永利渡假村 (WYNN) 2017 Q2 法說會逐字稿

Good afternoon.

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

At this time, I would like to welcome everyone to the Second Quarter 2017 Earnings Conference Call.

(Operator Instructions) And I would like to turn the call over to Mr. Craig Billings, Chief Financial Officer.

Sir, you may begin.

Thank you, operator.

Good afternoon, everyone.

On the call today with me in Las Vegas are Steve Wynn, Matt Maddox, Kim Sinatra and Maurice Wooden.

Also on the line are other members of management from Macau, Las Vegas and Boston.

I want to remind everyone on the call that we will be making forward-looking statements under safe harbor and Federal Securities Laws and those statements may or may not come true.

I will now turn the call over to Mr. Wynn.

Well, everybody has seen our numbers and I'll confine my remarks to the most relevant points that I can think of at the moment.

Construction in Boston has been -- our job has been bought out.

The budget is fixed.

The work is now approximately 11.5 months old.

We're a little ahead of schedule.

We're on budget.

We're very happy with our builder, and that project is moving quickly towards completion in April and May of '19.

And we're very optimistic about that situation and delighted with progress to date.

The results in Macau need a little interpretation.

A whole percentage was high in one hotel, then low in the other, but what is clear is that things are moving along.

Our VIP business has picked up in both hotels, and the mid-market is growing.

We still suffer the walk-in, the dislocation of our walk-in potential because of the extreme construction that surrounds us.

There are 2 things about the construction that are worth noting.

We concluded our financial agreement with Leighton Construction when we opened a hotel last August 22.

However, we retained $100 million or more to finish work yet to be completed and any defects, Leighton has accepted complete responsibility for that.

They've struggled a little bit with their own control of the job.

But as a result, they -- as they've fixed things that had to be fixed and finished, we've taken 180 or more rooms out during the week, each of the past several weeks.

And we've got them back up on weekends, but we've had them down.

We think this cleanup operation, this completion that Leighton was obliged to perform, that, that phase is coming to an end by the end of August, which interestingly enough is a year after the place was opened, which gives you some notion of the complexity of these massive integrated resorts and what it takes to really polish them off.

It had no financial impact on us in terms of our relationship to Leighton.

That had been concluded.

And there were more than adequate funds in the retention to cover it.

But it did impact our performance by taking rooms out during the week, and certain other discomforts that are associated with the fact that you still have a builder on the property.

We're hoping that will come to an end at the end of August and September.

But the second part of the construction aspect of the conversation has to do with our neighbors.

We've discussed this in the past, but MGM, in these final stages, has enormous neighborhood implications.

Streets have been blocked, barricades are up and our conversations with our neighbors at MGM indicate that maybe this November, part of the building at least -- I don't want to speak for MGM, but in terms of our interest in talking to them, we've been given the impression that there will be partial, if not -- that these obstacles will be removed when they commence operations this fall.

And that will open up one side of our property, the west side of our property, which is the fronting side on the lake, in the gondola and our entrances.

On the south side of our property, the SPM company -- SJM rather, they had a fatal accident with a worker 3 weeks ago.

And as part of the post-accident procedure, the government of Macau stopped work on that job.

And as of yesterday, 3 weeks later, they still have not recommenced their construction of that hotel.

So its opening date, and therefore, when the neighborhood clears on the south, is still undetermined.

We also have construction on the north side of our property with the light rail or the monorail transportation link, which is one of the most powerful aspects of our company because it travels around 2 sides of our property, looking at our lake and our hotel, our fountains.

And then the first stop with escalators down to the sidewalk is directly at our gondola station in the middle of our fountain feature.

So that the completion of the light rail is not just a removal of a negative, but it provides an enormous positive for our traffic and the mass market.

We look forward to that.

It is being completed in a much more efficient and expeditious way than it has in the previous 2 years, even 3 years.

We even have the potential for a walkway to be completed in a matter of days that would allow us to use the bridge that's part of that station to get to the other side of the street even before the train or the monorail is in operation.

And that could happen -- Ian, you're on the call.

When do you think we'll be able to use the crosswalk, the elevated crosswalk and the escalators?

From an infrastructure point of view, it's due for completion in the next 4 weeks, including the escalators.

We need government approval to be able to use it because it is connected in part to the station, but we believe that there's support to get it up and running as soon as possible.

It's a safety issue when crossing the road, so I think we'll get support with this.

