永利渡假村 (WYNN) 2010 Q4 法說會逐字稿

Good afternoon and welcome to the Wynn Resorts fourth-quarter 2010 earnings call.

Joining the call today on behalf of the Company are Steve Wynn, Matt Maddox, Scott Peterson and, on the phone, Ian Coughlan, President of Wynn Macau, and Robert Gansmo, CFO of Wynn Macau.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks there will be a question-and-answer session.

(Operator instructions).

Thank you.

Now I would like to turn the call over to Mr.

Maddox.

Please go ahead, sir.

Thank you, and good afternoon, everyone.

Before we get started, I just need to remind everybody, we will be making statements under -- forward-looking statements under the Safe Harbor federal securities law.

And with that, I'm going to turn it over to Steve Wynn.

It's very nice to have this call again.

We moved up our date because we wanted to get the information out as soon as possible so that you would know where we fit in the scheme of things.

I think the numbers speak for themselves.

We had a fine year.

We even did better in Las Vegas, went from 240 or so to 270.

And I think that most of you, if I can anticipate some of the questions, would be asking, what about Las Vegas?

And we took a careful look at January and February, because in these calls we are always late for the quarter but we are in one.

And I know that you would like guidance on what we are seeing.

And indicators -- I've been fairly pessimistic in the past.

If there was a recovery underway, it was dampened by the fact that there was a great deal of capacity added to Las Vegas at exactly the wrong moment.

City Center and Cosmopolitan added 9500 rooms, almost 10,000 rooms to this inventory, at a time when the city could least -- was least able to accept that inventory.

And in spite of that, our room rates are up a little; our occupancy is okay.

Our convention bookings are ahead of last year.

I'm saying that these indicators are pointing up.

Slots are still weak.

But the indicators about visitation and room rate and convention bookings, which are very important for the mid-week period, are pointing up.

Now, having said that, I want to say that it's still very lackluster and disappointing.

But I think that 2011 is surely better than 2010.

We were a company that said 2010 was not going to be better than 2009, and we repeated it several times in this form that we are having today.

However, I'm going to say I think 2011 is better than 2010.

And if that's good news, then so be it.

As far as China goes, Macau, that market is very robust.

And we are looking forward to getting underway with our new hotel in Cotai, which we've finished designing and I even have shown some pictures of the project.

It's by far the best thing we've ever done, and it's a breakaway property.

It represents another generation of this phenomenon that we've come to know as the integrated resort.

It's an iconic building.

I think most of you in the analyst community will have a chance to see it now.

Matt will show it to you when you come to Las Vegas or in some form or another, or Samantha, will begin to show our competitors and everybody else what we've got in store for them.

I think that's about it for now.

Matt, Ian is on the phone.

I'll be glad to let my colleagues add their take on what's going on.

The purpose of these phone calls is to answer questions and, to the best of our ability, give people a chance to know what to expect in our industry and with our Company, in particular.

Matt, Ian, you're in Macao.

Scott Peterson is here.

We're all here.

Do you have anything to add, Matt?

What's your take on -- the Chinese New Year in Las Vegas surprised us.

We did not expect -- we had said to ourselves, okay, the Asian population that gambled baccarat has now got real strong choices closer to home in Macau; fewer of them are coming.

And in spite of that, we had the biggest Chinese New Year we've ever had, and Saturday night was the biggest night in the history of this building in terms of table win.

I mean we went over $16 million at the tables alone.

And, in China, we had a night that we'll all remember, in my 40-odd-year history.

We had a casino table win in excess of $46 million in slots and tables in one 24-hour period.

These kinds of things tend to stick with you.

Of course, that has a lot to do with luck, I want to add hastily.

It sometimes goes the other way.

A casino that can win tens of millions of dollars can also lose tens of millions of dollars, and frequently does.

With that, I'll let Matt at his comments, or Ian.

Steve, I think you covered it.

That's a good opening summary, and I'd suggest we just open it up for questions.

(Operator instructions) Shaun Kelley, Banc of America.

Good afternoon, everyone.

I just wanted to ask -- start maybe with Macau, Steve.

Obviously, the results, particularly on the volume side, were pretty incredible.

But we've got a number of questions from investors, I think particularly, recently, as it relates to the junket and credit environment in Macau.

Whether it's you or Ian, could you give us your sense of just what is the latest on maybe the credit side there and your sense of junket repayment, junket liquidity and how those relationships are doing right now?

Okay, I'll be glad to, and I think it's a very important and relevant question.

In Macau, the credit balances outstanding with our associates in the junket business are very large.

We, in our own account, on our own account, reserve 3% or 4% for bad debt.

This is my -- let's see, it's -- 1973; it's my 48th year -- 38, 39th year, something like that, 40 year.

And we've never, ever in the history of my Company, both Mirage Resorts and Wynn Resorts, have ever exceeded our reserve.

We are very conservative about credit.

And our relationships are managed with the junket operators in exactly the same way.

