永利渡假村 (WYNN) 2017 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen.

Welcome to the Wynn Resorts Third Quarter 2017 Earnings Call.

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

(Operator Instructions)

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

Sir, the floor is yours.

Thank you, operator.

Good afternoon, everyone.

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

Also on the line are other members of our 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.

Hello.

Well, you see the numbers, they sort of speak for themselves.

I guess, 4 of us are very happy that Las Vegas had the best third quarter in its existence since 2005.

And we're particularly happy because our non-casino revenue is so strong.

And it's the predicate for the development of the golf course, which we'll be talking about today.

And we're very happy with the progress of Macau.

When we began building the Plaza -- the Palace rather, and we told everybody about it, Matthew mentioned that we were going to drag it to the $1.3 billion, $1.4 billion level with those 2 places and we would go to -- from $3 million a day when we started heading -- and my goal was to get to $4 million, I'd be kept happy with that before we add more stuff in Cotai, which we will -- we'll be adding more rooms and things like that as we go along.

But we got it to $3.5 million and we've been moving every quarter.

In October we're at $4 million, a little better than $4 million a day because we had a holiday in the month.

But we're very happy with the progress.

When we started, we had 9% of the market with one hotel, the Wynn Encore, 1,000 rooms, downtown.

And now we have 16% of the market.

Our ability to capture market share is clearly established, and that, in a matter speaking, sets us apart, at least on that kind of a metric from perhaps some of the other places.

At any rate, in our own closed world, we're happy with that.

Again, I remind everybody that the problems that have beset the Cotai neighborhood that we're in exist as we speak.

We are -- we have construction on 4 sites.

We own the whole square.

There's 4 roads that surround our 50-odd acres, and the SJM is not scheduled to open till next year, that's our south side.

MGM is scheduled to open sometime.

The hurricane set them back a little bit, but they're 3 or 4 months away from full operation, I would imagine, or maybe they'll open in part, but they're on our west side, and so is the monorail station, which is still not complete, but I'm happy to say that the city, and the builders of the light rail are hard at it.

They're doing the street, they've got the bridge open.

They're going to -- the cars are about to be tested in the next several weeks, the vehicles themselves.

And they're headed for a '19 completion, maybe they'll do better.

But perhaps, the most egregious part of the blockade, the interference, will begin to disappear as we go into the next quarter.

We're hopeful of that.

And the light rail, of course, is on our north side as well.

All of this has constrained the traffic flow into the Palace.

And you can look at this 2 ways, you could say it's been a tough break for us to have to live with this our first year of operation.

On the other hand, we're doing very well and it portends a better -- even a better result as our neighbors get up and running, and we have the benefit of their connections.

And we will be building connections to them that are pedestrian safe.

But we've got to wait till they get finished with their own work.

So that describes my view at least.

Maurice is here to talk about Las Vegas.

Craig and Matt can talk about more particulars, if you're interested.

And then we finally find ourselves at the decision point after 2 years of design development on the golf course.

One of the things that's been so fantastic about this development behind us is there were so many choices because we have 1,000 acre-feet of water that came with the Desert Inn Water Company.

We have this remarkable proximity to our neighbor, the Sands Expo Center, and, of course, we have immediate proximity to the Las Vegas Convention Bureau.

I think, accumulated, that's over 5 million, almost 6 million feet of exhibit space, one of the largest conglomerations of exhibit space on the planet.

And they're adjacent to us on 2 sites.

We're going to play into that wonderful proximity with our development and -- but I'll give you a chance to answer questions because I'm sure you have some.

And then maybe we'll flow into the other discussion.

Go ahead, take questions ma'am.

Do we have a call?

Have we lost our connection?

(Operator Instructions) Your first question comes from the line of Thomas Allen.

So just -- so great results in Vegas and great ramp at Palace.

If people were going to have to nitpick, they're going to point to Wynn Macau where it seems like you've lost some market share.