Without it, we have virtually -- it's virtually life-threatening to get across the street to our gondolas and our entrances.

So we've been able to make money and have satisfactory progress in spite of these rather unique and unprecedented obstacles that we've faced.

But nevertheless, our business grows and we've settled one question beyond a shadow of a doubt in the last 10 months, and that is the cannibalization that was expected and the cannibalization that seemed to have occurred with our -- with other companies, including the Sands when they opened on Cotai.

The downtown place took a hit to -- in fact, we've continued to grow in our original Wynn Macau and Encore complex, and I'm very happy to see that.

Ciarán has done a great job in running that place.

He's on the call, if anybody wants to ask Ciarán about Macau, the original Macau facility.

And Ian is on the call to answer questions that are more broad ranging and those concerning the Palace.

Finally, as we have the opportunity to do these on these calls every 90 days, we are proceeding with our -- finishing our drawings and getting our planning and building permits to begin the development of the golf course with our phase 1 lagoon lake of 20-odd, 27, 28 acres and our 450,000 square foot addition to our meeting and convention space fully integrated into this facility.

There's 10 million square feet that we have already in this building.

And we are proceeding with our planning and our development of the 140 acres behind us.

The real estate behind Wynn & Encore, 10 million feet, is unquestionably the most powerful latent asset that this company owns.

Its adjacency to Las Vegas convention Bureau, the Sands, exposition center and most importantly, its integration with the 10 million feet of the Wynn & Encore makes that piece of real estate, without any possibility of debate, the most precious piece of real estate in the resort industry in Las Vegas.

And we have a lot of confidence in our ability to take that forward in the near future.

We've had expressions of interest from a number of companies who want to come on this property and participate either in the form of joint ventures or ground leases and other financial arrangements, and those conversations have been very exciting and give me a lot of optimism about how we're going to take advantage of this asset in the next 4 or 5 years.

And I think that pretty much is my take on the situation on this day, and we'll take questions now.

(Operator Instructions) Our first question comes from the line of Felicia Hendrix with Barclays.

So this is kind of for the whole team in general.

I was just wondering kind of after digesting these results, what your postmortem per property is.

Because we're analyzing it.

Certainly, at Wynn Macau, you did beyond fantastic on the VIP side.

Wynn Palace is kind of close to our expectations, and in both properties, mass was kind of lower than what we would have expected.

So as you guys digest this and look at it, what's your thought per property?

It's very important -- I'm going to take that first.

It's very important when you're looking at this industry whether it's ourselves or our neighbors like MGM and Venetian.

It's very important that you don't get caught up in the very short-term myopia that your professions demand in many respects.

Because it's the big things that determine the long-range viability of these places.

And the history of our company is it gives undeniable proof of that.

When you build better facilities, when you invest in human resources, this is a business that remains viable and growing over a long period of time.

So it's decisions that are not so much in the immediate analysis frame that matter.

So when we look at the numbers that you're looking at, to answer you directly, we say, "The train is on schedule.

The future of the company is being built intelligently with a strong foundation." And we take that as our principal responsibility.

When you deal to the kind of customers that we deal to, when you deal at the level we do, in the gambling build -- room, which is only less than half of our business, there's volatility.

But for example, in the last 4 days in this -- Friday, Saturday and Sunday in this casino, just 10 or 15 international players contributed $12 million in a slow month.

That's besides the full occupancy of the hotel and all the non-casino revenue and the slot machines and the race book and the poker.

The power of these enterprises are defined by their ability to answer the real issue with Las Vegas.

Can you come to a destination resort and fulfill your expectations of living big and exciting experiential moments?

Those kinds of moments take time to create, but once they are created, they endure.

And so you're talking to a group of men and women in this company.

Incidentally, we took -- we did a count up of all the most high-paid people in the company, and 65% [or 70%] of them are women.

When you talk to the group of ladies and gentlemen at Wynn Resorts, you will find a high level of consciousness of what we're about and what really defines our short-term and our long-term success.

And these are sort of chewy, laden-with-detail conversations that define these big moments of experience.

Wynn has emerged -- the Wynn Encore facility has emerged as the most celebrated hospitality installation in the world in terms of the awards and recognitions it receives for product and service.

I don't say that in a braggadocious way.

I mean, all you do is look at the Harvard Business Review, Fortune, Forbes Travel Guide, Barron's Magazine, Condé Nast Traveller magazine.

