Wynn Resorts (NASDAQ:WYNN) may be mired in sexual misconduct allegations against founder and CEO Steve Wynn, which investors need to take to take very seriously. But we need to keep in mind the company's core operations are still what will drive the stock long-term. Last week, the company reported another outstanding quarter in Q4 2017 on the back of strong results in Macau's VIP market. But that wasn't all Steve Wynn wanted to talk about.
The company has a number of growth initiatives under way, and gave some critical updates to investors. Here were the keys investors need to understand straight from Steve Wynn himself (all quotes are from Steve Wynn, and the transcript is via Seeking Alpha).
Las Vegas construction has begun
With regard to Las Vegas, we closed the golf course at the end of the year, and we began removing trees and doing the grading for our new convention and meeting space of 450,000 or 460,000 feet that we need very badly now because we're outgrowing some of our shows. The lagoon begins and are planning for the rest -- and our drawings proceed for the rest of the adjacent property on the west end of our 1600-foot long lake, that is 700 feet or 600 feet wide, 26 acres.
Developing the golf course behind Wynn Las Vegas is the first phase of a large expansion. The company will build a large convention facility along with the lagoon immediately. Shortly after, a new tower with all the suites will be built near the lagoon, and eventually a 2,000 to 3,000 room property will go up across the street on real estate acquired in December.
What Wynn is building in Las Vegas
This is a long explanation of what Wynn will have in terms of hotel rooms at a new tower in Las Vegas. I think it shows how he sees Wynn Resorts' position in the market and how he'll make the property profitable. New hotel rooms will have these characteristics, according to Steve Wynn:
It's 650 square feet, you walk in the middle of the room. The window is 24 feet wide. It's 27 feet to the -- from the door to the window. ... When you have the best hotel room in Las Vegas, when you're building all suite and give people all suites from $400 a night or $500 a night, you know what our average rates now are creeping up into the mid-threes. By the time these buildings are done in the next three year or so, we'd be getting $400.
He would also argue that the hotel, not the casino, is where Wynn's value lies. It's luxurious hotel rooms bring in high-end patrons who spend money at restaurants, bars, shops, and even the casino. And bringing more of these customers into the Wynn Las Vegas complex should be a good thing for operations.
Wynn Boston Harbor is ahead of schedule
Wynn Resorts' first development in the U.S. outside of Las Vegas is Wynn Boston Harbor, which will be the only full gaming license near the city of Boston. Once completed in mid-2019 it will be another cash machine in the U.S., and it may be ahead of schedule according to Wynn:
We were ahead of [sic] 34-month construction contract with Suffolk Construction, John Fisher's company. His people are among the most talented and collected construction folks we've ever dealt with, I'm happy to report. And they are on target, a little ahead of schedule, a couple of weeks maybe, of course, we got to wait and see how the snow comes, but we are right on target.
Macau will get another resort
Some of the questions on the conference call focused on Wynn's gaming license in Macau, which expires in 2022. Steve Wynn didn't seem to be worried about the license and said he was already planning an expansion adjacent to Wynn Palace.
[W]e have been encouraged by the government in conversations with them to file our plans for Phase 2, which we're working on now. As a matter of fact, everybody from Macau is here for design sessions with me this week.
This won't be a mega resort like we've seen before, but will instead focus on ultra-high-end players. If Wynn has his way, it'll be the most luxurious resort in the world.
We are taking the position that if we ask people to journey to us and forgo our neighbors that we have to give them a very powerful reason to do so. So we intend to plant this low-slung building of 5 or 6 stories or something like that, and that could change by 1 or 2... We are taking that idea of a fantasy-like enclave of special rooms with accompanying food and beverage facilities that are experiential in a way that has not yet been tried in the hospitality business in the world.
If anyone can build a property with only a few stories that can generate hundreds of millions in revenue it's Steve Wynn. Before the end of 2018, we'll likely see what he's cooking up next in Macau.