Casino operator Wynn Resorts expects its flagship Macau property, Wynn Palace, to be “the biggest beneficiary” of new smoking laws that will see smoking banned from VIP gaming areas citywide from 1 January 2019, according to Wynn Macau Ltd President Ian Coughlan.
Dissecting the company’s second quarter financial results during its Earnings Conference Call early Wednesday, Mr Coughlan was responding to questions about disappointing mass market growth at Wynn Palace, where mass and slot machine revenue grew just 1% sequentially. That compared to 4% sequential growth at Wynn Macau, which outperformed the market.
Wynn Resorts highlighted a lack of access caused by major construction works on a number of properties surrounding Wynn Palace as a key factor in keeping mass customers away, but Mr Coughlan pointed to current smoking regulations as another significant contributor.
“One severe handicap that we’ve had, particularly at premium mass level, is the smoking issue where there are spaces in town that have been grandfathered in,” he said. “They were formerly VIP and now they’re being used for mass high limit. And people are allowed to smoke in them and are competitors.”
Smoking in mass gaming areas has been banned in Macau since 2014, but is still allowed in VIP areas which Mr Coughlan said has led to some operators blurring the lines.
But “that all goes away at the beginning of 2019, on January 1,” he said. “Everybody has a level playing field. We will be the biggest beneficiary of that because we’re operating handicapped right now.”
Wynn Resorts Chairman and CEO Steve Wynn added that Wynn Palace’s mass market opportunities would increase significantly once surrounding construction works are completed. They include MGM Cotai to its immediate left, SJM’s Grand Lisboa Palace to the south and the new light rail to the north.
“The mass is really affected by the physicality of the neighborhood,” Mr Wynn said. “Mass has an awful lot to do with access. We’re literally surrounded on four sides by things that are under construction that will all add to our mass.
“One of the reasons our mass numbers are so impressive [at Wynn Macau] is because we’re in the middle of everybody. Right now [Wynn Palace] is on the edge and surrounded by fences. When we get surrounded again by SJM, by the monorail, by MGM and we have our connectivity, the picture’s going to change dramatically.
“We’ve dealt with a severe handicap here.”
Mr Wynn also pointed to ongoing work on Wynn Palace itself by contractor Leighton Asia, due to finish in September, as a factor. However, he added that Wynn Palace could receive a huge boost in a matter of weeks with an elevated section of the light rail to be completed, potentially opening up a walkway pedestrians can use to cross the street.
“Without it, it’s virtually life threatening to get across the street to our gondolas and our entrances,” he said.