One of our parent company board members is Linda Chen, who is the Chief Operating Officer in China and the President of Wynn International.

When Linda graduated from Cornell University -- I think the she's on the call or, if she is isn't, she's close by.

She's not on the call?

She's not on the call today.

Well, she's close by in China.

And Linda came to us straight from Cornell, in 1989, and she has been running our affairs internationally and, of course, guiding credit decisions in many respects for all that time.

And she's a very conservative woman.

And speaking of conservative women, Marilyn Spiegel, our President of our American Operations, would be on the call today, but she -- I moved the call up, and she was caught unaware of the schedule change.

And her daughter is having LASIK surgery to make her vision better, so she's in LA today, or Marilyn would be here to give her take on Las Vegas.

But as far as credit goes, we are conservative.

We do not -- I stress that -- we do not and never have used credit as a marketing technique.

You will see that in Macau, usually among the younger and less experienced operators.

It doesn't work.

It's a failed technique.

What happens is somebody comes along that thinks they can jack up credit.

They do it.

It backfires.

They get fired, and the next idiot comes along and takes their place.

Credit can't be used as a marketing tool.

We give credit to people to accommodate them, people who are well deserving of it.

And that's how we regard credit, and that's probably the reason why in 40 years we've never had the need to exceed our reserve.

I hope that's responsive enough for you.

That's helpful.

And just kind of following up on that, you did take a -- it looks like a $13 million bad debt provision in the quarter, Matt.

Was that mostly in Macao, or was that kind of spread across the two properties?

No; $11 million of the $13 million was in Macau.

And really, that was a function of business volumes.

So if you look at it, we had significantly more business volumes, in particular in our direct from in the fourth quarter.

And just the way our calculation works, the aging calculation, that was the $11 million came out.

So it was not additional reserve; it was purely based on business volume.

We had such a jump in volume we had to do it.

Now, our auditors -- if we're generous in our reserve, or we are extremely conservative, as we usually are -- comes the last day of the quarter and they get with Scott or Robert Gansmo -- with Scott Peterson in Las Vegas or Robert Gansmo or Matt; and they say, no; we see the collections.

You've got to adjust the reserve.

And just so you know, Sean, our reserve as a percentage of receivables is 47% right now in Macau, which is very, very comfortable.

How is that compared to the other operators, do you think, Matt?

Much higher.

That's helpful.

And just one last one, since you mentioned the direct business.

Could you give us a sense of just what your percentages are, indirect versus junket-based VIP for the quarter and how you think about that mix going forward?

And that's it for me.

Thanks, everyone.

On a volume basis, it's always between 10% and 15%, and it was closer to the lower end of the range based on turnover for the quarter, both in the fourth quarter of 2009 and in the fourth quarter of 2010.

So it's growing.

The direct business is growing, but our junket business as we add junkets has been growing faster.

We've been adding junket operators, and we've got one or two more coming this spring.

That's right, two more, potentially --

That will take us to 12.

Yes, and 24 additional tables.

Yes.

And I think that's it for a while, but we've got two junket operators coming on stream that you will see in the second quarter.

Great, thank you very much.

Joe Greff, JP Morgan.

Good afternoon, everybody.

Steve, you talked earlier about the Cotai project being a breakaway property.

I was hoping maybe you could give us a sense of maybe internally maybe how that design development has evolved.

And then if you can give us any sort of sense of your view on timing with respect to conversations you are having with the government, that would be helpful.

And then I have a couple of follow-ups for Matt.

Well, it's taking me a little over a year with DeRuyter Butler, my design partner, to draw the building.

There's two of us that do it.

And then, Roger Thomas comes along and makes it look beautiful on the inside.

When I say it's a breakaway property, this structure, this building and its arrangement, would never, ever exist in the Las Vegas market.

It would only be for Macau.

It's designed as result of our experience, which is maturing as time goes by, to make the building extremely user-friendly, convenient and beautiful with the people that we cater to -- junket operators, the public.

All of our restaurants are organized in a way to be an entertainment and theater.

Each of them is basically a theater with entertainment.

The entertainment quotient of the hotel that we are building on Cotai is markedly above anything we've ever done before.

This is the kind of the thing you have to see to understand, but everybody who has seen it, they all have the same three-liter response.

They go, wow.

There's no building that looks like this.

There's no building arranged like this in the history of our industry.

We've always been credited with leading the way in terms of the designing of these facilities.

And for Dee Butler and I, and for Roger Thomas, this is a whole other level that we've gone to.

And we could only have gotten there because we have 40 years of experience.

We could only get there because we've been in Macau for the past nine years, since the concession was granted and since we've been in business since 2006.

All of this contributes to an understanding of the market.

And then we get this leadership from the government, who constantly gives us guidance about what they would like to see happen in the enclave, in the special administrative region.

When we get this guidance from the government about entertainment and non-casino attractions, we pay very close attention and we act accordingly.

That helps us, again, tailor the property to Macau.

This building that we're going to show everybody in no way resembles anything that anybody has ever seen before.