Every conceivable measurement of quality of product and service, we've managed to attain a high level of success.

And as we build these additional non-casino attractions, we have to do the same thing again and again.

And that's pretty much our whole story.

You've been listening to me for a long time, most of you.

It never changes.

The way we define that challenge, the details of modernity using technology, using social media and all the -- this hotel is the first one that is all verbal.

You can walk into our rooms and tell Alexa to turn on the lights, open and close the curtains, play the Eagles or Beyoncé or Frank Sinatra.

You can do all of that, change the temperature in the room.

You could do it verbally.

So we take advantage of technology.

We try and stay ahead of the curve.

We're told by the people of Facebook that we're the most advanced of all casino companies in our use of social media.

Our nightlife people, headed by Sean Christie and Alex Cordova, are up to their ears in the use of those techniques.

So the tactics change, but the overall strategy does not.

And any of you folks want to add to that?

I'm sort of...

Sure.

Just -- I'm sure you can see it, but in terms of market share in Macau, because I think that's the question you are asking, what you see from first quarter to second quarter is we actually, in Macau, in total increased our market share in VIP, mass and slots sequentially.

Not going as fast as we had hoped 12 months ago, but the programs are in place, and we feel good about the direction that we're going.

Okay.

So that's all helpful.

If we could just kind of grill down to Wynn Palace and perhaps talk a little bit on the mass side and some of the programs that you've implemented there, given conversations throughout the quarter and even talks with things that you've commented on last quarter, I would have -- and I know the market on the mass side was down sequentially.

I just thought that you guys would have done better, given some of the changes there.

So perhaps you can just talk about that segment at Wynn Palace.

The mass is really affected by the physicality of the neighborhood.

I've said it so many times.

I'm thinking I'm boring you, but mass has an awful lot to do with access.

And I've laid out the obstacles we've faced.

Incidentally, I've mentioned the west, the south and the north side of our property.

The -- I didn't mention the east.

Well, that's under construction too because that's the service yard and the whole headquarters for the light rail system.

We're literally surrounded on 4 sides by things that are under construction that will all add to our mass.

One of the reasons our mass numbers are so impressive downtown is because we're in the middle of everybody.

Right now, we're on the edge and surrounded by fences.

We're on the edge of everybody.

When we get surrounded again by SJM, by the monorail, by MGM and we have our connectivity, the picture's going to change dramatically.

And if you go to Macau and you look at this firsthand, you'll grin and shake your head, and you'll say, “It's amazing this place does as well as it does.” We've dealt with a severe handicap here.

Now when I say we've dealt with a short-term severe handicap, we have an overwhelming advantage and that is that we're in Macau to begin with and Cotai as well.

And that's a privilege, that long term is sensational.

Ian?

Can I make one point, Steve?

Sure.

One other severe handicap that we've had, particularly at premium mass level is the smoking issue where there are spaces in town that have been grandfathered in.

They were formerly VIP and now they're being used for mass high limit and people are allowed to smoke in them and our competitors.

And that all goes away at the beginning of 2019, on January 1. Everybody has a level playing field.

We will be the biggest beneficiary of that because we're operating handicapped right now.

Okay.

And just quickly, just looking at the rolling chip turnover at Wynn Macau, is there anything you want to talk with that?

Was there anything extraordinary or out of the ordinary, rather, on that?

During the quarter?

Yes.

At Wynn Macau, we had probably the most unique statistical anomaly in my 50 years of doing this, and this is my 50th year.

And that is that with enormous volume, one of our leading outlets lost money for the entire month.

Not only did they not hold correctly, they went minus, and that's a outlet that in both downtown and at Cotai performs beautifully all the time.

But April, the bottom fell out and all the players won millions of dollars, and I think we ended up the month minus $10 million or something?

What was -- minus $10 million or $15 million.

Out at Wynn Palace.

Yes, forget about plus $50 million, it was minus.

But look, on a whole, percentages are right.

But during that quarter in April, we had a statistical anomaly.

Now we also had counterpoints to that in our history, but we did have one during the quarter in April.

But other than that, we have nothing to say.

Normal volatility even if it's exaggerated.

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

Craig, maybe this information was given.

I just didn't hear it there at the end, but did you break out what property level EBITDA was on a hold adjusted basis at Wynn Macau and Palace in the beginning?

Could you provide that now?

It was about $20 million low at Palace and about $20 million high at Wynn Macau.

They offset each other.

Okay, great.

