永利渡假村 (WYNN) 2016 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen.

Welcome to the fourth quarter 2016 earning call.

My name is Ronnie and I'll be your conference operator today.

(Operator Instructions)

I would now like to turn the conference over to Steve Cootey, Chief Financial Officer.

Please go ahead.

Thank you and good afternoon.

Joining this call on behalf of the company today are Steve Wynn, Matt Maddox, Maurice Wooden, and myself here in Las Vegas.

Also on the phone are the operational management teams from our Las Vegas, Macao, and Boston properties.

Before we get started I just want to remind everyone that 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'm going to turn the call over to Mr. Wynn.

Very nice to have this call.

You've seen our numbers.

I have a couple of comments.

We opened the Palace in Macau on August 22, we opened the Wynn Macau on Labor Day of 2006.

It took us about a year to get that property to produce operating profits of a million a day.

We were able in September, October, November, December to get to over $800,000 a day, and the way we operate, we tend to ramp up and put very little marketing pressure on a property to find out what its baseline strength is.

I've said this before but it's worth repeating, because I'm happy to say that since the first of the year, and during that period, the Macau and Encore properties maintained their levels of revenue without being negatively or adversely affected by the new hotel in Cotai.

And so that revenue is additive.

However, since the first of the year without Chinese New Year which is going to begin today, we were able to have the Wynn Palace come up to $1.6 million [a million six] a day and Wynn in Macau at $1.4 million [a million four] a day.

So the two hotels have been throwing off about $3 million a day, and I'm very glad.

It means that our situation is right on target, right on schedule.

As a matter fact we're little ahead now with our hotel occupancy at the Palace ahead of our predictions.

We're running in the 90s and we're pushing rates upwards in our occupancy which has caused us to have very good mass-market success in Cotai.

We're still barricaded on four sides by construction, both by the city's light rail system and by construction on two sides by SJM and MGM.

And at this point we're not really clear on when those properties will open, but we are pretty clear that the light rail at our barricades that have interfered with foot traffic will be relieved by the spring.

So I think if you're planning and looking at our operation in Cotai, you can pretty much figure that we're going to be barricade-free by the second half of this year sometime during the second quarter.

So the fact that we're experiencing this good mass-market activity is a function of our high occupancy at Cotai which produces a higher-end customer, consistent with our position in the market, both in the Macau original downtown area and the Cotai area.

Our fourth quarter was satisfactory in Las Vegas, and January is operating ahead of last year, as we head into Chinese New Year which kicks in pretty much tonight, tomorrow, and this weekend.

So we expect a happy ending or at least a vigorous ending in terms of casino activity at the end of January going into Super Bowl and February and the holidays in the first quarter.

That's pretty much my take as an overlook on our operations.

We've been in construction since July and Boston, Bob DeSalvio is on the telephone.

One of the most unusual parts of our business is that our two Chinese -- our Chinese operations are run by two Irishmen, and Ciaran and Ian are both on the call, and Matt and I are here with Maurice Wooden who runs America, to answer any of your questions and we'll be happy to take them now.

Questions.

Ma'am, you can begin to take questions on this call.

I'm still on it.

Does nobody have any questions today?

(Operator Instructions)

Felicia Hendrix.

Good afternoon.

How are you?

Steve, someone just emailed me to tell me that I should wish you a happy birthday which is tomorrow, so --

Thanks, thanks.

Don't ask me how old I am.

I won't ask you if you ask me.

So the color you just gave us in the opening remarks were very helpful, where Wynn Palace has ramped to EBITDA per day.

I was just wondering if you could just talk to us about what has happened to that property since the last quarter to get there?

Has it been more tweaking the product, more proactive marketing, has it benefited from the growth in the market, all the above?

I think it would be helpful to get some details around what has been driving that.

And then in line with that, regarding the margins that you're generating at the property, the EBITDA margins, have you gotten to above 20%?

How long does it take to get to normalized margins at the property?

You what, I think that Ian is perfect, he got up at 5:30 in the morning to talk to you and I think we ought to let him do so.

Hi, Ian.

Hi, Felicia, good evening, good morning.

We've done a significant amount of work at Wynn Palace after the property opened.

We completely reconfigured our main casino floor, and that's driven much greater animation and excitement.

We've added two theme slot sections, a high promotion, high-energy promotions area, a new poker area.

We've also increased accessibility to our high limit area, and we're constructing a new noodle restaurant on the floor, which has made the casino smaller and also helps with the energy.

