Wynn Resorts, Limited (WYNN) Q4 2012 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the Wynn Resorts Fourth Quarter 2012 Earnings Call. Joining the call on behalf of the company today, are John Wynn; Marc Schorr; John Strzemp; Matt Maddox; Marilyn Spiegel; Scott Peterson; Gamal Aziz, President and COO of Wynn Development. And on the phone are Ian Coughlan, President of Wynn Macau; and Robert Gansmo, CFO of Wynn Macau. [Operator Instructions] Now I would like to turn today's call over to Mr. Maddox. Please go ahead, sir.

Thank you, and good afternoon, everyone. Thank you for joining us today. Before we get started, I just need to remind everybody that we will be making forward-looking statements under the Safe Harbor of federal securities law, and the statements may or may not come true. With that, I'm going to turn it over to Steve for some opening comments.

In the 45 years that we've been doing this, we've had a record of constant progress and growth that has hovered between 25% compounded a year and 30-odd percent compounded a year. The basis of that growth has been some fundamental ideas about who we are as a company, the kind of services and the people we employ and the kind of facilities we've built. And we've tempered those simple truths with the fundamental understanding that our balance sheet was a critical part of our ability to grow, maintain service levels and take care of our employees. We've approached the idea of growth and development with those thoughts in mind, and we've been very fortunate to be allowed to participate in Macau. And of course, we've had wonderful history for the past 45 years in Las Vegas. During that time, our market share, in terms of the top line, the gross revenue that gets so much attention on Wall Street has been a story of irregular progress onward and upward. That's never changed in my career, and I don't think it's likely to change when you're in a business that involves great capital projects that take 3 to 5 years to develop and open. We are focused very heavily in the year 2013 and have been in '12 on just such factors. We began our project last year in May with the preparation of the ground on the landfill, known as Cotai. We had 52 wonderful acres but that had a great deal of challenge built into them because of water on the property. It was an expensive, time-consuming process to get the property ready for hard construction. I'm happy to say that the work that was done in the last 6 months is completed, and all of the governmental approvals have been given. And the day after Chinese New Year in the next 1.5 weeks, we begin the driving of piles, the building of the foundation of the building and hard construction has begun in China. We are 36 months out from the opening of our hotel on Cotai, which, in spite of the brilliance of the competitive construction and development that's taken place in China -- and for those of you who haven't been to Macau, the new structures are quite wonderful and each of the companies has done a great job. They're smart. They're well-conceived projects, run by men and women who know their business. In that context, we observe our competitors, as we have over the last 4 decades, and we design our next facility so that it will have a competitive advantage over our neighbors, which is quite a challenging statement to make. We've taken a long time to prepare the project that's being built in Cotai, and we are confident that the day that everybody gets to see it, they will be amazed. It represents progress and developments in our industry that have not been seen before. And that's what it takes these days to get people excited. The public is so sophisticated. As a result of the work that our colleagues have done at other companies, that -- it's a big hill to climb to get people to go "wow" and think that this thing that they are looking at today is better than anything they've ever seen before. But we've been at it a long time. We have a wonderful group of creative people that have been tested over and over again. And so as the market grows in China, for example, our gross share of the market naturally declines because we have one project on The Peninsula. And our market share, as other hotels have opened, has gone to 9% or 10%. And we don't focus very much on the top line, because so much of it is noise. We have 9% or 10% of the revenue, but we have doubled the amount of EBITDA in the project and less interest than our expense. So when it comes to taking home money, we get very, very healthy. And we're going to stay that way, as we build new hotels in China and elsewhere in the world. An example of this, building houses of bricks. If you read the 3 Little Pigs, it's got everything you need to know as a case study. I remember 1 year, we had a sketch on our annual report of 3 pigs: one sitting on the rubble of a house of straw; one sitting on the remains of a house of wood; and a chubby little pig sitting on top of a perfectly preserved house of bricks, smoking a cigar. And the headline on our annual report is, We Build Houses of Brick. Well, nothing's changed. I love the 3 Little Pigs as a case study. And our hotels that we build currently and the ones we're building in the future will represent houses of brick. In Las Vegas, this intensely competitive market, we outperform the industry. It's very difficult to do against such smart people, such clever people. But we enjoy the company we're in, and we relish the challenge as we go forward. So besides the performance of our company, which, in terms of earnings, was very satisfying and happy for us, we adjust by a few million dollars EBITDA in