永利渡假村 (WYNN) 2018 Q4 法說會逐字稿

Welcome to the Wynn Resorts Fourth Quarter 2018 Earnings Call.

(Operator Instructions) This call is being recorded.

If you have any objections, you may disconnect at this time.

I will now turn the line over to Craig Billings, Chief Financial Officer.

Sir, you may begin.

Thank you, operator, and good afternoon, everyone.

With me today in Las Vegas are Matt Maddox, Marilyn Spiegel, and Ian Coughlan.

Also on the line are Ciarán Carruthers, Frederic Luvisutto, and Bob DeSalvio.

I want to remind you that we may make forward-looking statements under Safe Harbor Federal Securities Laws, and those statements may or may not come true.

I will now turn the call over to Matt Maddox.

Thanks, Craig, and thank you, everyone, for joining us today on this conference call.

Before we just dive right into the fourth quarter numbers, I'd like to make a few opening remarks.

2018 was a year of transition for our company, and that transition is now over.

We have a fully reconstituted board.

It's -- with Phil Satre as the Chair, working very well with management.

In North America, we've hired a number of new people.

We hired a new Chief Marketing Officer that started about 2 months ago.

We've hired a new Head of Human Resources, for all of North America.

And within the last 30 days, we've hired Marilyn Spiegel, who is sitting beside me today as the new President of Wynn Las Vegas.

I'd like to welcome Marilyn back because she did work with us for 3 years in this role, almost 10 years ago, and I'm really excited to work with her.

Thanks, Matt.

So now that we have our board in place, our team in place in North America, and we're continuing to grow our team in Boston, and what I believe to be the best team in Macau, running Wynn Macau and Wynn Palace in place, we're ready to execute our strategy, and our strategy is growth.

I believe that we have the best and most robust growth pipeline in our industry.

As an example, 5 months from now, we're going to be opening the very first, large-scale, integrated resort in a Tier 1 city, Encore Boston Harbor.

The Boston Metroplex gets 20 million tourists a year, 2 million of those are international, and we have a $2.6 billion property that we're going to be opening right in the heart of the Boston Metroplex, and we'll be all alone.

We're really excited about that opportunity.

It provides a step change in EBITDA for our company, and that's in 5 months.

Looking here in Las Vegas.

Las Vegas is now a marketer's market.

You can see by the overall growth rates here, on The Strip, that it's pretty much in line with the economy.

And so we know that we have to take share.

And right now, in Las Vegas, we have a 400,000 square-foot convention facility, state of the art, under construction.

It's going to open in 13 months.

We know that, that's going to add 4 to 6 points of additional occupancy, at a strong rate, to our property in 2020.

And everybody on this call knows, when you get additional occupancy at a strong rate, that's straight flow through.

We've also redesigned with Tom Fazio our golf course, and it will be opening around the same time.

And not only does that golf course make money on its own, but we've underestimated the impact that it has on our domestic casino business, allowing our host and our team to run special events, to run programs, that will continue to enhance our casino play.

We have 3 new restaurant concepts underway here in Las Vegas that we're going to be rolling out in 2019, because our customers expect us to continue to innovate, and that's what we're doing.

So I feel very good about the position -- the long-term position of our property, and the ways that we're investing here in Las Vegas.

Turning to Macau.

If you look at our downtown property, Wynn Macau, which has always been an outlier in terms of its performance relative to its size, we realized, in the early 2018, in the first and second quarter, that Wynn Macau was doing very well, but it was making a disproportionate share of its money from second-tier junket operators.

And that's not a place where we wanted to invest for the long term.

We've been to that movie.

We know how it ends.

That is too volatile.

So we began redesigning Wynn Macau, the entire original casino, and also remodeling some of the nicest suites in Macau, the Encore Tower Suites.

And we started that construction in July.