We have increased our marketing activity both from an awareness perspective and also with general players that are visiting.

We have increased headcount.

We've become a member of the much-fabled Cotai Connection, which is bringing in just over 1,000 extra people a day.

The ramp-up in occupancy from the low 70s to the mid 90s has been a big help in animating the property.

And just generally we're finding after you get through the chaos of the first 6 to 8 weeks, a property settles and the true players in Cotai are finding our property and discovering it and visiting us.

We were very much helped by exposure over the October Golden Week and particularly Christmas and New Year was a very busy period for us.

So people are experiencing the property, the right type of players are coming, and they're finding it to be their home.

There's also been a very, very active program of re-energizing inactive players, players that had either split their play from Wynn Macau into the new properties in Cotai or had moved over to Cotai completely, and we've re-energized a lot of those players when they're coming to our property.

So we've been helped by a lift in the market also, but it's pretty much everything that Steve covered earlier.

One of the things that is being demonstrated, once again it's not the amount of tables, it's who is at them.

And we're probably a perfect example of that.

Wouldn't you say so, Ian?

Yes.

Yes.

I don't know what our market share is going to show but I suspect that it will climb from the last quarter.

(Multiple speakers) Chinese New Year is a great exposure opportunity for us as well.

It's the first prolonged holiday period so we expect very, very high visitation from people that would normally attend other properties.

And if we did our quick math correctly it was like VIPs versus mass, mix is roughly 60-40.

Where do you want that property to end up?

What about that, Ian?

We're growing all segments of the business.

The interesting thing in the split between Wynn Macau downtown and Wynn Palace is the strength of our junkets, and also the fact that our mass play downtown hasn't been affected [a drop].

So we're continuing to grow all segments at Wynn Palace, but where split works out, we'll see, but I think it'll be healthy and pretty similar to our operation downtown.

I should add this.

Because we get such big play, volatility plays a role month to month in that sort of thing.

Probably more so with us than with some of our neighbors, and that's also true in Las Vegas.

But having mentioned that, volatility is a factor when you look at our company compared to our colleagues up and down the street here and abroad, but remember, that volatility factor does have a concomitant benefit.

We always, year in and out, run a higher hold percentage than our neighbors.

And that's a historical fact, and it has to do with the kind of people that come to a place that is geared toward the top end of the market.

Even though we have more volatility, we still settle at a higher level than everybody else.

And just on the margin question?

30% in Las Vegas.

And Matt, what is it in China?

Wynn Macau has always been in that 30% range, and your question was, can we get Wynn Palace ramped up over 20%?

I think that is certainly going in that direction right now.

So are you over 20% now?

Through the quarter?

Yes.

Yes.

Yes.

Okay.

Perfect.

Thank you so much.

We're on our way there.

Carlo Santarelli, Deutsche Bank.

Hey everyone, thank you for taking my question.

Matt, just quickly in terms of Peninsula low mass hold, high VIP, looked a little bit lower on VIP at Palace, the net effect of all of that stuff with respect to EBITDA, any guidance on that?

About $6 million [light].

We're $6 million light.

It would have been another $6 million.

Would have been another 6, okay, great.

And Steve, on your comments regarding October, November, December, I think 840 a day was the EBITDA at Palace.

You said over 800 a day, was that for each of the 3 months?

Ian, is that -- I didn't look at that that way.

(Multiple speakers)

It ramped up in consecutive months.

Great, okay, that's helpful, thank you.

And then Ian or Ciaran and whoever wants to opine, but in terms of what you guys are seeing in the market right now, and I'm speaking more so towards the VIP side, clearly from the [DICJ] for the fourth quarter, VIP has meaningfully changed.

What is your opinion on that as we look out to 2017?

And do you think we're at the beginning of a sustained rally in that market?

It's been fits and starts throughout 2016.

People talked about a VIP recovery, but we really have seen a recovery over the last two and half, three months.

There's a lot more confidence, there appears to be more liquidity in the market, particularly with the junkets, and it's been sustained.

So the outlook is pretty promising.

I have said this before and I want to repeat it again.

It is very important to keep the long view of China.

The leadership of that country, and this is also true of Macau, it is a meritocracy, and there are smart people running the government.

They don't move as fast as we do in the United States, especially these days with our new administration.

But there is a steady program afoot.

You know Xi Jinping decided that it was a priority of his administration to eliminate the perception of corruption that was held by the people with regard to government, and that effort was vigorous and protracted and it did have an effect.

But it seemed to be the right thing to do for the right reasons.

