永利渡假村 (WYNN) 2017 Q1 法說會逐字稿

My name is Lebrielle, and I will be your conference operator today.

At this time, I would like to welcome everyone to the first quarter 2017 earnings conference call.

(Operator Instructions) I would now like to turn the conference over to Craig Billings, Chief Financial Officer.

Please go ahead.

Thank you, operator, and good afternoon everyone.

With me in Las Vegas is Steve Wynn, Matt Maddox, Kim Sinatra, Maurice Wooden, Ciarán Carruthers.

Also on the line are our colleagues in Macau, Las Vegas and Boston.

Just a reminder that today we will be making forward-looking statements under safe harbor securities laws, and those statements may or may not come true.

With that, I'll turn it over to Mr. Wynn.

You could see the numbers.

Business is good for us.

We're enjoying a resurgence of activity at the top end in China.

Our hotels, they're -- we're enjoying the continuing prosperity of Wynn Macau and the steady growth of Wynn Palace pursuant to plans and the expectations we've had since the inception of that project.

When we opened the hotel in Cotai this past August, we had 9% of the market.

In the first quarter, we went to 13% and now we're moving past 16% of market share.

So that's in spite of the fact that we are still surrounded by barricades and construction.

Now it happens to be sort of a mixed message.

The construction interference in traffic and the isolation of our project -- of our hotel is at an all-time high, but it's at an all-time high because the level of activity has increased, I'm happy to say, immeasurably especially in the monorail/light rail station that is right in front of our hotel and provides the greatest obstacle to movement of people.

But they're installing the escalators, and there's a new contractor and they seem to have a whole new energy and vitality in getting the transportation system, which benefits us enormously.

The new ferry terminal is about to open.

The monorail goes from there, the light rail goes from the ferry terminal and all of that straight into Cotai.

And it goes around our property on 2 sides, and we're the first stop.

And the people in it experience our lake and our fountains, and then they stop right at our gondola.

That construction has been a tremendous barricade.

I mean, literally a wall.

And now that seems to be getting to the stage where not only will it be completed later this spring, that part of it, but also the pedestrian crossover, which is part of that construction, will be available to us at about the same time this summer or this fall that MGM opens.

Their construction activity and the blockage of the street is at an all-time high, which is associated with the end game, the last 4 months of construction or 5 months of construction that MGM is experiencing.

And the activity on our south side at SJM has also accelerated.

So we're blocked out, but on the other hand, there's good news ahead as the time between our suffering and our relief gets shorter.

The hotel at Palace has turned out, from a guest point of view, very sticky.

People who stayed with us are coming back again and again, filling the hotel and we're happy about that.

So Macau is a story of our neighbors and surrounding construction.

Everything is moving along well.

Ciarán Carruthers is here in Las Vegas with me, who runs Wynn Macau.

Ian is on the telephone in Macau, and both of those men and our financial people are available for answers.

In Las Vegas, Maurice Wooden is sitting next to me, and we had the biggest hotel quarter in the history of the company.

Our revenues were up 9%, and our cash was up and we had a really good quarter.

And we've come to a final decision that I'll discuss in a few minutes and -- about the golf course and that development.

Bob DeSalvio is on the call in Boston.

We started construction in July.

It's a 34-month job.

They're slightly ahead of their schedule.

We're 8 months into it and -- 7 or 8 months into it.

The job is bought out.

The GMP is finished, and the project is bought out and we're on our way to a May -- April, May opening in 24, 25 months from now.

And again, men are available for questions.

So I'm going to take a moment and bring everybody up to date on the project that has occupied a great deal of our attention for the last 12 months, and that is redevelopment of the golf course.

The golf course grossed $7.3 million, netted $3.5 million or (inaudible).

46 people a day play golf, and that's very nice.

It's a beautiful Tom Fazio golf course.

But as a business, it was always a placeholder since we bought the place in the desert in the 2000.

That period is now concluded.

It's no longer a placeholder.

It's a development site.

Construction will begin in December and January, and the first phase of it will go rather quickly.

What we've decided after a year of development of fanciful and really imaginative ideas that include mountains and features and gondolas and restaurants and nightclubs and hotel towers is we realized that we have a pressing issue in the company now.

We have a very, very healthy convention and catering business in this hotel, and we get a big premium for our space.

And we have our shows that are stationed -- that headquartered here are getting bigger every year and they're outgrowing us.