Can you just discuss performance of that property a little bit?

If someone wants to nitpick, they're free to do it.

Ian, Ciarán, do you want to comment on -- we look at it as one place.

Wynn Macau maintained market share, and if you look at the Peninsula in general, there has been a gravitational pull to Cotai, and mass has been dropping off whiles it's been growing as a market.

But Wynn Macau continues to do more than its fair market share downtown, it continues to be the market leader.

It came off a very, very high comparison with quarter 2, but if you look at quarter 1, quarter 3 and 4 last year, and it had good growth, and there had been a lot of discussion about cannibalization at Wynn Macau, and there hasn't been cannibalization.

And it's just getting compared to a very, very strong second quarter.

If we look at October month-to-date, it bounced right back.

So we're very happy with Wynn Macau.

So much for nitpicking.

Next?

Steve, you brought up the golf course, can you elaborate on that a little bit?

Two years of design development, a lot of choices, we finally settled.

The golf course, for the sake of the golfers, bows out on December 22.

Earthmoving, tree moving, and I guess you could call it construction of the buildings begins the day after New Year's on January 3. I think, it is on Tuesday this year.

And we're moving trees and doing the grading of the property so that we can get started with the foundation on the 450,000-odd feet of exhibit space.

And then when we get finished with the convention of the jewelry show in June or the end of May, we'll be demolishing the north villas where the 1,500 room high-rise is going to go and the casino and the restaurants.

And the notion -- this lagoon is 1,600 feet long and 650 to 700 feet wide.

And it's surrounded by a boardwalk that's 1-mile long.

And along this boardwalk, and on the north and the south side, the north, which is towards Desert Inn road -- just for those of you who are familiar with this building, when you're in the Wynn hotel, when you look at the golf course, you're looking from west to east, The Strip is the west.

Desert Inn Road is north.

Sands Road is south and Paradise Road is the eastern boundary of our property.

The lake goes -- from just past the Fairway Villas, the lake goes 1,600 feet to the east, and it has an irregular shape.

It has -- the first 7 to 9 acres is wasted like an hourglass, from 600 or 700 feet wide down to 250 feet.

There's a pavilion on the south where all the big convention building is for outdoor events that's over 30,000 feet with roof and columns, although it's open to the outside air.

That's an outside -- in addition to the 450,000, that 30,000 feet is an outside pavilion, because we have a lot of events that want outdoors.

And opposing that pavilion is another little promontory that comes out that's a carousel that's 130 -- 103 feet in diameter, and the horses go, and you get -- you go on this carousel by walking on the -- from the boardwalk out on a finger dock, and you can step on to the carousel on a 20-foot wide finger.

And the carousel goes around, and there are boots -- the Pullman boots alternating with horses going up and down.

There are 2 rows of those, and there's a bar.

And 330 degrees of this carousel are out in the water, this bar rotates with the music and as a classic carousel, and it opposes with its beautiful lit roof the pavilion on the other side.

And then there are a number of other things that we call "midway".

The -- we have decided to take the theme of carnival and turned it on its edge and made a series of attractions and interactive experiences that, in some ways, have their roots in what all of us grew up with, with carnivals, but are not really that, they're far more.

For example, the notion of bumper cars.

Remember that when you were a kid?

Imagine that there are a whole line up of bumper cars like in the pit at Indianapolis.

You get into the bumper car but the entire skin is LED lights that are controlled by a system that is linked to contact with the car so that -- and then we have this rally every 10 or 15 minutes, and you go round and round in these cars, and if you touch another car, it triggers an enormous audio response and an electrical response.

So all these cars are flashing and exploding in color, and making crash and explosion -- explosive noises.

Now you go around this oval, and if you win, you get a prize.

But there are 3 keystone cops that have their bumper cars, which are dressed up like police cars with flashing red lights, and they're in costume, and if you get in the lead, they smash into you and cause tremendous crashes.

So in order to win the rally, you have to overcome our policemen and our traffic cops.

