The Wynn Macau IPO got off to an auspicious trading debut in Hong Kong, with its stock closing up 7% above its IPO price of HK$10.08. Analysts say it reflects rising optimism in Macau’s gambling prospects. That same optimism has been reflected in Wynn Resorts shares, which have surged more than 350% since the lows in March.
Steve Wynn, Chairman and CEO of Wynn Resorts joined Maria Bartiromo in a First on CNBC interview today. Here’s what he had to say.
Bartiromo: The stock obviously did very well in its debut. What do you think is behind this? Here we are looking at a really troubled economy across the board. You have been certainly fortunate enough to outpace many of your competitors in this space. How would you characterize business today?
Wynn: Okay. Here's what really was behind it. There are 31 casinos in Macau. Of the 31, if you take the profits or cash flow after interest and depreciation, Wynn's resorts single hotel - Wynn Macau exceeded the total of the other 30.
Bartiromo: Why is that?
Wynn: We've got a great staff. We've got a wonderful group of employees. We've got a great president there. A wonderful chief operating officer and they're very conscious about a relationship with our employees. And at the end of the day, we're in a hospitality business. And it's all about the experience that people have in the building. Do they feel good? And people make other people happy, and make other people feel good. You know, the gambling, the baccarat, slot machines, they're all the same everywhere in the world. A gaming table is a gaming table. There isn't a speck differentiation one from the other. But what we're talking about is the human experience, the emotion of attending one of these places. And that has to do with human resource engineering and our ability to make people feel welcome. That's all about the folks that work in the building.
Bartiromo: But you need the people there, Macau has really been the promise for so many people, around certainly the gaming industry overall as far as Macau being the promise of tremendous growth. And yet china, tightening restrictions on citizens traveling to Macau is one of the reasons the gaming industry was hit hard in the last few years. Tell me about the restrictions having been relaxed and the broader sort of landscape that you face in Macau.
Wynn: Maria, it's really a good point. When the central government tightened the immigration rules, they wanted to cool off Macau, and they were dead right. There was a time there when speculation was overrunning that community. My employees were having their rents doubled and tripled on them. In spite of the good jobs, couldn't afford to live. The standard of living wasn't going up. I had to give a cost of living increase to the line employees a year and a half ago, just to keep those folks from suffering. The government was quite right in trying to cool things off in Macau. One thing about the Chinese government, I think they get it right. I've been there seven years. And I've always been impressed with the thoughtfulness and the steady concentration that comes through in the policies. When it came time to relax them, they did it exactly the right time. So they did the right thing. And there was solid reason for them to do it.
Bartiromo: What about getting there? I remember when a discount airline first went into Las Vegas, it changed the business overnight. Isn't that right? Would things change materially if you were to see a discount airline, or another airline change routes to make it easier to get to Macau?
Wynn: Look, the big thing about Macau are the people coming from South China, from the Guangdong province. An airline coming to town only can help. But there isn't a shortage of airline travel from Japan and Taiwan. It's only an hour flight from Taipei. There are a number of flights each day. Discount airlines would help, there's no question. But the future of Macau is about the relationship of the special administrative region, to the central government, to Guangdong province and to the other coastal provinces of China.
Bartiromo: Is this still your biggest opportunity, Macau?
Wynn: We're more of a Chinese company than an American company at the moment
Bartiromo: Do you worry about Singapore? Singapore also on your heels now, with the first casino resort in Marina Bay coming online in 2010.
Wynn: No, I don't think it's going to have any effect on the Macau market at all. It will be a nice market but I don't think its impact on Macau will be noticeable at all. Remember, if the central government of China decided to let one other province besides Guangdong province have one visa per month as they've just done, they could flood Macau with human beings so you couldn't walk in the streets. You mustn't be confused about that.
Bartiromo: Let's take you back to Las Vegas, Mr. Wynn. Tell us how things are going there. It seems Vegas got hit harder than other sectors in this financial upset over the last two years. What are you seeing today?
Wynn: well, I'm seeing the midweek convention business and group businesses gone away. It has not been helped by the administration and the policies in Washington. And we're hopeful that they will improve and that the government will be a little bit more self-conscious about the hundreds of thousands of employees and the hospitality and other related service industries that have been really hit by the recession. Infrastructure improvements help the construction industry on the civil construction industry. But they don't help the kind of people that populate the hospitality and service industry in this country.
Bartiromo: All of a sudden conventions and the like became a bad word.
Wynn: Well, to give you an idea, I had an insurance company whose name I won't mention that has nothing to do with the government, and a particularly powerful and healthy corporation cancel $5.5 million worth of business because the Chairman was afraid that he might be the target of Washington's publicity in a negative way.
Bartiromo: It's about perception. Do you regret opening Encore when you did in December? Right in the middle of all of this.
Wynn: I don't know if I regret things, I wish I had a crystal ball, Maria, and that I could see into the future with perfect accuracy. I would be a much smarter guy than I am now. _____________________________
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