Wynn Resorts, Limited (WYNN) Q4 2014 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the Wynn Resorts Fourth Quarter 2014 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session [Operator Instructions] I would now turn the call over to Steve Cootey, CFO and Treasurer. Please go ahead sir.

Thank you and good afternoon. Joining the call on behalf of the company today are Steve Wynn, Matt Maddox, John Strzemp, Kim Sinatra, Maurice Wooden and myself here in Las Vegas. Gamal Aziz, Ian Coughlan, Frederic Luvisutto, Robert Gansmo, and Frank Cassella dialing in from Wynn Macau. Before we get started, I just wanted to remind everyone that we will be making forward-looking statements under the Safe Harbor Federal Securities Law and those statements may or may not come true. And with that I wanted to turn the over to Mr. Wynn.

I hope everybody can hear us today. We’ve issued our earnings, which I don’t think surprised anybody. I know that in Macau everybody follows the margins and the weekly casino numbers. January last year was a month in which we had extremely low hold percentage and this year we had a high hold percentage. So surprisingly we made more money in Macau in January, for example, than we did a year-ago. Our business for the year looked great, but the fourth quarter was tough, since golden week in October. The effects of the changes in China have had a negative effect on all of the top end business, whether that means retail top-end like Rolex and Louis Vuitton or whether we’re talking about the high-end gaming in junkets and the VIP sections. We looked at the fourth quarter and the drop in VIP business, and then we looked at the first month of this year anticipating the kinds of question we will get today, and we ask ourselves, it’s January where there any indications in January of a change. And in terms of the VIP business, no, turn was oft by 40 odd percent and the occupancy was high, because only we only have a 1,000 rooms in Macau and therefore, we still had occupancy it was more of our mass occupancy, a little more than the VIP occupancy, but the hotel was full. Things like Louis Vuitton, Christian Dior and Rolex were off as they were in the fourth quarter during January, even though we made $5 million, or $6 million or $7 million more than we did last year. Amusing January because we know the results of this first month and in January, we were able to make $80 odd million instead of $70 odd million. In Las Vegas, so there was, excuse me, if I can stick with Macau for a moment, there was one change, without any adjustment for whole percentage, but making normal whole percentage comparisons, which we had last January and this January our mass business was up 26%. Slots were off by 16% or 18%, but a lot of our slot business is very top end oriented. So it reflected the kind of diminution of business that we saw at the tables at the high-end. Mass business though was up legitimately 26%. We also are opening in a week or so, the new area of the casino in Macau that is dedicated to VIP business and this has better facilities than anybody seen in that town yet. And we are getting some very good people to occupy that space which also frees up some of our other space for more mass table games. So to that extent I think February is going to see an improvement of some sort and I don’t need to quantify that, but I expect that we will see a better result comparing that to the previous months. In Las Vegas, I mentioned in our third quarter announcement that if we had a legitimate November, December, we’d be the first company to exceed $500 million in profitability probably not only in the history of Las Vegas, but also in America. And in fact, we did do $515 million in EBITDA in Las Vegas, which was encouraging and we’re very happy about that. But China remains a big question mark. We have more questions and answers, thousands of our Macau employees are anticipating promotion and a better life, because of Wynn Palace, a break away property by any measurement, which up until now has been on budget and on time. But we were notified by our builder last night that because of a problem in the timing of our construction labor permits that they thought they were going to miss the Chinese New Year next year as the opening and they would be late with regard to that date that we have used in these calls. In our public releases, we’ve always said that it would be the first half of 2016 and I have, bit more optimistic and said we make Chinese New Year which until last night I thought was true. But if we were to believe the e-mail we got from Leighton construction, they are not going to make Chinese New Year they think they’re going to miss that date. I’m going to explore that little bit more deeply with them, Mike Harvey is on his call, who ran Leighton in Hong Kong and Macau and built our first two hotels as the Senior Executive of Leighton through running our jobs, he switched over to become our own Executive in charge for the Wynn Palace project. So he is in a better position to discuss the Leighton e-mail and its ramifications than I’m at the moment. But I do believe that for all Chinese business men, there is at the moment a bit of uncertainty as to what the future will hold, because so much of everything in China depends upon the policy of the Central Government. We have learned in the last 12 years, the way to behave in China and that is to listen very carefully to what the leadership says and to do our best to be helpful, and to conform with the program as we are their guest. In my history in China starting in 2001, I was very lucky to be instructed by Former President Bush on how to behave there, and that was to be helpful and to understand that culture. And to that extent, I believe that they sort out their problems in an orderly fashion as they see them. And in some cases that impacts like Macau or Hong Kong. There is nothing to be done but to be patient and to be alert and to do your best to be cooperative and to go along with the program. There is no doubt that the existence of Wynn Palace is a major event in the development of entertainment and tourism in Macau. And I believe that the government recognizes that to be true. We did get a 700% increase to our construction labor this week. Although we requested a 1,000, we got 700, and I guess that’s encouraging. Albeit that it was three months late. So timing and government approvals are factor that we have to deal with. Hopefully we’ll be able to keep our promises to our employees that live in Macau and all of the staff that work at these places and that their hopes for a better life will be fulfilled and that our ambitions to grow in Macau will continue to develop. I think that’s pretty much the kinds of comments that are appropriate at this moment. If any of my colleagues on the call would care to add any of these, Gamal Aziz and Ian are there, Linda is there, our main connection to the gaming fraternity there. And as I said Mike Harvey, the construction man is on the call and all of us here on Las Vegas and the parent company are standing by for questions which we’ll take at this time.