Anyway, it's bedlam in audio-visual interaction.

Now I gave you that one example, and there are number of others, because it's the notion of carnival.

But also, we've taken the word carnival, and we've put an E on the end, as they do in Rio de Janeiro, and its Carnivale (sic) [Carnaval] , sort of highfalutin saying it.

Because every night, at the far eastern end -- on the southeastern end, there is a ramp that goes to a building of 40-odd-thousand feet that is our housing for our floats.

And we are taking the notion of Carnaval in Rio and with the help of a number of wonderful consultants and collaborators like Michael Curry, who did the puppets for Lion King and has done work for us in Macau with our Golden Tree, the Lake of Dreams here, we have these floats.

These 10 or 12 floats that come out in an audio-visual parade every night right after dark.

And that parade is a musical and visual extravaganza, but it's not the Rose Bowl Parade, it's a much edgier kind of thing.

With huge spiders with spiderwebs and King Kong and the devil, and these things are 25 or 30 feet tall, and they're animated.

But what's wonderful is that people, 10 or 12 people can pay and be part of that parade and get on the floats.

They're self-motivated floats, they can drive down the ramp with wheels and then they can work through the water with their propulsion system.

But anyway, there's a carnival parade every night.

There are zip lines, and fireworks, and a host of other things that populate the boardwalk.

But it does leave 40 or 50 or 60 acres of undeveloped property at the far east or north towards the convention center for development in the future as we go forward with several applicants or possibilities that are already in negotiation with us.

But phase 1 of our convention center and our hotel and our casino and our restaurants and all that sort of thing, it goes along with a full-scale destination hotel.

This building on the north, where the north villas are now, is a 47-story, 1,500-room hotel with a new room idea that we've come up with that I think is going to be very well received.

And there's suites and there's villas and there's all kinds of that kind of stuff.

And everything looks over the lake and the boardwalk, and everything is interactive.

That's sort of the way it is.

I think, probably, sometime this spring, maybe at have another -- a conference, and show everybody the final model of what we'll be building at that time.

It's taken us some months of delightful design development to work through and get to the options that would be easy to monetize.

And it's like any other creative process, it's sequential, and you get to the best part towards the end of the process.

And we're happy with where we are, so we're ready to start building stuff.

And we'll put budget numbers and all of that sort of thing on probably in the next 90 days.

The Board of Directors is going to see it in a week.

And all of us in management have signed off on it.

So we're very happy.

And we're ready to go on some of the buildings.

As I say, we've -- we're in the final stages of getting our building permit to get going.

We should be in hard construction by April -- March or April, I would say.

After we move these trees and the earth, we've got -- the site -- Las Vegas is -- the whole valley here slopes from west to east downhill, 1 foot per hundred.

So The Strip is 2,075, but Paradise Road is 2,045.

You can't see a 1% drop deep down across the length of our golf course.

You could see it if you go to Bellagio.

You come in to the back door of Bellagio [on grade], but if you go to the nightclub they call Hyde, you can look down on the water, and you could see that The Strip is lower.

So we had to pick a level that -- where we wouldn't have to bring in thousands of truckloads of dirt or take out thousands of truckloads of dirt, which would add up to our cost.

And the water level is at elevation 2,060.

The boardwalk is at 2062.

Wynn, the hotel, and Encore are at 2,086, because we have a back of the house below the casino.

So you'll be looking down on the boardwalk about 20 feet and that allows us to have boardwalk buildings that are below the casino level and below the hotel level.

And I think that's probably enough information for now.

Maybe it was more than you wanted to know.

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

Maybe shifting back to Macau.

One of your competitors mentioned some reinvestment is required if the market has matured.

Are you seeing any change in the competitive behavior in Macau?

And what's your perspective on additional growth opportunities in that market?

Well, as a matter of fact, you're talking about Sheldon Adelson, and I spoke to him because I saw that announcement and it was interesting.