I was hoping -- sticking to Macau.

Can you talk about your premium mass business?

How -- can you just talk about, I don't know if you break it out this way, but what percentage of your total mass revenues or profitability relates to premium mass?

And can you talk about the relative growth rates between premium mass?

And Steve, I know you referred to a little bit of what you characterize as mid-market and between mid-market mass.

But can you talk about those relative growth rates in both Macau properties?

That would be, I think, helpful to understand.

And Joe, this is Matt.

Everybody -- all the competitors want to know what your breakout is of premium mass relative to mass.

So we really don't want to get into percentages of where we're driving our business.

Yes, don't -- we don't want to tell, Joe.

Okay, fair enough.

Maybe a way to ask this question and then kind of a generic way for you, Steve, then to give a high-level view, would appreciate your views is, when you look at the Macau market now, say, where it was earlier in calendar 2017 and you look at where it is now, are you seeing the market being driven more by VIP here in the 3Q, in the 2Q versus the 1Q?

I know that 1Q, if you adjust for that revenue classification from the government, it has been more mass driven.

Did that reverse here in the 2Q?

Or has it reversed here more recently?

And if that's the case, what do you think is driving that change?

Actually, Joe, I'm not the right guy to ask that question.

I've had my notes down on working the backyard here.

Maybe -- really.

Ian or Craig, either one of you guys want to take that?

I'm not trying to slip the question, Joe.

I'm just not up on that detail.

We opened Wynn Palace with very strong VIP business, particularly in the junkets.

And that strength has continued and the remarkable aspect of everything is we didn't cannibalize our business downtown at a VIP level in the junkets, particularly.

So that's been an area of strength.

It continues to grow sequential growth and junket business downtown has been significant 3 quarters in a row.

And we're built to take care of VIP customers at all levels, and our properties served the VIP customers very well.

We're known for that.

So when that area of the business is growing, we do well.

The lack of cannibalization, I want to point out hastily, is again a reflection of when you build these places with a solid foundation, physically, programmatically and in terms of human resources, the notion of cannibalization doesn't really apply.

Joe, I know the question you're trying to get is what happened to mass in the second quarter for the market.

And I think that you know that in the second quarter, it is seasonally slow for the market in June.

And so we're not going to say [err] and predict, which direction mass is going after 90 days.

The business still feels good across our properties in both the premium segment and in the regular mass segment.

Your next question comes from the line of Carlo Santarelli with Deutsche Bank.

Just a follow-up on Joe's question, Matt, you kind of made reference to growing shares sequentially from the 1Q to the 2Q of both properties, kind of across all segments.

I was just wondering, like, in terms of when you referenced that, are you referring to kind of mass and VIP and the way that they've historically been categorized by the operators or more kind of looking at the DICJ quarterly metrics?

The DICJ quarterly metrics.

Okay, understood.

And then Ian, if I could, you guys seem to have had a streak of very good luck, obviously, some bad luck at Palace this quarter.

But over on The Peninsula, if you look over kind of the last 5 quarters, the property's been holding over 3.3% on close to $65 billion of rolling chip volume.

Has anything changed there that just kind of created this run?

Ian, I want to join in that answer.

Sure.

It's important for the investment community to understand that one of the consequences of the type of buildings we build and the way -- and the money we spend on human resources, our properties have a stickiness, an attraction to a caliber of gambler that, to a certain extent, we enjoy to a greater extent than our competitors.

When you talk about a whole percentage, observe Wynn Las Vegas.

We always hold in the mid-20s, enormously more year in, quarter in and quarter out than our neighbors.

That's not an accident, it isn't about luck.

It has to be -- it's part of this program.

It's highly self-conscious and highly articulated.

We have more profitable casinos pound for pound, foot per foot.

I mean, we have someone has 9 casinos.

We obviously, with 3, don't compare.

But when you compare any single operation of gaming in Macau, casino floor for casino floor, you'll see that we always hold higher.

It's because people play longer and they're wealthier and they have more discretionary income than others.

And that results in a different business plan.

I can't stress that enough.

When you look at us, you have to understand and you've got to be conscious of the history.

Just take a look at casino performance in terms of whole percentage and stuff like that at the Wynn.

It's easy to look at that because the numbers are easier to compare because we don't have the chip roll and the repurchase, which is a complexity.

And people buying chips at the cage in China in the mass casino to order [distorts].

