Macau Gives Wynn Resorts the Go-Ahead on Cotai

Consider Wynn Resorts' (Nasdaq: WYNN  ) Cotai resort signed, sealed, and almost delivered after the company announced it was given a concession on Cotai. Since Wynn has already started prep work on the development, this isn't a huge surprise, but you never know how fast Macau's government is going to act on decisions like this.

A pretty penny
The land concession will cost Wynn $193 million, half of which will be paid in a down payment, the other half in eight semiannual installments. Rent on the property will also be $768,000, a drop in the bucket for a Macau casino.

The property Wynn will be building on sits directly across from Melco Crown's (Nasdaq: MPEL  ) City of Dreams and near Las Vegas Sands' (NYSE: LVS  ) Sands Cotai Central. MGM Resorts' (NYSE: MGM  ) proposed Cotai property sits in the middle of all three, so the area will be a cluster of high-powered casinos.

Details are sparse
While Steve Wynn has been espousing his usual gushing praise for his properties, we haven't seen exactly what the development will look like.

We know that there will be around 1,500 hotel rooms, 500 table games, a theater, and the usual restaurants and shopping.

What's nice for Wynn is that the area will be fully operational by the time its casino opens up. It won't be breaking new ground like The Venetian Macau did, and it will have a plethora of hotel rooms to feed its casinos.

The next growth step
Wynn is one of the more conservative casino operators and keeps its resorts as exclusive as its clients. This new resort on Cotai will continue that theme and by all indications should be another crown jewel for Steve Wynn. It looks like the resort won't be completed until around 2015, but it should be a major draw and an enormously profitable casino when it finally opens.

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Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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  • Report this Comment On September 13, 2011, at 5:34 PM, spokanimal wrote:

    Regarding your comment:

    "What's nice for Wynn is that the area will be fully operational by the time its casino opens up. It won't be breaking new ground like The Venetian Macau did, and it will have a plethora of hotel rooms to feed its casinos"

    ... it's important to note that because Wynn was late in the game in embracing Cotai, his land concession is "off-strip". Anyone familiar with Vegas who has seen how off-strip "Hooters" contrasts with on-strip "Excalibur" can attest to the validity of such a distinction.

    The "on-strip" resorts are dominated by Sand's Venetian, 4-seasons, Cotai Central and it's future parcel "3" location. Others are Melco's city of dreams, studio city, and sites 7 and 8 with are owned by the government and won't likely be a gaming concession.

    Off-strip resorts include "Galaxy Cotai", which is behind Venetian on the eastern periphery, Wynn, which is behind Cotai Central on the Western periphery, and MGM & SJM, which are also west of the strip behind Sand's resorts.

    It's important to note that virtually all current and future "off-strip" resorts will be behind but adjacent to Sand's resorts and are much more likely to feed patronage to the central, on-strip resorts that vice-versa.

    I should also note that back in 2003, Sand's CEO Adelson met with Wynn's Steve Wynn on Cotai, at which time Adelson shared his vision with Wynn and invited him to secure the central parcels along with him...

    ... Wynn laughed at the idea and said gaming in Macau would always be focused on the downtown core.

    Now that Wynn has to settle for a smaller, off-strip parcel, he obviously isn't laughing any more.

    Spokanimal

  • Report this Comment On September 13, 2011, at 9:02 PM, hullabulla1 wrote:

    Nice comment Spokanimal

    Paid "fools" can bash Sands as much as they can, Sands train is already on the track, will be hurdles here and there but meet you at station "100" in couple of years.

    Vegas is recovering baby and macau and singapore are getting hotter by the day

    "Location, Location,Location" title is currently held by Sands

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