And in the fourth quarter of this year, we'll be relaunching an entirely new premium mass casino experience that's open to the water, 3 new restaurants, 10,000 square feet of additional retail, and a new hotel tower that wasn't just a soft refurb, the Encore Tower, but is completely redone like it's new property.

We'll be effectively launching a new property at the end of this year for Wynn Macau that's focused squarely on the business that we believe in for the long term, and that's the Premium Mass segment.

Moving to Wynn Palace.

Wynn Palace continues to position itself as the premier property at Cotai.

Ian, and Linda, and the team, have been opening a new food and beverage outlet almost every quarter over the last 4 quarters, and he has another one coming up in the next 6 weeks I'd like for him to talk about, which is really exciting.

And so what we see at Wynn Palace is as it continues to get into its rhythm, it's the place where the premium players like to stay and like to play.

Now what we know is we don't have enough hotel rooms.

It's 1,700 hotel rooms.

So we are actively designing what I think will be the top tourist destination in Macau with the Crystal Pavilion, something that I've spoken about a couple of times on these calls, along with a Phase 1 hotel tower of 670 rooms, and a Phase 2 hotel tower that's roughly the same size.

So our growth pipeline is quite impressive if you just take a look at where we are right now, and where we're going to be in the next 12, 24, and 36 months.

Turning to the fourth quarter results.

In Macau, we generated $394 million of EBITDA.

It was above our range that we gave in the third quarter.

I would like to point out that we spent the vast majority of October and November inside the range that we provided in the third quarter.

And the inherent volatility of Macau makes predicting the market revenues, given everything that's going on with the head -- the global headwinds, potentially slowing global growth, things that companies now all over the world are talking about, not just us, does make it more difficult.

As an example, Wynn Palace, in October and November revenues were down slightly to fourth quarter 2014, October and November.

But in December, they increased 50%, 5-0.

On the VIP side, that was mainly hold, but on the mass side, it was up 40% in mass play in December.

Clearly, that's not a number we would extrapolate.

It's not something that we would say is a trend, but what it shows is the inherent volatility in Macau exists.

There are peaks and there are valleys.

But the way that we positioned our properties, we will be there to capture the premium customers when they come to town.

Looking at Las Vegas.

We made about $105 million of EBITDA this quarter.

In the third quarter, we had a setback in our baccarat volumes.

We had lost some market share, but we recovered.

We made a few changes in marketing and the way that we were looking at the business.

We recovered in the fourth quarter, and I feel good about Las Vegas, considering everything that we have going on here that I mentioned earlier in the call, with the convention center, the golf course, the restaurants, Marilyn's stewardship driving this property every day.

I think that Las Vegas' best days are yet to come.

And with that, I'm going to turn it over to Craig, for a little more detail on the quarter.

Thanks, Matt.

As noted in our release, our Macau operations delivered $394.1 million of adjusted property EBITDA on $1.294 billion of operating revenues.

After experiencing a normalized average of $3.6 million a day from October 8, the day after Golden Week, through November 30, results improved in December on the back of increased VIP turnover at Wynn Macau and higher mass win at Wynn Palace.

Overall, for the quarter, combined property mass table win was a particular standout, increasing almost 14% year-over-year.

Comparable to Q3, over 70% of our departmental EBITDA in the quarter was generated in mass tables, slots and non-gaming.

Our results in Macau were positively impacted by VIP holds, increasing EBITDA from our Macau operations by almost $15 million from a normalized level.

Bad debt expense in Macau was $3 million in the quarter compared to a $1 million credit in the prior year quarter.

Our Las Vegas operations delivered $105.2 million of adjusted property EBITDA in the quarter on net revenues of $393.6 million, driven by growth in table drops, slot volumes and RevPAR.

Table volumes were strong, but hold was low, negatively impacting EBITDA by about $5 million.

RevPAR in the quarter was also strong, bolstered by a healthy group calendar and more high ADR casino room nights.

RevPAR was also aided by relatively easy comps, given the tragic events of October 2017.