And my colleague Chris Flatt, who has been with me since the Mirage deal days when we built Mirage and she came from Caesars, Chris has been asking for more space.

She wanted just under 100,000 feet of convention, ballroom space, 86,000 feet, and she wanted under 60,000 or 70,000 feet of meeting rooms.

And in order to accommodate the business that we are dealing to now, and it had a certain profit level because of the catering cost plus business, it had a certain impact on our occupancy of 8% or 9%.

And when feathered into our retail, food and beverage and casino business, it had a certain worst-case impact on EBITDA of $50 million or more.

So we said, all right, we've got all these great ideas that are going into this lagoon and this beachfront property.

But what should we do to take the most conservative but dynamic approach to this property?

And after all of the studies and the pricing, we came to this conclusion that we were going to build, we would master plan the entire event, but we would build the beachfront meeting space, ballrooms, cabanas and pools that represented a certain need we had at the moment; build the lagoon 1,500 feet long and 800-odd feet wide with a 4,000-foot boardwalk with white sand beaches and water sports and attractions, bar and food service; build that first.

That would energize the real estate, that 130-odd acres that is the golf course with its water rights, and we would put this 20-odd-acre lagoon in the middle of it and then we would build our meeting space, leave room for our new tower that could be a couple thousand rooms.

We would leave room for everything, master plan it, but build at first the park that would immediately power up our existing restaurants, our existing casino, our existing convention meeting and catering operation, with an absolute certain return on that investment of excess of 10% or 15%.

We have no better use for our money.

We keep $1.5 billion or $2 billion in the parent company, and this would allow us to take the most conservative, but the most dynamic approach to creating this.

We can affect this tremendous uptick in the value of our surrounding real estate.

And that's what we've decided to do and that's what we've committed to plan and that's what the board of directors has approved, and that is now a project and hard construction will commence in 6 or 7 months because we're doing the drawings as we speak and we have been for a month or 2. But we'll do this with complete drawings and firm prices with guaranteed maxes and liquidate the damages and all the other things we do to protect ourselves.

So that's the formula, and we'll spend between $400 million and $500 million on it and we'll get the lagoon and these things up pretty quick.

If I start at the beginning of the year, we should be in shape within a year or so.

It goes very fast.

And that's pretty much the state of things.

I think I'll let the rest of this time today be left to answering questions directed either at us or China or Boston.

So go ahead with questions, ma'am.

(Operator Instructions) And your first question comes from the line of Carlo Santarelli with Deutsche Bank.

As you think about the master plan longer term, I know when you guys originally kind of proposed the idea back in April at the Analyst Day, a hotel and kind of broader scope was attributed to it.

Could we kind of look at it today and say, "Okay, Cotai is up and running.

Macau is doing a little bit better," but you guys are maybe being a little bit more conservative with the spend going forward with the elements of the project that you think have high return associated with them in the near term and then could potentially branch into something larger with potential additional hotel towers more similar to the original contemplation down the road?

I couldn't have said it better myself, Carlo.

Okay.

Okay.

That's easy then.

And then on...

(inaudible) if I may.

This idea if you build it they'll come has been something that I've done for the past 40-odd years, but I've never had an opportunity that was so rich in options in my entire career in Las Vegas.

This golf course and this lagoon and the beachfront property, every time we turn around, someone else comes to see us to do something else with it or to buy a piece or to rent a piece or to do a JV.

And it's been very exciting.

And so before I build my idea of a thing to go on that section, let's put it out there, let's feet it, let's live with it for a while, let's give everybody a chance to appreciate how dynamic this location is and how powerful the opportunity is.

Maybe we've missed something.

Every once in a while when you're a wide-eyed developer like myself and my colleagues, it's good to take a beat, and so we did.

Understood.

And then if -- maybe somebody could help out here.

Obviously, you guys had some favorables on the VIP hold side, maybe a little bit of light mass hold that looked like at Peninsula.

But when you look at each of the 3 assets, could you guys kind of give us what your sense was for normalized property level EBITDA metrics?

Nothing in China and a few million bucks in Vegas.

The direct hold was low, and the junket hold was high.

So when you look at it, there really was no hold impact on the Peninsula.

Okay.

And that was -- so the 3 3 you were saying on the junket side is the junket side played favorable, the direct side played weak and kind of mitigated?

That's right.

And your next question comes from the line of Joe Greff with JPMorgan.

Just so we maybe can get a sense of how to think about normalized margin on the Peninsula, I know there was a collection benefit and you've had them from time-to-time and I understand how you reserve for outstanding credit.