And I think that there's a limit to the verbiage that you can attach at a moment like this.

It really needs a picture and a floor plan to explain it.

But I promise you that it will attract a lot of attention.

You had follow-up questions for Matt?

Matt?

Yes, I was hoping if you could help us break out the cash balance between Macau and the parent.

Another question is, if corporate expense was higher than what we had modeled, and I'm presuming that relates to the revenues and cash flows tracking way above where people, your sales, have modeled it.

If you can help us understand what that corporate expense run rate level from here might be?

And then we're getting questions about the table hold impact in Macau on EBITDA; if you could help us understand that.

But I'm coming up with the math that would suggest that favorable table hold added somewhere between $15 million to $20 million of EBITDA in the quarter.

If you could help us understand that, that would be great.

Sure.

So at 12-31, about half of the cash is at the parent, a little more than half, and the rest is at the subsidiaries, mainly Wynn Macau, of the $1.3 billion.

If you look at corporate expense, we had corporate development activities, actually, that were ramped up in the fourth quarter.

I would say a better run rate is closer to the third quarter, which was, excluding stock-based comp, around $18 million as a run rate going forward.

So we just had some development activities in the fourth quarter.

And your -- what was your final question, Joe?

The favorable hold impact on EBITDA in Macau in the fourth quarter.

We never calculate that for you guys.

You know the range and you can see what we held.

So I'll let you do that.

Okay, thanks guys.

Mark Strawn, Morgan Stanley.

Just one quick follow-up on Joe's question on Cotai -- do you guys have any rough range of when you could potentially sign the land concession there, and whether or not you would --

Oh, yes.

-- And start meaningful construction in advance of that?

Oh, I'm sorry.

I should have said -- Joe asked that question, and I didn't respond.

The government officials -- Secretary Tam and Chief Executive Fernando Chui, themselves testified before the [ledge co], and it was reprinted in the newspapers that the master plan for Cotai includes specifically Wynn Macau's new property and SJM and MGM.

And so we've had confirmation from the government about their desire that we go forward, remembering that in China, it's a country far older, far more established than the United States, and things move at their speed.

And they are very meticulous about everything.

And so we tend to have gaps while we wait for approvals, but always that government is consistent.

They tell you what to expect, what they are going to do and what they want you to do.

And I meet with them every time I'm there, once a month, and all my conversations have been -- confirmed what I've just said to you, and I'm hoping that we can get started in March or April at the latest.

It's a landfill, as you know, at Cotai, and so there's remediation that takes place for the foundation work that adds six or seven months to normal construction time.

But we are so in love with this building that, if the government permits it, we will work more than one shift and make up time.

I hope that answers your question.

But there is no issue about whether we going to build the hotel or not, and the government has said so.

Understood, thank you very much.

Carlo Santarelli, Wells Fargo.

If I could just follow up on that, Steve, if I understand your time line, could we expect possibly an opening in 2014?

And then, I just had maybe one follow-up on Macau.

Thanks.

I think late 2014, early 2015 would be my best guess.

But again, I have to wait for the government to give us the green light.

These are not things that are under my control, nor should they be.

There are a lot of things that go into the development decisions in Macau at this point with this government.

They are very self-conscious about how they want the city to proceed and what role we are to play in that procession.

And so you end up sitting there quietly, waiting for the guidance and for the leadership to make up their mind on when and how you should proceed.

They're very specific about all of this, and in a way, although you perhaps get inpatient, it's a very satisfying environment to be in because you always know where you stand.

I love that, personally.

I find that very comforting.

Understood, thank you.

And then, I know you obviously gave a little data point there on Chinese New Year, but could you guys maybe characterize what you are seeing, obviously, in January and February, to date, in some of the trends in Macau?

Everything is up in Macau and Las Vegas, and we are also being lucky.

You know (multiple speakers) that's a gate that swings both ways.

We held, in Las Vegas, what, 22% for the year?

We're always within our range.

At the end of the day -- I've been doing this for a long time, and it always straightens out.

We have quarters that are down and quarters that are up, but if you take a look at our history, our casino organizations manage to get their share of the revenue, the appropriate share for all 40 years.

Yes, 22% for the year in Las Vegas.

And then, in Macau, on the VIP side, it was 3%, and then 23% in the mass casino for the year.

Right on the button.

Great, thank you, guys.

Chris Woronka, Deutsche Bank.

Can you just remind us what percentage of your business in Las Vegas is convention, maybe what you expect there this year?

And do you think the convention gambler is as good as your non-convention gambler?

Do you see the gaming revenues going back in line with the convention business?

What I would say about the convention business is definitely we will book more room nights on the convention site, north of 20%.

Somewhere between 20% and 22% of our room nights will be convention this year, and that was as low as 13% in 2009.

So it's going in the right direction.

And that's even -- before the recession, that number was always between 22% and 25%.

So now it's a question of rate.

In terms of the gambler, that's really not where we are going to see the gaming revenues.