Bad debt expense in Las Vegas was $1 million compared to a $1.1 million credit in the prior year quarter.

Compared to the prior year quarter, EBITDA margin in Las Vegas was negatively impacted by low hold and the year-over-year swing in bad debt.

We spent $52.4 million in CapEx on the additional group space at Wynn Las Vegas, taking our spend-to-date to $124.3 million.

In Boston, we incurred $197.3 million in total project cost during the quarter, taking the total spend-to-date to $2 billion.

The property remains on track to open in June of 2019, as Matt mentioned.

We ended the quarter with total debt of $9.4 billion in total cash and investments of $2.2 billion, including $1.2 billion at Wynn Macau.

In December, we completed the amendment and extension of our Macau credit facilities, both reducing amortization payments and extending the maturity of the facility.

During the quarter, we returned approximately $237 million to shareholders through the payment of our recurring quarterly dividend and the repurchase of $156.7 million of stock.

We repurchased just under 1.5 million shares at an average price just under $106 per share, and our quarterly dividend for the final quarter of 2018 is $0.75 per share, returning over $80 million to shareholders.

Consistent with our sharp focus on capital returns, we will consider adjustments to our dividend in due course.

With that, we'll now move to Q&A.

Operator?

(Operator Instructions) Our first question comes from Carlo Santarelli with Deutsche Bank.

Matt, you talked a little bit about, obviously, the volatility within the fourth quarter that you experienced and the $3.3 million to $3.7 million per day range in Macau that you'd referenced on the 3Q call.

In light of the quarter, and the overall, I would say, challenging Mainland China macro backdrop, along with some of the company-specific constituents not necessarily providing rosy outlooks for their China-based business, how does all this stuff kind of aggregate for you guys in your outlook around the market moving forward?

Yes.

So we remain watching the situation with caution, but I think as all companies around the world are doing.

Global growth is uncertain, and where the trade wars end up is also uncertain.

We continue to experience peaks and valleys in Macau, but as you can see from this quarter, we, being at the premium end of the market, we can control what we can control.

We can't control the vicissitudes of the market.

And so I feel really good about where Wynn Palace and Wynn Macau are positioned in the market, but we are still waiting to see, I think, like the rest of the world, what the market and how the growth will play out globally.

Great.

And then, Craig, maybe this one's best for you if I could follow up.

Obviously, you talked a little bit about the buyback and clearly seeing equity levels as being attractive.

Could you talk a little bit about kind of the guardrails going forward in terms of what you're able to do from a buyback perspective, given some of the ownership thresholds, et cetera, as well as kind of how you're thinking about capital returns in the future between dividends and buybacks?

Sure.

Thanks, Carlo.

We reached an important inflection point with the opening of Boston from a free cash flow perspective.

We're excited about that.

It gives us a lot of opportunity to think about how we might return capital to shareholders.

We've historically stated that we preferred dividends and the recurring valuation impact that we get from recurring dividends.

But as you see in the quarter, we're not afraid to return capital to shareholders in other ways.

It really is dependent -- stock price dependent.

We are -- we try to be opportunistic with respect to our buybacks.

Again, I think you saw that in the fourth quarter, and so we'll watch how the equity trades and how the equity is valued over the course of the coming few quarters.

Our next question comes from Joe Greff with JPMorgan.

Two questions that pertain to Macau.

First, with respect to, Matt, what you talked about at Wynn Macau and some of the redesign and reinvestment at that property and some of that stuff coming online in 4Q.

The disruption that you may be experiencing now, do you think that accelerates from here?

And then, maybe this is also -- Ian can chime in here, in terms of the business that might be not able to be contained at Wynn Macau for disruption?

Are you able to more easily ship that to Wynn Palace?

And then, I have a follow up.

So I'll start with that, Joe, and then, I'll turn it over to Ian.

