Please ensure Javascript is enabled for purposes of website accessibility

Steve Wynn's Next Big Bet on Sin City

By Travis Hoium - Apr 23, 2016 at 9:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Could a massive entertainment venue be in the works at Wynn Las Vegas?

Wynn Las Vegas could be in for a new makeover. Image source: Wynn Resorts.

Any analysis of Wynn Resorts (WYNN 2.63%) today usually focuses in large part on how the company is doing in Macau. After all, it is Macau that now generates 60% of the company's EBITDA, a proxy for cash flow, and with Wynn Palace coming this summer that number will grow dramatically.

But Steve Wynn hasn't lost sight of how important Las Vegas is to his business or how the city is changing before our eyes. And that's why Wynn Paradise Park could be the next development to hit the Las Vegas Strip. 

Like nothing Las Vegas has ever seen
Wynn's initial plans for Paradise Park are a sign of where the money is in Las Vegas. He plans to destroy most (or all) of the golf course to build a $1.5 billion project that includes a 1,000-suite tower, a 38-acre lake, and a beach with a variety of entertainment activities like water skiing and fireworks shows. Think of it like a massive day club in the middle of the Las Vegas Strip. 

Image source: Wynn Resorts.

The reason Wynn wants to turn the low-revenue golf course into a huge entertainment venue is obvious. You can see below that most of Wynn's Las Vegas revenue comes off the casino floor and day/nightclubs have become a huge revenue generator. I wrote in 2014 that estimates of revenue from these clubs was $155 million-$170 million. So, this addition will expand on those non-gaming revenue sources.

 

Q4 2015 Revenue

Change Y/Y

Casino

$170.9 million

+3.8%

Hotel Rooms

$101.9 million

+6.7%

Food and Beverage

$101.1 million

(2.1%)

Entertainment

$60.0 million

+4.5%

Source: Wynn Resorts.

A different approach to Las Vegas
Wynn Resorts isn't the only one to see clubs, shopping, restaurants, and other non-gaming revenue generators as extremely important for the future of Vegas. MGM Resorts (MGM 3.15%) recently completed T-Mobile Arena, which was built to draw people to The Strip for concerts and other events. Across the street, MGM Grand is known as much for its Wet Republic day club and Hakkasan nightclub as it is for gambling.

Las Vegas Sands (NYSE: LVS) has leveraged the convention business to fill its hotel rooms, restaurants, shops, and casino, boasting over 3 million square feet of convention space. Gambling may be the bottom-line contributor, but it's the draw from outside the casino that drives the entire machine.

Could this be a game changer?
What's amazing about the proposal of Paradise Park is how much it transforms what Las Vegas offers. Instead of being a small day club, as nearly every resort has added, it turns a major portion of the Wynn Las Vegas property into an entertainment venue. That's obviously where the money is in Las Vegas and with Steve Wynn having a pulse on where trends are going I'm not surprised to see him be one of the first to propose a wholesale change in what his resort is offering. This could be the future of Las Vegas.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Wynn Resorts, Limited Stock Quote
Wynn Resorts, Limited
WYNN
$59.72 (2.63%) $1.53
MGM Resorts International Stock Quote
MGM Resorts International
MGM
$32.09 (3.15%) $0.98
Las Vegas Sands Stock Quote
Las Vegas Sands
LVS
$32.07 (3.52%) $1.09

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
332%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.