[Operator Instructions] Your first question comes from the line of Joe Greff with J.P. Morgan.

Hello everybody. Good afternoon. Just looking at your fourth quarter Macau results and then looking at the EBITDA, and then you’re trying to normalize that, was there any adverse hold on the direct the IT side? And then you called out lower then recently experienced hold on the mass side, would you characterize that as having below normal hold there?

No, no. We didn’t.

So Joe as you saw in October, November, our market share was in the 8.5% and 9% range that’s the direct result of low hold in the premium mass area. And so that when you look at it, that’s between a $15 million and $20 million EBITDA impact for the fourth quarter which was in the premium mass area on October and November.

But nothing onto the IT side on the direct side, Wynn?

No.

No okay. As you point you and really shared about 10% on average less table games this fourth quarter versus a year-ago, how do you think that impacted, is there a way you can estimate that on a direct or indirect basis?

Joe I think that what you should know is that our tables are going to increase by about 40 tables after Chinese New Year with the new VIP rooms coming on and the incremental mass tables that will be up to about 485 tables, excluding poker in two to three months. And they are in the right positions in the casino. So it’s not just about number of tables, it’s where they are and we repositioned all the product and we’ll be up to 485 tables in a couple of weeks.

Okay and then my follow-up... Excuse me.

It’s a combination of junket tables and mass casino tables. And also to note, we’ve had a lot of construction taking place throughout the fourth quarter. Now we get the West Casino back in its entirety and it’s looking fantastic.

We’re installing furniture today.

And then my final question, going to the Las Vegas side of things it looks like promotions was up sizably year-over-year. Can you talk about what drove that and is there sometime one time related to last year’s mix and last year’s hold? Thank you.

No we didn’t do anything unusual here in promotions and that might just…

We don’t know what’s you’re looking at Joe, but we didn’t.

Okay, I’ll follow-up offline that’s help for me. Thank you.

Your next question comes from the line of Shaun Kelley with Bank of America.

Hi, good afternoon everyone. Steve in your earlier remarks, you mentioned that you did see I believe a 26% increased in the mass business so far in January and we haven’t heard that many kind of raise of why in Macau in recent months. So I was wondering if you could help us break that down a little bit, are you seeing that improvement in premium mass, in grind mass our traffic levels up just kind of may be help us think about that a little bit more.