the last quarter. The street estimates were $5 million or $6 million higher than what we did. But in Las Vegas, we were $15 million or $20 million higher than everybody thought. That's the warp and the woof of the business where in. Having said that, I think my role in this company is to talk about the future and the ideas that we hold. We don't ever talk about the deals we haven't made, because it's really a waste of time. We talk about the deals we have made. At certain times like this morning, or this afternoon, it's appropriate to talk about our aspirations and the things -- the deals that we've engaged in fully. I've spent months now designing the new concept of an urban Wynn. An urban Wynn is a concept that's based upon these observations. In the major cities of the United States, like Philadelphia and Boston, there are many hotels that get very healthy room rates. In Boston, it's hundreds and hundreds of dollars to get a room. And there are fine companies, like Ritz-Carlton and Four Seasons and others, that are in those cities. But we all know, as you do on this call, that it's uneconomical to build a really wonderful, brand-new hotel in a city today because of the cost of construction and the competitive room rates that prevail. So what does that mean? To us, it creates a wonderful opportunity. Let's take Philadelphia and Boston, for example. You can't build a brand-new hotel in Philadelphia for the reasons I just said. But with the presence of a casino room adjacent to such a beautiful hotel, you can build the best hotel in Boston, the finest project that the state of Pennsylvania or the city of Philadelphia, where I went to school, has ever seen: rooms of 800 and 900 square feet, or 700 square feet; beautiful suites; incredible restaurants with very talented chefs; entertainment areas that are fanciful, imaginative and new and exciting and fun to be in. It's always been a truth in our industry that the driver is the non-casino attractions. The gaming area is, at best, the cash register. There is nothing unique about a slot machine or a blackjack or craps table or baccarat table. In and of themselves, they have no power at all. The power rests in the experiential moment that people get when they're in the building. So you take a place like Philadelphia, where I went to school, or Boston, where my entire family is from and where I spent my youth, in many cases. Those cities can have a wonderful new hotel with an incredibly fanciful hotel, wonderful restaurants, entertainment and shopping. And they can be supported and justified for hundreds of millions of dollars because of the existing -- existence of a gaming facility that is adjacent, but not dominant, in those environments. People who want to gamble will find those rooms, will find those gaming areas, and they will use them regularly, assiduously and have a lot of fun doing it. We know how to do that. But what we specialize is in creating places that people want to go to for dinner with their families, to have fun, to go dancing, to see a show, to go shopping. And we believe it's important to keep those 2 things somewhat separated. There's a lot of -- awful lot of talk about the concept of an integrated facility. Integrated is a word that sometimes is misunderstood. In the early days of Las Vegas, for example, integrated meant that every restaurant and every element of the hotel was adjacent to a slot machine. We know today that, that's not the most intelligent way to do it. That people who are in search of hospitality, food, beverage, shopping and entertainment, don't necessarily want to traverse a room full of slot machines. And we've also learned that it's not necessary to force people to traverse a room full of slot machines and blackjack tables in order to have dinner or go to a show, that those 2 concepts do very well when they are adjacent to one another; therefore, integrated, in that sense of the word, but separate and apart in terms of their experiential moments. Those are the guiding principles of our development that are rooted in concepts like Philadelphia and Boston. And those are the concepts that will be rooted in whatever we do elsewhere in the world. We have a very established brand. People know who -- in every jurisdiction, who we are. We don't need to sell ourselves anymore. But what we do need to do in facilities that are prospective, such as Philadelphia, Boston or any other city, and I'm not going to mention all the cities we're working in because those are deals that we haven't engaged publicly yet. But those are the -- our job in those places is to explain how we're going to apply our brand and our experience to produce a great place that is value added for those cities, that brings people from outside the region into those cities, the places pay healthy taxes and they employ lots of people. That's our selling point. That's our story. And we'll take it where we can make money in the future, and we'll do so with great respect. And we'll do so with a lot of sensitivity to the communities in which we operate our business. Those are the guiding principles of who we are. The numbers that we publish speak for themselves. And I think it's okay to take questions now. And Matt, and Ian -- Matt is here with Gamal and Marilyn. Our leadership in Las Vegas is here. Scott Peterson, our CFO, is here to discuss the details of our business, if you're interested in asking questions. And Ian and Robert Gansmo -- Ian Coughlan in Macau and Robert are on the call. And I'll open this for questions now.

[Operator Instructions] Your first question comes from the line of Shaun Kelley with Bank of America.

