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Published Thursday, July 24, 2008 | 6:58 p.m.
Updated Tuesday, Oct. 28, 2008 | 10:15 a.m.
What do you do when your profit is down in the double digits and near-term profits are uncertain?
If you're Steve Wynn, you tell investors to suck it up or look elsewhere to buy stock. And you say it in the kind of tone teachers use to reprimand spoiled children.
Other CEOs – likely facing similar double-digit declines in their profit columns – are no doubt working on optimistic-sounding speeches for their investors. But Wynn, at least with regard to the U.S. economy, chose to play it straight, saying he was concerned about the reduction in flights to Vegas and that there was little he could do to shore up profits during the slowdown.
"If there's less traffic, you make less money. Live with it," Wynn said.
There aren't any big secrets or innovative ways to save money in the gaming business, Wynn said. They're simple, like keeping rooms less clean, offering flowers and linens that aren't as fresh, replacing carpets less often and cutting staff. But doing such things "is a mistake" and breaks an unspoken contract with staff and customers who expect better, he said. By this point in the discussion, it was clear that he was referring to competitors that may already have crossed that line.
Overall, profit tripled at Wynn Resorts and revenue rose 20 percent in the second quarter versus a year ago, partly driven by a 50 percent increase in revenue at the company's resort in Macau, which is considered the most high-end casino in that market and is raking in big profits in spite of keen competition for Chinese customers.
And yet, the earnings report from Wynn Resorts, the first of the major Las Vegas operators to report second quarter earnings, wasn't welcome on Wall Street because it revealed just how bad things are at home. Second quarter operating profit at the company's Wynn Las Vegas property was down 29 percent compared with a year ago while Wynn Macau was up 68 percent over the same period. Budgets for both Encore resorts under construction in Las Vegas and Macau rose slightly, to $2.3 billion and $700 million, respectively.
Wynn lashed out at the media for its exaggerated coverage of the junket rep wars in Macau, saying his company didn't participate in competitors' money-losing battle to attract junket reps, who bring high-rollers to casinos in exchange for a cut of casino winnings.
"The status of journalism associated with gaming is deplorable," he said.
Wynn also belittled competitors who "chased each other in a circle", outbidding each other with ever-higher junket rep payments, while Wynn Resorts stuck to paying reps a rate close to the rate cap of 40 percent of winnings that Macau's government is expected to impose in order to settle the escalating rate war.
"It looked like a dumb thing to do, to blow your margin," he said. "Every Second-rate management team has tried to buy business."
If you make less money you employee fewer people and you pay less in taxes. It's Nevada that is getting the shaft from these energy prices. Increased costs to get here and no money for visitors to spend that put it in no payout slots at home called gas pumps. Call or email Harry Reid and tell him this isn't San Fransisco, quit doing what Nancy Pelosi tells you and drill for oil in America.
email link
http://reid.senate.gov/contact/index.cfm...
Las Vegas
Lloyd D. George Building
333 Las Vegas Boulevard South, Suite 8016
Las Vegas, NV 89101
Phone: 702-388-5020 / Fax: 702-388-5030
I cannot believe that Vegas Casino's have turned their back on the middle-aged/ middle-class gamblers that made Vegas what it is today. This is one of the main reasons Vegas's profits are slowing.
I have 3 adult kids in their 20's and have gone out to Vegas with us at least twice each. They all come back saying it was OK, but way too expensive and doubt they will go back. Eating at the Casino's has gotten outrageous and out of whack with what the average person can afford. Why do they continue to "Up-Scale" their restaurants and hotels to the point of only being able to attract customers that make over $200,000 a year?
I am so tired of seeing on the Travel Channel about Vegas and "The Whales", just how many of those do they think are out there? Vegas was for the middle-class masses, but now all's they want is the young crowd that can barely afford the plane ticket and are living at home in record numbers until they are in their middle 20's because they cannot afford to move out.
You are absolutely correct and Vegas should pay attention. Get back to the basics of Casino adult gambling fun and try promotions that will bring the middle-class/middle-aged customer back and you will see Vegas thrive again.
These are the types of customers that come 2 and 3 times a year and actually "Gamble". The Strip Casino's have all but lost this business, these customers in record numbers are going downtown and to the local Casino's to gamble. I have been coming for over 15 years and have changed to this type of gambler myself.
I use to love Steve Wynn's properties "The Gold Nugget" and "The Mirage", but when we visited his new "Wynn", well"it's obvious he has gotten so rich off of the "Middle-Class" that he has also left us behind. His new Casino was cold and so up-scale that I will never go back. This is a lesson that all the Strip Casino's should realize. The middle-class are the ones who made Vegas, if you turn your back on them, they will turn their back on YOU!