I think that we -- in the fourth quarter, you could feel, at Wynn Macau, some of that disruption, and I think that, that -- those volume levels, again, all market dependent, are in this range and sort of what we're expecting until we can relaunch the property at the end of the year.

So I don't know, Ian, if you want to follow up on that?

As we look at the construction program, it's essentially over 12 months.

We've already gone through 3 months of it.

We do manage with a great team at Wynn Macau to contain the impact and any business damage, but there's clearly disruption, and it will increase over the next 6 months.

Areas will be inaccessible, there'll be a reduction in certain table play.

It does affect customer base.

So -- but we are hopeful that we can minimize the impact and run along from our fourth quarter and keep going until the fourth quarter of this year.

And Joe, I'm sure you'll -- as you see, the first 2 quarters of 2018 were quite strong for Wynn Macau, and a lot of that was bolstered by mid-tier junkets, which has really been the segment in Macau that has declined, by far, the most.

So.

Great.

And then, also, Matt, can you just talk about sort of the length of collections from junkets and direct players and I know your bad debt expense went up marginally, but can you just talk about what you're seeing on that front?

That's all for me.

Sure.

So we talk about this a lot to try to decide if there's a trend that we're noticing.

I was in Macau 2 weeks ago and met with the Head of Suncity, Alvin, in particular, to talk about what he's seeing, and collections are not an issue right now.

Liquidity doesn't appear to be an issue.

It's really more caution.

So this is not the scenario that we saw in 2014 and '15.

That's not the case at all.

We're not having any of our junket operators come to us and ask us for additional advances, which is -- that's usually a clear indication of a credit bubble.

So the caution is coming from the player, not from the junket?

Yes.

From both.

I think everyone's learned a valuable lesson.

In particular, the really large players that had a multibillion-dollar business.

And so, again, the mid-tier junkets are the ones that we've seen decline, but the 3 major junket operators still appear to be healthy.

There's also much tighter regulation off the junket market, and the DIC, and DICJ, and the government have done an excellent job in bringing very professional levels of management to the junkets.

So the exposure we had a number of years ago has dissipated.

Our next call comes from Felicia Hendrix with Barclays.

So, Ian, we'll keep you on the hot seat here, just on share in Macau.

I know you fluctuate between 15% and 17% and that's right where you are at the lower end.

Or maybe some of that was because of what's going on at Wynn Macau, but down sequentially and year-over-year.

So wondering if some of that is indeed, attributable to Wynn Macau.

Is that maybe a function of some of the new folks who have come in.

Maybe you could just talk about that and help us also understand kind of where it's coming from, again, Palace or The Peninsula, VIP, mass.

So if you could walk us through that, that would be great.

I think the share drop you're looking at is very Wynn Macau-focused and it's linked to what we have referred in the previous call about this arrival of 8 new junket rooms in the city and a shrinkage in mid-tier junkets generally, and that has affected Wynn Macau.

Wynn Palace continues to do very well on the share basis and Mass Market in both properties is doing very well.

It's really just junket VIP at Wynn Macau.

Great.

And then, have you seen any change across-the-board in perhaps that your properties in terms of commission levels?

No.

Okay.

And then, just switching gears to Las Vegas, Marilyn, it's nice to hear your voice again.

Welcome back.

Thank you.

I was wondering if you could just kind of address this -- a 2-parter.

One is your -- the RevPAR in the fourth quarter, which was up 13%, I think, is a lot higher than anyone expected.

And I know there was an easy comp and a bigger portion of that was really driven by occupancy, but I was just wondering if there was anything extraordinary in the quarter that might have been driving that result, because there seems to be a bit of a narrative out there that high-end operators like yourselves could be having difficulty raising rate from where they are now.

And then, I was also hoping you could address, perhaps, coming back and being new, looking at the property with fresh eyes, some of the ideas you might have about Wynn Las Vegas.

Absolutely.

I was delighted to see the fourth quarter RevPAR.