The convention business is the midweek business, and you feel it much more on the non-gaming side.

Okay, great.

And then just a question on comps.

We know your competitor next door has a new comping policy, at least for the middle end of the market.

Is that something you guys look at or not at all?

We heard about it.

I can't say that I understand exactly what they're doing, not because it's particularly arcane, but because we can't make any money next door.

We can only make it here.

So we have enough trouble controlling our comps in our own building.

I'm sure -- they're a pretty sophisticated bunch next door.

I'm sure, if they changed their comp policy, they've rationalized it in terms of their own experience.

And I didn't get, nor have I ever had the opportunity to discuss it with those people.

We don't enjoy a dialogue with them.

But we have always been one of the most conservative in town in terms of comps, and we are very steady with that.

And so nothing has really changed on our side.

There was a period when MGM and Venetian were very aggressive about comping.

And as you go down the ladder in descending viability of these properties, naturally the management gets hungrier and hungrier to try and gather up customers.

And invariably, they pick up the stuff that the top hotel has rejected.

And so you see that it's sort of a negative process, because, as you go down the ladder, the customers that are not worthy of promotional allowances are getting them.

This invariably leads to financial instability and a change of executives.

It's sort of like the credit thing I said earlier.

Okay, I think that's all I've got to say on the subject.

Okay, great, thanks.

Harry Curtis, Nomura Securities.

I've got a couple of quick questions.

For Steve, to what degree did the infrastructure improvements in the region in Asia impact how you design your building and the balance between the VIP and the mass segments?

And then, secondly, going back to Vegas, two years ago holding a conference or convention in Vegas was toxic.

And Steve, when you speak to your friends who are CEOs, I'm just wondering if you are sensing whether or not any of that ice is thawing.

And are they beginning to see the relative value that Vegas offers?

Matt, what did you say?

I think, just on the convention side, we've definitely seen -- people have relaxed in terms of worrying about coming to Las Vegas.

You mean when the President said --

Exactly.

-- the business about, he doesn't want people going on junkets --

Yes.

-- to Las Vegas?

Well, we had unintended consequences to that statement, as you know.

I remember -- I'm not going to mention the company, but one very large insurance company had a huge piece of business with us that just the hotel bookings were in excess of $5 million.

And when the President said that -- and the revenue would have been in excess of $10 million.

When the President said that, this company had nothing to do with TARP or government bailouts at all -- very healthy, powerful company.

And the Chairman called to apologize that he didn't want to appear to be profligate.

And so he was going to, unfortunately, pay $3.5 million in a forfeiture fee, and canceled this $10 million piece of business.

We were disconsolate over this occurrence and immediately called Harry Reid and started whining to Harry.

As I say, those were unintended consequences.

And as Matt has mentioned, I think that has relaxed.

The second part of your question -- you mentioned something about infrastructure?

Right.

Could you clarify that question?

I'm not sure I understand it.

Well, the expansion of the rail system by 2015 or thereabouts, the bridge connecting --

Oh, you are talking about the stuff that they're going to do, the bridge?

You are talking about Cotai?

Right.

And Macau, the bridge, the bridge from Lantau Island across the Pearl River Delta?

Oh, my goodness.

It's a cataclysmic event.

It's 20 minutes from downtown Hong Kong.

It makes Macau and Zhuhai suburbs, and Shenzhen one giant metroplex with about 40 million people.

The impact of that bridge, which has been greenlighted by the central government, is incredible.

I'm not sure that any of us understand how big that impact is.

And it splits, as it -- you know, the way it works, you come from downtown Hong Kong and you go to Disney World, Walt -- Disneyland, on Lantau Island, and the bridge to Lantau Island from Hong Kong is only a few hundred meters long.

And then you get to Disneyland, and then you keep going.

And on the north side of Lantau Island is a horizontal long finger that points toward Zhuhai in the Pearl River delta.

On the north side of the island is the airport at Hong Kong, the beautiful, incredible Norman Foster Airport.

And then the end of that island, just past the airport, is 18 miles across shallow water, maybe 18 or 20 feet deep.

And it crosses the Pearl River delta heading towards the Peninsula that is Zhuhai and Macau.

They're going to build this road, this bridge, very much like what I think you would see in the Florida Keys.

And at that point, it's all one city, and that's -- and I think there's rail.

And of course, the central government of China is connecting all the major metropolitan areas with high-speed rail.

It's quite incredible to see, and the influence on future movement of the humans is powerful and enormous.

And so the only thing we can say -- we try to understand it because we want to make projections and give guidance to you.

And it's such a big deal, but it's hard to do.

We will undoubtedly underestimate its impact.

But do you think that there are design implications, like expansion opportunities beyond your initial footprint that this cataclysmic event gets you thinking about, more towards 2017 and beyond?

Yes, and we've left room in our plans to add more facilities so that we can service the needs that the government explains to us properly.

Again, you always want to be in a position to follow the lead that you get from the government.

They are very, very planning oriented.

