Wynn Resorts - Earnings Call - Q4 2011
February 2, 2012
Transcript
Speaker 0
Good afternoon and welcome to the Wynn Resorts' fourth quarter 2011 earnings call. Joining the call on behalf of the company today are Steve Wynn, Marc Schorr, John Stramp, Matt Maddox, Marilyn Spiegel, Scott Peterson, and on the phone, Ian Coughlan, President of Wynn Macau, Robert Gansmo, CFO of Wynn Macau. Now I'd like to turn the call over to Mr. Maddox. Please go ahead, sir.
Speaker 3
Thank you, and thank everyone for joining us this afternoon for our fourth quarter conference call. Before we get started, I just need to remind everybody we will be making forward-looking statements under the safe harbor of federal securities laws, and those statements may or may not come true. With that, I'm going to turn it over to Steve Wynn for opening remarks.
Speaker 4
Today is a particularly delightful day for us because about an hour and a half ago we opened up to the rest of the world our brand new Wynn Resorts website, which we've taken a great deal of time to make beautiful and special and ultra user-friendly. Anybody who's on the call wants to see our best effort, go look at our new website and check out Garth Brooks. He does a video himself. A lot of great things on the website, but it's brand new and we launched it an hour ago. Mike and Mr. Weaver and our company and everybody else have been on this for months, and we're very proud of the product.
As far as the last quarter and the last year, we got two hotels, really, the Encore Wynn Complex with 4,700 rooms and 1,000 rooms in Macau, and between the two of them, they managed to produce a cash flow and EBITDA of $1.63 billion, which is not bad for two buildings. We're very proud of our staff for the good job they did. I checked with the gaming control board, and interestingly enough, our casino win in Las Vegas at $776 million last year was the all-time historical record for a gaming license facility in the state of Nevada's history. It exceeded the previous record of $764 million, which coincidentally and delightfully enough was held by Wynn Las Vegas in 2007.
All in all, it was a good year, a lot of international business in America, a robust and wonderful season in Macau, and I guess you've got the numbers, ask the questions. We're all ears.
Speaker 0
In order to ask a question, please press star and the number one on your telephone keypad. That's star and the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Carlo Santarelli with Deutsche Bank.
Speaker 2
I had two questions. First, I wanted to discuss with you guys how you're thinking about the balance sheet and cash flow here over the near term. If we assume the bulk of CapEx for Cotai, it's probably a few years away yet. My second question is, it looked to me in the quarter like OpEx, non-gaming OpEx at Wynn Macau went up. I'm wondering if there was actually any incremental expense creep there or if that more had to do with the distribution of where you maybe played lucky on a rev share basis or with your junket customers. Thank you.
Speaker 4
Linda, you want to answer that question or you?
Speaker 2
Chen's on a collection trip. You can do it.
Speaker 3
Sure. For the quarter in Macau, you saw operating expenses, including taxes and commissions, go up to about $1.5 million from $1.35 million. The vast majority of that was bad debt expense, which was, you know, for the year fairly flat, but it bumps along throughout the quarter. What you saw in the quarter was a little bit of a pickup. That was really the story in Macau, and there's a little bit of incremental payroll expense as well. In terms of our balance sheet and cash flow, I think what we've done in the past continues to be a good indication of what we'll do in the future. We look for new projects, we find them, finance them conservatively, build them, and with our free cash flow, we've had a very generous dividend policy. Every year, that's decided on a case-by-case basis by our board of directors.
Speaker 2
Okay, thank you very much.
Speaker 0
Your next question comes from the line of Joe Gress with J.P. Morgan.
Speaker 1
Good afternoon, everyone. Steve or Ian, this question is for either one of you or both of you. In Macau, can you talk about the competitive dynamic there? We saw last night with one of your competitors have some initial success in what they would consider their junket reaffiliation initiatives. Are you seeing either any direct or indirect competitive pressures from that? I have a couple of follow-ups for Matt.
Speaker 4
I'll answer that question. Do we feel any competitive pressure in Macau? Oh my goodness, we sure do. To the credit of our competitors, when we opened up in 2006 in September, we were sort of in a category of our own, physically speaking, and we matched that with a service level that was, I think, sort of new for the town, and we were rewarded appropriately for those initiatives. Our competitors, I think, to a certain extent, got tired of always seeing our yields per foot and our yields per table as high as they are, and have paid more attention to what we do. We see their designers and their executives trooping through our hotels almost on a daily basis. To their credit, they have done some beautiful work.