The convention business was great and came in superstrong.

And so that's really what you're seeing in the fourth quarter.

For the first quarter and the rest of our year here, it's solid, but we had an outstanding fourth quarter.

Coming back to the property, as you know, I was here, and then I had a prior -- competed against this property.

There is no better set of assets.

There is no stronger employee team, management team, in all of gaming.

And so I'm delighted to lead this team.

I think we have operating opportunities, really with all of our assets.

And specifically in casino, we can drive more from our casino block, get more off of our floor.

So that's where I'll be focused going forward.

Great.

And then, just to touch upon the question I had on rates, and the narrative out there that there might be a feeling of where the higher levels are.

Yes.

Felicia, it's Craig.

I'll take that.

We've heard that as well.

We continue to be comfortable overall with '19 in rate across the different categories.

There may be shifts between quarters.

As an example, we have a large group that's moving from Q1 to Q2, and so you could see RevPAR fluctuations between those 2 quarters.

But overall, we feel fine about '19.

The Q4 results, which as Marilyn mentioned, was underpinned by very strong group, was also positively impacted by high casino room nights, high ADR room nights in the casino, which as you know, are generally comp rooms.

So overall, we feel fine.

I wouldn't extrapolate the numbers that we turned in, in Q4, but we're sanguine.

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

Just 2 fairly short ones.

So the first one, just on Macau to follow-up.

So to build off the market share dynamic, Matt, you sort of outlined a pretty extensive program of what you're up to at Wynn Macau and The Peninsula.

Is that going to be enough, do you think, to regrow market share?

Or is this just what you need to do to sort of defend where you're at right now, just given, like you said, some of the shifts in the mid-tier junket, than what's happening in the market overall?

Yes.

Look, I think we're going to defend our position on The Peninsula as the premium property.

And knowing that the mid-tier junket business is not reliable, we're actually gravitating the business model away from that.

And two, over the long term, the premium mass model, which Wynn Macau does very well, and I think the -- our Encore casino is probably some of the highest grossing mass tables in all of Macau or Cotai.

And so what we want to do is replicate that experience, and not rely on mid-tier junket operators.

So really repositioning that property for the future.

And as you do that, would it be fair to think that, look, revenue market share might be one thing on the VIP side, but obviously, this could have an impact or a material impact on EBITDA and mix, as it relates to profitability?

Is that part of the trade here?

Well, clearly, premium mass business is more profitable than mid-tier junket business.

So we're not just focused -- we don't sit around and focus on monthly gaming market share, given what happens between VIP slots and mass.

We're focused on where do we position ourselves in the Greater Bay region, an area with 60 million people, a GDP of over $3 trillion, a new bridge that's connected Macau to one of the busiest and nicest airports in the world, how do we position ourselves for the future?

And how we do that as we focus on the premium customer that's making the decisions about where they want to go and where they want to stay?

And that's what we're doing at Wynn Macau.

Great.

Got it.

And then, last question would just be on Boston.

I think everything there, whether it's budget or time line for opening, all seems to remain in the commentary very, I think, steady as she goes.

Just from a high level, and I appreciate there are some things that aren't wrapped there as it relates to the final procedures, but is there anything that can really derail this from an opening standpoint?

Or is this -- as far as you're concerned, we get into hiring phases and training, everything is sort of kind of working towards the ultimate goal here, and it's kind of hard to change that date.

Well, we are clearly internally working towards opening June 23.

We did, I'm sure you saw the press, settled here in the State of Nevada on the regulatory issues.

Everything, except the fine.

There's no limit on our licenses.

There are no current employees under review.

And we're really looking forward to working with the Massachusetts regulators and the gaming commission to get through the process there.

I want to commend the regulators for the extensive and thorough work that they've done in Massachusetts.

They've taken this extremely seriously and I think that they've done a very good job, and we're now just looking forward to a hearing being set and for us to present our case.

