ynn Macau Vice Chairman Linda Chen, who helped Wynn also open the Bellagio and MGM Grand, said the company plans to invest 20 billion yuan ($2.9 billion) in an ambitious complex that’s designed to impress tourists and broaden Wynn’s appeal to non-gambling visitors.
Called Crystal Pavilion, it’s designed in a shape of Macau’s symbolic flower lotus and includes two hotel towers, interactive sculptures, a planned theater, art gallery, food pavilion and gardens and was called “a bit aggressive” by JP Morgan when first unveiled to investors in July with a $2 billion price tag for the first phase. Construction is expected to start in 2021, with an opening set for 2024.
“Destination is the most important engine,” Chen said in an interview with Bloomberg at the Wynn Palace in Macau earlier this month. “People have to choose Macau as the destination before any industry can thrive. The non-gaming drives the visitation. Once they choose that destination, then everything else comes.”
Chen, who has headed the Macau operations for more than a decade, needs to shift the company toward tapping Macau’s potential as a tourist mecca. Of all the casino operators in the China-controlled territory, Wynn is the most reliant on the declining VIP gambling business, which slid 23% in the third quarter from the previous year.
A rise in recreational gamblers and day-trippers, aided by the new mega-bridge linking Zhuahai to Macau and Hong Kong, has been partially making up for the slump in high rollers. But Wynn is “most exposed” to the VIP segment at a time when Chinese tycoons with less confidence are opting to “save up for a rainy day,” said Robin Yuen, an analyst at UOB Kay Hian. The Hong Kong protests may also have a negative effect, as many tour groups combine Macau tours with Hong Kong, Yuen said.
Chen said she learned a lot from the company’s founder Steve Wynn’s innovation and attention to detail in design. Wynn Macau continues to invest in innovation, she said, citing how the group is introducing an AI waste-tracking system for cutting food waste.
Macau’s location in China’s Greater Bay Area, its luxury offerings, Chinese temples and heritage as a Portuguese colony make it a unique cultural hybrid. It now needs to figure out how to earn more from the swarm of tourists.
Wynn Macau said third quarter revenue from VIP gaming fell 32% from a year before. The stock has advanced just 2.7% this year, lagging the 11.6% rise in the Bloomberg Intelligence index of Macau casino operators, as investors worry about its reliance on the declining VIP business.
Licenses for Macau casinos are also expected to come up for renewal over the next few years, with Wynn’s due in 2022. While the government is unlikely to disturb business of the territory’s biggest employers, license renewals are an incentive for casino operators to display their commitment to Macau through projects such as the Crystal Pavilion despite headwinds in the VIP segment or geopolitical tensions.
“Of course, Macau is also being affected by the U.S.-China trade issue,” Chen said. “However, those are temporary, short-term concerns. Our goals are long term.”