Wynn Resorts Revenue Take Hit Due To Macau Collapse
Wynn Resorts makes a significant amount of its revenue from its operations in Macau, the biggest gambling hub in the world. Wynn Resorts and other leading gambling operators have all experienced a significant decline in profits due to the anti-corruption crackdown in Macau which started early 2014 and is expected to continue throughout 2015.
Wynn Resorts reported that after the second quarter in 2015, gambling revenue from its Macau operations dropped significantly to $617 million which is a 35.8% drop when compared to the same period in 2014. One of the main reasons why Macau’s casino industry has slumped is because VIP gamblers from Mainland China who contribute to more than 50% of Macau’s total casino revenue have decided to stop visiting Macau and take their business elsewhere due to the anti-corruption crackdown.
The lack of VIP gamblers in Macau clearly reflected in Wynn Resort’s figures as Wynn reported that chip wagers from VIP table games dropped by 41.1% and average daily rates fell by 3.9% to $321. Since these VIP gamblers decided to move away from Macau, Wynn Resorts room occupancy rate also dropped resulting in 5.8% drop for revenue per available room.
Wynn Resorts is also in the process of constructing a mega-casino resort in Everett, Massachusetts that is expected to cost over $1 billion and also a $4 billion hotel in Macau’s Cotai strip, even though the Macau market continues to be in a slump.
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In a statement, Chief Executive Stephen Alan Wynn
We build and develop projects that usually room for room, inch for inch, pound for pound outperform the neighbors. We’re about to enter the starting gate in Cotai in a few months and then we’re going to have a real interesting turn around the track.
Gamal Aziz, the president of Wynn Macau continues to remain hopeful and states that the recent visa relaxation made by the Macau government to Mainland Chinese is an indication that the government realizes that it needs to take steps to once again encourage the casino industry and stop it from further declining.
Billionaire Steve Wynn addressed some of the challenges that his company is facing and stated that while there are challenges in Macau and even in Everett, Massachusetts he will continue to be the eternal optimist and wait for things to turn around and get better. Wynn Resorts is also looking at Japan as a future market as the country debates on whether it should legalize casino gambling.
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