永利渡假村 (WYNN) 2014 Q4 法說會逐字稿

Good afternoon and welcome to the Wynn Resorts fourth-quarter 2014 earnings call.

(Operator Instructions)

I would now like to turn the call over to Steve Cootey, CFO and Treasurer.

Please go ahead, sir.

Thank you and good afternoon.

Joining the call on behalf of the Company today are Steve Wynn, Matt Maddox, John Strzemp, Kim Sinatra, Maurice Wooden and myself here in Las Vegas, Gamal Aziz, Ian Coughlan, Frederic Luvisutto, Robert Gansmo and Frank Cassella dialing in from Wynn Macau.

Before we get started, I just want to remind everyone we will be making forward-looking statements under the Safe Harbor federal securities laws, and those statements may or may not come true.

And with that, I want to turn the call over to Mr. Wynn.

I hope everybody can hear us today.

We've issued our earnings, which I don't think surprised anybody.

I know that in Macau, everybody follows the margins and the weekly casino numbers.

January last year was a month in which we had extremely low hold percentage, and this year we had a high hold percentage.

So surprisingly we made more money in Macau in January for example than we did a year ago.

Our business for the year looked great, but the fourth quarter was tough since Golden Week in October, the effects of the changes in China have had a negative effect on all of the top end business, whether that means retail top end like Rolex and Louis Vuitton or whether we're talking about the high-end gaming in junkets in the VIP section.

We looked at the fourth quarter and the drop in VIP business, and then we looked at the first month of this year anticipating the kinds of questions we get today, and we ask ourselves -- is January -- were any indications in January of a change?

And in terms of the VIP business, no.

It was off -- turn was off by 40%-odd, and the occupancy was high because we only have 1000 rooms in Macau and therefore we still had occupancy.

It was more of our mass occupancy, a little more than VIP occupancy, but the hotel was full.

Things like Louis Vuitton, Christian Dior and Rolex were off as they were in the fourth quarter during January even though we made $5 million or $6 million or $7 million more than we did last year.

I'm using January because we know the results of this first month, and in January we were able to make $80 million-odd instead of $70 million-odd.

In Las Vegas -- excuse me, if I can stick with Macau for a moment.

There was one change.

Without any adjustment for hold percentage, but making normal hold percentage comparisons which we had last January and this January, our mass business was up 26%.

Slots were off by 16% or 18%, but a lot of our slot business is very top end oriented.

So with reflected the diminution of business that we saw at the tables at the high-end.

Mass business though was up legitimately 26%.

We also are opening in a week or so the new area of the casino in Macau that is dedicated to VIP business, and it has better facilities than anybody has seen in that town yet.

And we're getting some very good people to occupy that space, which also frees up some of our other space for more mass table games.

So to that extent, I think February is going to see an improvement of some sort, and I don't need to quantify that, but I expect that we will see a better result comparing to the previous months.

In Las Vegas, I mentioned in our third quarter announcement that if we had a legitimate November and December, we'd be the first company to exceed $500 million in profitability probably not only in the history of Las Vegas, but also in America.

And in fact, we did do $515 million in EBITDA in Las Vegas, which was encouraging and we're very happy about that.

But China remains a big question mark.

We have more questions than answers.

Thousands of our Macau employees are anticipating promotion and a better life because of Wynn Palace, a breakaway property by any measurement which up until now has been on budget and on time.

But we were notified by our builder last night that because of a problem in the timing of our construction labor permits that they thought they were going to miss the Chinese New Year next year as the opening and they would be late with regard to that date that we have used in these calls.

In our public releases, we've always said that it would be the first half of 2016, and I have been more optimistic and said we'd make Chinese New Year which until last night I thought was true.

But if we're to believe the email we got from Leighton Construction, they're not going to make Chinese New Year.

They think they are going to miss that date.

I'm going to explore that a little bit more deeply with them.

Mike Harvey is on this call who ran Leighton in Hong Kong and Macau and built our first two hotels as the Senior Executive of Leighton running our jobs.

He switched over to become our own executive in charge for the Wynn Palace project, so he's in a better position to discuss the Leighton email and its ramifications than I am at the moment.

But I do believe that for all of Chinese businessmen, there is at the moment a bit of uncertainty as to what the future will hold because so much of everything in China depends upon the policy of the central government.