But can you talk about what that impact may have been at Peninsula in the 1Q just so we get a sense of how to think about normalized property level EBITDA margin?

Joe, it was about $5.5 million.

$5.5 million.

Great.

And is it your sense that the rate of outstanding credits being paid off, and I think that's been a theme for you and others on the VIP side in Macau, was that starting to plateau?

Or is there -- do you feel that's sustainable?

Who wants to answer that?

This is Ian in Macau.

We've had some favorable collection of credit, and it certainly seems to be tied in with the stronger credit market in general and it has benefited for us for a number of quarters.

Okay.

And maybe just a big picture for you, Steve.

You referenced obviously a resurgence in the high end, the top end in China and it's certainly manifested in the numbers you've reported tonight.

What do you think is driving that, and how sustainable are those drivers from here?

I don't know if anybody has the right answer for that, but if you can share with us your views.

I have an answer.

I have an opinion on that and of course, it's just my opinion.

But I've said on these calls in the past that it would be a mistake to misunderstand the primary underlying driver of the Chinese economy.

It is a massive thing.

And when you say that, as I have in the past, that we have a very positive and bullish look forward into our long-term position in Macau.

At some point, the long-term vision and the short term begin to melt as they are now.

The suppression of the VIP market was something that was a result organically of a process that the administration of President Xi Jinping thought was appropriate for the country, the elimination of corruption.

And it had secondary effects on high-end products like shopping and automobiles, and gaming was part of that.

But having made a corrective move in China, there comes a point when the corrective move is sort of finishes.

And although corruption is still a major item in the PRC, the initial impact has softened because so much of the work that they thought had to be done was done.

And so people begin to return to normal spending habits, and they're not so strongly influenced by public policy issues that involve public officials.

So the people are settling back into routines that they're comfortable with, and that includes going to Macau and buying a new car or shopping at Louis Vuitton.

And we're -- we've always been part of that cycle, and it wasn't going to be permanent and we've said that before.

The long-term strength of the Chinese concession is one of the most precious assets in modern day, and we're just good at seeing it.

And other thing, they limited the expansion of Macau in a number of ways: first, by the real estate that's available.

The last hotels to be built are being built at the moment, SJM and MGM and that little sort of [ squirt ] project was Louis XIV or something, the guy with the red Rolls-Royce is building on Coloane.

It's a little boutique place.

That's it.

The new tower, the rooms that were added at City of Dreams is coming into the season.

And then that's it.

The door sort of closes on more supply, and then we're just left with the enormous demand of China.

And that's sort of coming into play now, again, and I think you're going to see it continue.

And your next question comes from the line of Stephen Grambling with Goldman Sachs.

Maybe a quick follow-up to Joe's last one.

Just how do you think about the ultimate size of the demand from VIP longer term?

And as you referenced VIP returning, how much of the recent strength has come from existing players versus new players?

And are you seeing any changes in that customer base based on either sourced industries or geographies of the 2 properties?

What do you say, Ian?

Ciarán, what do you say?

We're seeing -- we're very cautiously optimistic in terms of how the business in the VIP side is growing moving forward.

We've obviously seen some good growth over the last quarter, 1.5 quarters.

Initial early signs are that that's going to be sustainable in the short period.

For how long that can be sustained really is too early to tell.

We'd like to see another quarter or 2 with some good, solid growth.

The upside, of course, is that with properties like ours, we obviously benefit the most in the marketplace, being in the preeminent product for service and luxury.

So as that new liquidity enter into the marketplace, the premium mass, direct and junkets, we benefit more so than anybody else.

Cautiously optimistic, but I think a little bit too early to call as a long-term sustainable story.

So...

Do you see -- Ciarán, do you see -- he asked an interesting question.

Are they just the same old people coming back, or are there new ones that you're seeing?

We're seeing some new ones, but we're seeing a lot of the old play come back to as well.

We've seen some old faces that are coming back into the marketplace.

We've seen some junkets that have been fairly stayed over the last 18 months, 24 months start to rebuild.

We recently had a junket at Wynn Macau during this quarter.

And then other ones coming up this week?

That's right.

At Wynn Macau, this junket went from 2 tables to 10 tables about 6 weeks ago, and they've been very solid through that period and they continue to show good strength.

So again, early indications are positive, but cautiously optimistic looking forward.

No, that's very helpful.

