 1:51pm
UPDATED : Thursday, 03 November, 2016, 10:47pm

Wynn Macau , the casino operator controlled by Las Vegas gaming mogul Steve Wynn, reported on Thursday a third quarter loss as its multi-billion dollar new luxury resort Wynn Palace got off to a stuttering start.

The firm recorded a US$8.6 million loss for the three months ended September 30, compared with a net profit of US$62.1 million for the same period last year.

Adjusted property earnings before interest, tax, and amortisation, a crucial gauge on a gaming operator’s profitability, missed analyst estimates, rising 8 per cent to US$177.0 million for the quarter.

The downbeat figures sent Wynn Macau shares tumbling as much as 4.66 per cent, their biggest drop in more than nine weeks,. They close the morning down 3.99 per cent at HK$11.54.

The underwhelming results, which includes 40 days of operations at Wynn Palace, are in stark contrast to mounting signs of recovery in Macau’s gaming sector, and took analysts by surprise, with many hoping the new site would help lift the recent gloom hanging over the world’s largest gambling hub.

Using carefully crafted language, officials at the company blamed the results on other construction work near the complex hampering the ability of punters to get to the site by bus, car or taxi.

“The ramp-up at Wynn Palace is clearly taking a little longer than we expected,” Matthew Maddox, president of Las Vegas-based Wynn Resorts, which owns Wynn Macau, said during a conference call with analysts.

The US$4.4 billion Wynn Palace is considered the highest profile and costliest integrated resort ever built in Macau.

Chairman Steve Wynn added: “What we have is an anomalous situation where all four sides of our property are currently being enclosed by either barricades or construction blockades of one kind or another.

“It has tended to isolate our property and has made access to the palace temporarily highly encumbered,” he added.

Wynn Palace, located in the popular Cotai district of Macau, is a close neighbour of MGM China’s MGM Cotai and SJM’S Grand Lisboa Palace, both of which are still to be completed. The site is also next to a section of the under-construction Macau light rail transit system.

Wynn revealed the company has been holding talks with the Macau government to try to rectify the access problems, and has been assured the situation will be sorted within “the next several months”.

But analysts also believe the resort has failed to lure as many tourists and recreational gamblers as expected, making it lag behind its newly-opened peer The Parisian, developed by Sands China, in attracting mass-market paying guests.

Last month, the casino giant also suffered a public relations jolt after Gamal Abdelaziz, who was in charge of Wynn Palace, resigned as the president and executive director of Wynn Macau “in order to pursue other opportunities”.

He was replaced by Ian Coughlan, who also oversaw the company’s Wynn Macau resort on Macau Peninsula.