We have learned in the last 12 years the way to behave in China, and that is to listen very carefully to what the leadership says and to do our best to be helpful and to conform with the program as we are their guests.

In my history in China starting in 2001, I was very lucky to be instructed by former President Bush on how to behave there, and that was to be helpful and to understand their culture.

And to that extent, I believe that they sort out their problems in an orderly fashion as they see them, and in some cases that impacts like Macau or Hong Kong.

There is nothing to be done but to be patient and to be alert and to do your best to be cooperative and to go along with the program.

There is no doubt that the existence of Wynn Palace is a major event in the development of entertainment and tourism in Macau, and I believe that the government recognizes that to be true.

We did get a 700 person increased to our construction labor this week.

Although we requested 1000, we got 700.

And I guess that's encouraging albeit that it was three months late.

So timing and government approvals are a factor that we have to deal with.

Hopefully we will be able to keep our promises to our employees that live in Macau and all of the staff that work in these places and that their hopes for a better life will be fulfilled and that our ambitions to grow in Macau will continue to develop.

I think that's pretty much the kinds of comments that are appropriate at this moment.

If any of my colleagues on the call would care to add to any of this, Gamal Aziz and Ian are there and Linda is there, our main connection to the gaming fraternity there, and as I said Mike Harvey the construction man is on the call.

And all of us here in Las Vegas and the parent company are standing by for questions, which we will take at this time.

(Operator Instructions)

Joe Greff, JPMorgan.

Hello everybody, good afternoon.

Just looking at your fourth-quarter Macau results and then looking at the EBITDA there and trying to normalize that, was there any adverse hold on the direct VIP side.

And then you called out lower than recently experienced hold on the mass side.

Would you characterize that as having below normal hold there?

Joe as you saw in October and November, our market share was in the 8.5% to 9% market range.

That was a direct result of low hold in the premium mass area.

So when you look at it, that's between a $15 million and $20 million EBITDA impact for the fourth quarter, which was in the premium mass in October and November.

But nothing on the VIP side on the direct side?

No.

Okay, and as you pointed out in the release, you had about 10% on average less table games this fourth quarter versus a year ago.

How do you think that impacted?

Is there a way you can estimate that on a direct or indirect basis?

Joe, I think what you should know is that our tables are going to increase by about 40 tables after Chinese New Year with the new VIP rooms coming on and the incremental mass tables.

So we will be up to about 485 tables excluding poker in two to three months.

And they're in the right positions in the casino.

So it's not just about number of tables.

It's about where they are, and we repositioned all the product, and we will be up to 485 tables in a couple weeks.

Okay -- excuse me?

It's a combination of junket tables and mass casino tables.

And also to note, we've had a lot of construction taking place throughout the fourth quarter.

Now we get the West casino back in its entirety, and it's looking fantastic.

We're installing furniture today.

Excellent, and my final question going to the Las Vegas side of things, it looked like promotions was up sizeably year-over-year.

Can you talk about what drove that and is there something one-time related to last year's mix and last year's hold?

Thank you.

We didn't do anything unusual here promotions, and that might --

We don't know what you are looking at Joe, but we didn't.

Okay., I will follow up off-line.

That's all for me.

Thank you.

Shaun Kelley, Bank of America.

Good afternoon everyone.

Steve, in your earlier remarks, you mentioned you did see I believe a 26% increase in the mass business so far in January, and we haven't heard that many rays of light in Macau in recent months.

So I was wondering if you can help us break that down a little bit.

Are you seeing that improvement in premium mass, in grind mass, are traffic levels up?

Just maybe help us think about that a little more?

Ian, where is that?

It's coming from the mid-level mass,.

The high-end mass, very high-end is as impacted as VIP, but interestingly, the mid-level mass, we got back room inventory from some of the junkets that we had moved on during the year.

We got rooms back from refurbishment.

So we've been able to provide more of the hotel accommodation for the mid-level mass sector.

There's about 7000 players that we've targeted directly in a niche way.

We call it a winter campaign, and its proved very successful for us.

Great, that's really helpful Ian.

And I guess my other question would actually be on Boston.

You didn't provide a budget in the release.

Is that something that you could provide?

I think there were some comments that it probably moved up to closer to $1.75 billion, is that about the right number?