And maybe if you turn back to Las Vegas, Steve, can you just talk about any impact you're expecting from the Raiders move there and how that may or may not play into what you ultimately pursue at Paradise Park?

Love the Raiders are coming, and I even spoke before the joint session of the Senate and the Assembly at Carson City, along with Jim Murren and the folks from Harrah's were there, we're very, very happy.

This was a -- this was whipped cream and cherry on the cake.

I mean, getting professional sports into Las Vegas is a perfect thing.

I was -- I spent Easter on vacation in the Bahamas, and one of my guests with me was Dan Snyder that owns the Redskins.

And while I was there at Baker's Bay, Robert Kraft was on board and so was Steve Bisciotti that owns the Ravens and we were all talking about how certain the owners were.

We had 31 out of 32 votes to move the team here.

I was certain, everybody is, that NFL games in Las Vegas are going to light it up.

Super Bowl, without the game actually here, is as big as New Year's practically in this town.

Now when we have these home games or exhibition games in the city, and we'll have a stadium big enough for Super Bowl and the Super Bowl will be here more than once, this place will go bonkers.

And speaking for our own hotel, we figured to get a big share of the top end of that business.

So we believe that there's a tremendous impact to the football team to The Strip, first of all, regardless of where the stadium is built.

And I think that I know where it's going to be built.

Marc has an option on a piece of property just on the other side of I-15 on -- just opposite Mandalay Bay, actually off Russell Road is the site that he's optioned.

That may or may not be the final location for this big installation, but I suspect we're going to have football here in 2020 and I can't wait for it to happen.

What its impact will be on my development of the golf course is another story.

We're building the golf course to power up our existing assets and to allow us to expand in noncasino ways the power of Las Vegas.

I want to repeat once again that a casino is a passive place.

Every slot machine and roulette table in the world is identical to every other.

What drives people, what moves people are the noncasino attractions.

And that's why in spite of the fact that we've had the most financially successful casino in the world, other than Singapore and Macau, right up until today, never in my company's history, and that includes Mirage Resorts, Bellagio, Mirage, all the rest of them, Atlantic City, Biloxi or downtown Las Vegas, the casino revenue has never been equal to 50% of the revenue.

It's always been less.

And lately, it's almost 2 to 1. So what moves people are the adventures of a vacation, great service and the choice of activities.

The development of the golf course is a direct aim at that mentality, and the football team is just -- it's like adding into a symphonic orchestra the strings and the percussion.

So we're -- and we've got the T-Mobile Arena that MGM and Phil Anschutz built, AEG.

My guess is we'll end up with an NBA team before this is over.

We've got a hockey team.

You fast forward 36 months or so and Las Vegas is, I'll bet will be, a sports capital.

How about that?

(inaudible) 160,000 rooms.

Where is it better than here for that sort of thing?

And everybody wants to come here anyway from every city and other countries, and we'll use that football stadium for soccer before it's over or my name isn't Steve.

So I think that recent developments will tend very positively for Las Vegas.

And your next question comes from the line of Felicia Hendrix with Barclays.

Ian and Ciarán, this will probably get directed to you.

So just wanted to first compliment you on the great performance in Macau in the quarter and on the VIP side, both properties beat us nicely.

But on the mass, depending on the property, they're either in line or slightly below our expectations.

So I'm wondering now that you have the VIP piece of the puzzle in place, what's the plan to drive mass growth?

And I know for you guys it's primarily premium mass.

And then B, how would you describe that piece in the quarter relative to your expectations?

This is Ian.

So looking at the premium mass portion at Wynn Macau, it was really postopening of Wynn Palace about maintaining service levels and keeping the stickiness of the customers that we had downtown and we've been very successful in doing that.

And over at the Palace, it was about continuing that slow steady build of premium mass players from a quite distinct market.

And I have to say on both counts, it's been successful.

The ramp-up period of Wynn Palace is not as quick as we'd like it to be, but it's been very steady.

There is momentum.

And on the premier mass side, we continue to build new players for Wynn Palace.

And as each weekend and each holiday period goes by, we pick up more people.

We've done a lot of internal building of keyholes for the marketplace, and we're out there hunting for players and making them happy and keeping them.

And how are you seeing the promotional side of the business in that segment?

As referred to on previous calls, Cotai is more heavily promotionally driven, and we're in that game and we're competing with everybody else.

We're not doing anything untoward.

We're not changing the dynamics of the market.

We're just competing fairly, and we've got the nicest [ tie ] in Cotai.

