Wynn Resorts, Limited (WYNN) Q2 2008 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the Wynn Resorts, Limited second quarter conference call. Joining the call on behalf of the company today are Steve Wynn, Marc Schorr, John Strzemp, Matt Maddox, Andrew Pascal, President of Wynn Las Vegas; David Sisk, CFO of Wynn Las Vegas; and on the phone, Scott Peterson, CFO of Wynn Macau. (Operator Instructions) Thank you. Now, I would like to turn the call over to Mr. Maddox. Please go ahead, sir.

Thanks, Michael. Given that we released our preliminary results about two weeks ago, we are not going to open this call with prepared comments. We're just going to turn it straight over to question and answers. But before we do that, I need to remind everybody that we will be making forward-looking statements under the Safe Harbor Federal Securities Laws. And because the management team at Wynn Resorts cannot predict the future, these may or may not happen. So, with that, I'd like to go ahead and open it up for questions.

(Operator Instructions) Our first question comes from Celeste Brown with Morgan Stanley.

Hi, gentlemen. Good evening.

Hi.

I have a question for Matt and a question for Steve. Matt, can you share with us how much stock you've bought back, I guess, over the past quarter?

Yes, sure. We repurchased, over the last 60 days, about $695 million worth of stock. We repurchased 4.2 million shares at $85 in June and an additional 4.2 million shares at $79 in July. So the total is 8.4 million shares. And then if you add that to the 4.4 million shares that we repurchased in the previous quarters, we're at 12.8 million shares at an average price of around $87 or close to $1.2 billion.

Okay. And then, Steve --.

That results in outstanding shares of about 103 million.

That's correct.

Steve --.

So, it's about 13 and 103 left.

Okay. And, Steve, everyone is doubting Vegas and you have this every couple of years where they say Vegas is dead. I think you've said in the past that innovation is a key to Vegas continuing to draw on visitors. Can you talk about what you are doing that's going to continue to draw in new people and drive growth in the market?

Well, we actually enjoy the company of all those people who say Vegas is dead, because it drives the stock down. You get to buy some back at prices that we think are terrific. And when it comes to predicting Las Vegas and describing why it has survived in spite of all of the other stuff, if you have any sense of history whatsoever about this city, then you recognize its central personality. Las Vegas has been the place where the party has been going on for 50 or 60 years. And to the extent that this city has made a promise that it was an exciting place and the party was going 24/7, it has kept that promise decade in and decade out. The promise has taken different forms as a result of the influence of different men. Some of them like Kirk and I are still around and there is always new ones coming up that are doing fabulous jobs like [Malouf's] and the [Fatita's] and the Boyd's. We've been here a long time and we've adjusted to changing times. And we offer products and hotels that have been very successful or semi-successful or mundane, as the case may be, depending upon imagination and management's ability to understand the customer in a very emotional sense of the word. People come to Las Vegas to live large, have experiences they can't get at home. So, when you just throw footage at them or just throw stuff at them, they react in an unprecedented way. But when you spark it up with creativity or originality, might even show people that you really understand who they are and what they want, they pony up the money, they pay the price and they come back again and again to Las Vegas. Otherwise, how could you have ever explained the fact that all the big Chinese players flew right over Macau to come to Las Vegas on Chinese New Year. I mean, we've had evidence. We've had historical case studies decade in and decade out about this city. And for some reason, it has not been able to sink in to the journalists that write about this place. I guess I'm happy, because it gives us the opportunity. But frankly speaking, the historical sense of Las Vegas has been sort of slow to sink in. That's it.

And, Steve, what do you notice being different about the environment we're in today versus prior environments? I think you said in an interview that you've seen two of the downturns prior to this one. Is there anything different in your eyes?

No, no. You distinguish the events that produced cyclical economic activity, and they're always sort of unique to the moment. For the large part, (inaudible) oil has hit us in the butt and caused inflation under dislocation economically. And of course, when it does, it affects energy. Las Vegas is a reflection of that, just like the rest of the country. But there is not a heck of a lot of difference between what's going on now in terms of recessive and economic profile and other recessions really, not in my mind.