It's right in that area, $1.7 billion, $1.75 billion.

We're feeling great about Boston incidentally, just great.

We love the idea that we've got that for diversification.

We've never ever been in the position we were the only game in town.

We've always in my career for the past 40-odd years, we have competed and prevailed in the most competitive markets that exist.

And we tend to thrive under those circumstances because as a top-end operator, we tend to take off the creamy part of the market whether it's in mass or in VIP.

And to be in Boston Massachusetts and the metropolitan area in Everett and have almost 4 million people where we are the only game in town in titillating.

We've worked very hard to compete for the right to operate in Massachusetts as you know, and it was expensive to do that process and time-consuming, very -- we had an 1800 pound application when we finally finished.

We spent $25 million just to get to the end of the game in terms of local elections and requirements with related communities.

We had $130 million in infrastructure that we had to agree to, and then there was another $100 million in the cost of the license and other miscellaneous stuff.

We were in $230 million of our budget already or promises for that that are separate and apart from the construction on that project budget.

We're going to be one of the top five private employers in the history of the state of Massachusetts.

We're going to be responsible for $50 million a month in revenue for the state, probably another $50 million in related revenues to all the surrounding communities.

We're going to employ thousands and thousands of people.

It's the largest construction budget in recent history in Massachusetts, maybe forever.

We've got a serious presence there in Massachusetts, and we're delighted to have that position.

And we finished the design of the hotel, and I think it's along with the Palace the best work we've ever done based upon 40 years of experience with what's -- best of all, with the same group of executives that have learned from all of our past experiences and projects.

And hopefully our next stuff that comes up will reflect the evolution and the enlightenment that we've been able to achieve because of those experiences.

So speaking for myself, I am delighted with the Boston opportunity Wynn America now enjoys.

I think we're alone.

This last few months we got our investment grade which we've had from Moody's, now from Standard & Poor's, so our credit rating is the highest in the industry.

We financed $1.25 billion of our Boston project a few months ago at LIBOR plus 175, and we're in real apple pie shape just as our financing in China was at LIBOR plus 1.75.

$3.85 billion of the project in China was financed nonrecourse at LIBOR plus 175, or a total of 3.3% for the $3.85 billion that we raised again nonrecourse.

Our Boston financing is nonrecourse to the parent in Wynn America, which is as I just said, I'm proud to say investment grade.

So all in all, the setup is just right for Massachusetts, and as we wind our way through the complexities of the Asian situation, our setup is just right to keep our promise to our employees and to the government in China.

Great, thank you very much.

Felicia Hendrix, Barclays Capital.

Steve, you touched upon this in your prepared remarks regarding how you view doing business in China and being a good corporate citizen there.

And along those lines, a lot of investors have remarked to us lately how they've noticed increased rhetoric from all the Macau operators regarding the diversity of their new casino resort projects.

Obviously everyone is taking directives from the central government seriously, there really shouldn't be a question there, but in your view, has the mandate changed?

That is, is your perception of what the government wanted when you started your new project, when you started Wynn Palace, has that changed significantly when you started?

And if so, does the increased rhetoric on diversification of the Macau economy affect your expectations for the returns of Wynn Palace at all?

That's a great question I must say, and I'm sure glad you asked.

I didn't expect that today.

The answer is at least speaking -- I'm getting over a cold -- for our company, in each and every case in America leading up to China, we have broken the record for casino revenue at the Mirage.

We broke the Caesar's pre-existing record for casino revenue, then we broke the Mirage record at Bellagio, and then we broke the Bellagio record at Wynn, and then we broke the Wynn record when we opened Encore.

What's interesting though even though we've gone into the $800 million range, never in the history of our company has our casino revenue met or exceeded our noncasino revenue.

That is to say that the reputation of this company, its status today, is based upon the fact that we did not focus completely on gaming, but recognize that gaming was a result and not a cause, that although it was a productive cash register in the building that the real attraction and the power, the energy, the vitality of our enterprise was directly related to its noncasino, experiential, entertainment and hospitality aspects.

The one thing that led to the spread of new concessions in Macau, the desire of that government after the turnover to the PRC was to broaden the appeal of Macau and to diversify from purely Baccarat to beyond Baccarat.

All the operators there, all of our competitors, have recognized this from day one not because of a mandate from the government necessarily, but because of their understanding of how the industry survives and prospers.