The casino hotels and the gaming spaces and the restaurants and the offerings that are being put forward by Galaxy Entertainment Group, by Sands China, and by Melco Crown’s City of Dreams and SJM Holdings are really terrific. Everybody gets smarter and everybody gets sharper, and that makes us all work harder, and we take that all into consideration, of course. I got a smile on my face. We get to go last in Cotai, and maybe we'll have some new moves to show our friends. In the meantime, they're doing a damn good job, and we feel it all the time. Have to stay on our toes to hold our position. Do you have some follow-up questions, sir?
Speaker 1
Yes, Steve, you introduced the topic of Cotai development. Obviously, there was nothing in the earnings release, and there's nothing out of the Macau market. How are you thinking now in terms of timing, or is it really the status quo from where we were just a few months ago?
Speaker 4
We are working assiduously on the perfection of all of our drawings and specs, which are part of the process of developing a new hotel. We don't waste our time as the clock ticks down on the way the government approvals roll out. Our best process is to just keep our chin down, pay attention to the things that we control and that are under our direct supervision. Of course, as licensees or as concessionaires in Macau, we await governmental action when the government thinks it's appropriate. I guess what I'm trying to say, if I can address your question, is that nothing much has changed except we're working in Macau on the Cotai project, doing the kinds of things that are necessary for it to be completed in the future. A lot of that gets done in anticipation of the government taking its final action.
Speaker 1
Excellent. Matt, if we were to normalize Macau, hold down both VIP and mass, where would we end up with a normalized EBITDA run rate? If you could help split out the cash balance between Macau and Las Vegas/corporate, that would be great.
Speaker 4
Well.
Speaker 1
Thank you.
Speaker 3
You know, Joe, we usually don't give the exact number. We held a little higher in VIP at 3.18% instead of the typical 2.95% to 3.0%. In our mass market, if you actually look, since Encore opened, every quarter we held, I think it was 29%, 28%, 28%, and this quarter was 30%. We continue to hold quite high in our mass market casino since Encore has opened. Normalizing it is hard with just a little over a year and a half under our belt because we continue to hold quite well there.
Speaker 1
The cash balance split, Matt?
Speaker 3
It's about 50/50.
Speaker 1
Great. Thank you very much.
Speaker 3
Forwarding you that.
Speaker 0
Your next question comes from the line of Sean Kelley with Bank of America.
Speaker 1
Hi, good afternoon, everyone. Just wanted to ask about Chinese New Year. Obviously, a lot's been made about the kind of the macro situation in China, but wanted to get your thoughts on what you guys are seeing on the ground as far as just general levels of activity and excitement both in Macau and Las Vegas.
Speaker 4
There is plenty of business in Chinese New Year, both over there and here. The levels in Las Vegas were a little less than they were last year, but that's because I think partially a reflection of the calendar. The calendar, incidentally, has been against us since New Year's, American New Year's, because last year we had the perfect roll-up with the long, long weekends and a maximum duration of vacation time for our guests. This year, the calendar reversed on us, and this is the shortest type of arrangement when stuff drops on Saturday night. The calendar plays a big role on these things like Chinese New Year and American Christmas New Year. I think probably it's because Asian customers have so much choice in Asia as well as the United States that this business gets spread out a little thinner.
That's why we hope the market continues to grow.
Speaker 1
That's helpful. Just one on the Las Vegas revpar, you know, that came in a little bit below the market averages, and I think, you know, you guys have generally been buzz-feeders in that market. Just kind of curious, did you find it harder to push rates in the fourth quarter? How are you thinking about, you know, 2012 on the room side for Las Vegas?
Speaker 4
Marilyn.
Speaker 1
Right.
Speaker 4
I don't know if that's exactly.
Speaker 1
It's really, I don't know, our hotel revenue was up 11.7% and our ADR was at $250. We had more rooms. We only had 1% of our rooms out of service this year versus 9% last year. We have a consistent strategy of identifying lodgers who are going to stay in our hotel, eat here, and go to the shows and shop here. We were pleased with the increase that we had in RevPAR. We can always be bigger, but we achieved greater than last quarter. We were down a little bit from the third quarter. The third quarter is a monster quarter sometimes. We had good convention business in the third quarter, too.