And it had an effect on luxury brands such as gaming and Louis Vuitton and Chanel and Mercedes Benz and that sort of thing.

But the long term thrust of China is inexorable and undeniable, and that's why we built what we built, and we're going to build more in the future, because we have real estate to do it.

We have a very, very bullish, bullish attitude about China long term for our company.

And as we manage our properties, in anticipation of that kind of movement in the general economy, we're being rewarded.

And I think it's probably a sound way of looking at China and our business long term.

Great, thank you.

And that if I could just one follow-up.

I know you mentioned Bob's on the phone.

It looks as if costs for Boston are up maybe $300 million at the midpoint.

Could you talk a little bit about what that relates to?

This is Matt Maddox.

So we're working through our GMP right now.

That previous budget had been in there for a number of years.

We put a fairly conservative estimate in our current earnings release, and I think over the next 90 days we'll have much more clarity as we finalize our guaranteed maximum price contracts.

But it's moving along, they're proceeding apace.

We've been in construction since July, and we are satisfied with the progress.

It's Matt.

We've spent about $467 million to date.

Great.

Thanks, guys.

I appreciate it.

Joe Greff, JPMorgan.

Good afternoon, everybody.

A question on when Palace -- I think it was Ian who mentioned about some of the physical changes that you guys are making to the property, among some of the things (inaudible) maybe marketing, or marketing differently, or to different customers.

Can you talk about marketing expenses?

Are they elevated relative to what you think might be a normalized level?

And to what extent do you think they might normalize over time, over what time frame?

That's an interesting question.

Ian, do you want to take a crack at that, you or Ciaran?

Linked with the opening and marketing expenses, we're in the range that we anticipated, but they were slightly higher than what we'll have as a run rate for the remainder of the year.

We've already seen the market expenses start come down.

So they're within the Cotai range, it's a different marketplace than downtown.

Marketing reinvestment is generally higher in Cotai, but it's where we anticipate it to be.

Great.

And Ciaran, welcome to the fun conference calls here.

Maybe you can talk about, since you're new, where you see the opportunities for Wynn Palace to improve, and Steve Wynn, maybe Steve you can talk a little bit about what are some of the opportunities that are more obvious now, that were less obvious upon the opening, in terms of ways to improve revenue and profitability there from here?

Go ahead, Ciaran.

Good morning and thank you for the welcome.

I'll let Ian talk to the opportunities there for Wynn Palace, because my focus is going to be to continue to maintain the position and the performance of the downtown Wynn Macau property.

Obviously the Peninsula remains a very solid proposition for a very core market of high-level gamers that are coming into Macau.

And I think the performance in Q4, as solid as it has been, despite the opening of the Wynn Palace, despite the opening of some of the other new properties on Cotai, bodes very well moving forward into the future.

Obviously work to be done to continue to maintain that position and maintain the service standards and so on.

It's been incredibly welcoming joining the property and seeing just how much commitment there's been, both from our stays in terms of the standards to maintain the physical property, and also the commitment and the hard work of the team of professionals that are there, and they provide such excellent service.

We've just got to continue to build on that.

The way to look at us, and that'll give insight to project us.

We have a very definite approach to this whole notion of the gaming business and integrated resorts.

And our approach is based upon two solid truths.

Number one, better customers, people who have the money to choose, who engage in visiting hotels and facilities of this type, have a common thread that is undeniable, and that is they go where they're treated the best and where the facilities are superior.

If you're a player who attends these places, you have a choice, and you always go, in the long run, always go where the rooms are better, where the facility is immaculately maintained, and where the staff has had invested in it tremendous amount of energy for training and personal attention to the guest.

That is to say we're very customized in the way we treat our people and the way we present our facilities.

In the long run, that garners the strongest possible clientele.

And again, I point out, it's who's in the building, who's sleeping in the rooms, that determines the results both in gaming and non-gaming results.

It is true that there is a second approach to this business which is more akin to Walmart and the mass approach.

And the Sands and the Galaxy and the Melco people do that beautifully.

We come to these people with a different message.

That if you have the money and the inclination to visit such places, ours offers the most luxurious environment and the best service and the best food.

And in the end -- and our shops are catered to the kind of people we expect to be staying in the rooms.

That's to say that our facility is at the end of the day truly integrated, but it's integrated with a philosophy that's integrated.

And that tells you our story.

That's the Wynn story, plain and simple.

It's never been any different, whether it was the Golden Nugget downtown, the Golden Nugget of Atlantic City, Beau Rivage in Mississippi, the Wynn and the Encore in the central part of Macau, or the new Palace at Cotai.