Similarly, downtown and we still command the Peninsula.

So we're delivering on our promise.

Both properties are in great condition, and the player counts are building.

Can I add something to this?

If those of you on the call have been there, if you can visualize the physical layout, our benefit downtown has been at the Wynn Macau that we were in a cross-flow of the people from the surrounding casinos, both SJM's place, the Arc, MGM and the one in the corner, StarWorld.

In Macau, we were, on opening day in August, at the end -- the east end of Cotai.

When we get through with the next 6 to 10 months, we are in the middle of SJM, MGM and we -- and surrounded by the light rail, the monorail.

So now we get this brand new center of energy called Cotai east, for lack of a better term, that has a tremendous impact on our walk-in mass business.

Not only do we not enjoy this at the moment, but we are blocked on our west side by barricades and construction, as I've mentioned so many times before.

But understand that when it finishes, we're in the middle again, and that's where that -- that's why the Peninsula Hotel has always had such a terrific mass business because they walk across the street and boom.

I mean, when SJM opens their 2,400 rooms, we are literally across the street from them and across the street from MGM and across the street from the new tower at City of Dreams, and all of that connectivity comes to bear as we move forward in the quarters ahead.

A lot of things that [ mature ] that we thought they'd be done by the time we were done.

I literally thought we were going to be last at one point.

And of course, it turns out we were first not only with the transportation, but with the existing hotels in our neighborhood.

So it's been a challenge to deal with that handicap, but that comes to an end here pretty soon.

And then it swings the other way rather dramatically, rather dramatically, and we've got extra real estate to build more rooms and we will add to our room total because we know that we can fill them at a good rate.

So that's helpful.

So it sounds like, just taking everything together what you all said, maybe to assume some sequential growth just from some of the programs you're doing, but really the real growth in the premium side will come when all the construction has gone?

Right.

That's what we believe.

You've just summarized management and board's conviction on this matter.

Great.

That's helpful.

And Steve, your comments earlier on the growth of the market, particularly on the VIP side, were very helpful.

I think what a lot of people are also a little cautious about is in the past when growth came in -- when GGR grew too fast or perceptively too fast, we would see the government either subtly or not so subtly make different policy changes to rein in growth.

Do you think there's a risk of government interference this time?

Or do you think this is a new normal given the new supply that needs to be absorbed?

We don't -- based upon our conversations with the government and our perception of things they've said to other people, we do not see any negative impact by central government or Macau government activity.

Matter of fact, we see quite the opposite: support and encouragement.

Your next question comes from the line of Thomas Allen with Morgan Stanley.

So just on the Wynn Macau, the Peninsula property, you were able to improve your market share by over 1% versus the fourth quarter.

I heard your comments to the last question around the strength in VIP and the stickiness of your customers there.

But is there anything else you're doing differently to support that improvement in market share?

Yes.

We hired Ciarán Carruthers.

Next question.

At the end of the day, it's about people, isn't it?

And we are constantly strengthening the human resource side of this company.

And under Ian's leadership, we've done so on a number of levels, a number of levels.

Now the way it works over there, if somebody that we admire and is willing to come to work for us and we come to a meeting of minds and if they're in the market, they have to give notice.

And then they have this sit out, cool off period that's imposed by the laws of Macau.

So some of these people that are coming to us have had -- their arrival has been stunted by the law.

On June 1, we get another tranche of some of our new recruits, and they're in training outside of Macau to join our company and to pick up on our culture.

But we have a steady program of muscling up marketing, food and beverage, casino and hotels.

One of the men that's coming to us is a five-star executive.

He starts on June 1. Tony is coming from the Bangkok hotel where he got the five star.

He's joining us.

Our new food and beverage Vice President is finishing his cooling off period as well as several other people.

And I'm not quite sure how public I should get while they're in the cooling off period, but I will tell you that come June 1, we power up even more our executive leadership of the company.

Steve, there was one other gift we gave Ciarán when he joined us in January.

We added some tables to Wynn Macau.

We had it overstirred a bit in terms of table movement, and now we've calibrated both properties for optimum efficiency and that certainly helped the quarter of Wynn Macau on the mass side.

And as you can see, everybody, this whole business and the amount of tables was overrated.

It's a thing I said in August, and you can see that it's not up to the amount of tables.

It's who's at them that matters and how long they stay.

That's the game we're in, not the gross amount of tables.

We never have been the biggest at anything.