Speaker 4
If I can add to that, I think you ought to step back. When Encore Las Vegas went from $270 million last year to $430-odd million.
Speaker 3
40.
Speaker 4
For $40. I mean, if that's not robust growth, I don't know what it is. That involved improvement across the board.
Speaker 3
In fact, out of the $160 or $170 million of EBITDA increase, $60 or so came from the casino and $110 came from non-gaming in EBITDA increase year over year. The hotel tripled in EBITDA.
Speaker 4
Hotel, retail, everything performed better this year than it has in the past. We are quite satisfied with that. I'm not sure we quite understood the origin of your question, but I hope our answer is helpful.
Speaker 1
It was, thank you very much.
Speaker 0
Your next question comes from the line of Mark Strawn with Morgan Stanley.
Speaker 1
Hi. One quick follow-up in Macau. I was wondering, you mentioned the new competition that's entered the market on the VIP side. Are there things that you're doing specifically, whether it's maybe changing over tables to more VIP tables or signing up more junkets to start to drive that business incrementally?
Speaker 4
Yes. The answer to your question is yes to all of the above. You know, it's a fine line on these calls between answering your questions and sharing strategies with our competition. They're doing very well without our help. The answer is yes. We understand the competition. We feel it. We see it. We really enjoy the fact that the market gets better. In the long run, the most important thing about Macau will not be so much the amount of construction and development that takes place in that place, but more importantly, the quality of the things that are built. I saw Galaxy when it opened. I thought it was terrific. They went and spent a whole bundle of money since they opened on yet again tweaking the place and making it better. I mean big money.
I don't have access to their internal financial numbers, but I can tell you that they made some serious upgrades in their very first year of operation. I think it's true also of Sands China that literally hundreds of millions of dollars have been spent in making Four Seasons, Venetian, and those places even better. That's for tens, a better future for the market as Macau takes its place as the real center of tourism and excitement in the Pacific. We're watching all this. We're playing in that game. We've got the experience, the capital, and I think the staffing, the people to stay right up there and hold our position. That doesn't mean that it's true every single day, but it positively is true over the long run.
You could take any period of history of gaming in Nevada or Atlantic City or Macau, and you will find that our facilities and our people generally outperform room for room, table for table, anybody else in the business. We're a younger company than some of our competitors. Remember that we started in 2000. We didn't have a facility open until April 28, 2005. We weren't in Macau until September, the first week in September of 2006. This year, our increase was almost, I guess, a half a billion dollars almost. Our increase in profitability of those facilities was almost $500 million. Most people would call that really getting along. It's hard. It's very, very difficult. We're up against smart people who know what they're doing and have gotten smarter each season.
Speaker 3
Great. Thank you.
Speaker 0
Your next question comes from the line of John DeCree with CLSA.
Speaker 1
Hi. I have two questions. I'll start off with along the same vein of competition in Macau. Could you maybe then paint this in the context of CapEx and OpEx going forward? Should we expect any fresh level of spending to potentially keep your properties more, you know, up to date with some of this new fresh competition that has come out, which has been, you know, faring pretty well amongst the VIP players?
Speaker 4
You talking about in Macau or Las Vegas?
Speaker 1
In Macau.
Speaker 4
We're constantly tweaking Macau. We're less now having developed all of our 14 acres on the peninsula. We're less now with rather subtle adjustments within the building itself. I don't think that any of those numbers rise to the level of conversation on a call like this today. We're coming up on the five years when we redo the rooms, but they were already better than most of them in town. Encore is new, but the Wynn's 600 rooms will be redone shortly in a manner consistent with what we did in Las Vegas, which was quite a nice upgrade and very well received, as you could tell by our rates. Marilyn's taken perfect advantage of the wonderful look of Wynn in Las Vegas. Everything's pretty new in our company. We keep everything bright and shiny to the best of our ability.
It's one of the main reasons we're so conservative about our balance sheet so that we can always stay, you know, sloughed off.