And as I say, that makes life a lot simpler for us because we know what to expect.

And they publish and give us, formally and informally, guidance on these matters.

We reflect flexibility in our plans so that we can respond appropriately.

That's perfect, thank you.

Robin Farley, UBS.

Obviously, these results speak for themselves, but I had a question, kind of forward-looking.

First is I'd love to hear what the corporate development activity you talked about in Q4 that was a little bit more than usual.

And then, secondly, specifically on Japan, I would just be curious what your thoughts are about how that might roll out in terms of time frame and what you could do there.

Robin, I don't know that anyone is in a position to make a prediction about Japan.

Everybody is paying very careful attention.

In terms of corporate development that Matt mentioned earlier, I think I'd rather talk about deals we make rather than those that we don't.

And that's sort of a, I think, a healthy attitude to have.

I don't want to fill a conference call with wild statements, hopeless and promises that we can't keep.

I know that it's a popular thing that some of our competitors have done.

We don't do that.

So we'll do our corporate development activity.

When they mature and they represent real business opportunity or decisions that have been taken by the Company formally, naturally we publish them right away.

But if it's all right with you, Robin, I think it's probably not a healthy thing to speculate.

Okay, fair enough.

We spend money in order to position ourselves, and I think that's our job.

We get paid for that.

I think that's what we owe our shareholders.

But I don't know that we owe our shareholders or anybody else visions of sugar plums dancing and that sort of thing.

It's just the kind of thing that it's probably a good idea to avoid.

Okay, fair enough, thanks.

[John Oh], CLSA.

I have a couple of questions.

I'll start off with, in the fourth quarter we've seen a pretty steady recovery of revenue share.

I'm wondering how much of that can be attributed from the impact of the additional junket operator that was brought in versus organic growth.

First of all, to that question I will respond by saying that junket grew, our own program under Linda Chen's direction and [Frankie Zhao's] direction grew.

Our general casino activity grew, our slot machines grew, our hotel room rate grew, and our poker grew.

It's been across the board.

So there was no specific spike that came as a result of that additional junket?

I'm happy to tell you that it was straight across the board.

The property, the 1000-room Wynn Encore building is very well received by our customers.

The Encore building, in particular, which reflected a structure that was designed after we had been in the market for a couple of years, we had gained insight.

It was reflected in the design and execution, and it represents a progression, an evolution of our perception of the market.

Cotai is yet another echelon, another plateau of that sort of thing.

Okay, and I guess, thinking of just your business segments, between direct and junket and also, to a certain extent, mass market, what do you see as the low-hanging fruits from this year that you expect the strongest form of growth?

What do you think, Matt, or Ian?

We could talk about Las Vegas, we could talk about -- Scott Peterson is here; he's an expert on low hanging fruit.

Robert Gansmo is on the call.

Robert, are you there?

I am indeed, Steve.

There, there's that fine gentlemen.

I am particularly proud -- I have to add this.

I'm particularly proud about the depth of our financial area of our Company.

I've been doing this for 40 years, and I've never been in the company of such talented men and women as we have now.

So I think maybe Scott Peterson and Robert Gansmo should weigh in on this one.

In terms of areas of opportunity for growth in 2011, we are continuing to see improvements in domestic business.

And so we are seeing lots of opportunity there.

Obviously, Matt already talked about the convention opportunities that we have here in Las Vegas.

We are expecting that to really help us on the rooms side this year.

You raised rates?

Yes.

We raised rates.

We have just remodeled the entire Wynn facility.

We've spent -- we pumped into Las Vegas $200 million last year between the Beach Club, Surrender and the total remodel of Wynn.

We upgraded all of our rooms.

We did a number of things.

We redid baccarat, and that's been very well received.

So those were things that we were able to do.

We have 3% of our rooms out, between 2% and 3% of our rooms still under remodel.

We finish by April, by the end of April.

And the amount of rooms that are out of order, suites and villas, is down to 2% to 3% now, so it really doesn't matter a lot.

It did, over this past weekend, with Super Bowl.

Where else do you do, Scott?

Well, again, as you referred to, it's the first full year now of operation of Surrender and the Beach Club.

So we'll see some improvement there just because it's a full year.

I think also --

In spite of competition.

In spite of competition.

I think in the second half of 2010 we also made some good improvements in the way we're operating the facility.

So I think that we will see some improvements in expenses.

I think, overall, where we are at right now in the fourth quarter is kind of where we are.

But compared to earlier in the year and in past years, I think we have made some dramatic improvements.

Robert, what do you think, looking at your operation in Macau?

Well, you know, Steve, I think that Encore gave us a huge boost, and that came on, on April 21.

So we haven't seen the full year of Encore's capabilities with us yet.

And there's actually still room to grow there.

So, especially on the weekends, we were always capacity constrained with our rooms.

So adding the 414 rooms and suites really helped us out.

Another thing that we've done is, as everybody has mentioned, we've added some junkets.