Thank you.

Your next question comes from Joe Greff with JPMorgan.

Good afternoon, everyone. Steve, I was hoping, can you give us an update on your Cotai opportunity, both maybe in terms of timing and positioning? And as you continue to observe what's going on right now on Cotai with some of your competitors, how does that influence or change your thinking on that front?

We look at the competitors and really talk here in markets that are overdeveloping. And whether the competitors are struggling --.

You need to speak up a little bit.

Am I being heard?

I can't really hear you all that well, but it could be my phone.

I'm sorry. Let me move. Can you hear me now?

That's great. Thanks, Steve.

Okay. We thrive in markets that are overdeveloped. And overdeveloped markets always have people that are struggling or underperforming. We don't really care, because we're not the Chamber of Commerce. But the more people there are in the market, the better it is for us, because we take the top end of that business. So we like it when it's overdeveloped, and we don't particularly care whether our neighbors, I would prefer that our neighbors be successful, but their success is not entirely relevant to our own performance. And I think you've seen that in the past. So, does that answer your question?

Partially. I was hoping maybe in terms of timing for when you think you would break ground or when you would open. And then further to that question is, is there any kind of commitment that you've made to Macau Government or to the Central Government in China that gives you latitude if you would like to alter that, whatever that timing might be?

Well, I don't have an opening and a groundbreaking date. I'm in design development with my colleagues now on Cotai. And we intend and our project is taking shape to be quite different from anything that we've ever done before or that exists. And the idea that we're exploring in Cotai is the one we're also exploring for the golf course, here in Las Vegas. So, to the extent that we are capable of ramping up dimensionally, with an idea, and in this company, first an idea, then a place or a thing. We are developing the notion for both places, but undoubtedly, Cotai will be first. I don't have those dates for you, Joe, today. I'm sorry. And the way it works in China is that you submit your plans, you pay your premium and you have a reasonable amount of time to begin the work. If you want to amend or change the product, you file an amendment with them and that may or may not cause a change depending on the footage or the components in the premium. But it's very much like the United States, though. You go through design development. And once you have the land, you do your project. But the difference is there you have to do the project. You can't quit without forfeiting the land. We don't have any intention of being in such a predicament. But as far as the freedom of design, it's the same as here. You're limited by your imagination.

Great. And then maybe, Steve, you can give us your big picture view on maybe what the government is trying to do with restricting travel and visas. And what do you think is going on there and how do you see that potentially impacting your business there in the Macau market?

Well, China is managed by very intelligent people. They handle big problems efficiently, probably more efficiently than us in the United States, in my view. And inflation is a problem in China. And I think that the government is trying to keep the jets cooled. They're trying to make sure that that place doesn't get too overheated. I can only guess, because, of course, I'm not privy to the conversations of the Standing Committee or the Central Committee or the Communist Party or the government itself. But I would assume that restrictions on visas are cooling effects and especially impacts the mass market which affects our competitors more than us really. It's conjecture as opposed to any insight that's significant, I'm sorry to say.

Okay. That's helpful. Thanks, Steve.

Your next question comes from Steve Kent with Goldman Sachs.

Hi. Maybe you could comment on some of the press reports about some corporate actions around your property in Macau. I mean there has been reports of spinning it off, selling a percentage of the property. I don't really understand the rationale to do that. But maybe you could explain that or give us some value creation from that. And then also, maybe you could talk just about how current trends are in Macau, whether visa restrictions or junket policy or anything like that is affecting current trends over the past few weeks, given the very active momentum in that market.

With regard to corporate finance activities, we are not in the market selling any part of the Chinese subsidiary. But like anything else in this company, all of us in management to perceive the opportunity to achieve greater value, we would unhesitatingly jump on it. Were we to perceive an under-evaluation, we would immediately jump on it, and we'll make those judgments in due course as time goes by and no other commitments are appropriate, except you can count on us to be able to add and to calculate things at least as well as the investment community does with regard to our own property.