Speaker 1
All right, great. My last question is on incremental projects in the United States. We've read about your intention to do something out in Massachusetts. Could you tell us how do we balance that potential CapEx outlook in some of these states in the U.S. versus the ongoing CapEx commitment you have in Cotai already? How do we then view that versus your cash commitments of your annual dividend of $0.50 per quarter and also the trend of special dividends that we've seen in the last two years? How do we tie this up together and just have a view on what's going on with respect to the appetite in the U.S.?
Speaker 4
That's a very good question. You sound like a member of the board when you ask a question like that. It's a proper question. That's why we call the extra big dividends special, because there's no guarantee that they will always be there. They're special. Our regular dividend, and we approved one yesterday of $0.50 a quarter, is another story that we have every intention of keeping as a regular dividend. When you talk about new jurisdictions, and you know, we're a company that is a primary concessionaire in Macau, and we own 50-odd acres or we have access to 50 acres of developmental land in that community. When we talk about our investment and the return on it, you get a certain picture that's very attractive. When you talk about jurisdictions in the United States, such as Massachusetts, the calculation has to be very precise.
The capital investment has to be appropriate. Management is called upon to make careful distinctions about opportunities versus costs. That's a challenge for all of us in this room, Mr. Maddox, Mr. Schorr, and the rest of us. That's what we do in the parent company. We pay careful attention to that as these processes move step by step forward. As you know, in Massachusetts, for example, there's a threshold issue of local community approval that's concomitant with the calculations that have to do with investment and return on investment. I think the way I would put it to respond to you directly is that we look at our capital, we look at our debt, and we say, okay, what are our opportunities? What can we afford to do without compromising our balance sheet and make sure that our investments have a proper return on invested capital?
Last year in Las Vegas and in the previous month preceding that, we spent $80 or $90 million remodeling this hotel. We redid our Baccarat. We built the beach club and Surrender, and all of those investments had handsome, stunning returns. We were able to invest money in the United States within our own facility that made sense. Building new hotels in the United States is a complicated issue at the moment and is very, very dependent on the political environment that shapes the opportunities we have. We're engaged in a very spirited national debate about economic priorities and the role of government and regulation. We're particularly sensitive to any kind of regulation that involves financial institutions. We're certainly sensitive to issues of healthcare because we insure all of our employees. All of these factors weigh heavily in our calculations. It's an ongoing process.
I guess that's about all I have to say on the subject at the moment.
Speaker 1
Great, thank you.
Speaker 0
Your next question comes from the line of Kenneth Fong with JP Morgan.
Speaker 1
Hi. Thanks for taking my question. I would like to ask for Wynn Macau, what is the casino receivable in the fourth quarter compared to the third quarter? Particularly on the bad debt expense, what is the magnitude for it regarding to Macau? My last question is for the bad debt provision, is it a function of your account receivable going up or are you seeing the credit quality basically deteriorating from a customer's side?
Speaker 3
Yeah, that's not the case. Our bad debt provision was basically flat year over year. If you look at where we are, we continue to be well north of 50% reserved on our receivables. We have the most conservative policy out there. Year over year, which you'll see in our balance sheet when it comes out, you'll find that our bad debt reserve as a percentage of our receivables is flat. We have not seen anything to date that has caused any alarm in Macau or here in Las Vegas as it relates to receivables.
Speaker 4
Finally, I want to add for, you know, maybe the 50th time in these kinds of conversations, we are a company that absolutely does not use credit as a marketing tool. We give credit to appropriate parties in appropriate amounts. In the 44 years that I have been doing this, we have never once in any company that we've managed, Mirage Resorts, Golden Nugget before that, and Wynn Resorts, we have never, ever exceeded our reserve. We are a company that thinks that credit and marketing are two separate subjects. The alternative to that strategy is very disastrous.
Speaker 3
Just to be clear on the earnings release, you see provision for doubtful accounts of $33 million for the full year compared to $28 million. That increase is almost all at Las Vegas, and it's because of additional play in credit issued in Las Vegas, not because of the quality of the credit. Macau has been relatively flat year over year.
Speaker 1
Got you. Thank you very much.
Speaker 0
Your next question comes from the line of Harry Curtis with Nomura.
Speaker 1
Hi. Two quick questions, one for Marilyn. Marilyn, if you could give us some thoughts on how you expect Las Vegas trends to look in 2012 versus 2011, and any hard data on bookings, what sort of expectations you have for pricing lift, convention demand, that kind of thing. Steve, you know, very sensitive topic, not sure what you can say about the Okada relationship, but do you have any sense of what the end game here is on his part?