Steve, I just wanted to start by asking about Cotai. Obviously, it's a huge milestone to get the construction approval and to be able to move ahead there. So could you just walk us through what a few of the kind of the upcoming milestones are here, in terms of what some of the dates are around driving piles and kind of the next phase beyond that? And in particular, what's the labor situation like with 2 other projects, probably already kind of in the ground and moving on Cotai? And the flexibility around labor, in particular, would be helpful.

Sure. First of all, as I say, we start construction this week, which we call hard construction as opposed to site work. The foundation of Cotai -- having dried out the property which took quite a bit of time and $30 million, the next phase now is the creation of the foundation. It's a landfill, as you know. And to give you an example, if you like trivia, the caissons that support the high-rise building, they're every 40 feet going sideways. And they are 4 across the tower, one on each window wall and then 2 inside the building. So these caissons are 10 feet in diameter and because -- and we have to hit bedrock. And those caissons are columns of concrete reinforced with rebar in a steel casing. And they go down in our high-rise at a minimum of 78 meters and at a maximum of 92 meters, to give you an idea how deep these holes are. The public area -- the 3 levels of public area and the podium building are supported by piles, which are basically either steel or concrete-reinforced columns that are nails, that are pounded into the ground 5 or 6 at a time, brought together as if you put your fingers on the table, spreading your fingers, the top of your hand would be the pile cap. And then we drive all these piles. And we put a cap on top of them, and we rest the garage and the public areas on top of them. That process of getting out of the ground and building the one layer of subterranean parking is going to take close to 1 year. Once we get into that phase at the end of '13, then we go up with the high-rise and the rest of the building at a remarkably rapid pace. And we do more than one floor a week and go up 20-odd floors to full height. So it goes very fast. The trick is getting out of the ground, and that will take most of '13. And then '14 and '15, we'll finish the job and get that structures and the interiors installed. So the labor situation for this phase has been handled already. As you know, we're financed at less than 2% for this project and we were this past summer. And finally, the government has been very cooperative in giving us the labor we need to do the next phase of our construction. So I think that the government -- you've noticed, many of you, the rather slow progress of the approval process. That has been a process controlled by the government, specifically, to meet the scale of labor that's needed. And so the government, in controlling the approval process, has taken into account the kinds of labor approvals they're going to have to give us. And they've done it efficiently and correctly and cooperatively. So I don't see a labor problem in our future. We've never had one in the past, I might add. In spite of some of the publicity that surrounded other projects, we've never had to struggle with labor. We've been able to get the help we need for our construction companies and for our subs. And our buildings have pretty much proceeded on schedule. We have no reason to think that this one's going to be any different. I hope, Mr. Kelley, that's a satisfying answer.

That's great. And then the second question was just on kind of, given your prepared remarks around some of your looking at new urban concepts. I couldn't help but notice that you guys made a fairly high profile, higher relatively, recently. So kind of wondering, as you think about the Wynn brand going forward, would -- to spin the question a little differently, would you ever consider the hospitality business without the gaming element to it, as you look at some of the larger cities and some of the needs that are out there? Just curious on that.

I think there are one or -- my answer would be, no, with 1 or 2 exceptions. I have, for the past 10 or 15 years, relished the idea of having a new hotel in London. That city is probably one of the greatest places in the world for average daily rate. And it's a city with, as you know, with highly protected historical landmark buildings. It's very difficult to get a site in London that you can demolish and build anew. If I had the chance in Mayfair or in the right location in London to build a hotel, I think I'd love to do it. Of course, you can always apply for a gaming license and put a small room of baccarat and roulette tables in there, which would be fringe or icing on the cake. But I'd say that London is a great hotel town. New York City is a whole story unto itself. I'm not sure if I'm as clear on New York as in the non-casino sense as I would be in a place like London. But generally speaking, you know we're in this business, Mr. Kelley, and that's pretty much where I want to stay. We understand this part of it. And what I really love about the gaming aspect is that the gaming room, however subordinate may be, is still -- the revenue from such a room is still the thing that allows us to light up the city, bring people and build a new hotel, bring people in from outside the area. In Philadelphia, they have a group of casinos, for example. Some of them are owned by friends of mine. But basically, they're boxes of slots. They have a high tax rate for slot machines in Pennsylvania. But they have a much more reasonable tax rate for table games. Table game business is not a big deal in that city at the moment. As you know, many of those places were built before they allowed table games. But our hotel is conceived as a hotel. We'll be able to bring people from outside the region, who will come for conventions or other reasons to Philadelphia, to stay in our hotel. And because I have beautiful rooms, I can put a table player in there and take advantage of a preferential tax rate and get table business. On the Acela train, it's 66 minutes from Penn Station to 30th Street Station. And we're 10 minutes away from 30th Street Station. If you think about that for a minute, Philadelphia takes on a little different color. And speaking as a Philadelphian, as far as my 4 years of school at the University, I think that's a good idea. We had this fabulous, 70-acre site on the Delaware River, and there's a brand-new $0.75 billion interchange on I-95 that dumps directly across the street into our property. It's a very, very desirable, provocative situation. And that would be done at about the same time our hotel is done. I like that set up. But it is a casino hotel at the end of the day. It's an integrated destination as supposed to slots in a box.