Okay.

As far as the second part of your question, which was about the government's junket activity --.

Any changes at the margin over the past few weeks or even a month or two?

Well, there was an awful lot of publicity about a junket war. And as I remember, some of the sell-side analysts predicted doom and gloom. We had guys in Hong Kong and the press saying that all of our junket operators will leave us. The status of the journalism associated with gaming is deplorable. I mean we sit around here and just grimace at the ignorance which characterizes most of this writing. But it is this simple. Everything that's ever happened in China is a repeat of the same lesson that the government pays attention to the affairs that go on in its jurisdictions and they take an active role in expressing themselves when they think it's appropriate. An uncontrolled junket scenario would be bad for Macau, bad for the employees, bad for the community, and it would not be tolerated by the government, nor was it ever about to be tolerated by the government. So, it came as no surprise to us that they said to some of the other operators, "That's quite enough. Go back to 1.25." There are six enterprises that can operate gaming in Macau in the special administrative region. I think you know who they are. There are three primary concessionaires and three sub-concessionaires, a total of six. Five of the six chased each other in a circle raising junket fees and blew their margins and then complained about it. We did not. We experienced our greatest revenue periods in the history of the company at a lower rate of junket commissions than the other five. The government stepped in and said, "We really don't want to see this go any further. Go back to 1.25 or 40% of the win, which is roughly the same thing." And they're going to make a law out of it, as a matter of fact, with the [Lynch & Co]. So, you shouldn't be surprised that in the Peoples Republic of China and in the special administrative region of Macau or Hong Kong, for that matter, that the governmental authorities will lose control of the businesses that are there. I think that the chances of that happening are close to zero. And that's the way it's going to be in the future.

Okay. Thanks, Steve. Thanks, Matt.

Your next question comes from Rachael Rothman with Merrill Lynch.

Hi. Good afternoon. Steve, I was wondering if you could talk a little bit about the physical structure of your assets and maybe how you're positioning Encore in Macau and Encore in Vegas and going to differentiate them from your existing assets. And maybe --.

That's a good question.

I am sorry.

That's a very good question, Rachael. And I am glad you ask it, because it is appropriate to answer it, and I will try and do it in this way. Remember I said a moment ago that in this company first an idea, then a thing or a building or a restaurant or a program. And in the case of Wynn Las Vegas, we tried to preserve intimacy but still have choice, which goes along with success and which is a very integral part of any offering these days in a destination resort. Lots of restaurants, lots of stuff, lots of shopping, lots of this, lots of that. But the trouble is, the places get vast. They get oversized. I felt that way. To a certain extent, I felt Bellagio was getting a little bit for me before we sold it. The distances to walk were great. And I asked myself, could we build a place that preserved human scale and intimacy, and yet, at the same time, continued to offer choice to our guests. And I used New York City as a model. There was a great city with all the choice in the world, yet within neighborhoods like Tribeca or Soho, Broadway, Upper East Side, or Harlem, you could find intimacy. And that was the guiding principle or notion that -- sensibility that underpinned the arrangements of the parts of this hotel when we built it in 2000 to 2005. And, yet, of course, we decided to maintain the highest standard of service with our staff, quality of food. We matched the shops to the sensibility of the guests that we were expecting to stay here. We matched our restaurant offerings to the sensibilities of the guests that we were inviting, and with that, in that way, we were consistent and not schizophrenic in our presentation. So when it comes to building next door on the adjacent piece of property, it's very much like a museum or a collection. We refer to this as the Wynn Collection. And like a museum that has paintings, it has Picasso, it has Matisse, the two best 20th Century artists, pop art, Lichtenstein and Warhol. Neither Lichtenstein nor Warhol are the same as one to the other, but they're both good pop art. Picasso is not the same as Matisse, but they belong together in a collection. And so, when we did Encore, we said, "If New York and the sensibility of neighborhoods is the driving force of the integration of the parts to the whole, what would be the philosophical notion or sensibility of Encore?" And we based our answer to that question on things that had happened in this city recently. Since 2000, the rise of the nightclubs and the party scene that has now become a $600 million or $700 million business in Las Vegas and, incidentally, caused a lot of trouble with the second shows and the showrooms, the nightclubs, the desire for this generation and even my generation to be up late and listen to the music and raising hell, that has taken a turn. And so we looked to the south of France. We looked to the other great resort, imaginative places, and we said, "Think of [Sankol Sank], the Beach 55 at San Trope. The party starts in the afternoon, goes through lunch, dinner, and then continues at byblos in the nightclub." And in the case of Encore, we were thinking of that as an appropriate addition, an appropriate other offering to the people who would be on our property. And so, we opened the casino more. If Wynn and other casinos, for example, to use that as an exhibit, a casino Wynn is a pretty casino, but it's walls around a big room that contains activity. What we did in Macau, which was an experiment that worked out very well, and what we're doing again in Las Vegas, is we took the walls away and turned them to glass looking onto gardens and the party at the pool and the nightclubs and the cabanas and the restaurants that are outside. We took the walls away from the casino and then we made chambers within the casino that are small and more intimate spaces that would allow people to be in small spaces surrounded by big, beautiful spaces. Now, that's a complete reversal psychologically, to the environment of Wynn. And, yet, side-by-side, the places offer a wonderful choice emotionally to the people who visit. Therefore, Wynn and Encore are a collection of equals. Now, the casino is a little smaller, the rooms are a little bigger. They're all suites. That's okay too. That's another choice and choice is what we're all about. But one thing is for sure, if you're talking about this company, we stay at the top end and we intend to keep a grip on it. I hope that answers your question. That's the most technical explanation I can give you.