Speaker 4
I do. Yeah, I'll go first, Harry. Steve enjoyed Mr. Okada's participation in the company for all those years. I think it's 12 now, and we wish him well. We have a sharp disagreement, the entire board of this company, and in fact, the board in the Hong Kong company. We have a sharp disagreement with our colleague with regard to the Philippines, and we have expressed our conviction that it was not an appropriate business opportunity for us for a couple of years now. For reasons that are best known to Mr. Okada, he has not enjoyed that disagreement. I guess that's the proper way to put it, and it's created a problem for him in that it expresses itself, I would guess, in dissatisfaction with our decision. The decision is unanimous among all of the board members.
When it's been communicated to Mr. Okada at various board meetings and privately by myself, he finds that stressful. We've also taken a very strong opinion about not wanting to give the impression that Wynn Resorts was the developer of the land that he's acquired in the Philippines, and this has created some stress between us, unfortunately. How it ends up, I don't know, except that Wynn Resorts doesn't, and this is a unanimous opinion of the board of directors, that we are not going to go in business in the Philippines. Mr. Okada may choose to do so, but he does so without the organizational support or the financial support of the company that he's an investor in at the moment. Harry, I guess that's about the best way to put it. I think that the publicity that's attended Mr.
Okada's dissatisfaction is unfortunately a reflection of his frustration with that decision of the board.
Speaker 1
Steve, is he so unhappy that it makes sense to make him an offer that he can't refuse?
Speaker 4
I think we're getting a little ahead of ourselves here. I think the most important thing for us to say today is that we respect Mr. Okada's opinion and his ability to direct the affairs of his own operation at Universal. It used to be called Aruse. I believe he calls it Universal Gaming and Entertainment. He has to take full responsibility for what he does with that company. I will take full responsibility for what we do with this company. That is the way it will remain.
Speaker 1
Okay, why don't we move back to Las Vegas then?
Speaker 4
Okay, there's Marilyn Spiegel.
Speaker 1
Okay, do you want to talk about the convention business? In 2011, we had a really breakthrough year in our convention channel, and we see 2012 to be on a similar level in terms of convention channel revenue. I know some of our competitors have talked about they're even seeing wider increases, but we had such a great year. We were hopeful that 2012 comes in at about that same level. We are seeing the first quarter being pretty much flat. January last year was great. This year, February is great. You add them together, they're equal. We're getting a little more rate in the convention channel. We are very cautious about July and August. Every year, July and August are tough years to book in Las Vegas. From the inquiries we've had, we anticipate that there could be some deep discounting in the market.
Perhaps we broke out earlier in convention channel than competitors, but we are looking forward to a good year for coming in at about the same level. There won't be any mixed lift that would allow you to raise your transient rates much? Transient, we're going to be pushing on transient. As Steve Wynn mentioned, we have a brand new Wynn Resorts website. We're seeing additional inquiries and bookings through our website even prior to the new website being launched. Transient's an important channel to us, and we are continuing to grow that. We grew it quite a bit last year.
Speaker 4
Marilyn, I would add this. When you operate a hotel like Wynn Las Vegas and Encore Wynn Complex or both properties in Macau, time is your friend. Guest experience remains the only essential truth and power source of franchise in the industry that we're involved in. When you give guests a better experience, when you give them a better product, time is your friend. You pick up hotel guests and patrons on a long-term basis, one, two, three, 40 at a time, and that franchise grows. That's why you see our room rates higher than our neighbors and our friends up and down the Strip or in Macau. You know, that's the only thing left for us to do, Harry, is the basics better. I wish we could go faster. I sure wish we were in Singapore. That would have been great.
You can remember that when Singapore came about, we were still in 2004. We were still eight months away from our first opening in Las Vegas and a year and a half or more away from the opening of our hotel in Macau. We weren't ready for the opportunity in Singapore. That's not true anymore. We have the capital structure and the organizational depth to handle growth and expansion as we go forward. You have to just sort of sit on your thumb sometimes and wait for it to come to you. When the opportunities present themselves, we jump on them and we do a good job. You know, we're all young around here, except for me, and we're satisfied with our progress. That's it.