And in fact, we continued to modify our floor to increase capacity with both our VIP and especially also our high-limit mass areas.

That has been extremely well received.

The boutique feel associated with the Encore Casino has really been a boost to our win per unit.

Robert, just for a second, I want to clarify for the people on the call.

In Encore, we added what looks like a general casino area on the corner, facing MGM and the Ark, our neighbors.

And there's a door on the corner, and what are there, 27 games in there?

Robert?

Yes, 25 games.

25 games.

And they are in a space that is enclosed.

It's not a junket room, ours or anybody else's.

And how does a win per unit in that environment compared to the win per unit in the rest of the general casino?

Could you share that on this call?

Yes.

I've got to tell you that those games over there -- when we started out and opened up, because of its positioning across the street from MGM, we thought that perhaps we needed some lower-limit games, some $100 games.

And what we found was the customer presence there was demanding that we raise the limits.

And so now you won't find a game that's less than $500.

In fact, you might have a difficulty finding that from time -- you've got $500 games, $1000 games, $2000, $3000 games in there.

And on a win per unit basis, it's almost three times the amount in the fourth quarter and 2.5 times for the full year, compared to the general casino.

There's an interesting piece of information, that Chinese market response to intimacy.

So now, we have a piece of mathematics that impacts the design part of our Company that I'm so involved with.

We have a phrase that we use with a smile on our face called learning from Lisboa.

And for many years, Stanley's operation under the direction of Ambrose So and Lewis Ng and others was a series of small, small spaces that were added on and added on and added on, until it became sort of a warren's nest of one space added on to another.

Now, ordinarily you would say, well, that's an awkward way to build a building.

Of course, it represents many, many years of expansion as the market grew.

But we looked at that and said, but the Asian player is used to intimacy, used to smaller spaces.

They seem to be comfortable in it.

So when we designed Wynn Las Vegas -- Wynn Macau, rather, we chambered our casino -- something you would never do in Las Vegas.

We chambered it.

We put columns that were not structural to break up the space into 14- and 16-game units.

And we draped those columns with tied-back drapes to give them more of a sense of enclosure.

We did the conditioning, the HVAC, the heating/ventilation/air-conditioning, in such a way that we could separate them with a rail or perhaps with a glass wall or, finally, with a partition, without interrupting the business.

We gave ourselves the opportunity to break down the space.

That was received very well, and the performance of Wynn Macau from the day that it opened was superior to its competition.

Then, when it came time for Encore, we actually built spaces that were smaller, on purpose.

And you just heard what Matt said.

What's the multiple?

3.5 times in the fourth quarter, and 2.5 times for the year.

And I have to say, if any of the Lisboa people are in the telephone, learning from Lisboa.

It's very good to visit your competitors to see what they are doing and, from those visitations, get some sense and guidance on what you should do when you design a building.

It's Macau.

It's not Las Vegas.

And it's always instructive to remember that.

That's the low hanging fruit, increasing --

Can I add one thing, Steve?

Because I didn't want to sell our slot friends short.

Marilyn has put a high priority on -- really, she thinks there's a lot of opportunity in our slot revenue.

That is, we think we can do better, Scott.

Absolutely.

She is doing a lot of work.

I am meeting with her several times and our whole team is meeting with her, so I think there's some low-hanging fruit there, too.

And that's going to be -- a lot of that is going to go straight to the bottom line.

Yes; and we've restructured our slot operation for 2011.

We are in the process of doing that.

It will be completed here in a few days, and we are going to have a jump there.

Was that helpful?

Ask a follow-up question -- Matt alluded to the percentage of about 10% to 15% being direct versus junket.

With the two additional junkets that will be coming in in the spring, how should we see that ratio?

With two additional junkets, you will probably -- you could see that ratio come in -- go to the lower side, for sure.

But the direct business is still up well over 50% for the year and is continuing to grow, but Linda gross one customer at a time.

So --

Ian, do you have anything to add to that?

You are the boss.

As to just the general market and our opportunity this year, you don't get a lot of transparency in the investment community on what we do behind the scenes.

But we're the employer of choice.

We are first out of the gate to recognize where our employees' livelihoods need to be improved.

We invest a lot of money behind the scenes in training and development.

We have a massive learning and advancement program.

In an ever-shrinking employment market we have weathered nine new casino property openings, four of which claims to be better than Wynn.

And we continue to be at the vanguard of, at the front of quality in a very, very tight labor market.

So there's a lot of work goes on behind the scenes to keep us ahead of everybody.

Our employees recognize that, and there's great consistently in the service delivery of Wynn Macau.

And we've seen areas like the mass market, where everybody has gone promotional and has bannered their casinos.

We have maintained quality.

We have tried to improve the offer, and we've focused on service delivery.

And we've reaped the rewards of that, both in slow times and in busy times.

If I can add to those points that were so well made by Ian, last month or about six or eight weeks ago, Prime Minister Wen Jiabao came to Macau and said that he hoped that the prosperity that the resort industry was enjoying at Macau would a shared by the workforce.