But when you use a traditional form of measurement, Wynn Las Vegas answers the questions that you're asking about Wynn Macau.

We always hold the higher.

It's one of the goodies that has to do with our program.

Ian, you can take it from here.

What we've seen with, particularly holding the junkets, is when we have extremely high volumes then we do think the whole better.

When you have less volume, we have higher volatility, which has been an issue at Wynn Palace on occasions.

And usually, these things, over time, sort themselves out.

That's right.

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

So last week, there were some stories about junkets asking their customers to remove deposits.

How are you thinking about the strength or longevity of the junkets system at this point?

We don't pay attention to the minutia.

I mean, what we're saying is that people who go on vacation in America and China and decide to go to a destination resort that includes a gaming room, those people tend to have the money that provides them choices in life and they don't usually allow their preferences to be altered.

They overcome changes, but they do what they like to do.

Golfers buying golf courses.

People who would like to gamble and want to go to a fancy resort find a place that gives them what they want.

And they've got the money to deal with change, and they do.

So the nuance of moment to moment developments doesn't change human nature.

And therefore doesn't in the long term ever change us.

So we heard what you heard.

We said, "Okay, that's interesting.

Next case." We didn't pay much attention to it.

Okay.

And then just your occupancy continues to rise.

How are you allocating rooms between cash and [confirms] at this point?

And how are you thinking about it going forward?

Which property?

So I think at Wynn Macau, it was up 600 basis points and I think it continued to be pretty, but still pretty high at Wynn Palace, too.

So both properties would be helpful.

Occupancy is in the mid-90s of both properties.

We allocate rooms to the most valuable customers, and downtown Macau has been pretty consistent in allocating over 80% to our casino customers and the rest is cash.

Over in Cotai, that's a different market.

We are up to close to 60% in comp rooms at the moment for casino, and we plan to give even more rooms over to comp.

And we would like very much in phase 2 in Cotai to add a whole bunch of rooms so that we can improve the mix for everybody.

And as soon as the government lets us, we'll build some more beautiful hotel towers with or without gaming.

That's not the most important thing.

We just want the people to stay in the hotel, to have their meetings there, shop, eat in our restaurants.

If they want to gamble, that's their business, but we'd like to have more rooms.

We were constrained by a height restriction because of our proximity to the airport.

So that location had good news and bad news attached to it, where the first stop from the ferry terminal and we're right next door to the airport and all that stuff.

But we couldn't go as high as we wanted to.

So 1,700 rooms was all we could get in that first structure.

But we have property on both sides of our land concession that -- and already, we've built the connections to those sites to the additional real estate, so that we can add more rooms.

And depending on our -- on the permissions that are -- and the latitude given to us by the government, we would erect beautiful hotel towers with convention and meeting space at the minute we were allowed to do it, which would change the mix.

That's the end of my answer.

Your next question comes from the line of Shaun Kelley of Bank with America Merrill Lynch.

I think a couple of the questions here have been sort of trying to hit on the same topic, which is the sequential -- some of the sequential figures we're seeing at Palace.

So I guess my question is this: I mean, if we look at the big sequential growth you saw this quarter at the Peninsula, do you really care or are you concerned at all with the fact that Peninsula at the moment is growing faster than Palace?

Or do your kind of even plan on running the business that way?

Are you happy to sort of service the customers where they want to go right now?

You're right, what you just said at the end.

We don't care.

It's all one big thing.

We -- it's one integrated resort in 2 locations.

To us, it's six of one, half a dozen of the other.

You already know why the Palace is a little retarded because of the neighborhood, but to us, it's all one thing.

Same ownership, it's all just 2 locations.

Could care less where the money comes from.

And Steve, when we look back at this 3 to 5 years from now, do you think we are going to be looking at a Palace property that is getting -- that sees a much bigger ramp from here in the mass market, given some of the factors you mentioned?

Or do you still think that there's room for the VIP and the higher rent players through comping appropriately and just getting to discover the property that there's still more growth and more potential there?

I think we'll look back and see Macau grow and prosper.

With that growth will come concomitant growth in the mid and premium market levels as well as VIP.

As the market gains traction and receives broader visitation in the Pacific Rim and from Mainland China and from everywhere else, Taiwan, Japan, as the market grows, all those segments will beef up.

It always happens sort of proportionally.

Unless someone restricts a certain part, like we had the restriction of the VIP, then of course, you see the relationships change.

But under normal conditions, it proceeds pretty much pari passu.