Operator, do we have any more questions?

Yes.

This question comes from Thomas Allen with Morgan Stanley.

A few questions on Macau.

First, just on the bridge and the smoking ban.

How do you think those are affecting the market and your shares specifically?

Go ahead Ian.

Thomas, this is Ian.

On the bridge, it's only been open a few months, but there's already a distinct benefit for premium mass and VIP players.

I'll just give you my own personal example.

I was flying out to Vegas yesterday.

I took a car from Wynn Palace and I was checking in with Cathay Pacific in an hour and 2 minutes from leaving Wynn Palace.

That's remarkable.

It's a huge boon for people that want to arrive in Hong Kong Airport.

Hong Kong Airport has 3.5x the number of daily flights from the PRC than Macau Airport does.

So it opens that up for us, and also just international travel in general.

Long term, it's a significant artery linked to what Matt was discussing about the Greater Bay area.

So we feel it's a huge relevant piece of infrastructure that's going to benefit the city over the coming years.

On the smoking ban, it's still early days, but we're delighted because it levels the playing field.

We've been at a disadvantage, particularly in Cotai, with these grandfathered in, mass-area tables that had smoking allowed.

Now everybody is operating from the same template, and we believe it's a big advantage for us in Cotai in particular.

Too early to really judge if it's affected the speed of play, et cetera, but right now, we're happy to have the ban in place and everybody operating with the same rules.

Very helpful.

And then, just one follow-up, Ian.

Both [Praveen] and I noticed how your slot revenue was really strong at both properties this past quarter, and knowing it's not a huge part of your overall revenue, it just stood out to us.

Anything driving that?

So our slot business, again, being at the premium end of the market, is very swayed by big players and the movement of big players is unpredictable, just as Wynn Palace generated 50% more in revenue in December.

A lot of that was due to the arrival of some big players that weren't expected, similarly in slots it gets affected like that.

So it's really linked to more volume.

Your next question comes from Harry Curtis with Instinet.

So either Matt or Craig, versus the third quarter, the thoughts that you gave on forward EBITDA per day.

What are you thinking today?

Is there any change to that?

Do you modify it?

What...

Well, I think we don't want to be predicting what we're going to be doing in the first quarter.

And in particular, because in Macau, as I said, it's inherently volatile and there are peaks and valleys.

And so Chinese New Year is coming up and that, I think, is going to be the real test for the first quarter.

As you can imagine, you have the lulls in January before Chinese New Year, then we -- I think Chinese New Year is going to be quite strong, but we really need to wait and gauge on what does it feel like right before, what does it feel like after, to get a sense for it.

Ian, do you have any other thoughts on that?

No.

That's it.

Then, following up on a comment you made about it being a growth kind of company, which is accurate through the opening of Boston.

But once Boston is open, the growth pipeline runs out, and so give us some longer term thoughts on the strategic direction.

Sure.

I actually completely disagree that the growth pipeline runs out.

We have $0.5 billion of capital that will be deployed in Las Vegas and opened in 2020, and that will have real impact on this property and the operating leverage of this property.

In Wynn Macau, that is another relaunch of a new property, and that's about 2020.

And we're designing what I think will be a real game changer for Macau with the Crystal Pavilion and with the new hotel rooms at Wynn Palace.

That will be a large project, and we think that it is going to solidify Wynn Palace as the place to go in the Greater Bay region.

So if you look at the way that we're stair-stepping these things, sure, we'll be opening a $2.6 billion property, wrapping in June, wrapping up a $500 million expansion in Las Vegas in 2020, wrapping up a couple of hundred million dollars expansion in Wynn Macau at the end of this year, but we'll be rolling right into what we're doing at Wynn Palace.

We are also very active in new markets.

While you don't count the chickens before they hatch, I think we're well-positioned in Japan.

That's -- we're working on that over the next -- right now.

We have our designers here.