And that will be exactly what happens in Boston.

And that's going to be our story, and it won't change, and you've got a long history of our operations from the Raj and Bellagio and the Golden Nugget, to the buildings that we're operating today.

There's nothing mysterious or secretive or in a certain sense particularly cunning about what we do.

It's very straightforward.

Right out in the open where everybody can see it.

Our competitors choose to approach their challenge in a slightly different way, and it's certainly valid based upon the earnings and the results of those places.

But we slot in somewhere else.

And in the long run it gives us tremendous stability and performance that, room for room, foot by foot, in any building that we built, they tend to over perform.

And we're comfortable doing this.

I would say that we probably -- our management team is a collection of men and women who are attracted to the pursuit of excellence.

We share a common understanding of who we are and what we present to our guests.

So we're at least consistent but we're definitely different in our approach than some of the other places.

And that's not to say that their approach is less valid than ours, but ours is well defined and historically consistent.

Steve, can you give us the latest update on Paradise Park, on the golf course?

Well, that takes up most of my time, and we're very close to having our choices settled in.

We're adding significantly to our non-casino revenue, both in the building of the lagoon and everything that's around that lake.

It's 1,000 feet by 1,000 feet in general terms, close to 20 acres of -- 20 or 23 acres of space, surrounded by a 4,400 foot long boardwalk that's 18 feet wide, and which is ringed with retail, food, and beverage, and an additional hotel rooms, convention, and meeting space, and various attractions for the 800,000 people a week that come here.

It includes a new big theater, a new tower of rooms, substantial expansion of our convention and meeting space, and related entertainment attractions and customer activities that we think will appeal to a broad range of folks, and having the ability to have a perimeter that's white sand beaches, and the boardwalk seems to us to be pretty fetching in the middle of the southern Nevada desert.

(Multiple speakers)

What are you thinking in terms of the time table?

Matt and I hope to take the business plan to our board of directors in the second quarter, and therefore be in a position to begin work in the fourth quarter of this year.

I say that, but we have to have our prices and our business plan on lockdown before I go to my board to get their permission to proceed.

We keep the board apprised in every meeting and on every telephone call of our latest nuance in that development.

But the incredible amount of options that were available on this 130 acres with 1,000 acre [feet] of private water, the choices were numerous.

And my challenge and my design team that has been with me for over 35 years has been to make sure that we make the right choices, and there've been so many of them, it's been dizzying.

But I think that we've nailed it down.

We've wrestled it to the ground, and Maurice, Matt, all of us have a tremendous amount of confidence that it's the only way forward.

I mentioned that last September for example, very interesting.

Last September there were 30 days in Las Vegas for example, we won $1.87 million a day in gaming.

And that had to be the biggest number in America, or anywhere but Singapore and Macau, in the world.

As good as that was, $1.87 million a day, that was net of any discount or promotion allowances, our non-casino revenues was $3.34 million a day net of comps.

That tells you about this causal relationship between non-casino revenue and an integrated resort and casino revenue.

It's the non-casino things that bring the folks and determine their choices of where to play the games.

And so when we approach the design of the golf course property, which sits on our books at a cost of zero, that whole parcel has been written off in prior development, we think that we want to take our non-casino revenue to enormously high levels, because we think that the probability of this 800,000 people a week in this city remaining the same and growing is almost a certainty.

And that's the fundamental assumption about Las Vegas that leads us to wade in to the convention and non-casino end of the business with a high degree of confidence, and entertainment as well.

Thank you.

Harry Curtis, Nomura.

Two quick questions, and welcome, Ciaran.

I wanted to focus on the growth in VIP in the fourth quarter versus sequentially from the third quarter, just in the market as a whole, yet at the same time the overall trend in mass was flat, and I would have thought that there would be an inverse relationship three or four months ago, so wanted to ask you guys why you thought particularly mass had yet to -- or slow to take off given the openings.

I think if you look back over history, when your properties open the junkets ramp up much faster than mass.

They get quick injections of liquidity and hit the ground running.

The mass-market customers with new openings tend to not come right away and then find their way to the market a little more slowly.

But junkets pretty much come out of the gate at 100%.

So that's what I think what you saw in the fourth quarter was VIP revenue at $4.1 billion compared to $3.5 billion for the market in the third quarter, so you saw the new properties really powering the VIP market.

And then again, with mass we're still hamstrung, Matt, don't you think, by the barriers that surround our property?