That was followed immediately by public comments made by the Chief executive, Fernando Chui.

When our Company hears those kinds of comments, we don't wait for a week or a month, we respond instantly.

And we increased the line employees, all the non-executives, salaries and a cost-of-living increase by 6%.

We were first to do that, not because we wanted to be first but because we respond directly to leadership given to us by the government.

And that's an important part of our strategy, of our identity in that community.

Our job is to constantly refresh the notion that we are humble, proud and grateful to be allowed to be part of that scene.

And the way you do that in China is to take good care of your employees.

And I guess finally, are we still aiming for a $2.5 billion price [stack] (inaudible) in Cotai?

And could you also share with us what is the latest date for construction to commence in order to meet the time line of 2014, or late 2014 opening?

Now that the plans are finished, it's in the hands of Wynn Design and Development to create a construction budget.

And that process has just begun, and I'm not quite ready to say, but I think $2.5 billion is a comfortable number for us.

We have no compunction about spending that kind of money on the facility with all of its entertainment potential.

And so -- and as far as I mentioned a few minutes ago, as far as when we get started, that's up to the government.

They will tell us.

And I expect that it's not very far away.

Okay, thank you, everyone.

Janet Brashear, Sanford Bernstein.

I'd just like to follow up on a few earlier points.

First, on the topic of credit, you said that credit is looser now than in past times, perhaps, abundant in the market.

And also you reiterated that your practice is to be extremely cautious.

I'm wondering if you are seeing credit being extended too freely elsewhere in the market, and, if so, what impact that would have on the market as a whole.

Do you want to answer that, Robert or Ian?

Sure.

We take a lot of time to understand our customers.

We don't use our credit as a marketing tool.

We are conservative in our reserve methodology because we don't want to get whipsawed.

I think that -- I can't say for sure how the other operators make their judgment calls, but it appears that credit for a time, if we go back a couple of years, was overextended.

It also appears that some of the operators may have more liberal decision-making processes with respect to credit than we do.

Well said, Robert.

I would not tell you that our credit has loosened.

I would say that our business volumes have increased.

We've made our -- we've kept our reserve methodology the same throughout, and we'll continue to do so in the future.

Politically correct.

We continue to be very prudent about junket partnerships.

We have more people interested than we require, and we add very organically.

We're very careful in our due diligence, and the relationships we have with our junket partners are true partnerships.

We are very, very careful in how we vet people and whom we allow on property.

And looking at the rest of the market, one would say that that may not be the case in certain properties.

But certainly at Wynn Macau we are conservative and careful.

And we've benefited from very close engagements with long-term business partners, and the fruits of that can be seen in our results.

Okay, thanks.

A question --

Excuse me.

When I said that we've been lucky, I want to make it clear.

We've only been holding 1.9% in Macau.

So, if you see our market share this month, it's going the other way for a few weeks.

And those things get corrected, as I say.

And we'll get to 2.9% or 3%.

And our market share will pop back up, as it always does, no matter what the other guys are doing.

Okay, thanks.

I also wanted to follow up on the infrastructure question that we were talking about earlier.

As traffic continues to grow in Macau, the visitation traffic, the people flowing in, and new supply is moving very slowly, do you foresee a point where the current infrastructure starts to become a barrier to growth and where your gaming positions max out?

No, I don't, to give you a short answer; I don't.

I think there's a lot of capacity, and I think that the infrastructure will handle it.

If you're asking me about the impact of the bridge, again, as I said earlier, it's hard to imagine what it's like when it's 20 minutes in a car from Hong Kong to -- and maybe 40 minutes, 30 or 40 minutes from Shenzhen.

I can't -- and the rail service.

These things are so strong that we are in a bit of a quandary about that.

I don't know how Ian feels about it (multiple speakers).

I think, if you look at the very peak times that happen in the city over the Golden Week holidays, everybody manages to get in.

We're able to handle incredibly high volumes.

I think the infrastructure side of things is a bit over-talked about.

There are good things happening in the next 18 to 24 months.

We have the PacOn Ferry Terminal goes through a considerable expansion, the Gongbei border gate is increasing capacity of daily arrivals by up to 60%, and there's more ferry services been put online to Macau.

So the market seems to be able to handle the additional customer arrivals.

So I don't foresee an imminent problem.

And the beauty of Cotai coming on stream in late 2014, early 2015 is the monorail system will be up and running from the PacOn Ferry Terminal around our property on two sides.

So the government have reacted.

There's more taxis in the marketplace.

Macau is a small city.

When it's very busy, it does get a little bit choked at key times.

But that's the same everywhere in the world.

We are right next door to the airport.

We're the closest hotel to the new ferry terminal.

And the monorail storage yard is behind our hotel, and the monorail, as Ian just mentioned, goes around two sides, and the main stop is at our front door.

If I could get you to speculate on one more impact in the market, Galaxy Macau opens sometime in the near future.

What impact would you see that having broadly across the market?