Ian's here with me.

We're focused on putting forward what we think will be, without a doubt, the most innovative and creative project and presentation in Japan.

And I think we're well positioned there.

That's further down the road, but we are going to continue to do those things and do them at the highest level.

Fair enough.

I guess what I was attempting to get to was that after you open -- after you pay your final bills in Boston, you become a -- you should become a significant -- I mean, a really significant free cash flow generator.

And you've talked about dividends and share repurchase, but it's the amount of free cash flow that I think investors need to focus on.

Would you agree that even with these other projects, the free cash flow generation in 2021 is multiples, multiples higher than you've seen in the past?

Well, you're exactly right.

Once the bills are paid in Boston, the free cash flow generation for this company goes up significantly.

Because these other large-scale projects I'm talking about definitely take a couple of years before they -- the spend gets up and running or even longer.

So you're exactly right.

In 2021, and into -- then into '22, I think the free cash flow profile changes quite significantly there.

Craig, do you have any?

No.

I think that's right.

And as we talked about, Harry, we will look at all routes to make sure that we have portioned the appropriate amount of that free cash flow to shareholders.

Okay.

And then, just real quick, I don't know if it's an observation or a question, but Phil Satre having joined the board is a significant positive, given his years in the industry and the respect that he's had.

What is his role going to be?

Will you trot him out on these calls?

Because he really has -- he could be adding quite a bit.

I talk to Phil, probably, 3 or 4 times a week, he is a great resource.

I have a really good relationship with him.

I don't think he is interested in getting back on the earnings conference calls of Wall Street.

He's running boards.

He's the Chairman of the Nordstrom board before stepping down.

He's been on a number of boards.

So he's really, as the Chairman of our board, focused on being a board member and not an [involved].

Our next question comes from Stephen Grambling with Goldman Sachs.

Just a couple of quick follow-ups.

First, on Las Vegas.

I know you don't give explicit guidance, but as we look at 2019, can you just give us a sense for some of the puts and takes to think about for the market.

Are you seeing any changes in trends among the international versus domestic leisure customer base or even the convention customer amidst greater market volatility?

It's Craig.

So yes, great question.

So if you look at 2019, and I think we were pretty explicit with some of the sell-side analysts subsequent to the Q3 call to try to help frame up Las Vegas.

But just to reiterate some of that.

If you look at our first quarter of '18, I think it was a record first quarter for the property ever.

So...

It was.

Yes.

We're going to have a tough comp, frankly, in Q1 of '19.

You probably should look back to Q1 of '17 to get a better sense of where the property might perform, and recognize that we're in a slightly different cost environment now due to some Department of Labor regulations that we talked about on a prior call.

Beyond that, we're really looking at overall baccarat volumes, which as we talked about on the Q3 call, tend to be very global.

And so much of the circumspection that we take towards the overall Chinese macroeconomy extends to Las Vegas as well.

And so we really need to wait to see how Chinese New Year plays out to determine what we think about bacc for the year as well.

Matt, do you have any other...

Yes.

Sure.

I think, as I said in my opening remarks, Las Vegas is a marketer's market.

I think we will be focused on how are we going to increase our share in casino revenue and how we're going to drive our rate.

We have structural -- new construction programs that are coming in to help us drive rate.

That will start in 2020, but we're focused right now, every day on how are we're going to gain share on the casino side in particular, the domestic side, and grow our baccarat business, because it's worth looking at our global profile.

We will now have 3 regions that our high-end customers will want to visit.

They will want to go to Boston.

There are lots of direct flights from Asia straight to Boston.

They will want to come to Las Vegas.

And so we're all working on how are we going to create the Wynn experience globally, so that we can continue to take share from our competitors.

That's helpful.

Then, maybe, turning to Macau real quick.

There's been a lot of questions about the impact of the renovations.

Would it be possible to just give us a sense for how many, maybe, nights were out of service as we think about those coming back maybe online even before thinking about incremental spend from customers?