We are, we are.

And (inaudible) some of the market overall.

Mass was pretty much flat from the third quarter, but that has always, when I look at the data, ramped up more slowly than VIP with new properties opening due to the junket what the operators, how they inject the liquidity straight into the market.

That get you, Harry?

Is that your --

It does, thank you, and Steve, a question for you.

You commented about how bullish you are about making incremental investments in Macau and China.

If you could put that comment into context versus the rhetoric that's been going on between our new administration and Xi Jinping's Beijing administration.

It's been strained.

What do you think the implications are for Wynn development in China given this initial saber rattling?

I think that's probably a good word for it.

I'm of the mind and I have a reason to believe that this position is shared in Washington.

As you know I am acquainted with the administration.

Several of us in our business were sitting within 30 feet of President Trump when he took his oath of office on the platform last Friday.

We all believe, and I mean all of us, that the most overwhelmingly important event geopolitically for the next 50 years is a constructive liaison between the People's Republic of China and the United States of America.

That truth is undeniable, that dynamic is unquestioned.

Now there are issues that are real between two dynamic economies like China and the United States undeniably.

And there's a difference between free trade and predatory trade.

The government in China understands that it has to do a better job with intellectual property rights.

They do the best they can in China to create jobs and take people out of poverty and that makes them very dynamic in the management of their economy with that single goal in mind.

It affects everything from the way they treat energy to create plants and factories, to how they manage the currency and the movement of currency and their trade policy.

United States has its own point of view on that subject, and the president is been really clear during the campaign that he wants to protect American jobs.

Well, that's what they want to in China as well.

So there's going to have to be a rapprochement, there's going to have to be an adjustment.

But we basically do have intelligent people on both sides dealing with this.

My own feeling is that it will resolve itself intelligently.

You can make all kinds of examples, I mean China controls its currency.

But during QE1, 2, and 3, we devalued the US dollar by close to 20%.

So when the Fed, in financing a deficit of close to $2 billion a day, increases the money supply, well that's the same sort of thing but we just do it differently than they do in a centrally controlled government like Beijing.

But a lot of the same things are happening on both sides of the ocean, and they're being done to protect the citizens of those two countries.

Yet there isn't a leader in America or a leader in China that doesn't understand that when United States and the People's Republic of China come together on an intelligent basis, the world is a better place.

I'm in a position to know that that opinion is held in Washington and Beijing.

And it gives me long-term confidence in spite of what happened short term verbally.

We mustn't confuse long term United States policy with the short term conversations that lead to its development.

Do I sound like a politician?

That's what happens.

That's what happens when you spend four days in Washington and you get brainwashed.

(Laughter) It's a sickness but it's fascinating.

And the fact that America's going through a change is probably the greatest thing that's happened in my lifetime, because we were so on the wrong track for the past eight years and I've made no secret about that.

And I think we're in for better times, for sure.

To reign this back towards Wynn in China, despite the somewhat strained verbal sparring, you feel confident that additional investment in Macau is coming?

Absolutely.

Okay, very good.

Thank you.

Thomas Allen, Morgan Stanley.

Hey, so focusing on Macau in the fourth quarter, I'm comparing the Wynn Macau property to Wynn Palace, your VIP turnover was comparable, but your mass drop at Wynn Palace was about 35% lower than Wynn Macau.

As you continue to ramp up Palace, how do you think should that should change?

Thank you.

Directly related to the physical barriers that surround our property.

And that only gets better with each passing week and month this spring.

That's my answer about that.

There's an awful lot of people, a few hundred yards from our property but they can't quite get there and they will.

They positively will, just like they did in the past.

Watch it change.

I tell you that it will change.

You can believe me or not believe me but it's as simple as that.

Okay.

Thank you.

(Inaudible) -- the Wynn Macau having had 10 years to build up an incredibly high stable of high end players, particularly in Encore, and it will take time to build that at Wynn Palace.

Seeing is believing, it gets better every week, we're seeing a buildup in our high-limit players, and that will continue to grow over the coming months.

All right, thank you.

And then just, Steve, in December you sold some of your Vegas retail to client acquisitions, can you just talk about the rationale there?

Thank you.

Matt did that deal, which was absolutely perfectly timed for us and I'll let him describe it.

So we looked at it for multiple reasons.

Number one, the people that we partnered with, our longtime retailers and in the business, and so we wanted to continue to control our retail, we saw the minority stakes, we thought it was a good capital rate, at a multiple that's double where we trade on the market, and so not only was it the ability to raise capital to fund future projects at a really high multiple, but we brought in partners with a lot of experience in the luxury retail space to complement what we already do.