Speaker 1
Okay, that does it for me. Thank you.
Speaker 0
Your next question comes from the line of Stephen Kent with Goldman Sachs.
Speaker 1
Hi. Just a question on the tax rate, Matt. What should we be thinking about for next year? Also, I can't help but ask the question because I never heard this before. What is a collection trip that Linda Chen is on and what do you do?
Speaker 4
You go around and ask guys to pay their money.
Speaker 1
Linda can't do that. How does she do that?
Speaker 4
You call around and beg and cry and whine and plead to get the receivables in. That's what it is, Steve.
Speaker 1
I'd rather have her go to dinner.
Speaker 4
We take them out to dinner and beg, you know. Typical. We're getting good at it. We've been begging for 44 years.
Speaker 3
On the tax rate, I think it'll vary. You know, somewhere between 2010 and 2011 will be, you know, I think is a good estimate. Each year, you know, this year we had a large reserve that we had to take back at 12/31 because statute of limitation hit on a 1048 reserve that we had. That's why you see a big credit in the fourth quarter. We actually couldn't do it beforehand. If there was some.
Speaker 4
Was that because you over-reserved?
Speaker 3
You just can't take it till statute of limitations expires, and you know it's finished. I would say it'll be somewhere between 10 and 11.
Speaker 1
Okay, thanks.
Speaker 3
That's about as much as I can give you.
Speaker 0
Your next question comes from the line of Robin Farley with UBS.
Speaker 1
Thank you. I just wanted to circle back to your comments about Chinese New Year. When you talked about it being down, I think that was just a Las Vegas comment. I wonder if you could talk a little bit about Macau. You know, there are unofficial market share numbers out there and just kind of the change in January from Q4. I know that can be due to just fluctuations in hold. Maybe you could give us a little color on what you see happening with market share.
Speaker 4
As I say, the combination of calendar and/or market share can give you a different picture. I think if you adjust everything, we're around 13% of the market. The market's gotten much bigger. There are a lot of tables and machines in Macau, for example. We still focus on that other number, Robin, which is our fair share. What is the ratio of our cash to our equipment in the marketplace? We keep growing. I don't know. Am I responding, Robin, directly to your question?
Speaker 1
I guess in general terms, I was hoping for a little bit more specific in terms of kind of Q1 and what you're seeing.
Speaker 4
January was better this year than last year because we had Chinese New Year in it in both places.
Speaker 1
Right.
Speaker 4
I don't mind saying that. We had robust growth in January over previous year. Now, to tell the whole story, we got to see February and March unroll. Frankly, it'll be interesting to see. You know, Super Bowl and President's Weekend are in February this year. Last year, we had Super Bowl and Chinese New Year sort of done with a perfect calendar. You know, it's sort of like a perfect storm. We'll see how February rolls out. We had a whopping month in February last year in Las Vegas. I think the biggest one in our career.
Speaker 1
62?
Speaker 4
Yeah, we made $62 million in one month at Wynn and Encore. Pretty good for 2,700 rooms. I don't think anybody does as well as we do, even if they have more rooms than we do. As I said before, Robin, I wish we had more. We build these things, you know, sort of one at a time. Patience gets the money, I guess, in our case.
Speaker 1
Okay, great. Thank you.
Speaker 0
Your next question comes from the line of Cameron McKnight with Wells Fargo.
Speaker 1
Good afternoon.
Steve, wondering if you could comment on what you think about the macro outlook for China. When you and Linda travel around the country, what are you hearing and seeing from customers that you speak to?
Speaker 4
The businessmen with whom we have regular discourse in China, in mainland China, and Hong Kong, and Taiwan are all feeling very comfortable about their country, the leadership of the government as it relates to managing the challenges that face their economies. There's a sense of stability there that at least we glean from, that we infer from our conversations with the folks that are robust businessmen in that part of the world. If you ask me, what are we getting from them? We're getting a feeling of a good tomorrow, a healthy Chinese economy. Everybody has challenges. You can sit around and you can conjure up problems that could affect China just as you can for the United States.