Great. Thank you so much. I appreciate it.

Your next question comes from Dan Geary with Wintergreen Advisors.

Hi, guys. I know you don't worry much about short-term economic issues or stock --?

Not at all.

Market fluctuations. Us either. And it seems like both your existing properties are doing really well and Encore is pretty much fully funded and going to raise the bar for Vegas and Macau again. But what does worry you as you look out a couple years in the future? What kind of nods at you and keeps you worried at night, either --.

Well --.

The company specific or just generally?

Not to be too frivolous about this, but I've always been a guy that thinks no one's going to show up, which is probably why we over-design these places. If I don't go wow, why would you go wow? If I'm not delighted with the place, I certainly wouldn't expect anyone else to be. And I only hope that we've used our capital responsibly. Our places tend to be expensive, not as expensive as some of the others that I'm hearing about these days. But we don't worry about how much a thing costs if it's the right thing, because we know that if we do it well enough our business will justify that investment. I wonder and I'm always second guessing myself, as are my colleagues, on did we do it well enough? Did we take enough time? Were we thoughtful enough? Were we sensitive enough to our guests? If the answer to that question is primarily yes, because I don't think anybody is ever perfectly successful. As human beings we're only partially successful in achieving our goals. But if we're substantially successful, I believe that the rest takes care of itself. And the end of the day, we're going through the hiring this week. We had 14,000 people in 30 hours apply for jobs here. Half of them were unemployed. And how many now, after --.

About 24,000.

24,000 now, this is our third day. And it's interesting to note that half of them are unemployed.

About 30%.