Based upon creating experiences for people that they can't get at home.

Tourism, the broadest definition of tourism, a positive exciting experience that you can't get at home, and surely we recognize that a slot machine or a Baccarat is an experience you can get anywhere.

Every damn slot machine on earth looks like every other one, I can't tell one manufacturer from another unless I look at the plate on the side.

Every roulette table is identical to every other roulette table no matter what nation you are in from one end of the gold to the other.

Our company has recognized that more than any other company in history.

Our noncasino revenue always exceeds our casino revenue.

Wynn Palace was built as Bellagio and Wynn and Encore have been built, to create a complete tourist destination experience.

Only the smallest part of our budget in Macau is dedicated to Baccarat tables, but hundreds of millions -- yes billions of dollars, up to $4 billion dedicated to entertainment, shopping, food and beverage, spas, incredible hotel room experiences, and most importantly, to an extensive, in-depth training routine and discipline on the area of human resources to guarantee the visitors to Wynn Palace a unique experience for those people who travel and seek to have unique experience.

So when you hear that the central government and the Macau government urged operators to diversify the attractions of their facilities, when they speak to us, they are preaching to the choir.

We invented that idea.

It has been certainly enhanced, and it's certainly been carried on by companies like Venetian and Melco, no question in Galaxy.

And all of these facilities being built in Cotai today are remarkable destination resorts, and they were planned and they were executed with enormous amounts of capital before and during any encouragement by the central government or the Macau government.

So this is a development -- this development of noncasino is something that was going to happen anyway and has happened, and I said this once before and I'm going to repeat it again today.

If you take Macau with its destination resorts, which include gaming tables, and you take Hengqin Island adjacent to Macau with its additional non-gaming attractions like theme parks, I say that Macau Hengqin Island area will in the next 5 to 10 years become the most dynamic tourist destination location on the planet.

And that's saying something in a country that has Orlando and Anaheim and Las Vegas.

But boy, what's being done over there is really something.

And to a certain extent, it's happening in Shanghai as well.

So I hope that's a response to your question

That was great color, I appreciate that, and if I may move on to Las Vegas for a moment.

One thing.

Last year, $800 million-odd in gaming revenue, but the total revenue of the place was just shy of $2 billion.

That's not a gambling hall.

I'm talking about Las Vegas now.

Just $[1.97] billion or something in revenue, just shy of $2 billion.

The gaming was only $800 million-odd of it.

That gives you an idea -- and it's going to be in China, because of the vigorous gaming activity, it's very hard to exceed the gaming with non-gaming facilities, but if you look at the facilities, they are lopsided non-gaming.

Okay I'm sorry, that ends my answer.

I appreciate that.

Can you tell us or one of your colleagues tell us what you are seeing from the Asian Baccarat customer in Vegas.

In the quarter in the market, Baccarat volumes were down 11% year-over-year.

I'm just wondering is there something structural, is it economic, is it something we shouldn't be concerned with?

Just what are you seeing there?

Certainly I'm concerned about the attitudes and trying to handicap the behavior of Chinese -- Hong Kong and Chinese players that travel the world and visit various places.

Our New Year's was very vigorous in terms of Malaysia and Indonesia and Taiwan, Korea in January and South Korea in January.

The hit is in Hong Kong and mainland China.

The future of it is unknowable at the moment.

There are so many moving parts, I don't have an answer to it on this call.

And sometimes you just have to say you don't know.

Well I don't know either, so I guess we are even there.

That makes a whole bunch of us.

All right.

Thank you.

Carlo Santarelli, Deutsche Bank.

Good afternoon.

I wanted to touch a little bit on how you guys are thinking about your dividend as well as overall capital as we go forward.

I believe leverage today on an LTM basis is around 3 times.

Clearly there's Cotai spend, but as a pertains to your domestic dividend, the $6, how are you guys thinking about balancing that with leverage and obviously retained earnings in Macau?

Well first of all, let's understand that Macau -- this is not 2008.

Macau went from skyrocketing to healthy revenues.

Let's keep some perspective to this conversation.

Our structure now does not threaten our dividend in the near future.

Now when Cotai opens next year, hopefully sometime next year, that there will be incremental revenue and profitability from it, and I can't see that any other answer would be appropriate looking forward.