I think, you know, you look at the situation in real time and you see that we're struggling in the United States mightily, and there isn't any signs of a mighty struggle in China at the moment. Macroeconomics, if we're qualified to discuss such a subject, that, you know, we're getting it through people. Of course, we see it with our numbers, so. You know, yesterday, Sheldon Adelson had his call, and you've got a sense of, I think you might have gotten that from him. I don't know how our comments compare to his. Most of you were probably on that call. I didn't hear it. Did you ask that question of the Sands folks?
Speaker 1
No, I didn't.
Speaker 4
Did Matt, did they give their opinion on that?
Speaker 1
They did not.
Speaker 4
I've given you ours. Is there anybody at our table that would like to add to that? Ian, you're on the call. You and Robert, how do you feel about that? Robert, Ian, what do you think?
Speaker 3
I think the general view out here is steady as she goes. There's a desire in China to maintain momentum, and there's a regime change at the end of the year. I think there's a desire to keep everything focused and steady. There's a lot of chatter all the time about liquidity issues, about economic wars around the corner, but everything seems to be moving steadily in the right direction. There's a desire for stability always in China. We're not seeing anything locally. Chinese New Year was very strong. There was a little bit of dampening because you had two New Year holidays almost back to back. The general growth has been very good. We've absorbed extra mouths here in Macau with Galaxy. They didn't have Chinese New Year last year in Cotai. The sentiment is pretty positive. The growth levels in Macau won't be as significant as last year.
Speaker 4
One of the things that is reassuring in this Chinese discussion, everybody knows what's going to happen in China next year politically as far as leadership goes. No one knows what's going to happen next year in the United States as far as political leadership. We probably tend to be a little more apprehensive and paranoid here than they are there. That's another feeling I would get talking to businessmen in the United States that are across the board frightened and unsure of the future politically and therefore economically and fiscally in the United States. I don't feel any of that from our Taiwanese or our Chinese business colleagues. Nothing of that sort like we have in the United States at the moment.
Speaker 1
Great, thanks very much.
Speaker 0
Your next question comes from the line of Tom Marsico with Marsico Capital.
Speaker 1
Hi, Tom.
Speaker 3
Hey, how are you doing, Steve?
Speaker 1
Hi.
Speaker 3
I just wondered if you had noticed any decision-making among the Chinese officials around the approval of new sites to start in Cotai as it relates to the change of leadership in China. What are your expectations considering building the new facility in Cotai as it relates to the change of leadership there?
Speaker 4
We gather our information from public statements made by governmental officials on official public occasions. The government of Macau, for example, has stated in statements to Legco and other fiscal moments in their processes that companies, in particular SJM Holdings, Wynn Resorts, and MGM, will be developing in Cotai. Those statements we read in the paper and we observed from the government in the past months. They tend in that country to make their statements public and their policy statements public, and they don't really change or alter any of that privately. That's pretty much the way it stands as far as we know today, Tom, and those statements made by Secretary Lau, the Chief Executive Choi, and others.
Speaker 3
Does the timing between the Gazette announcement and a formal announcement from the government vary depending upon project and situation?
Speaker 4
Yes, it does vary. As I say, there's enormous public works going on in Macau. The light rail system has begun, and a host of new projects. The university, which of course got some publicity because of our involvement in education. There's an enormous amount of public works going on. All of the projects, public and those concerning private companies, all go through the same departments in the government in the Special Administrative Region. They have limited resources and an enormous demand on their time. What happens is that things get handled in due course, and you're left with only one option, and that is to be patient and respectful of the process.
Speaker 3
Understood. Steve, a couple of years ago, there was a lot of building going on, and there was concern about facilities for the workers to stay in Macau and also the inflation that it was causing in that area. Are the people in Macau, the government officials, comfortable with the level of inflation in the area as it relates to wages, as well as the number of workers that are available to work on these projects, given the extensive nature of the activity that's going on there?
Speaker 4
The government has expressed its understanding and insight into the pressures created by public works and private expansion and has recognized that in principle in terms of their discussions about allowing the labor force to adjust appropriately as long as the people of Macau are fully employed, which at the moment they are. They certainly observe the inflationary pressures that have been created by the rapid, massive expansion of the economy in Macau. They ask us on many occasions to please be very sensitive to the needs of our employees, especially those line employees who feel the pressure of rising costs for housing and such living expenses in Macau. They ask us to please be sensitive to keeping our employees even and hopefully ahead of that curve by our treatment of wages. We respond directly to that.