And your next question comes from the line of Joe Greff with JPMorgan. Joseph Greff - JP Morgan Chase & Co, Research Division: Steve, the Las Vegas results, I thought, were encouraging. Can you share with us what you're experiencing, thus far, early in 2013 and share what that is -- maybe what you're seeing on the group side. And from a bookings perspective, last year in Las Vegas, I guess you could characterize the environment as being a little bit uneven with certainly strength in the baccarat and nightclub segment and then room rates up and down, depending on what's going on in the city. If you can share with us what you're seeing there, that would be helpful.

I'm going to let Marilyn deal with that because she's so confident and on top of it.

So Joe, obviously, the convention business is the one that allows us the most stability to forecast what's going on. We feel really good about 2013. We are tracking above in room nights. We're tracking above in rates. And we're seeing the same kind of strength going on into 2014. So that's going to lay the base, and we hope that's going to really maximize a great hotel year. Obviously, we will still be focused on bringing in hotel guests, who want to engage in every part of our non-gaming business. Super Bowl this weekend, and we are heartened with the business that we have coming in for Super Bowl. The Chinese New Year is right around the bend. So we're very hopeful for a great first quarter. Joseph Greff - JP Morgan Chase & Co, Research Division: Great. Steve, you spent a decent amount of time on this call talking about urban Wynn, Philadelphia and Boston and other cities that you didn't mention. When you look at your return thresholds, return on invested capital criteria, how do you think about those things?

It's a good question. Take a place like Philadelphia, you spend $800 million or $900 million or $1 billion. You borrow 6 -- you borrow $650 million at great rates today. Good idea to borrow money at these rates. And you put up $300 million or $400 million in equity, and you make $175 million. We can't get a return on equity like that. And if you can get that kind of a return on equity, you ought to keep building those hotels. It lays a base of a long-term franchise. These -- once you get one of these hotels that's up and running and established, their future is better than their past. Tomorrow is better than today, and the day after tomorrow is better. That's the whole point of this. I don't trust slots in a box. That's why I've never done a riverboat or a racino. Not our business, not interested. But a hotel, a place that has the full range of services that people learn to like, and even people that don't gamble who live in the city go to dinner. We get tremendous average rates in our restaurants. We make money with our restaurants. There's nothing wrong with that in cities like Philadelphia and Boston, with all those kids in college, all those people visiting Boston from around the world. I love the Boston market. I think it's a terrific opportunity for our company to make a great contribution to the touristic profile of those cities, bringing people from outside the region into the region and creating places for the people who live in the city that are fun to go, week in and week out, even if they're not hooked on a slot machine or a gambling game of some kind. And these kinds of things -- these values would apply to any major urban center, like Toronto, like Dallas, Houston, Atlanta, Chicago. We could be a very good neighbor in those cities. We could make a significant contribution to the tourism, the employment and the revenues that those governments enjoy with our brand. And whenever possible, we'll take our story to those cities. We'll put our cards on the table. We'll present a project that's appropriately designed with as much excitement and originality as we can muster and hope that we get picked. These processes -- very often, these processes are political in nature and factors come to bear that are not things within our own control. But I'm always excited and anxious to put our cards on the table, make our presentation and hope that we'll get accepted for who we are. But we avoid hyperbole. We avoid -- last week, I got a phone call in my office. It was on a weekend. And I was in Sun Valley, Idaho. And my secretary said, "Tomorrow, will you please accept a call at a fixed time from the president of Forbes Five-Star rating service?" I said, "Sure." I got on the phone with this wonderful man, he said, "Mr. Wynn, I wanted to give you the good news in person before we release it publicly. But we've just added Encore Macau, the hotel and the spa, each with a Five-Star rating. One of the only 4 Five-Stars in China was held by Wynn Hotel and Wynn Macau Spa. And now you have 2 hotels in Macau, both of which have received Five-Star ratings in the hotel and in the spa. You enjoy Five-Star ratings in Wynn Las Vegas with your spa and your Tower Suites. And now you've also got Five-Stars in Encore Las Vegas and Encore Spa. That means that you've got 4 hotels, each with Five-Star ratings in 2 locations. That gives you 40 stars." And to use his words precisely, "That's the most on the globe." Well, I said, "I'm sure excited to get this phone call to have all those Five-Star ratings complete across the board. They're very important to us. They tell the public who we are. They're consistent with our aspirations and our brand. And thank you very much for the phone call." That was this past week. That's where we're going. It's a little slower, a little more meticulous. But it builds a base on which this company can enjoy a franchise and longevity. Joseph Greff - JP Morgan Chase & Co, Research Division: Matt, one final quick one. How much of the $2 billion in cash at quarter end was held in Macau?