We've always been the one that captures the quality end of the market.

And those are the kinds of buildings we build and those are the kind of people we hire that are joined together because of a common desire to be part of a high-quality operation.

And to that point, if I can add, across all of our business segments through the first quarter, we had our average daily volumes exceeded the period that immediately lead up to Wynn Palace opening.

So we've been able to regain -- not only regain the business that we may have lost through the Palace opening, but we're growing on that as well as the market is lifted.

Congratulations, definitely seeing in the numbers.

Just moving on to Vegas.

Revenue was up 6% in the quarter; EBITDA, obviously up 23%.

How does that market feel?

Obviously, there are one-time things that were supporting the first quarter in the market in general.

But do that market feel like it's starting to improve?

And maybe specifically around high-end Asian player would be helpful.

Mr. Wooden is here.

So again, I think the first quarter was a perfect balance of all areas.

You look at our gaming, hotel, food and beverage.

So we're in a perfect position where all those areas actually performed much better than they did last year.

Looking forward, our convention pace is outperforming, outpacing any future historical metrics that we use.

And so we're on a really strong pace for 2018 and 2019 for convention bookings as well.

So here in Las Vegas, we're optimistic that we'll continue to look at a RevPAR growth somewhere in the 4% to 5% for the year.

And looking into the future with respect to the kind of convention business that's really important to us, we see tremendous growth there as well.

We'll be constantly adding and developing that convention to the market, especially the part where all the money is, which is the catering and meeting room and banquet business as opposed to the exhibit space itself.

For that, we're right across the street in the Sands.

We're right across the street of the Las Vegas Convention bureau.

Both of these entities are aggressive, and we're in the crossfire.

So we love it.

And we're feeling good about our Asian business as things improved in China.

We've always been the principal beneficiary of Asian baccarat and roulette business in Las Vegas even before we opened [ Wynn Macau ]. The Mirage had the best Chinese business, and Bellagio had the best baccarat business.

And then Wynn and Encore had the best baccarat business.

And we feel, almost as quickly as they do in Macau, we feel that here in Las Vegas, up until and including last night and this morning where baccarat numbers in any given shift are $2 million, stuff like that.

This place gets that business every week, and it's pretty cool.

So we enjoy that.

You may ask yourself, why would Asian people with so many casinos in their home territory fly 15 hours to Las Vegas and stay at a place like [ Wynn ] or Bellagio or The Venetian.

It's because of the choices we have here.

It's because of the noncasino menu.

That gets back to football teams, basketball, hockey, conventions, shopping, restaurants.

I mean, this place, this town is a real safe bet.

We ask our employees.

We say, "Does anybody on the board of directors believe that Las Vegas will not, in the next 15 to 20 years, be one of the major destination tour cities in the world?" And no one has ever answered no to that question, and that's why I feel so good about our real estate and our opportunities here.

And then we're going to open this place in Boston in 2 dozen months, and we're going to have a case study of how a grand hotel put in a major metropolitan city can change the neighborhood for the better and be the largest private investment in the Commonwealth of Massachusetts and the second largest employer in the Commonwealth of Massachusetts behind Mass General Hospital.

So I like the direction we're in, and I'm feeling comfortable about the pace of our growth.

And I don't feel like anybody's after us.

We're moving along exactly the way we should be, and my colleagues join me in that confidence.

Your next question comes from the line of Robin Farley with UBS.

One Macau question and one question about the U.S. operations.

The Macau question, kind of similar to what other folks have been asking about.

But when you look at the greater number of rooms that you have on Cotai versus the Peninsula, when do you think that the mass drop there will get to -- exceed what you have on the Peninsula?

Good question, Robin.

I'm not the guy that could answer that.

I know that Linda is on an airplane because she was here with me last night.

She's on her way -- Linda Chen -- back to Macau.

Ian, Ciarán, do you -- can you deal with Robin's question?

We've got 700 more keys at Wynn Palace, and the waiting of casino rooms versus cash rooms is a lot lower than it is on the Peninsula.

Downtown in the Peninsula it's been virtually impossible for 10 years to get a room in Wynn Macau because it's been so heavily casino-driven.

Cotai is a slightly different market, but we have lots of room to grow casino customers and continue to hold high occupancy at Wynn Palace.

We've listed occupancy at Wynn Palace from the low 70s in the third quarter to mid-90s in the first quarter of '17.

And there is quite a lot of activity in tour and traveling cash business, but we have lots of rooms with the casino market.