Now it's down to 30% are unemployed and 70% are from other places. If we could do a good job of screening those people, this is big stuff. This is one of the great creative moments. If we can do a really good job picking the new members of our family, if we can get happy souls that really like each other and like people, then I tell you, we will prevail in the future in any economic environment. So I worry about those rather simple short-term issues that are before us at the moment, and that is the staffing of Encore. Other than that, I'm not worried at all. Nothing else bothers me. We got money. We are funded. We got funded at very, very advantageous rates. And the company has never been positioned better than this. I'm not trying to sell this company to anybody. As I told you, I'm quite happy when the stock prevents a buying opportunity, speaking for myself. So I really don't care whether you guys are buying or not. But I do care that we're doing a good job and executing our responsibilities. And this period that we're in is really a key period. Andy and everybody are picking 5,300 people. 1,700 of them will replace the folks that we're transferring from Wynn to Encore. And then the other 3,600 or 3,700 people will be brand new at Encore itself. We're trying to carry that culture next door, and we've never had a better culture at any of my prior enterprises than we do this time. Our human resource efforts have matured and Wynn and the attitude of our staff is absolutely delicious. I've never been happier with the people that work for me, the dealers, the housekeeping, the food and beverage, the accounting folks, the public area porters in this hotel are dreamy. So that's what I'm worried about.

All right, thanks.

Your next question comes from Larry Klatzkin with Jefferies.

Hi, Steve. Couple questions. One, is it true that when the commission cap comes in effect that that really has a minimal effect on your property, that you're not really paying commissions much over 1.25 anyway?

We're paying -- we've never paid any more than that. Actually, less in most cases.

All right.

The commission cap affected the other five guys. We never went up, Larry, only the other five did.

All right, that --.

In the case of one or two of them, it was to teach a lesson to the other three or something, some foolishness like that. But we never joined that herd in that particular move. We thought it was self-defeating and rather foolish, to be honest with you. It looked like a dumb thing to do to blow your margin. What good is it to buy business? Listen, I've been at this for 40 years. And every second rate management team has tried to buy business. How many times, historically, do you have to see that it doesn't work before you finally get it through your head that you can't buy business and survive in the gaming industry? But I guess that when new people come that have no sense of history, they have to go through the learning curve all by themselves, and, God bless them, we'll stand around and wait for them to be finished.

All right. Second question, Steve, what keeps you up at night? What out there is concerning you in the market right now?

If Elaine kicks me. Nothing keeps me up at night. I'm having a really good time, actually. This is one of the sweetest times of my life, seven grandchildren and two healthy businesses, and construction in two cities with healthy, full financing. We don't need any more licenses. We don't need any more jurisdictions. We can be busy for the next 10 years growing with just the stuff that we own now. But more importantly, by taking this rather conservative attitude, we build better projects. Bigger is not better. Better is better. And as we build better projects, we cement and reinforce our reputation for being consistent and dependable. And when new jurisdictions come online, when and if they do, if the business opportunity is right, we will be given an opportunity to participate without exception. The issue is, do we protect our reputation and our brand or do we grow over aggressively and haphazardly? That's a danger to -- especially in periods when there's a lot of money available. It's so easy for people to go off half baked and half cocked, over pay for property, bite off more than they can chew. And I've always been worried about that, because I thought, well, if we could do a good job on the things we're doing, then people will trust us, not just our employees, but our customers will trust us and if there's new jurisdiction, let's just assume that it's an important jurisdiction, for example, let's take Japan or Taiwan or some important place like that, or a new State in America. You have to assume that there'll be people in that process who really know what they're talking about. And, naturally, they'll go looking for the best operator. And you'll be known by the work that you've done. We've got a concession in Macau because the people who were making those selections had stayed at the Mirage and Bellagio. That's how we got our concession. We didn't do any political maneuvering. We didn't know anybody. We didn't have any connections. We just had nice hotels and people trusted that. That's our story and we're sticking to it.

Okay. That makes good sense. As far as Japan goes, do you see any -- is that still probably two years away or is that --?