75%.

And your next question comes from Carlo Santarelli with Deutsche Bank.

Marilyn, if I could just follow up on the prior question, as it pertained to Las Vegas and some of the business that you're seeing, especially in the first half on the group convention side and out into '14. Do you feel that, that's more Wynn-specific? Or are you seeing that more broad based across the market and you guys are getting an ordinary share of that?

That's -- I wish I could tell, because you don't know what your competitors are booking. I mean, we have a confined amount of meeting space. And we enjoy a position to be next to the Las Vegas Convention and Visitors Bureau. So we find ourselves to be the host hotel now of many of the conventions that used to be housed closer on Paradise Road. So that's been great for us. There are a lot of hotel rooms between Las Vegas [indiscernible] to The Venetian and Palazzo and the Wynn. And so we see many of the very high-end conventions coming here. So we see a lot of technology. We love technology. We see pharmaceuticals and those conventions are great. They access and utilize every part. Yesterday, our entire spa was sold out with massages. And today, our entire golf course was sold out with golf. So I don't know what the rest of them are doing, but we have to wait for each quarter's earnings to find out.

Great, that's helpful. And for Ian or Robert, just quickly, I know you guys opened your second-floor VIP room not too long ago. I was just wondering how the reception has been to that. And if the incremental tables actually have come online, I see the number actually trended down a little bit sequentially by about 4 tables. And I was just wondering if we should expect to see the full 504 being deployed on a go-forward basis.

So the new junket space on the first floor has been performing very well, but if -- tables that have resulted from a reshuffling of tables elsewhere in the building. So it isn't necessarily 14 incremental tables. It's 14 tables that we're getting higher yield out of by removing tables from elsewhere in the property. So it's part of our continuing efforts to increase yield from our existing gaming units.

And we're having a very healthy January in Macau. Even though last year, Chinese New Year was in January, we're beating last year. And without Chinese New Year, we're going to have $100 million month. I guess, I'm given some advanced notice. We're going to have, I think, $100 million month in Macau this month.

And your next question comes from the line of Felicia Hendrix with Barclays.

Ian, while we have you, and we know you're awake there early this morning, Steve spoke earlier or at the beginning of the call about focusing more on profitability than revenue market share. And along those lines, I was definitely pleasantly surprised by the margin results that you guys produced in Macau. Margins were flat year-over-year despite lower revenues. Obviously, mix always plays a role but your margins are still better than we were expecting. So in spite of the competition, just wondering if you could talk about what kind of things you are doing in Macau to offset the dilutive impact of the competitive environment and, especially, since that's going to persist for some time.

The big focus that we have being 6 years old and being almost at capacity in terms of the facility is the enhancement of service quality and the maintenance of the facility and the reinvestment in the facility, which, I think, now that everybody's revealed their new junket rooms, their new mass market, high-limit areas, it's going to come down to service quality and delivery. So that's going to be the tone of 2013. We certainly had efficiencies in FTEs, which are down fairly considerably on the same quarter last year, but none of it has been at the expense of service. It's been through some very good technological improvements in our gaming systems. It's understanding our business better, and we will never sacrifice service. But we will continue to look at how we can improve margins.

We had, last year, an interesting experience. Marc Schorr came home and said, "Steve, I went to see the new VIP slot room at Galaxy. Boy, did they do a good job." And all we've done, basically, is put our high-limit machines in a certain area, so the customers could have a convenience. But we don't have a high-limit slot room like the one you built in Las Vegas that produced such stunning results this year for us and is currently producing great results for us in Las Vegas. He said, "We need one." I said, "Okay, Marc. You're right. We got to catch up with the other guys." And so we sat down, and we designed a drop-dead, high-limit slot room. When is it going to be done, Ian?