Ian where is it?

So it’s coming from the mid-level mass, the high-end mass, very high-end this impacted as VIP, but interestingly the mid-level of mass, we got back a room inventory from some of the junkets that we have moved done during the year, we got rooms from refurbishment. So we’ve been able to provide more of the hotel accommodation for the mid-level mass sector. There is about 7,000 players that we’ve targeted directly in the niche way, we call it a winter campaign and it’s proved very successful for us.

Great, that’s really helpful Ian. And then I guess my other question would actually be on Boston. So you didn’t provide a budget in the releases. Is that something that you could provide, I think there were some comments that it probably moved up to closer to $1.75 billion? Is that about the right number?

It’s right in that area $1 billion, $1.75 billion. And we are feeling great about Boston indecently, just great. We love the idea that we’ve got that for diversification. And we’ve never ever been in the position we were the only game in town. We’ve always in my career for the past 40 odd years we have competed and prevailed in the most competitive markets that exist. And we tend to thrive under those circumstances, because as a top-end operator, we tend to creamy part of the market whether it’s the mass or in VIP. And to be in Boston, Massachusetts and in the metropolitan area in Everett and have almost four million people where we’re the only game in town is scintillating. We worked very hard to compete for the right to operate in Massachusetts as you know and it was expensive to do that process and time consuming very and we had a 1,800 pound application when we finally finished. We spent $25 million just to get to the end of the game, in terms of local elections and requirements with related communities, that we had $130 million in infrastructure that we had to agree to and then there was another $100 million in the cost of the license other miscellaneous stuff there. We were in $230 million of our budget already, or promises for that that are separate than apart from the construction on that project budget. We are going to be the one of the top five private employers in the history of the State of Massachusetts. We are going to be responsible for $50 million a month in revenue for this state, probably another $50 million in related revenues to all the surrounding communities. We are going to employ thousands and thousands of people. It’s the largest construction budget in recent history in Massachusetts maybe forever. We’ve got a serious presence there in Massachusetts and we are delighted to have that position. And we finish the design of the hotel and I think its along with the Palace the best work we’ve ever done based upon 40 years of experience with what’s best of all with the same group of executives that have learned from all of our past experiences and projects. And hopefully our next stuff that comes up will reflect the evolution and the enlightenment that we’ve been able to achieve because of those experiences. So speaking for myself, I am delighted with the Boston opportunity. Wynn America now enjoys, I think we’re alone this last few months we cut our investment grade which we’re had from Moody’s now from Standard & Poor's. So our credit rating is the highest in the industry, we’ve financed a $1.25 billion of our Boston project already few months ago at LIBOR plus 175 and we are in real apple pie shape, just as our financing in China was at LIBOR plus 175. $3.850 billion of the project in China was financed non-recourse at LIBOR plus 175 or a total of 3.3% for the $3.85 billion that we raised, again non-recourse. Our Boston financing is non-recourse to the parent in Wynn America which is as I just said I'm proud to say investment grade. So all in all the setup is just right for Massachusetts and as we wind our way through the complexities of the Asian situation our setup is just right to keep our promise to our employees and to the government in China.

Great, thank you very much.

Your next question comes from the line of Felicia Hendrix with Barclays Capital.

Hi all, Steve, you touched upon this in your prepared remarks regarding how you view doing business in China and being a good corporate citizen there, and along those lines lot of investors have remarked as lately how they’ve noted increased rhetoric of all the Macau operators regarding the diversity of their new casino resort projects. And obviously everyone is taking directives from the central government seriously there really shouldn't be a question there that in your view has a mandate changed? That is your perception of what the government wanted when you started your new project, when you started Wynn Palace, has that changed significantly when you started? And if so does the increased rhetoric on diversification of the Macau economy affect your expectations for the returns of Wynn Palace at all?