At least that's my take on it.

I don't know.

Matt, do you look at it differently?

No, no.

I think you're right.

One thing about Wynn Palace that we also haven't talked about is we are building some new amenities that are going to be great attractions for the mass market.

They'll be opening next year.

More restaurants are coming in the next 9 months that are going to continue to add to that.

For Chinese New Year.

Incidentally, what Matt just said is true at each of our hotels all the time.

That's true.

We never leave any of them open.

For example, in a week or so on the 4th of August, we redid the whole north end of Wynn Las Vegas where the Race Sports Book were -- that were located and where a big casino bar and delicatessen are located.

We closed the whole north end of Wynn, decided that we wanted to make it more exciting.

We -- new gorgeous screens, a brand new bar, new VIP seating sections for race and sports people.

We've updated the restaurant and we're going to -- this Friday morning, we're going to take the wall down and everybody's going to be dazzled because the entire north side of Wynn is going to look different than it did when we put the wall up the day after the Final Four.

None of these hotels stays -- stay the same.

We think of ourselves, if we're not growing, we're going backwards.

If we're not adding new and exciting nuance to each of our properties for our repeat visitors, then we're not keeping the promise that is the backbone of this corporation.

So what Matt just said about things are going to open between now and Chinese New Year, well, that's going to be true in Las Vegas and you be damn well sure that when Boston opens up, we'll you be tinkering with that.

We buy more real estate so that we can grow Boston.

We're buying up the neighborhood to make Everett a destination convention and entertainment element of the metropolitan area in Boston, in Central Massachusetts.

We never leave these things alone.

That's one of the reasons why we hold a higher percentage of [fixed tables] and why our room rates stay high.

So these places never get static.

We don't allow that to happen.

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

Just circling back to Wynn Palace.

You outlined a couple of the challenges for the property and kind of different timelines for when some of the work inside the property will be done in a month.

MGM opening by year-end, maybe the light rail and SJM sort of further out.

When we think about the ramp up of the property, how much of the difference between what the property's doing now and what you think it can be doing when all is said and done?

How significant are the changes that happened by the end of this year versus maybe light rail and things -- other things that might take longer?

Just to sort of manage our expectations about the ramp up.

Interesting question, Robin.

I got to think about that one.

Wow, that's the kind of question I ask myself.

Any of my colleagues want to help me out with this one?

That's a very provocative question.

Robin, my take is like we said last quarter actually, the ramp is going to take us longer than what we told you guys at our Analyst Day last April.

Those forecasts are still what we project, but we need the infrastructure in place.

Our programs are moving forward, and so we're big believers in that properly and in Wynn Macau, but we have to get through really the next, as we said, 2017 to see a lot of these things start to happen.

So that's what we said last quarter and that's still how we feel.

For example, if they turn on those escalators, that's an item.

You can't get across the street now.

It's very tricky to understand that.

We can look at the numbers from our neighbors and compare ours to them per table, I guess, Matt?

And say, well, suppose that if we're less per table, I don't know, are we than one of them?

Will the number per table change?

It should -- we're right at fair share right now, and our properties have always been 1.2 to 1.3 per share, and so I believe that's where Palace is going to go.

There you go, Robin.

Once it has all of the elements in place.

Yes, if we're 1:1 on revenue versus -- our percentage of the revenue versus our percentage of the equipment in the market, if we are 1:1, that's the only time it's ever happened in my career in 50 years.

In New Jersey, we're 1.68, 1.58.

And the more hotels that opened, we increased the margin of excess margin over 1:1.

If -- so if we're 1:1, Matt, right now and the neighbors are 1:2, we've always been 1.2, 1.3.

Look at Wynn Macau.

Then that would be a bare minimum, and that building, the Wynn Palace, is the fanciest thing in China, by far.

And I wasn't questioning that you would grow to a premium to your fair share, I was just thinking about time frame.

And so it sounds like maybe, from Matt's comment, that a lot of things by year-end sort of will -- a lot of the biggest, the most -- the biggest hurdles for you will, by the end of 2017, is that fair?

I don't know, Robin.

It depends.

What are they going to do with the light rail?

What happens when MGM -- is MGM going to open in November?

And when they open, will it be a complete opening, a partial opening?

Will there be blockades left?

What really is going on with SJM?

They asked us if we would link SJM to us.

Well, one of -- on the empty land on the south side of our property, the corner of it is directly opposite the corner of SJM.