Just shows us how progressive and how dedicated to doing the right thing all of us are?

Here is a case where Sheldon and his staff want to make Parisian better and update anything that they find that's weak or that could be better.

And what's fascinating is that today in Macau, an operator as big as the Sands says, "Okay, we're going to do something and improve something, and if we have to spend $1 billion, we've got that much faith in the future of the market." I was glad to see it.

So much so that I called Sheldon to talk to him about it.

And he was elaborating on it to me.

So it's a good thing.

It shows that we never -- in our business, sort of like the theme park business, if you're not growing, you're shrinking.

If you're not getting better, you're slipping.

It's a capital-intensive business.

But what's wonderful about our business is those capital investments are well rewarded.

For example, this year we closed -- after the final 4 last year in March -- the next morning, we closed the whole north end of the casino where the Race & Sports Book were located, and our Delicatessen -- Zoozacrackers.

We closed it off, spent $11 million and then opened it up the day of the exhibition games in August.

New screens of the most advanced kind, a brand new restaurant called Charlie's, new bar, new everything, brightened and opened the whole north end of this casino for $11 million.

Well, we've now assessed it for several months.

It looks like we're going to increase our EBITDA by $5 million.

Now when we keep a couple billion dollars in the bank, we can make 2% maybe.

But when we invest in our own business and have a return of 40%, 50%, actually double-digit returns, there's no comparable use of our money.

We have a dividend program.

But the same thing happened when we moved poker over to Encore and turned Botero into Jardin.

There, we invested $5 million, and we made an extra $1.5 million in EBITDA.

So like the Sands, in this case they're doing it on a rather larger scale, we invest in our own business continually to give our guests a better experience.

And it's a good investment.

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

Two questions: One, can you just talk about what trends, what kind of recovery levels that you're seeing in Las Vegas?

We've heard comments, obviously, from LVS last night, and Caesars made some comments about Asian play earlier in the week.

And then my second question for Craig, if you could just give us hold-adjusted EBITDA for the properties in Macau and Las Vegas, that'd be helpful.

We don't have any -- the hold adjustments are not really significant here.

It's 10 to 15 in Macau.

Yes.

They're not significant.

So.

In Wynn Macau, you can see that [3.37%] VIP hold adjustments between 10 to 15.

And at Las Vegas?

2% or 3%, yes.

Nothing serious.

It's just that we've had all this business before.

We've always been the principal recipient of international high-end business.

And it's not only true in the pit with the table games, it's true about the hotel and the restaurants.

It's the kind of clientele we have.

And it's one of the good things about running a sort of higher-end operation.

There's good news and bad news, of course, with every segment in the market.

But we have enjoyed this kind of international play for a long time, starting in 1989 with the Mirage.

And we haven't really lost that in spite of whatever location we've been at since Mirage, Bellagio and then it came over to Wynn and Encore.

So it's really nothing new to us.

We changed our business plan 3 years ago in July of '14, was it, Maurice?

Yes, it was '14.

'14, in July.

We lost $150 million in Wynn when the campaign of corruption came in Macau.

We lost $150 million in Las Vegas, which was about $40 million, $30 million in those days of EBITDA.

Well, Maurice Wooden and I and the gang, we all sat down, and we redid our business plan.

No one had changed the price of gambling in 50 years in spite of the increase of cost of running the business.

Well, we thought it was time to take another look at it.

It involved changing the location of the equipment on the floor.

Primary locations, we put higher-yielding equipment; secondary locations, we put in lower-yielding destination things, we took the Craps table from in front of the elevator, put it over on the side.

We put higher yield games.

We took 50% of our Blackjack and went 6 to 5 on Blackjack instead of 3 to 2. We went to double odds instead of a higher multiple of odds, unless someone was playing on a high-limit game.

We took away the casino block from the hotel.

And instead of the casino having a block that they had to get back, the hotel had the block to sell for cash and the casino had to ask for the rooms.