That’s a great question, I must say. And I’m sure glad you asked it. I didn’t expect that today. But the answer is at least speaking - I’m getting over cold, - for our Company in each and every case in America leading up to China, we have broken the record for casino revenue at the Mirage, we broke the Caesars pre-existing record for casino revenue than we broke the Mirage record at Bellagio and that we broke the Bellagio record at Wynn in the we broke the Wynn record when we opened Encore. What's interesting though, even though we’ve gone into the $800 million range, never in the history of our company, has our casino revenue met or exceeded our non-casino revenue. That is to say the reputation of this Company, its status today is based upon the fact that we did not focus completely on gaming but recognize that gaming was a result and not a cause that although it was a productive cash register in the building, that the real attraction on the power of the energy of our – vitality of our enterprise, was directly related to its non-casino experiential, entertainment and hospitality aspects. The one thing that led to the spread of new concessions in Macau, the desire of that government after the turnover to the PRC, was to broaden the appeal of Macau and to diversify from purely Bacura to beyond Bacura. Now all of the operators there, all of our competitors have recognized this from day one, not because of a mandate from the government necessarily, but because of their understanding of how the industry survives and prospers, based upon creating experiences for people that they can't get at home. Tourism, the broadest definition of tourism, a positive exciting experience which you can get at home and surely we recognize that a slot machine or a Baccharat an experience you can get anywhere. Every damn slot machine on earth looks like every other one I can’t even tell one manufacturer from another unless I look at the plate on the side. Every roulette table is identical to every other roulette table, no matter what nation you’re in, from one end of the globe to the other. Our company has recognized that more any other company in history. Our non-casino revenue always exceeds our casino revenue. Wynn Palace was built as Bellagio and Wynn and Encore have been built to create a complete tourist destination experience. Only the smallest part of our budget in Macau was dedicated to Baccharat tables, but hundreds of millions, yes billions of dollars up to $4 billion dedicated to entertainment, shopping, food and beverage, spas, incredible hotel room experiences, and most importantly to an extensive in depth training routine and discipline on the area of human resources to guarantee the visitors to Wynn Palace, a unique experience for those people who travel and seek to have unique experience. So when you hear that the central government and the Macau government urged operators to diversify the attractions of their facilities, when they speak to us they’re preaching to the choir. We invented that idea, it has been certainly enhanced and it’s certainly been carried on by companies like Venetian and Melco. No question in Galaxy and all of these facilities being built in Cotai today are remarkable destination resorts. And they were planned and they were executed with enormous amounts of capital, before and during any encouragement by the central government or the Macau government. So this is a development, this development of non-casino is something that was going to happen anyway and has to happened. And I’ve said this once before, I'm going to repeat it again today. If you take Macau, with its destination resorts, which include gaming tables and you take Hinson Island adjacent to Macau, with its additional non-gaming attractions like theme parks, I’d say that Macau Hinson Island area will in the next five years to ten years, become the most dynamic tourist destination location on the planet. And that’s saying something in country that has Orlando, and Ohio and Las Vegas. But boy what’s being done over there is really something. And to a certain extent it’s happening in Shanghai as well. So I hope that responds to your question.

No, that was great color, I appreciate that and if I may move on to Las Vegas for a moment. Can you…

One thing last year, $800 odd million in gaming revenue but the total revenue of the place was just shy of $2 billion. That's not a gambling hall. I'm talking about Las Vegas now, just $1 million, $1 billion $1.97 million or something in revenue. Just shy of $2 billion, the gaming was only $800 odd million of it. That will give you idea of – and that’s been, and is going to be. And in China because of the vigorous gaming activity it’s very hard to exceed the gaming with non-gaming facilities, but if you look at the facilities, they are lopsided non-gaming. Okay I'm sorry that ends my answer.

No I appreciate that. Can you tell us or one of your colleagues tell us what you’re seeing from the Asian Baccharat customer in Vegas in the quarter in the market Baccharat lines were down 11% year-over-year. I'm just wondering is there something structural, is it economic, is it something we shouldn’t be concerned with just what are you seeing there?