It's being done in 3 phases so we don't impact our current business levels. So phase 1 has just completed; phase 2 will begin after Chinese New Year and finish in mid-April; and phase 3, which includes the addition of private slots suites, will finish in August of this year.

So there's a case where we had to play catch-up because the boys down the street got smarter, and they really do in China. But to give you an idea, I think we -- did we open Miu Miu, Ian?

It opens next week, Steve.

Okay, here's the space that we re-purposed. To give you an idea what -- about the vitality of the Chinese market, you'll all get a kick out of this. We had 2,000 square feet. We had a very big coffee shop and buffet. It was too big for what we needed. So the front of it, which is adjacent to the lobby and across Louis Vuitton, was 2,000 feet that we could -- it was easily -- the coffee shop was separated into 2 chambers. One that opened onto the pool and had a buffet, and the one on the front opened up onto the shopping arcade. So we took the front part, the 2,000 square feet, and we said, "Okay, we're going to turn it into retail." 2,000 feet. I made a deal with Prada, and they paid for 2,000 feet. Dig this: $6 million a year, $500,000 a month for 2,000 feet. Welcome to Macau.

Steve, I also think it's important that...

They just started paying rent.

I think it's important that everyone also understands that we're using our capital to improve our resort by doing every room, all the hotel space are in the remodeling phase right now.

Yes, the hotel is 5 years old -- it's 6 years old. It's time, as we did in Las Vegas, to do the refurbishment. And we're going to follow the plan, the decorating, because the hotel at the Wynn Macau is the same-size room as Wynn Las Vegas. We're going to use the scheme that we have here and it has been well received in town here. We upgraded our interiors and made the rooms much more beautiful on the second time around, even better than they were when we opened, which was great. And we're going to use that decor and that scheme in Macau. And that's going to come up now.

And if I may, Gamal, I wanted to welcome and congratulate you. And I know it's early, but hopefully, maybe you could talk to us about some of your thoughts about your new role and your view on the current growth of the company?

Thank you very much, Felicia. This is really an opportunity to expand the brand at a time where there's a great sense of confidence in the future. And I know that Steve had shared with you a couple of the opportunities that we're pursuing. We're pursuing others and with the goal to succeed in going beyond what we have been doing. There is a tremendous reception to the brand, just in my first 10 days. And having visited Philadelphia and Boston, we see a tremendous appreciation for our participation in this market and a hunger for what we do. So I expect that in the next few calls, we'll be sharing with you what we're working on. But for the time being, as Steve has shared, we're working on Boston and working on Philadelphia. And we'll continue to grow that list.

And your next question comes from the line of Cameron McKnight with Wells Fargo.

Steve or, perhaps, Ian, we've seen a fair amount of macro indicators in China improve over the past couple of months. When you guys sit down with customers, what's the pulse you're getting and what's the sense you're getting in terms of people's outlook?

This question was asked of us in previous calls last -- in 2012. And the suggestion was made that China was precipitous on the edge of an adjustment. Some words were even as strong as collapse. And we said that based upon our conversations with our clientele, which represented a broad range of businessmen from every part of China, that we didn't feel that. We didn't think that was going to happen. And we thought that the central government was alert, responsive and responsible. That's been a pattern for the past 12 years, as far as I've been able to perceive in China. And so we were positive in the face of questions that had negative implications. Now you see a robust growth rate in the Macau market, and people are talking about China differently. Nothing's changed. Just the conversation changed. We didn't see a problem before. And I don't feel one, at least on the level that we operate. We don't feel that there's a problem now. We feel the sense -- I speak to Mr. Adelson, and I speak to Jim Murren, and we all sort of agreed that the news in China is healthy. The news in Asia is healthy and most likely to continue. So that's the kind of feedback we're getting. I'd be happy to share anything else, if I had it, with you. But I -- there's a possibility that I'm being a Pollyanna and that my exposure is limited, so that I don't get a big enough picture. But on my board in China are a couple of very, very well-connected, very sophisticated men. Allan Zeman is building projects in 5 major cities. He's the Vice Chairman of the Macau Board, from Chengdu to Guangzhou to outside Singapore with Jeffrey Katzenberg and Steve Spielberg, and in 4 other cities. And he spoke to me the other day, it was my birthday, and he gave me a call. And he was breathless with the expansion and the excitement in the cities of China that he himself was experiencing with his business, city by city, party secretary by party secretary and mayor by mayor. Allan was glowing. Bruce Rockowitz is the President of Li & Fung, the largest sourcing company in the world. He has been named on Baron's Magazine as one of the 30 Best CEOs in the World. Bruce Rockowitz is on my board. Jeffrey Lam and Nick Sallnow-Smith, they have been in government, the President of Hongkong Land. Nick and Jeffrey say the same thing to me, so I don't think that I've got blinders on or that I'm stuck in a corner somewhere. But I don't claim to be a macroeconomist. But I haven't heard any predictions of doom or big, cloudy forecasts that I read about in the United States last year. And I think, today, though some of those clouds have gone away, people have a more accurate view. One of the problems we have in the United States is, generally speaking, even among sophisticated segments of the population, the understanding of modern China -- of the People's Republic of China, is way, way behind the curve. China has progressed politically and economically, commercially, far beyond where people are giving them credit for today. It's a very sophisticated place and as near as I can tell, very well led by the government. They tend to be practical. They spent -- they tend to be very empirical and alert and quickly, quickly responsive. Maybe it's the advantage of their form of government, and -- but it's clearly the case. I hope that's helpful.