We stopped giving discounts at Craps and Blackjack or exceptional promotional allowances.

We changed the criteria from average bet and length of play in all those traditional metrics that casino marketing people for decades have half a century of running hotels, and we went to EBITDA per foot with the cold-blooded attitude that promotional allowances would only be issued on current play, not on what you did last trip or the trip before, but what was your activity now.

And we told our customers, "Look, if you want to stay here treated like a prince, just give us your credit card.

We treat everybody that way.

But if you expect to get a free room, free food or any of those things, we're just a business, and it's based upon if you gamble at a level that's acceptable, well, then of course we won't charge you for your dinner or your hotel room.

But if you don't, don't expect us to give it away free." Now that's a soft way of putting it, but I assure you that the application is hard -- as hard as a diamond.

We don't [calm] people that don't play period.

And therefore, our margin on table games, which historically has been below 20% in this city, is 50%.

We have the same margin with table games virtually now as we do with slot machines and our rooms.

So maybe we have a little less business, but we sent a lot of nonproductive customers over to our neighbors.

And because we love our customers, we send them over to our neighbor in a Rolls-Royce.

And Joe, the first part of your question is, like everybody, we thought increasing cancellations, et cetera, after the event, but we are pretty much back to normal booking trends here at Wynn for this year through next year.

Actually one of the groups that canceled rebooked at a different date.

So if you're going to ask us, "What effect did the tragedy at Mandalay have on us?" None that we can measure.

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

My question is for Ian or Ciarán, whoever may be available to answer.

But it seems as though you guys kind of hit your stride on the mass floor at Palace in the period.

Obviously, your roll -- both roll and revenue were up mid- to high teens, obviously slots were up nicely on a sequential basis.

Could you talk a little bit about maybe the experience there, and is this more just a function of, obviously, maybe some seasonality but also kind of hitting your stride, getting a better sense for who your customers are and what's really having the impact there that allowed you to outperform the market?

And mention when you do the new construction of Red 8 and what a big deal that is.

Go ahead Ian.

So this is Ian.

At Wynn Palace, we're seeing the fruits of our labor in terms of the first half of the year.

We were looking to gain momentum, particularly in the mass casino, we've done a lot of reworking of services in the mass casino.

We've changed a lot of our player programs.

We haven't overinvested compared to our competitors, but we've been very focused on service levels and introducing new players.

And players get sticky over a couple of visits.

It takes times like Chinese New Year, the May Golden Week to introduce new players and make them comfortable with the property, and we're seeing the benefit of all that work in the first half of the year.

We've also significantly ramped up events at the property.

We're holding concerts on a monthly basis, and we've introduced it at Wynn Macau also.

And that brings in a lot of players.

We do events for up to 1,000 people, and we do a lot of food and beverage events associated with the casino.

So it's really -- in addition to the market lifting, we're also gaining momentum from the initiatives we put in place.

We continue to work on new food and beverage offers.

We opened Buns & Bubbles in the late summer, which is a mid-entry point offer for families.

It's got indoor/outdoor dining space off our retail arcade.

So that's proven to be very, very successful.

And we have a number of other projects coming up, primarily Red 8, which we'll open the new Red 8 in just before Chinese New Year 2018.

And that will have a family section as well.

It's a larger restaurant with presentation cooking.

The existing Red 8 space will be reconceptualized off the casino into a café.

We also have a fast pizza pasta restaurant coming in our retail arcade.

So we're really focusing on the customers that are in the building, providing them with more variety of food and beverage experience.

And one thing you guys didn't mention on the call, and maybe it didn't really play much into the quarter.

But obviously, the typhoon was a bigger deal seemingly on the peninsula than it was on Cotai.

I'm assuming everything is kind of back to normal at the property today, but any kind of color you can give on maybe the impact that might have had at peninsula over the period?

So, we would certainly...

I just said, for example, we closed the Macau -- the original 600 room tower for a period.

