Wynn Las Vegas struggling??

[Grant]

Rumor: Just about everything has been said about Wynn Las Vegas, including that it's losing money; that it is closing restaurants and clubs and attractions; the shows are failing; and it is having massive layoffs.

Fact: The rumors are based in certain factual realities. The original nightclubs, La Bete and Lure, are undergoing some changes, with the former getting a top-to-bottom overhaul and a new name, and the latter getting some cosmetic upgrades. A few of the restaurants are getting cosmetic overhauls as well. The art gallery may be closing, but it's only so they can expand a nearby store. The paintings will probably wind up on display elsewhere in the hotel.

Where the shows are concerned, despite an avalanche of bad press, Le Reve seems to be holding its own and, despite an avalanche of positive press, Avenue Q is struggling to find an audience. The latter will be the centerpiece of a big promotional push, so expect to see puppets everywhere in Vegas soon.

As far as layoffs, there was a big story in the local papers that Wynn was going to get rid of a bunch of workers as part of an "adjustment" in the labor force as a reaction to the natural "settling" of a hotel.

In other words, when a place opens you need lots of people and as you get better at doing things and the crowds calm down a little, you need fewer people. However, Steve Wynn himself spoke out the next day and said that is not true -- the company will make adjustments through attrition, and no one is getting laid off.

So what about the losing money thing? Well, yes, that part is technically true. But in the third quarter the company only lost $8 million, which is significantly less than in previous quarters and means it will probably turn a profit in early 2006.

That's pretty stunning for any major business, especially a big hotel-casino, which is expected to lose money when it starts. Factor in that the hotel is running at 93 percent capacity and averaging more than $260 a night for its rooms, both figures at the top of the charts, and it shows that things are only going in the right direction for Wynn.

[GREGRIO]

Wynn isn't having any problems at all.....it's all in the plan.

[Grant]

Yeah, I figured that.

They will be a hit on the strip for a looooonng time...

[doctor_al]

I wouldn't go so far as to say it's "according to plan". These are definitely bumps. In addition to what's been written, from what I've been hearing Wynn is being pretty aggressive with "pre-emptive comps", i.e. sending out free room offers to likely folks, especially in california.

My wife and I went through there in late September. It's nice and all, but nothing wow'ed me. In fact, I felt like I was in a different flavor of Bellagio, maybe the cranberry flavor. Folks who have stayed there have been impressed, but there's little to grab the casual visitor, IMO.

So yes, I think Wynn is struggling more than expected, perhaps. But as a long term bet, there's several things in his corner:
1) It's Steve Wynn - he's a scrapper, he's not afraid to change what didn't work, and his attention to detail ultimately wins out (no pun intended). Consider the Bellagio itself - after the initial Wow factor, it seems a little too understated for the strip; but then you get to the service level, the fit-and-finish, and the wow returns...
2) Harrahs buys Caesars - it's likely there will be some Caesars regulars who won't feel the love from slot-pushing Loveman that they did in the "old days". More targets for Wynn.
3) Macau - I can't imagine a Macau casino not making huge coin - which floats the Wynn during the rougher periods. Even the perception of making money there (or being able to) floats the stock price.

[GREGRIO]

Here's a bit from Rod Smith's Nov. 20th RJ column...



Wall Street analysts can't seem to stop pointing out records set by Wynn Las Vegas. In its first full quarter of operation, Wynn Las Vegas generated more cash flow than any Las Vegas casino in a first full quarter after an opening: $73.2 million, compared with $65 million at Bellagio and $18.3 at The Venetian in their first quarters. Even now, its cash flow was second only to $84.3 million from Bellagio, which after all, has 1,200 more rooms. Wynn Las Vegas also has only 5 percent of all table games, but 15 percent of table game revenue. Not too shabby for the newest show in town.