That's very helpful. And then just as a quick follow-on, Steve, you last spoke about competition in the market in Macau about 6 months ago. Do you sense that level of competition has increased since then or remained relatively the same?

Murder tough. Oh, those guys have blood in their eye. I mean, how would you like to compete with Francis Lui and Packer and the Hos and Sheldon Adelson. I mean, these are tough guys. And they are paying attention to business. I don't know about anything else. I got to tell you that the guys in the gaming industry in Asia are triple sharp. They haven't missed a trick. I was listening to Sheldon's call yesterday. I mean, you don't get numbers like that unless you're on your game. And it's true of Galaxy. Those companies are not American. Maybe we don't have as much visibility as we should, but I have an awful clear sense. The Lui family and Francis Lui that runs the family's business, he has brothers that run their business in San Francisco in the United States. The father is one of the leading property men in Hong Kong. That whole family controls Galaxy and they are on their game. I think the competition -- it's very, very tough, but it's very healthy. I told you that Marc Schorr comes home and says, "Uh-oh. We're $1 short and a day late on the high-limit slot room. We got to kick it." We don't get to talk about that for months or ignore it. We have to respond now on the spot, no kidding around, and we've got to bring our best game to the table. So I like it that way to tell you the truth. We've had a long history of being in competitive environments. Fremont Street, we made more money than all the other places put together. Atlantic City, we made more money the first quarter we were open there than the other 4 places combined. The Strip, we've always had the best hotel on the Strip in Las Vegas. We broke -- the largest win in the history of Nevada after Caesars Palace was Mirage, its first year. It broke the $400 million level. Then the first year of Bellagio broke the $600 million level of gaming revenue. In 2007, we broke the $700 million level at $724 million in Wynn. Last year, we broke the record again at $770 million for the history of gaming in Nevada with $770 million with Wynn and Encore. And we did it again this year at $766 million or something like that. Better than last year, if you adjust for whole percentage. So in each case, we've always functioned in very competitive environments and our competitors have lifted our game. They forced us to really reach. That's a healthy thing for the communities, such as Atlantic City or Las Vegas or Macau. It's a healthy thing. What's not healthy are monopolies. Monopolies cause people to be slobs. They don't pay attention to business. They take everything for granted, their employees, their customers. And that's unhealthy. It doesn't lead to a better future. That's not the story in Macau today. Macau is on the move. And as good as it looks, it's going to get better with these projects that are under construction and that have come online. You haven't felt the full impact of some of the places that have just been opened in Macau. We haven't felt the full impact of the efforts of Adelson, his company, the Sands. We haven't felt the full impact of Galaxy. We sure as hell haven't felt the full impact of Wynn yet. So the future looks pretty good to me.

Just a couple of factors in Macau, Steve, that are also being slightly overlooked. One is that, for at least the next 24 months, there is no further casino spaces opening. So everybody has time to stabilize, understand the market better while it's still growing. The second thing is the development of infrastructure in Macau. It's going to be completely transformed in terms of the arrival experience for customers, their ability to get around town. In the next 4 years, it will be remarkable what's happening here with new ferry terminals, connectivity via bridge to Hong Kong. We've got high-speed train connectivity into Zhuhai. And we've got our light rail system, which is being built all around town right now, the phase 1, which tackles 2 sides of our property in Cotai. So the city is going to be transformed.