So I was always hoping the dividend would increase.

I haven't thought that it would decrease nor do I think so today.

Now Matt, you deal with this, you and Steve Cootey.

You can correct me if you would like to.

No.

You are right.

My feelings won't be hurt.

Low leverage, lots of cash project the dividend, and we have a big property opening next year.

Understood, thank you guys.

And if I can ask one follow up, actually two, both on Macau.

One was would you guys be able to comment on whether reclassifications played any role or have played any role in some of the moving parts?

I think Matt from your comments, the $15 million to $20 million of premium mass EBITDA drag, if I do backwards math, that is roughly $20 million a month of less revenue, which explains the delta between what you did in January relative to what you were doing in 3Q.

Is that all that is, or was there some other reclassification activity?

And my quick follow up is would you guys just mind commenting -- I got a little bit confused.

Is the West casino renovation and all the tables, will they be ready for Chinese New Year or are there different parts of that?

The last one, the answer is yes.

Everything will be ready in a few days.

We're finishing everything in real time in the next six days.

Okay, go ahead Matt.

We haven't been going through these reclassifications scenario you've seen other operators going through.

So our mass tables are our mass tables, and the same with our VIP.

Thank you, Matt and Steve.

I appreciate it.

Stephen Kim, Goldman Sachs.

Hi, good afternoon.

Maybe if I could just go for a little bit more of a longer-term question, which is what examples are you seeing today in Macau that give you the confidence that Wynn is pivoting more and more towards the mass or the high-end mass and away from the junket?

What are you seeing today that gives you the confidence that the $4 billion and all the things you are doing are going the right direction?

I guess that's what we're all struggling with.

And the only example I would use, Steve, which I think you lived through was in the late 1990s when we saw a move towards US customers wanting better restaurants, better rooms, that gave you the confidence to go and build the Bellagio.

So what is it today that gives you the confidence that you are doing the right thing in Macau?

Interesting question.

I'm gathering my thoughts.

At the end of this consideration, you and I and everybody else on this call have to ask ourselves -- is there a commonality in humanity in terms of aspiration?

Is China so different than America?

And my answer to that question based upon these 40-odd years of dealing with Asian customers more than anybody else probably in the last 30 years, starting with Mirage, and talking to them constantly both here and at home in Macau is that aspirationally, all folks are the same.

When they go on vacation, they want to live bigger and better than they can in their normal disciplined lives.

And that's what makes destination resorts necessarily special so that they can fulfill that aspirational dynamic.

Nothing that we've seen in China has changed my opinion, and in fact, everything that we've experienced in the past 12 years in wonderful Macau has reinforced that folks may look differently and talk a different language, and their menu may be different, but in terms of what they want, it's all the same.

And every place in the world we've given people what they want in this ever more mobile society, the moving middle class of the world, they have responded to the same invitation with similar enthusiasm.

Wynn Palace is a gilt-edged invitation to that party, and my confidence is based upon 40 years of experience both with American and international players, and the Brazilians and the Mexicans and the Argentinians and the Colombians where we have offices and the Venezuelans, the Taiwanese, the South Koreans, the Japanese and the Chinese folks when they have some money and a chance to enjoy it, they all want the same thing.

And that's the basis of my confidence, and I might add it's most likely if Sheldon was on the call or Francis Lui or Lawrence Ho, or Jamie Packard, they would say the same thing.

I believe that to be true.

And not something I'm very hesitant, as you know -- I'm insecure about the short-term future of the way things roll out in Macau.

But I am not insecure about the answer to that question.

So Steve, just to be clear -- because I guess what I was asking for and I know it's a big ask, you're seeing good hotel room demand, you're seeing people willing to trade up for things in restaurants and hotels, in the way they are interacting in retail.

In the fourth quarter I guess or in January, that's what I'm really trying to get at is whether you're seeing any of that today?

It's confusing.

People with money are destabilized at the moment in China.

I think -- and you were seeing that all across mainland China that people are being cautious.

There's an uncertainty in China these days about things that are a little foreign to us here.

What is expected of them?

What's the relationship of Chinese businessmen to Chinese government officials?

Is corruption as widespread as people say it is?

I read the South China Morning Post.

I talk to people, and this campaign against corruption has been a big wake-up call in China.

