GGRAsia – Opening Japan casino market will take time: Wynn CEO

Opening Japan casino market will take time: Wynn CEO

Nov 07, 2019 Newsdesk Latest News, Macau, Top of the deck

The process of establishing in Japan casino complexes – or integrated resorts (IRs) as they are known there – “is going to be a longer process than a lot of people are anticipating”. That is the view of Matt Maddox (pictured in a file photo), chief executive of Wynn Resorts Ltd, in comments to investment analysts on the United States-based casino group’s third-quarter earnings conference call on Wednesday.

The CEO also said – in response to an analyst question about capital costs to enter Japan, where a figure of US$10 billion-plus has been mentioned to build a resort – that Wynn Resorts would “make sure… there is something that’s right for Wynn”.

He added that meant whether such a venture was “financially sound” and whether the project was “something that will change the company” in a positive way. A senior executive at rival U.S.-based operator Las Vegas Sands Corp also mentioned on a recent earnings call the need for “prudence” when weighing a Japan opportunity against the potential costs.

Wynn Resorts’ Mr Maddox added on his firm’s latest call it was also important in the Japan context that the group had local partners with the “same values”. The Japanese government has hinted that foreign casino operators would need to link with local firms to form a consortium, in order to have a tilt at a Japanese casino permit.

“We are working with various [potential] consortium partners now and we’re doing things quietly and behind the scenes,” said the CEO.

He noted: “I go over there about one week out of every couple of months. We have people on the ground. We’re building up our team.”

The group said recently it was focusing on the Tokyo Bay area in its effort to secure a Japan licence. Up to three casino resorts will be permitted in Japan in a first wave of liberalisation.

Another highly-populated conurbation – the city and prefecture of Osaka – has stated a wish to try to establish an IR there as early as the year 2025, to coincide with the metropolis hosting the World Expo 2025. Wynn Resorts took part in a request-for-concept exercise run by the Osaka authorities, but announced last month it would not pursue further that opportunity.

Japanese communities wishing to host an IR must first find private-sector partners and then make a bid to the national government, seeking selection.

The Wynn Resorts CEO noted on Wednesday’s call: “We’ve been working on Japan quietly behind the scenes for almost a decade now. We have spent 85 percent to 90 percent of our time in the Tokyo Bay area”.

He added, referring to the announcement not to pursue Osaka: “We didn’t necessarily change strategy. I think we just publicly said that we would not be pursuing Osaka, which is something… we were going to announce eventually. And we believe that there will be opportunity in the Tokyo Bay area.”

Macau loyalty programme

In other remarks on the call, Ian Coughlan, president of the group’s Macau operating unit, Wynn Macau Ltd, said the brand was “aggressively” expanding the signing up of consumers in that market to a company customer loyalty programme.

“That was up 48 percent in the third quarter versus the third quarter last year,” stated Mr Coughlan.

Earlier on the call his boss Mr Maddox had reiterated that a nearly-completed revamp of the Wynn Macau property in downtown Macau would be targeted at “premium mass” customers, said by investment analysts to be cash-based players betting in high multiples.

Mr Maddox said the revamped area would have a first-phase opening in “about 60 days”.

“We have 7,000 square feet [650 sq metres] of new retail that we’ll be opening, two new restaurants, the new casino [area] and a fully remodelled Encore [hotel] tower. All of that opens at the end of this year and in early 2020,” the CEO added.

It would help “position Wynn Macau as a market share taker in the very near future,” he added.

Mr Coughlan mentioned the firm was hiring staff for what he termed 44 “new” gaming tables – understood to be a reshuffle of table inventory – to be placed at Wynn Macau.

He added: “Also at Wynn Palace, we’ve introduced a new pit of 20 tables just off our high-limit table games area, which will also be very fruitful for us. We moved around some slot machines. So in both properties we continued to change the floor and react to the customer base.”

The Macau president additionally stated – in response to analyst enquiries – that the launch expected soon of Macau’s Light Rapid Transit rail line serving Cotai – including a stop outside Wynn Palace – would aid mass-market traffic to the firm’s Cotai resort, as would the eventual opening of market rival SJM Holdings Ltd’s Grand Lisboa Palace resort nearby.