I don't have a clue as to where Japan really is in what you'd call an arc to legalization if it's in one at all. These kinds of subjects, naturally, get lots of public conversation. At any given moment in any jurisdiction on Earth, there's a politician or a business group that is trying to promote the expansion of gaming as a source of employment or tax revenues or touristic development. It's a natural kind of thing, so there's always stories in some newspaper and, of course, half the gaming companies jump on their airplanes and run off hysterically to make sure that nobody gets ahead of them in the queue and basically it's not what happens in the end of the day. You look back at Great Britain. They issued the Budd Report and then a White Paper. And when the British government issues a White Paper that means they're really serious. And everybody said, they're going to change England and make it like Nevada. They're going to really open it up. And we said to ourselves here, that is such an inconsistent likelihood. It is so -- such a turnaround for the British personality. We don't, based upon history, and for some reason studying history and gaming executive thinking don't go together. But if you studied the history of Great Britain, you would have known that that was the opposite of their inclination. And so we didn't go to England and we didn't buy any property and we didn't do anything. And, of course, they didn't change anything in England. I'm not saying we're smarter than anybody else. But I am saying we can and do study history. And that's the best predictability of the future.

Your next question comes from Steve Wieczynski with Stifel Nicolaus.

Yes. Good afternoon, guys. Hey, Steve, I know it's still kind of early, but can you give any insight in terms of how advanced bookings are going for Encore?

Andy?

It's too early.

Too early. You know what we did, which is sort of par for the course, you're never sure at the very beginning whether your opening date is perfect. You get a schedule from the builder. And I was in a construction update meeting with Andy and everybody this morning at 8 o'clock, and our builder, [Ron Tudor], and everything is looking fine. Naturally, there's a lot of things that have to happen. But what does happen at the end that is a very important factor? Out here in Nevada, we have a tremendous requirement for life safety. The standards imposed upon new construction since the fire at MGM in the late '70s are horrendous. You can't die in a fire in one of these buildings here. They can't burn. You might ruin your clothes or get soaking wet with the sprinkler system, but you won't die in a fire here. And they have a routine for inspection before you can get a certificate of occupancy in these buildings that is very, very convoluted and very long and arduous. We budget eight weeks. It's minimally six and we put in a 33% cushion, and we budget eight weeks of inspections. And during those inspections, depending on what section of the building we're talking about, the building has to be cleared of all workmen. And until those inspections have been approved and you have a certificate of occupancy, you may not occupy the space with your employees, which represents the final stage of the move in. So we get to the point we are now, five months out, and we say, inspections start next week or they may have started already, Andy?

Start this week.

They started this week. The inspection process begins with the fire department and the building department for us to get signed off area by area. And let's say that one of our systems fails and instead of just taking a day or so to fix that particular system, it's more complicated and that could affect our opening date. So we set a date for December 1 turnover. It looks good to us. That means that we'd be open and running with the cash registers clinking away for Christmas/New Year's. But Marc Schorr, who is a conservative kid from Long Island says, "I'm not going to be embarrassed and have to move people from our hotel because we're two weeks late. So I'm not going to open up bookings for conventions or big time bookings until February." If everything goes according to Hoyle and we're in hunky-dory shape the first of November or the middle of October and all the big inspections are rolling out without a hitch, then we'll open reservations for December for the transients in November or October; by October, Andy is saying to me. If that's true, then we may not have full occupancy. But that's precisely the time when we don't really care about full occupancy. We'd rather have partial occupancy and ramp up. We're going to have our employees stay in the hotel for three weeks, eat in all the restaurants, stay in the rooms, call for room service. We take our time in pre-opening procedures so that we can make a good impression. But until October, we won't know. So we don't open up the booking machine until the last minute. We are taking reservations for next year and they are doing fine.

We're taking transient calls.

Yeah. We took transient calls and we're booking February 6, forward. But what happens between December 1 and February 6, we'll be able to influence that rather powerlessly in October. But we are holding to our date, incidentally, as of this conference call. And as I say, I'm fresh from an 8 o'clock meeting this morning, so I can tell you that's how it looks and $2.3 billion includes a big, fat contingency. Maybe we'll roll that back when we're all done. But we prefer to put the bigger number up there and then scale back.

Okay, great. Thanks.

Your next question comes from Bill Lerner with Deutsche Bank.

Thanks. Hi, guys. Hi, Steve. Two questions. One, Steve, could you just talk about, I guess, the rationale behind the hire of Tim and Tom and just generally what they're going to be doing? And then the follow-up is, in Macau, I guess you really obviously more than doubled or nearly tripled your slot count, but win per unit only sell about 30%. So, obviously there's mass market growth, but what else is going on there? Are you converting people in a big way from the tree at the corner of the property or is there something else?