President Xi Jinping has determined that his leadership should eliminate the perception of corruption, and the only way to do that is to root it out.

And you know there's a huge national campaign to investigate public officials and their behavior.

Now it's comforting to note that the liaison officer who represents the central government in Juhai that looks over Macau made a public statement when I was there last week that there is little or no evidence of any government officials gambling away their money in Macau.

He wasn't concerned about that.

That was a positive announcement by him, and I think he felt it necessary to say that.

But we wait for announcements from the government with bated breath to understand what their perceptions are of Macau and what the related activities will be as a result of those perceptions.

So I think what we're seeing across China is a retrenchment of spending instincts, and how long will that last?

I don't know.

Okay, thanks.

Thanks for the color.

Thomas Allen, Morgan Stanley.

Good afternoon.

So you mentioned earlier how there are very good people filling the new junket tables you are bringing on board ahead of Chinese New Year.

We read almost every day about turnover in the junket business.

Can you just discuss how you chose the partners that you did, how you were dealing with junkets in general and have you changed your direct VIP mix at all in Macau?

Thanks

The answer is we have changed.

We've eliminating the weaker junket operators, and very much as if we were looking in the mirror, we sought safety and security by dealing with only the strongest operators financially.

One of them is called Sun City, and the other is called Guangdong named after the province that is adjacent to us, Guangdong Province, the capital of which is Guangzhou.

And we've given our two new rooms to Guangdong and to Sun City, and Sun City is the financially probably the most powerful of the junket operators.

We never had them in our facility, and we're welcoming them with a sparkling new really dramatically lovely space, and they're enthused about that.

And we have gone to 9 operators from 12 or 13 and reclaimed those tables as I mentioned earlier.

Because we want to do business with only -- we're very conservative about credit, so we want to do business with only the most conservative counterparts in that industry.

Is that helpful to you, that answer?

Yes.

Very helpful, thank you.

And then just as my follow-up, we noticed in your results that your promotional spending in Macau revenue went from 5% to 6%.

I think I asked the question last quarter about what would happen with the promotional environment, and you talked about at a certain point you have to raise your promotional spending to fit the market environment, but at a certain point, it gets futile.

Can you talk about where that could go?

And just a final numbers question for anyone in the room, when you talk about mass market revenue up 26% for your property in January, was that versus December or was that versus January the prior year?

Thank you very much.

January of the prior year, in quick aspect.

Matt, why don't you deal with that?

On the promotional side?

Or whoever wants to deal with that.

If you look at our third-quarter, promotional allowances were $50 million, they were $48 million in the fourth quarter and $48 million year-over-year.

Getting into the mix that it has gone from 5% to 6% of revenue, I think that's missing the point.

They were flat year-over-year, and we're not seeing any major increase in promotional activity in the industry.

Does that help?

That helps.

Thank you.

(Operator Instructions)

Harry Curtis, Nomura.

Hi guys.

So Steve, I wanted to get back to the focus of your target market for Wynn Palace.

Given these policy changes and the uncertainty, has that changed your focus on where your target market is going to be and what your ROIC expectation is?

And tied into that is, going back two quarters ago, you talked about table allocation.

It seems to us that the 1750 remaining or unallocated tables is more permanent than we had though, and have you amended your view on that topic?

My target market hasn't changed at all.

We are after everybody.

That's been the story for 40 odd years.

We're looking for everybody who have the funds and the desire to experience the highest end treatment that they can get.

Matt, can you enlarge Harry's question -- answer to him?

Sure, on the table allocation?

I thought we dealt with that.

We allocate the tables based upon a moving assessment that's weekly, and we reevaluate the activity on our VIP.

And if we don't like it, we move it into mass.

And Harry is asking about do you think you will get your tables for Palace with only 1750 left.

Well at the end of the day, the government will assign those tables.

And they haven't officially done that yet.

But I might point out that in planning Wynn Palace, we were required to submit extensive schedules of how many employees we would need for construction and when we would need them.

How many people we would hire from Macau, how many tables we'd nee, everything was included in the submissions that were considered and reviewed by the government extensively for protracted periods of time.

And the process was slow, laborious and extended, and then we got our final approval and we commenced construction.

The building was designed and the employees and the promises made to the employees were all based upon all of those submissions and those declarations, which were then approved and accepted, and we were given the green light to go ahead.