You go ahead, Ian.

Go.

So it was -- it had a much bigger impact in Downtown Macau just because of the nature of Downtown Macau.

Being the older part of the city, it was less prepared.

Cotai features a lot of new properties, which didn't have as much damage as Downtown.

We had a lot of services that were cut off Downtown.

Clearly, the focus was on taking care of residents and areas like the hospitals, et cetera, in terms of power supply and water supply.

So we weren't affected Downtown.

More the image of Macau was affected for a period of time, and that did affect bookings.

We had 2 groups that were essentially cut off from Macau for nearly 2 weeks.

And so we did see an impact.

It's hard to quantify what it means in EBITDA terms, but there definitely was a lull probably for 2 to 3 weeks.

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

Ian, maybe we could stick with the same kind of line of questioning but wanted to dig in a little bit more on the gaming operations side as you continue to ramp up Palace.

Any kind of things that you could tell us about what you're doing either on the junket relationship side or how you're configuring the mixed between premium mass and grinder base mass right now in terms of what you saw in terms of player behavior in the quarter, and how you continue to see the building ramping from here?

So taking mass first.

The lift in mass was in all segments of mass and as a consequence of the growing market and all the initiatives I described earlier.

On the junket side, it's kind of a situation where the players within the junkets are demanding to come to Wynn, and we're seeing the benefit of that.

And junket played roles as the property matures and gets older and people become more comfortable with it.

Interestingly, we've had a lot of strong junket interest at Wynn Macau also, where we have a couple of new junkets that are interested in joining us and we've got expansion of existing junkets.

So the junket world is very stable, the growth is very measured and we're getting the benefit of it being -- having 2 properties that cater to the higher-end of the market.

Your next question comes from the line of David Katz with Telsey Advisory Group.

Steve, you've been -- you had been, after the tragic events in Las Vegas, made some commentary about issues such as security and the like.

And I appreciate your comments that business is back to normal and so it seemed as being present in the market at that point in time.

Have you made any changes or has the industry or The Strip as a group, had any discussions about preparedness or security going forward that would -- that we could know about?

Short answer is, yes.

I believe that the self-consciousness about security has been continuous with all of the operators in Las Vegas for some time.

Now the nature and the particular nuance of each of these companies' reactions to the threat, I'm not an expert on.

I know what we did here because, as one of my competitors described it, Wynn is paranoid.

And -- 2 years ago, between Thanksgiving and Christmas, we had a series of repeated consultations with consultants, including Ray Kelly from New York.

Those team from the development group, SEAL Team 6 as they're known to some people.

A lot of people came.

We beat the bushes to find out everything that was -- that we could throw at this problem to harden this as a target, with the idea that if someone was looking at the hotel, they would see that we had met the threat level on a number of ways, and they would move on some place else because this would be a tough place to survive for more than 3 minutes if you had a gun on you.

That included every door, profiling, dog sniffers, all the stuff.

And it became operational in the 1st of May, the end of April of '16.

Since then, we invested all this money, it was close to $6 million or $7 million a year, beyond our normal security for payroll, equipment and all kinds of -- without going into details, we did an awful lot of stuff that we never ever would have thought we would have to do.

Because I personally felt that we were exposed, and that we should send a clear message that there was very little chance of being unnoticed in this building.

Now having said that, we knew this particular fellow that did the shooting at Mandalay, he's been a customer here since '06.

First started coming -- we first picked him up on our records as a typical slot player with a modest credit limit of $50,000.

And I got to interview -- and in the last 3 years, he's been coming frequently with this lady companion of his.

And I interviewed -- I had the chance to interview the people in the high-limit slot area, he plays video poker, he did, at a $20,000, $30,000 level, and he never owed a dime.

He had a $50,000 credit card.

He didn't owe a dime in Las Vegas.

He played in Mandalay and Caesars and here.

He was a winner at Mandalay.

He was a loser over the 6 or 7 or 8 years here.

