Citing “very encouraging” trends in Macao, analyst Joseph Greff of J.P. Morgan gave Wynn Resorts a favorable notice today. Without getting too much into the minutiae, Wynn execs cited rapidly improving VIP business, 96% hotel occupancy and a 34% uptick in retail sales. Added Greff, “For the four-week period following the Chinese New Year, WYNN indicated that relative to 2019 levels, mass table drop was at 82%, direct VIP turnover was at 120%, and tenant sales were at 78%. Wow.” At those rates Macao will be back much, much sooner than expected.
In the SEC filing that sparked Greff’s enthusiasm, Wynn dealt entirely with January and February numbers from China, not addressing its domestic performance or 4Q22 results. Net revenue at Wynn Palace and Wynn Macau was as much as $395 million, which had Deutsche Bank‘s Carlo Santarelli extrapolating to a run rate of $600 million for the entire quarter. Return on investment was $98 million, on pace for $146 million in 1Q23. Wynn’s Macanese share stands at 15%. “Given the dynamics in the market at present, with limited group patronage and heavier mass mix, we believe the Cotai asset [Wynn Palace] is outperforming the Peninsula asset,” Santarelli wrote. “We also believe rated play is outperforming unrated play, which also speaks to outperformance in Cotai.”
Reporting 4Q22 revenues, Golden Entertainment was in line with Santarelli’s estimates, prompting him to raise his revenue targets for the next two years. While Golden is doubling down on its tavern business, adding four to six a year, Santarelli believes it will spin off its Nevada slot routes, a move he thinks could bring in at least $320 million. There were some headwinds, with labor costs $3.5 million higher and Laughlin business missing 10,000 customers, attributable to one less concert in the quarter. Leery of the volatility of baccarat, Golden deemphasized it at The Strat, dampening gambling win. However, the tower resort will benefit from a $30 million refresh of its hotel rooms. Santarelli stood pat on his $49 price target and “Buy” rating.
J.P. Morgan analyst Omer Sander described revenue and cash flow as “weaker than expected,” blaming the downturn on Strat casino winnings and those labor expenses. The good old days haven’t returned to The Strat, which is booking 144,000 fewer room nights than it did in 2019. But “management sees [occupancies] recovering over the course of the year with conventions, international travel as well as Formula 1 in November. At current ADRs, this recovery could generate $30m in incremental revenues and $20m in EBITDA.” Sander sees some positive tailwinds coming in the form of the 2024 Super Bowl, which will benefit The Strat, and population migration to the Vegas Valley, which should boost both the new taverns and Golden’s two Arizona Charlie’s casinos.
Golden has $270 million cash on hand, against only $1.9 billion in debt. It also has the $230 million sale proceeds of Rocky Gap Resort coming to it, money that will probably be used to pay down debt. The room makeover at The Strat is anticipated to be done in time for Formula One (above) and to justify higher room rates—so don’t say you weren’t warned,
At least *somebody* likes Excalibur. That’d be an unnamed (but adorable) cat that stayed there undetected for six nights. The furtive feline secreted itself in a tiny crawl space in a bathroom, emerging only to pee in the shower and knock items off the vanity, as cats are wont to do. Veterinarian Lindsey Sanders and her husband were in Las Vegas for a convention, and by a strange coincidence were checked into the same hotel room where the cat was staying. “The third night, I heard some weird sounds,” Sanders told 8 News Now. “I thought it was in the hallway.” Replied Mr. Sanders, “There’s a cat in here.”
Presented with a kitty crisis, MGM Resorts International security behaved abominably (which may explain why the company is hiding beneath the cone of silence on the cat kerfuffle). Excalibur staff first tried to put the cat on a leash. Now have you ever tried this? Doesn’t go well, does it? Then the lumped the poor feline into a pillowcase before transferring it to a cage. Fortunately, hotel staff were able to track down the previous room occupant, now in Reno, who had left the cat behind while staying at Excalibur. Owner and pet have been reunited. There is no word on whether the cat was socked with resort fees for its unauthorized sleepover.
PointsBet must be getting desperate. In Colorado it’s blatantly marketing to teenagers. According to the Colorado Sun, “PointsBet’s signs can be displayed at the [University of Colorado] spring commencement and even at events where teenagers are likely to show up, such as football camps and new student orientation.” The U is getting a cut of the action: $30 for every student who places a wager with PointsBet. The legal gambling age in Colorado, by the way, is 21. That doesn’t stop the spectators at football games from being bombarded with messages like “PointsBet: Do It Live.” Having been caught with its hand in the cookie jar, Colorado U is withdrawing from the revenue-sharing aspect of the agreement, but the damage has been done, especially to the school’s image.
At a campus where 34% of the students are under 20, university leadership was bagging over $1.5 million across the life of a five-year contract to pimp PointsBet. When confronted by investigative journalists, the company clammed up, although it had earlier said it was targeting “the alumni base, the alumni base in Colorado or other states.” Uh-huh. The PointsBet messaging at University of Colorado games is shameless and relentless, and the school darn well knows the risk it is running with its student body, especially when incoming freshmen are exposed to PointsBet advertising. As Eastern Michigan University law professor Richard Karcher wrote, “Who cares whether the university intends for its advertising to reach their students? It is, and the university knows it.” We’re not entirely surprised that PointsBet would stoop so low but expected better from the groves of academe.