So as we gain momentum and continue to ramp up those rooms, we'll go to mid-tier and premium mass customers.

And when that happens, if -- as soon as we straightened out the concession business, we'll add several thousand rooms to Cotai.

Okay.

Great.

And then my question on the U.S. operations.

If you look at your budget for Boston, kind of 2 quarters ago you were talking about kind of $1.9 billion to $2.1 billion.

And then it was sort of moved to the $2.2 billion range and now $2.4 billion.

So when you look at that...

That's the end of it, $2.4 billion.

It's bought out.

That's the number with a big contingency.

And that was one question was like, is that final number?

But then also, I think originally when you were talking about the project in Vegas you were talking about $1 billion budget.

Is it sort of just a coincidence that the Boston budget -- that the Vegas budget has gone down by the amount the Boston budget has gone up?

Is there anything to be read into that?

No, no.

It is a coincidence.

I tried very hard to explain why we're handling the lagoon and the golf course the way we are, and it was a function of the EBITDA certainty of Phase 1 and the fact that we have so many options about what to do with the rest of the real estate on the waterfront that we want to see it first.

So the fact that, that budget went down is a coincidence entirely.

The fact that the budget went up in Massachusetts is a function of the surprisingly expensive bids we got from the subs.

I did change scope about 8 months ago, wasn't it, Moe, when we added more convention space.

I added more convention space on our property.

But it really, the GMP is at $1.310 billion and we were surprised for a couple hundred million -- $150 million to $200 million, Matt -- on the -- and we took a lot of bids and we went back and value-engineer it because we didn't like the bids and we cleaned it up some more.

But boy, I would tell you, building in Boston is expensive.

The subs have a lot of work.

They -- we were cross-bidding 4 and 5 different outfits on things like HVAC, electrical and plumbing and those number stood.

And it's not just that it's a union town, because we've always built union buildings out here.

It's the building trades are busy in Boston, and the cost of living is high in Boston.

Now that's a gate that swings both ways.

The cost of living is high in Boston, so wage levels are higher in Boston, but so is the average income in that magnificent metropolitan area.

It's a matter of fact, the average income in the metropolitan area, the 4.8 million or 4.9 million people that we are going to serve by ourselves, so to speak, is one of the highest per cap metropolitan areas in the United States, if not the highest.

Is it the highest, Matt?

I don't -- it's one of the highest.

Yes.

I mean, we've never been in a city where the per cap income is this highest.

There's, not to mention, nonstop air service from every single capital in the world to Logan airport, including Hong Kong, Beijing and Shanghai, Geneva, London, Mexico City, Buenos Aires, Rio de Janeiro, Tokyo, Seoul, nonstop service to Boston on a daily basis.

And we've never been in a city where we're 12 minutes away, where our hotel is 12 minutes away from an international airport with nonstop service from every capital on earth.

The first time for us.

We've always had to go get the folks in L.A. and fly them over here in one of our jets, but not this time.

We're 12 minutes from Logan airport.

I was there last week and that's how long it took me to get there.

And we're 12 minutes from Boston Garden.

We're in Everett, which is its own city with its own mayor, wonderful fellow and a wonderful city council, but we are surrounded like an island by Boston and its suburbs.

And on the edge of our property, if you take 3 steps to the right, you're in Boston.

You take 3 steps to the left, you're in Everett, and that's on 3 sides.

So we're an island in that metropolitan area and happy to be there.

So it was a coincidence.

Your next question comes from the line of Harry Curtis with Instinet.

This is Dan Adam for Harry Curtis.

In Macau, looking at demand trends so far in April, we are wondering if you're seeing a continuation of the strong 18% market growth that we saw in February and March follow through into April?

Well, I don't know that we want to get into the next quarter...

No, I don't think so.

We usually -- too early right now to be talking about the second quarter.

Yes.

Yes.

I don't think that -- I don't want to give people false expectations or anything like that.

So I think we'll [ lay off that point].

It's all right with you, Mr. Adams?

Your next question comes from the line of Adam Trivison with Gabelli & Company.

Steve, can you give us your thoughts on the opportunity in Japan and how you're approaching it in the context of your other investment opportunities?

Could you repeat the question, please?

Could you talk about the opportunity in Japan and how you're approaching it in the context of all of your investment opportunities?

Matthew Maddox has handled that, and I think I'll let Matt (inaudible).

Sure.

So we've been monitoring Japan for the last decade pretty carefully, and for us right now, this is actually a really exciting time.

