GGRAsia – Wynn confirms end to Japan efforts, upbeat on Macau

Wynn confirms end to Japan efforts, upbeat on Macau

Aug 05, 2020 Newsdesk Japan, Latest News, Macau, Top of the deck

Casino operator Wynn Resorts Ltd is “pretty much ceasing” its efforts in Japan regarding pursuit of a casino project there, at least until there are meaningful developments regarding that market, says group chief executive Matt Maddox (pictured in a file photo).

It had emerged this week that the United States-based group – parent of Macau operator Wynn Macau Ltd – had already closed its office in the city of Yokohama.

As recently as December, Wynn Resorts had announced a “Yokohama focus” in its campaign to participate in a Japan casino licence, and launched an office there on December 15 for a unit called Wynn Resorts Development Japan.

But during the group’s second-quarter earnings call on Tuesday, Mr Maddox said in response to an analyst’s question on Japan: “Back in March, we decided that until there’s more clarity on what the business is going to look like, what the world is going to look like, and what the regulations really are over there, we’re pretty much ceasing our efforts.”

The CEO added: “We did that about four months ago. It doesn’t mean we’re not interested in the market, it just means that right now, it’s not a focus for our company.”

Mr Maddox further noted: “Our efforts in Japan in the last decade have been more monitoring as opposed to being really active.”

Most of Tuesday’s earnings call was focused on market recovery amid the Covid-19 pandemic, in places where the group already has business.

Craig Billings, the group’s chief financial officer, said that second-quarter business volumes in Macau had been “subdued” due to “restrictions on travel in the region”.

But he added that Wynn Macau Ltd had been able to cut non-labour operating expenses, so that it had experienced a “gradually improving… daily EBITDA burn of US$1.25 million to US$2 million”. That was a reference to earnings before interest, taxation, depreciation and amortisation.

Elsewhere on the call, management clarified that the lower EBITDA “burn” figure was in the context of moderate daily revenue, and the higher figure would be applicable in a zero daily-revenue environment.

Ian Coughlan, president of Wynn Macau Ltd, gave some commentary on the call regarding the relative importance to Macau operations of mainland Chinese visitors arriving via the mainland’s Individual Visit (IVS) exit visa scheme, and Hong Kong-based customers.

Mr Coughlan noted that 21 of the 49 mainland cities covered by the IVS scheme were in Guangdong province, neighbouring Macau, and that once Guangdong IVS visas returned, “that would lift our business significantly”. Investors anticipate that Guangdong will be the first place to resume the IVS system.

The Wynn Macau Ltd president said the firm hoped there would be a “clamour for visas” when IVS returned. Although initially there might be a backlog of applications, he thought that could be cleared on the mainland authorities’ side over “a couple of weeks” and that the operation would start to see “meaningful traffic” within two weeks of IVS reinstatement.

Regarding the importance of Hong Kong consumers to Macau’s casino industry, Mr Coughlan said that in 2019, Hong Kongers had represented market-wide about 17 percent to 18 percent of visitors, and about 9 percent to 10 percent of gross gaming revenue. A recent uptick in infections in that city may have put back the prospects of normalisation of travel between Macau and Hong Kong.

“Hong Kong is a good market for us, but we really believe the power comes from Guangdong,” Mr Coughlan said.