So for us it was really a win-win, and we will still control it and consolidate the profits of the retail space because we have over 50% of the ownership.

And Haim Chera and his father Stanley and that whole Chera family that makes up the Crown organization, they taught us a few things right off the bat.

They gave us a few pointers on the nuance of how we do our leases that immediately increased our profitability.

Perfect, that's all I had, thank you.

Robin Farley, UBS.

Great, hi, thanks.

I wanted to ask about you, you've talked about how Palace is going to ramp up.

At your analyst day last year I think you talked about a range of 630 to 850 which is a wide range.

Is that's still where you're thinking it will ramp?

And then similarly, I think you had talked about Wynn Macau, that you were maybe factoring in, it would be sort of 20% or 25% cannibalization.

Is that still -- also do you think that you will maybe sort of ramp to that on the downside of Wynn Macau?

I know this quarter was obviously it only down 7% EBITDA, I'm just thinking about where your expectations were originally?

We don't think there's much cannibalization.

That 25%, where'd that come from?

That was our analyst presentation showing the Wynn Palace, Wynn Macau market study of over a year ago back (inaudible) in April.

You still believe it?

No, well we've seen as Wynn Macau has held up better than we anticipated due to all the reasons we just talked about, the stickiness of the clientele and the 10 years of history.

And the ramp-up of Wynn Palace as we've talked about in our last call is taking longer.

We actually didn't anticipate all of the artificial barriers, the construction, not being on the Cotai Connection, etcetera.

So getting to the 600-plus million in 2017, it's going to take longer to ramp just like we said on our last call, but Wynn Macau is actually performing better than we expected.

No, and I wasn't suggesting that that would be the 2017, I understand that the property opened later and the ramp-up issues, I'm just wondering if that is still the range where you think it will ultimately ramp?

And then similarly do you think that as that ramps the Wynn Macau will maybe get a little bit more cannibalization along the lines of what you had originally thought as well?

Well Robin, with regard to the cannibalization, as Macau, as the Palace has ramped up, we haven't experienced the cannibalization downtown.

So what we thought before but what we're seeing now are slightly different in a better way.

So the only way that we can really know, Robin, is to watch the ramp-up of the Palace and to continually monitor the performance of the Encore Wynn facility in Macau.

You're asking an interesting question.

We are pretty much as you are, an observer of this.

So far it's been good news.

But the biggest thing we're looking forward to as these barriers and these obstructions come away, is the ramp-up of our mass business.

I would've thought, Robin, that the cannibalization would have occurred with be junket operators, and that's where we thought it would show up, and it didn't as yet.

So if the mass market ramps up in Cotai, I don't think it's going to affect the mass market of downtown.

That would have been where we look for at the least -- we would have looked for at the most in the junkets.

And as you see that's not what's happening.

I think there's more good news in the mass market in Cotai for sure, because of all these other things we've talked about, and I'm encouraged by what we're seeing with the junkets.

But I think that the Wynn Palace will get where it's supposed to get.

I think Wynn Macau may stay better than we thought.

Great, that's helpful.

(Multiple speakers) So I think what you're saying is that you do still expect that range that you talked about nine months ago, it's still the range ultimately you'll get to?

With one exception.

With the exception that we may not experience the cannibalization levels we mentioned earlier.

Right, no, that's great.

And then last thing just quickly, what percent of rooms are sold for cash at the Cotai property?

What about that, Ian?

So what we've experienced is very similar to the Cotai model.

We're doing around 60% of our rooms are casino, directly casino related, more comp related, and 40% are tour and travel FIT and wholesale.

Okay, great, thanks very much.

Shaun Kelly, Bank of America.

Hi, good afternoon.

I just wanted to go back to some of the sequential ramp-up you guys are starting to see into Q1.

From our seat it's always getting a little harder to get a sense of what's going with the market kind of on a monthly basis, so I guess my question is in terms of that big ramp up that you're continuing to see so far this year, how much of that would you characterize as the market versus Palace and your properties continuing to take share?

Oh.

Ian, do you have a feel for that question?

There was a very pleasant surprise at the end of last year and earlier into this year.

We had a very strong Christmas and new year as a market.

A lot of holiday travel, a lot of holiday travel out of China, and revenues were excellent.

And the sentiment about Chinese New Year is particularly strong.

Last year Chinese New Year people were pretty dour entering and not expecting much, but this year at all levels of the business people are anticipating a very, very strong Chinese New Year.