Well, I mean, certainly I'm concerned about the attitudes and trying to handicap the behavior of Chinese, Hong Kong and Chinese players that travel the world and visit various places. Our New Year’s was very vigorous in terms of Malaysia, and Indonesia, and Taiwan, Korea this in January and South Korea in January. The head is in Hong Kong and Mainland China. And the future of it is unknowable at the moment. There are so many moving parts. I don’t have an answer to it on this call. And sometimes, you just have to say you don’t know.

Well, I don’t know either so I guess we are even there.

There's a whole bunch of us.

Alright, thank you.

Your next question comes from the line of Carlo Santarelli with Deutsche Bank.

Hey, good afternoon. I wanted to touch a little bit on how you guys are thinking about your dividend as well as overall capital as we go forward. I believe leverage today on an LTM basis is around three times clearly there is Cotai spend, but as it pertains to your domestic dividend the $6, how are you guys thinking about balancing that with leverage and obviously retained earnings the Macau?

Well, first of all, let’s understand that Macau this is not 2008, Macau went from sky rocketing to healthy revenues. Let’s keep some perspective to this conversation. Our structure now does not threaten our dividend in the near future. Now when Cotai opens next year hopefully some time next year that there will be an incremental revenue and profitability from it and I can’t see that any other answer would be appropriate looking forward.

Yes that’s right.

So I was always hoping the dividend would increase. I haven’t thought that it would decrease. Nor do I think so today. Now Matt, you deal with this, you and Steve Cootey. You can correct me if you like to.

No, you are right.

Our feelings won’t be hurt.

No, you are right. Low average, lots of cash protected the dividend and we have a big property hoping next year.

Understood, thank you guys and if I could just ask one follow-up actually two, both on Macau. One was would you guys be able to comment on whether reclassifications played any role or have played any role in some of the moving parts. I think, Matt from your comments the $15 million to $20 million of premium mass EBITDA drag, if I just do some backwards math that’s roughly $20 million a month of less revenue, which kind of explains the delta between what you did in January relative to what you’re doing in the 3Q, is that all that is or was there some other reclassification activity, and then my quick follow-up is would you guys mind just commenting, I got a little bit confused, is the West Casino renovation and all the tables will they be ready for Chinese New Year, or are there different parts of that?

Last one, the answer is yes.

Okay.

Everything will be ready in a few days we are finishing everything, in real time in the next six days. Okay go ahead Matt.

And we haven’t been going through these reclassifications scenario you're seeing other operators going thorough. So your mass tables are our mass tables in the same as our VIP.

Great, thank you Matt and Steve, I appreciate it.

Sure.

Your next question comes from the line of Steven Kent with Goldman Sachs.

Hi, good afternoon. Maybe if I could just go for a little bit more of a longer-term question, which is what examples are you seeing today in Macau that give you the confidence that when it’s pivoting more and more towards the mass or the high-end mass, away from the junket. So what are you seeing today that gives you the confidence of that the $4 billion and all the things you’re doing are going the right direction. I guess that’s what we are all struggling with. The only example I would use Steve, which I think you live through which was in the late 1990s, when we saw move towards U.S. customers wanting better restaurants, better rooms that gave you the confidence to go and build the Bellagio, so what is it today that gives you the confident that you’re doing the right thing in Macau?