It seems to me that at the end of the day, the government will respect that.

Talks of caps and all of those things occurred after our approvals and after our construction had begun and on the land.

And so although I don't know what our table total is as we speak today, I have a sense that common sense and consistency will be the order of the day.

I don't see the government of Macau threatening the security of the employees who live in Macau who are all shareholders of our company.

I just don't see that.

Nor do I sense that in my conversations with the government.

So how they allocate those tables is something that's clearly their own business, but the responsibility for these projects although we have financed and built them is also their business.

And I have confidence that their common sense and their integrity will at the end of the day be the last word on the subject.

I don't know how you would look at it if you changed the seats with me this afternoon.

That's how I am feeling about it.

I don't see the government of Macau scuttling their own industry.

Okay.

I appreciate that, and then the only other question I had, Steve, would be as you look at Vegas over the next couple of years, what do you think the demand picture looks like, particularly as we -- as the group business, the convention business comes back.

Can you talk about your expectations there?

Yes, Maurice is with me, but there is a preemptive moment to that answer.

Two projects have been announced directly facing our land.

We have over 2000 feet on the strip, and opposing our 2000 feet are the frontage of the old Stardust and the old Frontier Hotel.

The Frontier has been purchased by the interest of James Packer, and he has hired people of quality and experience to build and design a facility that is approximately $2 billion.

KT Lim, an internationally experienced casino developer in Malaysia and Hong Kong and even New York with slot machines at Aqueduct and Singapore and Malaysia at Aqueduct, he has announced the project on the site of the old Stardust or the Echelon property again that opposes Encore that is $4 billion.

Now if you say that instead of an empty land and a couple of shell structures we're going to have $6 billion worth of construction and eventually in four or five years, buildings and employees and guests across the street with thousands of rooms, that's worth at least $30 million to $50 million on the bottom line of my company.

I love that.

And so right away, I see Las Vegas being enhanced going forward by this experienced capital investment.

Hopefully those projects won't be false starts, they will really happen.

And the men who've announced them are people fully capable of keeping the promise.

That's good news for us in our spot here on the Promenade.

So my feeling about Las Vegas, it's still the destination of choice worldwide.

Otherwise, why would all the Asians come here as they do on Chinese New Year?

Why were they all here on New Year's Eve?

They filled -- over 2000 of them filled our ballroom to watch Bruno Mars, and then they shopped and ate and gambled and enjoyed themselves to the hilt.

They had a great new years.

So nothing's new, and I think again so much depends on American domestic political situation.

I thought that we were under the gun during the recession with administration policies that were more of a wet blanket on job formation and economic development than they were constructive.

But that was my own personal view.

We seem to have overcome the administration and the recession, and we finally slowly seem to be crawling out of the ditch we were in, and maybe things will continue to improve in America.

But Las Vegas and at least Wynn Resorts has come through it handily.

I think the same thing will apply in the future.

And so when you look at the year that you've come through in Las Vegas as far as room pricing and operating leverage, do you think that 2015 and 2016 will be just a strong based on the forward bookings that you have?

I raise all the prices on our rooms by 18% in August, was it August Maurice?

Actually it started Labor Day weekend.

Yes, I decided to raise the prices.

Pricing is always one of the art forms of any business.

Pricing blackjack, pricing rooms, pricing everything is always -- you don't want to price yourself out of the market, but you don't want to miss the opportunity to take an increase especially if you think you have the demand and reputation that allow you to do it.

We've been able to do that so far.

The business of business is not about home runs.

It's about bunts and singles.

And you build a reputation and you create a platform for a business that can sustain pricing increases over a long period of time because of consistency.

Consistency is probably the most important word in politics and business and human relations.

Consistency is the most important thing to the future of Macau.

Does the world think that China is consistent, that Macau is consistent, that the businesses and the government will be consistent in their decisions?

Consistency allows for a better future and a better life for people.

Inconsistency is destabilizing and frightening and creates all that uncertainty.

We live with a certain amount of it on a daily basis.

Surely we do internationally as a nation with the problems in the Mid East, and surely we do politically in America, and surely at the moment we do deal with uncertainty in China.

The question becomes, if the only constant is change and uncertainty, then how agile is the company, how agile is it financially, how edge is it in terms of its human resources?