Well, they've done a very -- I talked to Mike Mecca, the boss, and if he's listening, hi, Mike.

How are you and Sandy?

As I understand what they're doing, it's a very ambitious, wonderful hotel.

And it's a combination of several offerings, a company that specializes in spas and rooms of that sort.

So it's a complex building with a lot of bells and whistles attached to it.

So I expect that it's going to be well received.

It's certainly the most ambitious and far-reaching of the Galaxy properties.

So I expect it's going to be a big lift for them.

It should be good for the market, too, because the market does not have enough hotel rooms to accommodate the people on the weekends.

So I think it will be good for Cotai and good for the market overall.

Yes, can't wait to go see it.

It's next month.

Thank you.

David Katz, Jefferies.

I wanted to ask about Las Vegas.

We've obviously come through an unprecedented set of circumstances in that market, and obviously the path to recovery, to some degree, is unprecedented also.

Can you talk about how your cost strategies, how you are thinking about cost strategies in the next 12 to 24 months?

I know there were instances of reducing labor, in particular.

And if you could talk about that topic and give us some color, that would be helpful.

Sure.

Look, we are running at around 9300 FTEs right now, and we think that that is a good run rate for even if business volumes do increase.

So our fixed cost right now we feel pretty comfortable with, and any increase in cost should really be more on the variable side.

So that's the beauty of these hotels with operating leverage.

As things get better, your margins get better.

Scott?

Yes, actually we've learned a lot in the last year and a half.

Since Encore opened and with the troubled times that the world went through, we had to look at ourselves, and we went back and changed a lot of things, and we got smarter.

And we are ready to start taking advantage of that.

And Marilyn came along.

And she has opened up a whole new set of (inaudible).

And we have sort of an inbred culture here, and we look at each other all the time.

And we're sort of like-minded men and women, and it's nice to have someone else with a fresh perspective --

Absolutely.

-- join us -- sit at the table and say, no, I don't think so.

Or just, why?

Yes.

Why you do that?

And sometimes, we don't have a very intelligent answer.

But Marilyn has focused us in some ways that are surprising and very refreshing.

Would you be able to talk about any specifics as to what her perspectives are and what categories she has brought a new look?

Well, I remember one conversation I had with Marilyn was about six weeks after she came.

She came to my office and said, you know, Steve, we have the tremendous success with nightclubs and our very popular, hip restaurants.

I think our steak house, SW, is the most successful restaurant in Nevada.

She said the public taste has changed.

We have a five-star restaurant, a Michelin star restaurant, a five diamond restaurant, and Alex.

But people don't want to sit for three hours and eat dinner that way anymore.

I'd rather repurpose that restaurant.

I know that you love the idea that one of the restaurants has got all those Michelin stars.

We've got three of them in the building.

But this one in particular, this gourmet kind of restaurant, she said I'm not sure that we can't use that space more effectively in another way.

And frankly, I would never have question that restaurant on my own.

Marilyn made me question the restaurant, and she was right.

I offer that as just a simple example of -- that was something that she brought to my office that I would have missed.

There's been more of that sort of thing.

We tend to be siloed, to use her word, siloed in the sense that each department is complete unto itself.

We've decentralized authority because we think that we want to put our best people right in the -- touching a customer very day.

We don't have a big layered structure.

Well, that's good.

That's good in one way.

We don't have a lot of vice presidents and floaters that go in food and beverage and other departments.

But on the other hand, that management style tends to miss some chances for sharing of employees, like making runs to the warehouse.

Each restaurant had a runner; why not have a runner handle several restaurants?

That's not asking too much.

Let's not silo or isolate each operation so much unto itself.

It's good that you think about it the way you do, but Marilyn said, I think that in the process you may be spending some money you don't have to spend.

And I found that very interesting.

And she used that word siloed in the sense that you have a self-contained tube that doesn't look outside itself very much.

That's always a danger when you are very focused on full service.

It turns out that we could make a change like that without sacrificing one speck of quality of service or responsiveness to our guests.

And I welcome that sort of thing, as did Matt and Scott and the rest of us.

And I think we are all one family here, so that sort of spills over to Ian.

Ian comes from the Peninsula operation in Hong Kong, and he wasn't so siloed.

I don't want to put words in your mouth.

I spent 10 years in three-star hotels, so I'm used to working with a tight budget.

You started with three stars, but when is the last time you were in a three-star hotel, Ian?

Oh, I stay in three-star hotels.

Oh, you stay in them?

(laughter).

Come on, you're going to make people think we're not paying you enough.

Thank you for that.

May I ask just one more, quick one, please, which is, I think, if we went back several conference calls, I believe you said that it would be a very long time before you would develop anything in the United States again.

And I wondered if you still think that's true.

I don't still think it's true.

I changed my mind.

You have?

Okay, thank you.

You're welcome.

I think that will do it.

That was the last question, so thanks, everyone, for joining us.

Bye-bye.

Thank you all for participating in today's conference.

You may now disconnect.