Wynn Resorts, Limited (NASDAQ:WYNN) is embarking on its biggest expansion in Las Vegas since completing Wynn Encore in 2008. The golf course redevelopment, once known as Paradise Park, is entering its final design phase and will soon begin construction.
There's a lot riding on Wynn being able to reinvigorate Wynn Las Vegas, which wants to remain the most profitable resort on The Strip. Wynn Paradise Park (as I'll call it) may be a step in the right direction and make this an even bigger destination for visitors (transcript via Seeking Alpha).
Final approval is coming soon
Steve Wynn laid out the timeline of approval and construction like this:
We'll put budget numbers and all of that sort of thing on probably in the next 90 days. The Board of Directors is going to see it in a week. And all of us in management have signed up on it, so we're very happy. And we're ready to go on some of the buildings. As I say we've -- we're in final stages of getting our building permit to get going. We should be in hard construction by April, March or April I would say.
The golf course will close on Dec. 22 to get ready for construction so the project is moving quickly.
Surprise, there's another big hotel
Wynn has talked about a hotel tower as part of the Paradise Park development, but it was never the main focus. That may have changed in final plans. He said:
The hotel that I described has 1,500 rooms, that's a complete -- it's not just a tower we're adding. It is a complete -- we're arguing about the final naming of it, as we speak but it is a complete destination hotel.
In addition, the tower will be 47-stories, placed in-between Wynn and Encore towers. For perspective, the Encore tower has 2,034 rooms and is 63 stories, so this will be another high-rise at Wynn Las Vegas. It could also mean the initial cost estimate of $1.5 billion is a little low, but the hotel could also become a big profit center for Wynn.
Non-gaming is the key in Las Vegas today
The lake being built will be 1,600 feet long and as wide as 700 feet with an irregular shape. It will be used for boat rides but its real role is to be the centerpiece of attractions around the lake. Wynn described the attractions like this:
It has spas, suites, restaurants, gaming, entertainment, showrooms, all that stuff and in addition it's on the water, on the boardwalk with all of that attraction and [its] things that I described that go from zip lines to a carnival parades and midway and convention facilities.
The convention space being added will really tie Paradise Park to the hotel and existing facilities. And Wynn hopes it helps attract more customers than the hotel alone.
Paradise Park and the hotel will be profitable on their own
When spending $1.5 billion-plus on a development in Las Vegas it's worth wondering if the investment will pay off. Steve Wynn thinks so:
So it's a profit center. And the boardwalk and all of its attractions support all three buildings but also the residual real estate that is adjacent to the boardwalk, takes on an enormously enhanced value per acre and is very attractive. Imagine being able to develop on the boardwalk, on the water with its beach and its parades and water attractions and lake surfing and all the boating thing, imagine that and being directly across the street from the Las Vegas Convention Bureau. How good a location is that?
The convention space across the street could end up being a big boost for Paradise Park because of its easy accessibility. Wynn and Las Vegas Sands (NYSE:LVS) could even connect the facilities with a bridge in the future.
Paradise Park isn't the end
Wynn Resorts has some of the most valuable undeveloped land in Las Vegas in the current golf course. And Steve Wynn doesn't seem to think this project will be the end of developments in Las Vegas.
My company intends -- my Board of Directors is committed to maximizing the non-casino touristic profile of this complex known Wynn in the next five years. We'll be in construction continually. A lot of this stuff will come on within the next 18, 19 months, hopefully. But there will be things happening in my view until 2021 sequentially.
Companies can't stand still in Las Vegas and Wynn Resorts will continue to reinvent itself. The Paradise Park project -- or whatever it's called at the end of the day -- is just one step in the evolution, which should lead investors to think Steve Wynn won't be resting on the laurels of his past success.