For the people who are listening, the tree at the corner of the property is sort of a Wynn signature idea of public entertainment. You saw it with the volcano and pirate ships that sink and waters that dance to Italian singers, that sort of thing. More of that is on the way at our new properties. Our win per unit in the slot machines is primarily due to the fact that we took our time. And when we opened the pieces that we opened, they had the same kind of fanciful, integrated sex appeal that the original place had, and that just gave the opportunity for more people to enjoy the place. The other factor that's at work at Macau is Marc Schorr, who is the member of this family, that's the revenue hound, especially with the mass market. So Marc, as is his custom, took a look at the process as the construction was winding down, and said, "Okay, I only intend to fill this place." And then Marc Schorr relied upon his experience, starting in Laughlin and even earlier in Atlantic City and instituted programs to take advantage of the spaces that we were building and took personal control of that subject and knew exactly what to do. Now, as far as explaining what we did, this conference call is enlightening, but we aren't giving lessons. So I'll leave it at that. Let the other guys figure it out for themselves.

Okay. Great.

Tim and Tom.

You asked me about Tim Tom. That's the happy phrase we use here for Mr. Breitling and Mr. Poster, or Mr. Poster and Mr. Breitling, more accurately. And we have plans to grow in the future, both here and China and elsewhere. And the opportunity to get two men who are just barely getting into their prime was irresistible. We've known them for a long time, admired what they did in the travel business. But beyond the technical things that made them wealthy individuals and successful entrepreneurs, they have a sweetness of personality, a sensitivity to people and a passion for this business that made the two of them individually and as a team irresistible to us. So we scooped them up. We didn't want to see Tim and Tom out on the street where they might get in trouble. So we invited them to come in out of the bright sun and stick around here with us and try and figure out what to do next, which is what's fun about this business.

That's all. Thanks.

Your next question comes from shareholder, [David Tom].

Good morning. Thank you for taking my call.

Got a lot of shares?

Excuse me, Steve?

You've got a lot of shares?

I have 800 shares, sir.

Good.

Attaboy. Well, that makes you and I partners.

Thanks so much. Than you for taking my call, first things first. But I'd like to ask you a little bit about Macau and are you positioning the property there to take advantage of the upcoming Olympic Games and --.

Not really, David. The Olympics are 1,000 miles away in Beijing. I think that the migration to Beijing for those games and for the equestrian events in Hong Kong are a significant event in each of those communities. I am not sure that we would say there would be any significant falloff in Macau.

Okay.

So we didn't focus on that. And I don't think we've missed anything by not focusing on it.

Okay. All right. That answers my question there. In last quarter's call, you kind of departed from the norm and gave us kind of a little update as to RevPAR and occupancy rates and stuff like that. Do you anticipate doing something like that again in the future in case the shorts need a wakeup call like they did this past couple weeks?

I don't know. Have we done enough damage to the shorts? You know, I don't know if you can ever kill them, and I mean that jokingly. They're nice because they represent demand for buying in the future. But, no, there's not a lot of lending in this company. And the stock is rather closely held. And I think being a naked short in the Wynn stock is a risky business and let them deal with that. That's what they do for a living. I don't particularly want to give guidance to the shorts. It's more fun to bounce them.

Our final question comes from Robin Farley with UBS.

Robin, we were afraid you weren't there today.

Yeah. I was wondering when I was going to get through too. Three questions. One is just the Encore budget up about $100 million from last quarter. Is that scope changes or just higher construction costs, and at what point are all the costs locked in? And then I have two other questions.

Well, the increase in the Encore budget in Macau, here, scope changes, the project is bigger.

Did it change in the last quarter?

Pardon me?

Scope changes in the last quarter in Las Vegas?

Yeah. We added some more stuff.