We are as well in Las Vegas.

Maurice is here, and he can address these next few weeks.

So we've actually continued to see a great trend.

We saw at the end of last quarter or the last month, the last year, into the early part of this year and our parties and our events are full, and as far as the amount of credit coming in, it's been pretty robust, so we're pretty confident that we've seen the kind of activity that makes us feel comfortable that we've got the kind of business flow that we've been looking and anticipating for this year.

Great.

And maybe just to switch gears for a follow-up.

Now that Palace seems to have stabilized little bit and the ramp-up's looking pretty secure, could you (technical difficulty) how you're thinking about leverage target kind of into 2017 and how that might filter through to possibly looking at the dividend policy again, how that fits into your pecking order versus growth capital?

Sean, it's Matt.

You look at our balance sheet, we have significant cash on the balance sheet.

We have projects underway, I would expect that to remain fairly constant over the next couple of years, but EBITDA is growing.

So we're not really interested in paying down a lot of debt right, at the rate our EBITDA's growing, leverage is very comfortable, and we have lots of cash on the balance sheet for future projects.

So Matt, does that mean to the extent you're carrying positive operating cash flow, there is room to bump the dividend, or would it be more fair to think about being conservative right now just all -- just given capital budgets and things that can tend to shift around?

Well we only have a hundred million shares outstanding, so bumping the dividend conservatively is not -- doesn't really change our financial posture.

We're doing $0.50 a quarter, and I suppose it's possible we could go to a $0.75 or something but we haven't discussed that.

We've been more focused on A, working on our Macau operation and getting it stabilized, B, finishing what we're doing here in planning in Las Vegas, and C, putting final touches on everything that Bob DeSalvio's running in Boston.

The gaming market in America is subject to change.

Things happen and opportunities present themselves.

I think that we probably want to take a look in the next few months and see how all that plays out before we tinker with any of the kinds of things you're talking about like a dividend or anything like that.

The market's moving.

Opportunities may present themselves and then that would have to be folded into our planning financially.

There's not a hell of a lot more to say than that.

Perfect.

Thank you very much.

Adam Trivison, Gabelli.

Hi, thanks for taking my question.

Given that you have meaningful operations on both the Peninsula and in Cotai, I'm interested in your thoughts on how the opening of the Pac On Ferry Terminal may affect visitation trends in Macau?

What you think about that, Ian?

I think any infrastructure that comes online is going to be good for Macau.

It allows more visitation, and it'll certainly help the Peninsula -- excuse me, it'll help Cotai.

The current ferry terminal in Cotai is very temporary in nature and not a good arrival experience.

So we're looking forward to the opening of it.

Great.

That's helpful.

And the follow-up, based on some recent filings it looks there were some small changes made to the Wynn Boston Harbor floor plans.

Can you comment on those changes and maybe the thinking there?

DeSalvio, you haven't said anything today.

Why don't you chime in?

Sure.

We actually got some, I think we got some very good learning off of the opening of Palace, and we've been making shifts in terms of lightening up a little bit on retail, increasing some food and beverage and meeting space opportunities, because we thought that would be the right mix for the property.

So we made those adjustments, and they're going through final drawings and we think it was the right move.

Great.

Thanks very much.

David Katz, Telsey Advisory Group.

Hello everyone.

Thanks for taking my question.

I wanted to -- I know it's been asked from a couple of different angles, but I wanted to ask again about the VIP business and the degree to which there is market lift, and specifically how sustainable you believe the -- I think Ian used the word excellent in describing the trends.

How sustainable do you expect those to be versus how much is trajectory of ramp-up in that business because you're now open?

Good question, and I understand why you ask it again.

So there's market trajectory and then there's our trajectory.

We have an advantage.

You remember a few moments ago Ian used the word sticky, meaning the customer base was sticky at Wynn Macau, they like it there, and it's hard to pull them out of that place because it appeals to them on many levels.

And what happens is our trajectory is very much linked to the discovery that customers make of the superiority of our rooms, of the whole place and how much fun it is to stay there.

So we tend to get stickier with better players with each passing month.

And so I have to say that we only make money by paying attention to our own business.

What the market does is very important of course because we are part of it, but we're working on our own trajectory and we have a definite way of thinking about that and addressing it, if I understand your question correctly --

So in other words you're comfortable with where your trajectory is headed and the market helps to some degree but --

Well surely, because we spent $4.4 billion to making sure that we could comfortable.