So this is Ian.

On 1,004 keys, we'll, at our peak have 100 rooms in Encore out of order, and that will transpire over a period of 4 to 5 months.

Our next call comes from Anil Daswani.

Ian, another one for you.

Could you please give us an idea of what the comp ratios look like at both Wynn Macau as well as Wynn Palace?

And how close are we to getting to your targets now on Wynn Palace and the longer term?

So downtown Macau has been pretty consistent, about 95% of the rooms go to active casino customers.

At Wynn Palace, we've been pulling it up from 47% 18 months ago, up to 81% for the fourth quarter.

I mentioned on a previous call, we could always go all the way to 100%, and that would be ideal, but we're doing 2 things.

We're working at driving the percentage up, but more importantly, behind the scenes, we're looking at providing a better quality of customer.

And we're doing that by booking customers in advance.

Macau is a hard market for people walking in on the day and taking rooms, and people being comped on the floor.

We'd like to book more of that in advance.

So the ADT has come up as well.

So we're seeing the benefit of that.

You can see it in the Palace numbers.

And as a bit of a follow-up, I see you're renovating and trying to create a whole new premium mass experience on The Peninsula.

Do you anticipate that you could take market share from some of your smoking-friendly competitors in that neighborhood.

Is that what this is all targeted by?

So it's a 2020 beyond story.

This year is the year of renovation.

What I think is underlooked is the Wynn Club side of the Wynn Tower at Wynn Macau, actually contains all of our suites.

So geographically, we're creating a premium mass area directly under those suites with new F&B additions, 2 new entry points from the boardwalk walkway between Lisboa and MGM.

So we see that firing up that side of the property.

So we definitely feel we will take a much higher percentage of premium mass business downtown as markets recover.

And this is a long-term fund for the future.

So Cotai continues to take share from The Peninsula, but The Peninsula is still an enormous market.

And what we're going to do is we're going to continue to focus to take share on The Peninsula.

You're exactly right.

Some of our competitors had some premium mass smoking rooms that are now on a level playing field.

We are as focused on The Peninsula as we are at Wynn Palace, because it is a very large market and we think that we can continue to get ahead of our competitors.

And our last question comes from Robin Farley.

Obviously, a lot of the big issues talked about already.

I wonder if you could update -- on the last call, you talked about timing for a new Las Vegas resort that maybe you'd be under construction by next year.

So I just wonder if you can update us on kind of budget and timing of that.

Yes -- no, I can't.

And so what I said on the last call was that these projects typically take about 5 years.

It's a couple of years of design and development, and maybe I should have said something different.

It's a couple of years of design.

So I think we are a couple of years away from actually being able to answer what that project and budget will look like.

We are thinking about what could come next and what could be different because the more rooms, more casino, more slots, and more retail, is not going to cut it.

So that is at the very early stages, and we're really lucky to have 38 acres on The Strip.

But it doesn't really warrant a conversation at this point, Robin.

It's not something to put into your model.

So there's definitely no groundbreaking for 2020 there?

Okay.

That's helpful.

And then, just in the past times, premium mass levels have been sometimes tied to what's going on with the VIP business, just because it may be groups traveling with VIP players.

How are you seeing that now?

You mentioned that December, you had very strong premium mass business driven by a small number of players.

But in general, were you seeing with premium mass trends relative to the kind of flattish VIP drop?

So traditionally, you're correct.

The premium mass segment was fed quite strongly by junket players and VIP players.

Over the last 24 months, premium mass has become much stronger by the conversion of mid-tier mass players into premium mass players.

So it's less of an issue.

You can particularly see that with the junket world shrinking, more competition, and premium mass continues to grow.

Operator, was that the last question?

That was the last question.

Okay.

Thank you, everyone, for joining today.

We look forward to speaking again soon.

Thank you.

That concludes today's conference.

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