Okay. And then second question is, it sounds like the Macau market overall volumes are down in July since June and that's a little weaker than the usual seasonal uptick from June to July. Can you talk about is that something you are seeing or is that just the rest of the market because I think that would give us some insight into whether it's visa restrictions or if you're not seeing it maybe it's related to others and credit and liquidity issues or things like that?

Robin, at the moment it's related to others, not us. But we need also to pay attention to the visa restriction. It starts in August, not now.

Well, there was some visa tightening in June and July, but you're saying that hasn't impacted you?

We didn't see it, Robin.

Okay, great. And then last question is there's a lot of concern about the number of airline seats coming out of the Las Vegas market, starting in Q4, as probably the biggest reduction in airline seats in Las Vegas. Is there anything that you feel like you need to do or can do in response to that or in anticipation of that?

No. But it's a serious thing, Robin. You are right to mention it. I know that among your colleagues, you tend to be a little bit more conservative and pessimistic than others. And I think in this particular case, you put your finger on a big point, namely that the amount of lift into town is going to be constrained. That has to be an item. And we do get people on airplanes here. A lot of them are net jets, but, again, Robin, we're only one hotel and now two in '09 as opposed to some of our colleagues who have broad-based, very large, across the board operations like Harris and MGM in this city. Our neighbors next door have 11,000 rooms, 10,000 rooms, and we're at 4,800 even with Encore. So I'm thinking that it's a big deal. We're not sure what it will mean, but its part of the passing parade and the current short-term environment. I don't think as an operator there's a hell of a lot you do about it. You're not going to change your way of doing business. Let's assume that for the most part most of the operators on the strip, virtually all of them, I would say, at this point, are savvy, mature, and sophisticated. There's a certain amount of people that it takes to run one of these places properly. And those full time equivalents, those FTEs, in each hotel, there's a number. In our case it's 72, 72, 50. That's the people each 24-hour period that it takes to run the machine. And once you get to that number, you are efficient. Now, you can arbitrarily lop off other jobs. You can keep the building less clean. You could stop having flowers that are fresh. You could certainly lower the quality of your purchasing and lower the quality of the groceries. You can use cheaper linens and laundry. You can replace the carpet a year later. You can start to do the kind of things that compromise the property and its staff. You can begin to try and save money on your employees. Now, we think all of that, once you've achieved a balance and once the hotel's in equilibrium, which happens within two years after it opens, we think that cuts beyond that, cuts as opposed to tailoring, are a mistake, no matter what's going on outside. You've got to make a promise and keep it. The public has to be able to trust us. And if there's less traffic, then you make less money, period. Get a life. Live with it. But if you want to try and bend the organization every moment into some passing economic template, you will end up with a wrinkled and bent business plan and it will not serve your long-term interest very well. So I don't know what Las Vegas can really do about a major cutback in airline except make sure that Las Vegas keeps the promise and hopes that America gets healthier. But I am very resistant to the notion that all of a sudden management comes up with some earthshaking insight that lowers the cost of business or starts to spend money in new ways. You think about promoting and doing things. There's a certain kind of promotion that's appropriate, marketing initiatives, so to speak, for each type of hotel. And it's very important that management teams understand and get creative with the discipline of those marketing dynamics. But I don't think it's accurate to say that you can break the mold or change things or that you should. I think that's probably a mistake. So you get to the point where you just sort of say, "Well, we're in a slow time. Our EBITDA will be less, and long-term investors will understand that or they won't. And if they don't, they'll leave. If they do, they'll stay or they'll buy more of it, I guess." We're faced with these kinds of decisions, all of you in the investment business, every day. You have to ask yourself, if we own a company, do they know what they're doing, they understand the position they're in, are they mature and sensible people about how to deal with it? After all, this is not rocket science, this is just business, and you can't overreact to stuff. At least, we try not to here.

That is all the allotted time we have for questions. Mr. Wynn, are there any closing remarks?

No.

Ladies and gentlemen, thank you so much for dialing in for today's conference call. You may now disconnect.