But he never owed any money.

He didn't meet the profile of a problem gambler or anything like that.

He was a very controlled person.

And he and his lady ate dinner, and played the -- with the slot machines in the high-limit room before -- in the afternoon, then they went to dinner, tipped very well.

Went -- played after dinner, went to bed.

They were served by people in this organization over a period of years and can only be described as the most vanilla, unexciting, totally typical couple that has ever walked in this building.

When I interviewed the employees that knew them, they were stunned, mystified that the person they knew could have been a person that tried to assassinate hundreds and thousands of people and succeeded in killing 58 of them.

My employees were stunned.

We looked for a -- and the police nearby are looking for a motive and can't find it.

And it's a stupefying kind of event.

One of the young men that works for me outside the room, is [Tyler Tracy], took 1 in the shoulder and 1 in his back.

Fortunately, he's home and up on his feet.

But he got shot twice.

Both of the employees that were wounded in -- are back, are going to survive and be healthy and not have any long-term consequences.

The industry is getting together.

We're taking complete inventory of all of the damage that was done to the people there.

We want to separate minor injuries that were done as people ran from people who actually took fire or got seriously trampled.

The gaming industry is taking a complete inventory of what -- of the damage done to humanity, and the people that have long-term disability and life-changing problems so that we can give some help to them that's real and long-term, and we're sort of operating as a group.

Some of us are talking to one another, like the Sands and MGM.

And -- but we have nothing to add to the explanation of why this maniac did what he did other than he just had a screw loose, it snapped or something.

But as to what other hotels are doing, I'm sure that in every executive suite up and down The Strip and in Reno and everywhere else and in hotels around the country, everybody is trying to figure out, is there a way to use local parlance to lower the odds of a repeat.

I know that even at the level we're operating on from the past 2 years, Matt Maddox, who's is sitting next to me, told me that yesterday, he spent the afternoon in a discussion with some technology people that showed him an extraordinary thing that we could do that was unknown to us about what technology will allow in identifying without actually walking through a metal detector, but stuff that can identify what's on a person and identify where it is on a person on television.

My guess is that this sort of thing and vendors that sell the sort of equipment are going to be a good investment if you're a stock picker.

Matt, you want to mention anything?

No, Steve, I think you're right, the technology is getting there and it's catching up.

So I think that, everybody will be looking to enhance security through better technology.

We've had programs of training our employees for 2 years, room service, housekeeping, audio visual people that go to fix a TV or touch screen, they've all been trained for 2 years.

They inspect the rooms.

They look at the people.

We profile everybody.

We sniff the baggage in the baggage room.

We don't interfere with people that have pull-along luggage when they come in, we just watch them, and look at them and think about them.

And if there's anything about them that meets our various criteria, they're immediately tagged and followed and observed.

We have a whole routine that we do here that's transparent as far as the guest is concerned but highly articulated on our side.

Now if you're a bad guy and you were looking at the vulnerability of this hotel, you would probably spot a lot of the things that we're doing.

And that's okay with us.

It's all right if they see what we're doing in part.

Maybe that's a good thing.

But we don't flaunt it, it's just there.

And if I can just ask one brief follow-up with respect to the development on the golf course.

And the detail does sound exciting as expected.

When we think about what that project can do in and of itself in terms of revenue and profits, apart from what it does in driving business to the property, it's -- the existing property, can you talk about the different elements of it that will be revenue and profit center in and of themselves?

Sure.

The hotel that I described, the 1,500 rooms, that's a complete -- that's not just a tower we're adding, it is a complete -- we're arguing about the final naming of it as we speak, but it is a complete destination hotel.

It has spas, suites, restaurants, gaming, entertainment, showrooms, all that stuff.

And in addition, it's on the water on the boardwalk with all of that attraction and its things that I described.

They go from zip lines to carnival parades and the midway and convention facilities, the 1,500 rooms has its own convention component.