All of us, when I mean all of us, not only Wynn Resorts, but Sands China and Galaxy Entertainment Group and the other concessionaires have responded appropriately to the government requests, which are always reasonable, I might add. They do say to us, don't forget to take care of the people. Don't forget to take care of the people. We do. As well as we do in Las Vegas as well. We gave, in the last two years, a couple of cost-of-living increases to our employees, as well as investing capital in our facilities. That's how it plays out over there, Tom.
Speaker 3
If I could ask another question, getting back to Las Vegas, the changes that you've made to the entrance of the tower suites are terrific, and the flow is a lot better. Obviously, the big investment you made in Encore a year ago or so. Are you anticipating any new changes in Encore to get that hotel to the level that you'd like to see it to be, Steve?
Speaker 4
Yeah. We, in fact, are in the midst of some we consider very exciting options that we have available. You know, when we laid out, it's a very technical question, Tom, and I'm glad you asked if this is an appropriate time. When we laid out Encore, that place was configured to anticipate a flow of humanity through the door on the west side, which is the Strip entrance.
Speaker 3
Right.
Speaker 4
That anticipated the rather dramatic development of the Frontier property with the Plaza Hotel of Las Vegas and an Echelon Place by the folks at Boyd Gaming. As you know, both projects were aborted, leaving empty property on the other side of the street. Our performance last year, considering we're at the end of the Strip, is all the more remarkable, and the fact that we hold the record for the history of Nevada in gaming revenue is all the more remarkable, considering that we don't enjoy the kind of pivotal central location that Bellagio does, for example. We look at Encore and we say, really, the source of humanity on Encore is not from the west to the east as it is at Wynn. It is, in fact, from the north, which is where our porte-cochères and hotel towers are located.
It's from the north to the south towards Wynn. We've got a casino, actually, that is 90 degrees off center in terms of its acceptance of the flow of people. One of the things that Marilyn Spiegel and the rest of us have been looking at, and Maurice Wooden and my colleagues in this facility, is to rearrange the flow of Encore and its gaming facilities on a different axis. That also would allow us to employ a central entertainment attraction on the south side that would draw people through it. This conversation that you've drawn me into tends to be very technical about the way myself and DeRuyter Butler and the folks at Wynn Design Development work and take advantage of flow. I think that it's something that we understand as well as anybody in the history of our business.
We've come to the conclusion that there is very little likelihood that, considering the political environment in America, the business opportunities, that we are going to see any robust development across the street on the other side of the Strip. We say, all right, that's the way it's going to be. Let's just take advantage of it. We're thinking of some changes at Encore that would be very exciting and would work to our advantage. Pretty much, you know, Encore's rooms enjoy sort of a terrific little niche in the market as a mini-suite hotel. Only in Las Vegas would we call a 2,000-room hotel a mini-suite hotel, but that's what we are. That's how that works. We look at that, and we've got big eyes for it. We also have a terrific opportunity. We're going to reconfigure.
You saw the lobby and the new high-limit slot area is performing extremely well for us where Blush was. As we strengthen the south end, the south side of Wynn with the new lobby and the new gaming area that opened up on Christmas, we're also considering an exciting new development for the space that was occupied by Alex's restaurant. Those are basically the kinds of manipulation of the Las Vegas property that we see looking ahead.
Speaker 3
The opportunity at Encore could be substantial if you come out with a good plan for the flow of traffic, in your opinion.
Speaker 4
We're certain of that. I think we've drawn a bead on it, and I think we've got it in our sights. As a matter of fact, we're all pretty excited about it.
Speaker 3
Thank you for your help this afternoon.
Speaker 4
That's what we do, Tom. It's nice to talk to you.
Speaker 3
You too. Thanks, Steve.
Speaker 0
We have reached our allotted time for questions. I would now like to turn the call back over to management for any closing remarks.
Speaker 4
Mark, anything that you can think of? John? Kim, Matt? Ian, do you have anything you want to add? Or Robert?
Speaker 1
No, no, that's fine.
Speaker 4
Okay, everybody should take a look at our new Wynn Resorts website. It's a dandy. Thanks, everybody. Talk to you next time.
Speaker 3
All right, bye-bye.
Speaker 0
Thank you for participating in today's conference call. You may now disconnect.