It's very important for CEOs and senior management people in all companies to recognize that flexibility and agility is everything to survival in the modern world.

And I think that's probably almost a universal truth these days.

That's the main thing that I see going forward that we maintain the platform that allows us to deal with change easily and to be agile and then to trade on our goodwill and our past performance.

We've got the concession in Macau because of Bellagio and Mirage.

When the government of China decided that they wanted after the takeover to broaden the appeal of Macau as a worldwide destination, travel and tourist destination, they went looking for people that they thought could do it.

I think we got the concession because of our past performance in Las Vegas.

And our job in Macau has been to keep that promise going forward with the capital.

We have invested as much in China as we've ever made.

All of our money is back in there, and in spite of the success we've had, and that is true of Venetian as well as Galaxy and Melco were all the same in that regard.

Everybody -- MGM is doing it as well.

So I think that all bodes well for the future in spite of short-term uncertainty.

Thanks for the help, guys.

Robin Farley, UBS.

Two questions.

One I don't know if you have any thoughts on the potential for the smoking ban to be extended to the VIP segment --

Yes, the smoking ban will be extended in my view.

And any thoughts on what impact that may have?

Well unintended consequences in our case, for reasons entirely unrelated to the smoking ban, all of our facilities have terraces on the lake that we built with the fountains and the gondola in front of Wynn Palace.

So virtually a huge amount of our gaming facilities have terraces.

So you can get up from a table and walk outside the door and be on a patio outdoors looking at the water.

That's not why we did it, in anticipation of not being able to smoke in the building, but it turns out that we got a windfall in our plan in our facility.

But Robin, your question about the smoking ban will it be extended to be absolute in the building, the answer is yes.

I believe that to be true.

What was the second part of the question?

Part of it was just going to be the impact on -- before Wynn Palace opens this year, your day-to-day business now and whether there's anything you can do to make adjustments to minimize the impact from that.

And I did have a question --

Let's take them one at a time.

In terms of the impact, so long as it's the same for everybody, very little impact.

Go ahead, Robin.

My other question was about margins.

When you look at the fourth-quarter, more of your business came -- mass was a bigger percent of your business versus VIP from a year ago as a percent of your total business.

And we usually think of the margin being so much higher in the mass business.

And just looking at EBITDA margins for the property year-over-year, it was still down a bit.

I wonder if you could talk about maybe some of the cost pressures in the mass business and things that might be able to mitigate as business is shifting there?

Cost pressure in the mass business, our margin in the mass area has been very consistent.

Some of the things that you are picking up are retail revenues are down, and when retail revenues are down, that goes straight to the bottom line because that is least income and very high margin.

So it puts a hold on everyone who is experiencing that.

And we've always said we think our EBITDA margin given all the various mixes is going to be somewhere in the low 30%s, and that's where it's coming in.

Okay.

How is that Robin, does that cover it?

That is helpful, thanks.

Anyone else?

We don't want to leave you out if there is anybody who had another question?

This is a good time to do it.

I know there's lots of changes, so even though that was supposed to be the last question, if there's another one, I will take it.

Chris Jones, Union Gaming.

Thank you.

Just real quickly following up on the Leighton letter that you discussed, can you talk about how far off you are from peak labor and what you are assuming going forward in terms of what you'd have to get in terms of getting back on schedule or at least hitting the mid-2016 opening date?

Thank you.

We had two labor requests to finish.

It took 7000 people to build the building.

We had 4600, 4700, and we needed 2300 and we got 700.

Where1500 was due -- 1500, the 1000 that was a request was October.

The 700 we got was last week, and right around the middle of February we needed the last 1500.

That request is in.

It remains to be seen on how timely that request will be granted.

But that would take our workforce to 7000, which is what the Leighton folks said they needed to finish the building on time.

And they have vast experience in Hong Kong and Macau and everywhere in Asia.

And so when they say 7000 people it takes to build 6 million feet, that isn't a wish list.

It's just a simple practical explanation of the requirements.

And we're 1600 or 1700 away from that now.

Great, thank you.

That's it I guess, so thank you everybody.

I appreciate your attention.

Hope we've been responsive, and we will wait and see what happens in the next 60 or 90 days.

Thank you for participating in today's conference.

You may now disconnect.