In addition to the 450,000-foot building that's going on the Sands side, and the 30-odd-thousand outdoor pavilion that's going on the Sands side, the hotel on the north side has -- is a complete destination hotel.

So it's a profit center unto itself.

And of course, it's connected very conveniently -- if you look at the, and you will all know it when you see it, we have a tower on the north called Encore and a tower on the south called Wynn.

The new tower is standing in the middle of them.

If you were to walk down the showroom -- walk down the hallway towards the Encore showroom, you go straight ahead, you'd be right in the lobby.

So this new tower -- this new hotel is dead in the middle of the other 2. And the whole 1,500 rooms is closer to our convention facilities than the 2 existing buildings are.

But it has its own convention facilities, meeting rooms, ballroom and a complement of things you'd expect to find if you're building a freestanding hotel, profit center.

And the boardwalk and all of its attractions support all 3 buildings, but also, the residual real estate that is adjacent to the boardwalk takes on an enormously enhanced value per acre and is very attractive.

Imagine being able to develop on the boardwalk, on the water, with its beach and its parades and water attractions and wakesurfing and all the boating thing, imagine that and being directly across the street from the Las Vegas Convention Bureau.

How good a location is that?

I mean -- or how about being directly across the street from the Sands Expo Center.

How about being directly across the street from the new Forum that they're getting ready to build.

We've been in meetings with the folks from Madison Square Garden, The Venetian, and those folks have reached agreement.

They're getting ready to start construction there.

They're in the process of getting building and going through that sort of thing.

This whole complex of ours is intensely surrounded by major attractions.

That Madison Square Garden attraction is 18,000 theatrical seats.

It's not another arena for hockey or basketball.

It is Irving Azoff and Dolan's idea, like The Forum in L.A., as the major entertainment venue for Las Vegas.

And that is directly across from us face-to-face on the street, and we own the corner on both -- we own both corners that surround the Madison Square Garden construction.

So all of this stuff is going to become very interactive between now and 2020 and '21.

We had a lot going on here.

Not to mention the football stadium, not to mention the fact that finally it appears as if Resorts World is going forward with the construction of their resort that was on the site of the former Stardust Hotel.

I'm sure that someday something will happen on frontier property across from us.

Even though it sort of stumbled for the past several years, I would imagine that somebody will pick it up and do something constructive with it.

And we'll be happy to hook up with a bridge if they want to.

So I'm feeling really great about Las Vegas for the next 20 years.

And my company intends -- my Board of Directors is committed to maximizing the non-casino touristic profile of this complex known as Wynn in the next 5 years.

We'll be in construction continually.

A lot of the stuff will come within the next 18, 19 months, hopefully, but there'll be things happening, in my view, until '21 -- 2021, sequentially.

That's not to mention if somebody shows up that wants to make a deal with us on some of our other property that is on the boardwalk.

Is that too much more information for everybody today?

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

This is Raffi on for Robin.

Just a couple of quick questions from me.

On Macau, this is more for Ian, what are you seeing on the promotional side for higher-end play?

And do you expect any changes to that dynamic in 2018 with new competition?

I think everybody's being very measured.

As Studio City, the arrival of Studio City, The Parisian, Wynn Palace, people didn't shift off their investment rates, it's been very steady, both Downtown, the Peninsula and in Cotai.

Okay.

And then just outside of that, can you talk a little bit about Japan and your thoughts on that opportunity?

Maddox.

Sure.

So it looks like the political environment is continuing to be -- is stable now after this last election, and we think that there is gaining momentum for the IR legislation for sometime next year.

We also know that once legislation is passed, there's a long process of setting everything up.

So we're monitoring it carefully and spending time there in developing relationships.

And over the next couple of years, I think, it'll -- we'll understand the potential opportunity.

And there are no more questions at this time.

Thanks everybody.

Talk to you in the next quarter.

Appreciate your time.

Ladies and gentlemen, thank you for participating in today's conference call.

You may now disconnect.