They want to have a connection.

Well, I say, “Great, let's do it because it goes right into our retail.” Boom, build a hallway that's air conditioned, and we're in business and we're connected to their 2,000 or 3,000 rooms.

Same thing with MGM.

I'm a little confused about the timing on those properties, and I'm a little confused about the improvements in the neighborhood and how they affect us.

But I've got complete confidence that the Palace will be the show pony both financially and physically when these questions are resolved.

I'm just frustrated with giving you the kind of answers because your question really meant that I had to know how it was going to come in chronologically, and I don't, Robin.

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

I had a general question and then a housekeeping item.

The general question is the VIP growth of 35% according to the DICJ in the quarter was pretty exceptional.

And years ago, maybe 6 to 8 years ago, I recall a rule of thumb that the government was fined with a 15-plus -- a growth rate of around 15%, and I'm specifically referring to the VIP segment.

And to the best of your experience or knowledge, is there a growth rate that the government is comfortable with?

Or can a junket business grow at -- over 20% growth rate without the government's objection as long as its customers and liquidity sources are legitimate?

The regulatory agency has tightened its controls and supervision of the junket operators.

I think that's the form of expression that has been adopted, and we don't know of any arbitrary number that is in government thinking on this subject.

One thing we do know is that they wanted to improve the standards of probity and investigative activity, and they've done that.

And the main operators sail right through as they always have.

I remember when we were being licensed in Massachusetts, the question was, “Well, Macau has a reputation that's -- that may be questionable in some quarters, especially in Massachusetts.” And I remember that we said, “Wait a minute.

Let's put this matter to rest." We told each of our operators that they had to go -- in addition to being licensed in Macau, they had to go to the organized crime -- criminal division of the Hong Kong Police Department and get certificates of -- clean bill of health certificates.

They actually would investigate someone and then come to a conclusion and make a statement in writing that, that person was free of any criminal association.

And every one of our operators went instantly and did it without hesitation, and that impressed the folks in Boston.

We were happy to do it because we wouldn't want to do business with anybody that couldn't pass such an examination.

So the regulatory issue was the one that I think is at stake here.

I don't know that anybody has an arbitrary number about growth rates.

Is there -- maybe a different way of asking the question is, is it the fact that or -- junket liquidity, do you think that, that is maybe more of a relevant question versus government policy?

And where I'm going with this is, junket liquidity seems to run in cycles, and in your view, now that we're in an upswing again, what could slow it in the next year or so?

What do you say, Matt?

Harry, as you know, we've been through all of these cycles together.

So there are the macro issues we all understand and then there are the changes in regulation that could slow down liquidity.

But to try to guess what might happen in the future I think is not the right thing.

What I would tell you is that we are seeing the same faces and new people in our VIP rooms and in our premium area.

So that is a good sign about the health of the market, but I really don't want to guess on what could slow down liquidity in the future.

And ladies and gentlemen, we have reached our allotted time for questions, and I would like to turn the call back over to your presenters for any closing remarks.

I thought today's questions were well thought out and insightful, especially as all of the investment and analysts wrote for and reached out for the kinds of information that will predict the future.

And I know that's the job of analysts in advising the public on their investment decisions.

We do the same thing in protection of our shareholders.

Read the tea leaves, so to speak, try and anticipate the future.

And the most certain part of the future, which is change and how to build these enterprises so that they are equipped to handle change, they have the agility, the flexibility that's necessary for any commercial activity in today's world.

And I want to go back and say that in answer to all of the detailed inquiries that were brought up in today's Q&A, what will determine the future, believe me, will be the same fundamentals that have done it decade in and decade out.

How carefully are your buildings and your facilities designed and executed with care and professional input?

But most importantly, what is your human resource profile?

Because only people make people happy, and these places, their agility is measured in terms of the morale and the attitude of the people who engage the public every day in these buildings.

If you want to have an insight beyond the questions and answers you'll get from us on a quarterly basis, go to these hotels.

Interview employee.

Feel the vibe.

Eat the food.

Stay in a room.

Talk to the employees.

See if they're proud.

See if this job they have is a measure of their own self-esteem.

Do that survey, do that inquiry and you can predict the future.

Because when you get that information, you will know who will control every market and outperform the competition.

And that is all we've got to say today.

It's fun to have these conversations.

Talk to you next time, and thanks.

Thank you for your participation.

This does conclude today's conference call, and you may now disconnect.