Wynn Resorts CEO Craig Billings has revealed the company is assessing the situation regarding construction materials currently on the water awaiting delivery to the United Arab Emirates for its Wynn Al Marjan Island development, including the possibility of sourcing via alternative ports if necessary.
However, Wynn remains bullish on the development’s long-term prospects and has not changed its guidance range of between US$500 million and US$800 million in annual EBITDA, according to a Thursday note from JP Morgan analysts Daniel Politzer, Samuel Nielsen and Michael Hirsh.
Billings’ comments were made during the J.P. Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum shortly after a company announcement in which it said construction had resumed on Wynn Al Marjan Island after a “brief pause” due to the Iran conflict.
The Wynn Resorts CEO explained that only 7% to 8% of the Wynn Al Marjan Island team chose to repatriate – with the company’s blessing – as a result of Iran’s attacks on the UAE with a “large portion of its design/development team” remaining in market. He added that Wynn is “assessing the state of its materials and FF&E that is on the water now, with alternative ports to source materials if necessary.”
Billings, however, said he expects to the UAE could embark on an aggressive marketing push to promote tourism to the region once the situation normalizes.
Conflict aside, Billings noted confidence in the guided range provided and, according to JP Morgan, expects a quick ramp of the casino at Wynn Al Marjan Island once it opens due to its monopoly positioning years, meaningful gaming demand from the international gaming customers, a concentration of wealth in the region and limited gaming supply in the region.
He also expressed his belief that Wynn can fill the property’s 1,500 rooms almost entirely with their gaming database, while there remains the ability to expand room capacity from its land-bank whether they are Wynn rooms or via another operator or partner.
“Upside to Wynn’s high-end (EBITDA) range would require additional hotel rooms, but its current high-end assumes no further hotel capacity,” the JP Morgan analysts wrote.
“In terms of promotions/re-investment, Wynn expects to be conservative and sees strong flow-through, while noting its programs will consider its highly unique offering against the backdrop of offers in other similar markets.”
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