It seems like all of the right people and corporations are now focused on moving the IR implementation go forward in the next 12 months.

And the Wynn focus on quality and what we do, we think, fits quite well with what Japan is looking for.

So we are ramping up our efforts and really excited about the opportunity.

Okay.

Great.

That's helpful.

And then the second one, Maurice, you touched on this a little bit, but in Las Vegas, RevPAR was very strong in the first quarter.

Can you talk a little bit about the way that played out over the quarter?

I guess particularly, was a lot of it in March?

Or what was the pacing there?

Well, really January and March.

So we got early in the gate very strong with CES, and then there was -- from a convention and transient segment, the entire quarter had a lot of strength.

Obviously, in March, we didn't deal with the Easter holiday and the Passover holiday that occurs -- occurred in 2016 in March.

This year it's in April, so there was a shifting of that holiday period.

And then we had 1 unique group that comes every 3 years, CON/AGG-CONEXPO in March.

And it also helped the city.

It was a citywide event.

Great group to have.

And so -- but really, the strength is both transient and convention, so really then translates into cash revenue.

Your next question comes from Shaun Kelley with Bank of America.

Maybe I just wanted to go back to the kind of the ramp up at Cotai, and I guess it's probably a little bit difficult to analyze given that January and February were so impacted by Chinese New Year.

But when you kind of look back at the quarter, did you see, I guess, some continued sequential ramp up at least across the quarter in some of the key metrics or KPIs that you guys are watching at the property?

Business has been growing in all segments, nongaming and gaming.

It hasn't been outstanding in one particular area.

Okay.

And then I guess just as a follow-up is we talked a little bit about the promotional environment in the mass and premium mass segments, which appears still competitive in Cotai.

But could you talk a little bit about the VIP business, either what you're seeing from junkets right now, some of the interests in either extending credit from your standpoint, adding rooms, things like that?

Because it doesn't feel like many other people in the market right now are actually targeting this business from a competitive standpoint?

With the type of product that we provide and the service in the marketplace lends itself to being very attractive to junkets.

An interesting stat is that Wynn Macau and Wynn Palace combined junket volume was 2.5x our junket volume for the 60 days prior to the opening of Wynn Palace.

So we are very attractive to junket operators, and there are type of players.

Our direct program continues to grow between the 2 properties.

And in addition to being a great place for mass players, Wynn Palace and Wynn Macau lead in terms of VIP service and quality.

And maybe just the last one, Ian, are you seeing, I guess, new junkets or new subjunkets like some of the signs of, I guess, early credit formation, are we going to add that part in the cycle there?

So we -- we've seen junkets that have been quieter rebuild a lot of their business.

Ciarán referred to 1 junket that's grown from 2 tables to 10 tables.

We also -- that's at downtown Macau.

At Wynn Palace, we have a new very strong junket starting in a couple of days.

So there's continued interest from existing junkets who want to grow their business.

Shaun, it's Matt.

One thing I think you'll appreciate is we're generating about $8.5 million of VIP revenue a day between the 2 properties, which is similar to the 2014, 2015 levels with less than half of the advances.

So this is not a credit-driven liquidity revenue like we have seen in the past.

It feels very healthy.

That's great, Matt.

And then maybe if I could, just one more on that would be -- you sense a similar type of environment for the junkets themselves, are they extending with much credit, or the customer is more flushed with cash as well?

It's a tough question to answer, but it's an interesting question.

Yes, I guess, maybe you could see it a little bit in the collections, right?

In the past it's been, the shortest, 15 days.

Sometimes that period lengthens out a little bit, probably the only way to give any sense really.

You know what I would say is when you talk to the junket operators, they'll tell you their liquidity is much better.

And what that means is they're collecting more of their debts than they were in the past on top of raising additional funds.

So they're not getting the liquidity from the operators.

They're getting it from better collections and from outside investors.

So I think that's a good indication that the health of the junket market is at much better than it was.

It's such a good question.

I'm going to ask some of the junket operators about that.

(inaudible)

There's a general sentiment in the market at among the junket operators that they are managing to collect on debt that's owed to them and they're able to put it back into the market.

And there are no additional questions at this time.

Well, thank you very much everybody.

Talk to you again in 90 days or so.

Appreciate your interest.

Have a nice week.

Bye.

Ladies and gentlemen, that does conclude the conference call for today.

We thank you for your participation and ask that you would please disconnect all lines.