We're the first stop in Cotai from the ferry terminal and the airport. And the stop is right in the middle of the lake that we're building, that's roughly the size of Bellagio. And at the bottom of the escalator from that monorail, from that light rail system, we have put a Doppelmayr gondola car that has music and air-conditioning. And the people get in the gondolas and they go around the fountains into the hotel, looking at the fountains and looking down at our pool area, while the music plays and the fountains dance. We are meeting, in many, many new ways, the challenge of our neighbors and hoping to get the folks that are in the other hotels to also experience our own. And all of this is such a great fun.

And your next question comes from Robin Farley with UBS.

I wanted to ask you what kind of impact you're maybe seeing from the partial smoking ban at the beginning of the month? You mentioned what a great month it's been, $100 million month in January. I wondered if you could give us a sense of how much of that is coming from kind of VIP resurgence versus the mass market, just to get a sense of how the smoking ban may be impacting things and how VIP maybe resurging.

Robin, I'd like to have Ian and Robert Gansmo deal with that, if I may.

Sure. On the 1st of January, the new smoking law came into play, which bans smoking in 50% of the square footage of casino space in the city. Frankly, looking at the numbers, anecdotal evidence, consumer feedback, it's been very marginal in terms of effect to the business. We haven't seen anything at this point that makes us unduly concerned. We've worked very closely with the government as have our competitors to make sure it was a smooth a process as possible. And the Chinese consumers seem to be readily accepting of the fact that we have dedicated smoking zones, and they've received this fairly well. Clearly, for employees, it's been a huge boost for them.

Incidentally...

So far, so good.

Incidentally, in anticipation of the worldwide issue with secondary smoke, all of our junket rooms in our Wynn Club, our highest part of our gambling in Macau, are rooms that overlook on our lake and our fountains and each of them has exterior terraces for dining and smoking outside. That ability for all of our junket rooms to have exterior smoking terraces and restaurants that are indoor or outdoor dining, that's a new wrinkle that we put into -- I'm just touching a few of the points. That's a new wrinkle we've put into Cotai, that all of our high-limit games are waterfront. All of them. A lot of fun there, if you think about it, both in being a spectator to the music and the excitement and the lighting system that's all new. It really isn't like Bellagio. It's far more advanced. But coupled with the fact that you could be outside watching it, and while you're outside on the terrace, having a cigarette or having coffee. If you look up over the fountains, you'll see the people arriving in gondola cars, cruising by, looking down at the same thing that they're looking at before they enter the building and take the escalator into our shopping arcade. So this business of smoking is something that isn't going to go away, nor should it, in my view. I think that, despite the fact that I smoke cigars on occasions, I think that for people who don't smoke and the evidence about secondary smoke clearly indicates that governments are going to be more and more fastidious about trying to deal with this subject.

Robin, the January growth has been balanced throughout all segments. So it wasn't heavily weighted to VIP any more than it normally is. So we've had healthy growth in all sectors.

Matt, do you want to talk about last year in mass market?

Yes, sure. So there's been a lot of expansion in the market on the mass and VIP side. And we've continued to grow our mass market business. Our penetration in the mass market is still 1.25x our tables relative to our revenue. And on the marketing side, we're running very smart programs. So it's extremely profitable. Our mass market business continues to perform very well in Macau.

And your final question comes from the line of Thomas Allen with Morgan Stanley.

One of your competitors said yesterday they plan to open a new Cotai property at end of 2015. And you might have other properties opening around the same time as yours. Would you want some of kind of buffer between the openings? And if so, for how long? And then a second question on the Cotai opening, how confident are you in receiving approval for extra tables from the government for that property?

First question, would I like a buffer? Yes, by about 20 years, but I'm not going to get it. I'd like them to leave us alone for 20 years, but that's not going to happen so that's the world we live in. We're living in it today. Nothing's changing. And the second part of the question was?

He asked about the tables in Cotai.

Oh, the tables. Will we get our tables for our hotels? Yes, we will. Our plans, our tables, our casino layout has been approved by the government. They don't let you build the building and not give you tables in China. That's part of the approval process. They look at the whole picture, and then they take that into account. Thanks, everybody. That's the end of the questioning. We look forward talking to you next time.

And this concludes today's conference. You may now disconnect.