We didn't really leave this to salesmanship or verbalization by a CEO or any of the other senior people in the company.

We did this by putting our money where our mouth is and letting the property speak for itself.

And as people discover it, the property speaks with a very loud affirmative voice and says -- and beckons to people.

When they discover our rooms, when they see the facility, they say wow, I could stay here.

It takes a while for them to do that but they do it.

They always have done it.

In Nevada, in Mississippi, in New Jersey, they'll do it in Boston, it's always been the same.

The history of our operations is a straight line story, very much like the one I keep repeating on these calls.

And it's the only thing we understand.

Understood.

If I can just ask one more about the construction disruption that you discussed at the beginning.

MGM is on one side and the degree to which they may be having an impact construction disruption today versus when they opened, which is now later than what was anticipated, if you can just share some thoughts about how you see that impact or lack thereof evolving over the remainder of the year?

You bet I'd like to comment on that.

In 1986 I bought the property that is now known as the Mirage and I built -- and it was big enough to hold Treasure Island and the Mirage over a period of time.

But we built up the hotel right up against the Caesar's Palace borderline on the south end of that assembly because we wanted to be near our neighbors.

We thrive in a competitive environment.

We do much better when there's more people around us, not less, because there's a certain percentage of the people that go to these other hotels to which -- to whom we appeal in particular.

It doesn't do us any good to be alone or isolated.

We want to be snug up against our neighbors, because the more rooms that surround us, the more people, the better chance we have of attracting them so we anxiously await the arrival of SJM and MGM.

The reason that the Wynn Macau was such a overwhelming whopping success was because of its proximity to SJM, to the Arc, to -- what's the other place, Matt, something-world --

Star World.

Star World.

We're surrounded downtown by these people and it allow us to have an extraordinary outrageous return on capital.

I think we spent $750 million on the Wynn Macau, and we made like $100 million a month at one point there.

It's because of our proximity to our neighbors, it's because we're in the midst of so many visitors that we have the opportunity to exploit our competitive advantages of facility and service, so we're dying for MGM to open and SJM to get up and running.

We welcome our neighbors.

We're willing to build bridges between the properties, easy access.

And that's one of the reasons why the Sands experiences such terrific results is because of their connectivity and their proximity to one another.

And right now we're not enjoying that, but we will I hope in 2017 at some point have the benefit of active dynamic well constructed neighbors who each bring something to the world of visitors that makes Macau more powerful.

That's the beauty of this development.

Las Vegas and Macau prosper because of that development, not in spite of it.

And we ride that wave like a surfer.

So we're hopeful that they get open in the fourth quarter, or the third, whenever.

We haven't heard anything lately, maybe you have.

I haven't heard when SJM is supposed to open.

Does anybody on my team know what SJM's announcements are?

It's a mystery.

Hopefully maybe when they issue their earnings they'll talk about it, or the investment community will ask them.

Does anybody on this call know when SJM's supposed to be finished?

Do you, sir?

I do not.

Ian, do you know what the latest completion dates our on our neighbors?

Sometime in 2018 for the Lisboa Palace and (inaudible), and for MGM they announced the second half of this year.

But it's 2018 for SJM, huh?

Yes.

But they're on our south quarter.

That's the least --

What's going to be interesting is [they're going to] have a quartet of quality on the west side of Cotai, Steve, you have ourselves, MGM, and SJM and then with City of Dreams across the road with their new Morpheus tower, you have four high-quality projects all within walking distance of each other, so that would become its own hub in Cotai, the first stop on the light rail after the new Pac On Ferry Terminal and the airport.

So the future's very bright for west Cotai.

I wish it was true in Las Vegas across the street from us where Packard was going to build, and where I think the Malaysian folks are going to do it.

We love having neighbors.

The SJM facility is on the south side of our property, and that's not where the light rail is.

The biggest interference we've got is on the west side which is where Melco and MGM and our front door is, our lake and our gondola and all of our other access points.

So we get our biggest slug of relief when MGM opens and when they take down the barricades on the west side in front of our gondola and the front of our presentation.

SJM opening in 2018 probably is -- their construction is the least impactful of the problem that we've dealt with this year in terms of the barricades.

It's the west side of the property that really is important to us and that's where we're looking for good news in the second half or sooner.

Very good.

Thank you very much.

And there are no more questions at this time.

Thank you, everybody, look forward to talking to you in three months, and we'll have maybe more interesting stuff to talk about then.

Meantime, have a nice time.

Thank you for participating in today's conference call.

You may now disconnect.