Las Vegas is alive and well -- if you're a big spender, that is. Earnings results from Wynn Resorts (NASDAQ:WYNN) released July 29 showed continued growth at the very high end of the market even as mid- and low-level resorts continue to struggle.

Let's dig into just how different the picture is depending on how you look at Las Vegas.

The Strip in Las Vegas has dozens of casinos, but a small number generate most of the revenue and profits. Photo source: Jon Sullivan via Wikimedia Commons

Big spenders still frequent Wynn Las Vegas
Wynn's Las Vegas operations brought in an incredible $451.4 million in revenue during the second quarter, up 12.5% from a year ago; EBITDA, a proxy for cash flow, increased 18.3% to $160.4 million.  

Las Vegas as a whole is recovering, but high-end customers are flocking to Wynn Las Vegas more than any other resort: Photo source: Wynn Resorts.

Wynn's competitive advantage is built into the entire resort experience. Wynn and Encore hold more Forbes five-star awards than any other casino resort in the world and it has more four-star restaurants than any other resort in North America. There are also high-end shops from Rolex, Brioni, Chanel, Hermes, and dozens of others. Nightclubs like XS and Tryst are two of the hottest -- and most expensive -- clubs in Las Vegas, and Encore Beach Club is always one of the highest rated on The Strip. 

Put all of these assets together along with a brand like Wynn and you have a highly sought-after property for more than just gaming. In fact, Wynn gets a majority of its revenue off the gaming floor from its highly rated restaurants, clubs, and retail shops, which I'll cover below.

The property also compares very favorably to Las Vegas Sands, which has far more square footage, gaming space, and hotel rooms, and isn't exactly a slouch when it comes to luxury. The Venetian and Palazzo Las Vegas' second-quarter revenue rose only 2.1% to $353.1 million, while EBITDA was up just 4.9% to $66.1 million. And as we move down the food chain, the picture gets even worse. 

The competition can't keep up
What's amazing is how much more revenue and profit Wynn generates than low-end competitors. Wynn's second-quarter revenue from a single property -- including Wynn and Encore --  in Las Vegas was nearly as much as what MGM Resorts' Circus Circus, Monte Carlo, Excalibur, New York-New York, Luxor, and Mirage generated combined in the first quarter ($490 million). Its EBITDA was even more than those resorts made combined. The hope for MGM is that second-quarter results, which come out Aug. 5, will show significant improvement for these lower-end resorts.   

It isn't as if MGM doesn't get some of the luxury exposure. The Bellagio -- which happens to have been built by Steve Wynn --generated $319.9 million in revenue in Q1 and $105.1 in EBITDA, so the high end of the market is clearly doing well overall. But MGM gets dragged down by the lower end of the market, unlike Wynn, which is strictly high-end. 

What big spenders are buying in 2014
Gaming revenue grew significantly at Wynn Las Vegas in the last quarter, partly due to good luck at gaming tables. The revenue growth figure of 28% below includes that good luck, but table game play only grew 14.8% in the quarter and slot play was actually down 0.8%. What's shocking is that for a resort that makes so much money, only about 40% of net revenue comes from the gaming floor.

Guests are spending more money on hotel rooms, food, drinks, retail, and entertainment than they are at the gaming tables. The chart below shows revenue from each segment and how it grew over the past year.  


Q2 2014 Revenue (Growth Rate)


$182.5 million (+28%)

Hotel Rooms

$107.9 million (+7.3%)

Food and Beverage

$149.1 million (+1.8%)

Retail, Entertainment, and Other

$56.7 million (+3.1%)

Note: Total net revenue includes some segment revenue overlap primarily due to complimentary offers. Source: Wynn Resorts earnings release.

With its high-end offerings, Wynn is reaping the rewards of its wealthy clientele whether it's on the gaming floor, in restaurants or clubs, or even at retail shops.

How to play Las Vegas
With one property, Wynn Las Vegas is outperforming large sections of the Las Vegas Strip that are primarily owned by MGM Resorts and Caesars Entertainment. This is because Wynn is playing to wealthy consumers who are willing to pay for high-end hotel rooms, retail, and food offerings.

If you're looking at stocks in Las Vegas, the high end is the only place to be. It's where the money is, and with high-end incomes rising faster than low-wage incomes, that trend will continue for the foreseeable future.