Interesting question, I’m gathering my thoughts. At the end of this consideration, you and I and everybody else on this call, have to ask ourselves, is there a commonality and humanity in terms of aspiration? Is China so different than America? And my answer to that question based upon these 40 odd years of dealing with Asian customers more than anybody else probably in the last 30 years staring with Maurice and talking to them constantly both here and at home in Macau. Is that aspirationally all folks are the same? When they go on vacation, they want to live bigger and better than they can in their normal discipline lives. And that’s what makes destination resorts necessarily special, so that they can fulfill that aspirational dynamic. Nothing that we’ve seen in China has changed my opinion and in fact everything that we’ve experienced in the past twelve years in wonderful Macau has reinforced that. Folks may look differently and talk a different language and their menu maybe different, but in terms of what they want, it’s all the same. And everyplace in the world, we’ve given people what they want in this ever more mobile society the moving middle class of the world, they have responded to the same amputation with similar enthusiasm. Wynn Palace is a gilt edged invitation to that party. And my confidence is based upon 40 years of experience both with American and international players, and the Brazilians and the Mexicans, and the Argentineans and the Columbians, where we have offices, and the Venezuelans, the Taiwanese, the South Koreans, the Japanese and the Chinese folks, when they have some money and the chance to enjoy at, they all want the same thing. And that’s the basis of my confidence and I might add it’s most likely if Sheldon was on the call or Francis Loi, they’d or Lawrence Hover, Jamie Packer they would say the say the same thing. I believe that to be true. And that’s something I’m very hesitant as you know. I’m insecure about the short-term future of the way things rollout in Macau. But I am not insecure about that answer to that question.

So, Steve, just because what I guess I was asking for and I mean I know it’s a big ask as like you’re seeing good hotel room demand, you’re seeing people willing to trade up for things in restaurants in hotels in the way they are interacting in retail, in the fourth quarter I guess or in January, that’s what I’m really trying to get out is whether you’re seeing any of that today? I'm not sure if you cold be able to…

It’s confusing.

Okay.

It’s confusing. People with money are destabilized at the moment in China. I think that - and you’re seeing that all across mainland China, that people are being cautious. There’s an uncertainty in China these days about the things that are a little foreign to us here. What is expected of them? What’s the relationship of Chinese businessmen to Chinese government officials? Is corruption is widespread as people say it is? I read the South China Morning Post, I talk to people and this campaign against corruption has been a big wakeup call in China. President Xi Jinping has determined that his leadership should eliminate the perception of corruption. And the only way to do that is to root it out and you know there is a huge national campaign to investigate public officials and their behavior. Now it's comforting to note that the liaison officer who represents the central government in Zhuhai that looks over Macau, made a public statement, when I was there last week, that there is little or no evidence of any government officials gambling away their money in Macau. He wasn’t concerned about that that was a positive announcement by him. And I think he felt it necessary to say that but we wait for an announcement from the government with bated breath to understand what their perceptions are of Macau and what the related activities will be as a result of those perceptions. So I think what we’re seeing across China is a retrenchment of spending instincts and how long will that last, I don’t know.

Okay, thanks. Thanks to the color.

Your next question comes from the line of Thomas Allen of Morgan Stanley.

Good afternoon. So you mentioned earlier, how there are very good people filling the new junket tables, you’re bring on board ahead of Chinese New Year. We read almost every day about turnover in the junket business. Can you just discuss how you choose the partners that you did how you were dealing with junkets in general and have you changed your direct VIP mix at all in Macau? Thanks.

The interest we have changed, we’ve eliminated the weaker junket operators, and very much, as if we’re looking in the mirror, we saw safety and security by dealing with only the strongest operators financially. One of them is called Sun City, the other one is called Quang Dung named after the province we that are adjacent to us Quang Dung province the capital of which is Guangzhou. And we’ve given our two new rooms to Quang Dung and to Sun City. And Sun City is the financially, probably the most powerful of the junket operators. We’d never had them in our facility. And we’re welcoming them with a sparkling new really dramatically lovely space and they are enthused about that. And we’ve gone to nine operators from 12 or 13. And reclaim those tables as I mentioned earlier, because we want to business with only, we are very conservative about credit. So we want to business with only the most conservative counter parts in that industry. Is that helpful to you, you got answer?

Yes, very helpful, thank you. And then just as my follow-up. We know as in your results that your promotional spending in Macau as percentage of revenue went from about 5% to 6%. I think I asked that question last quarter about what would happen with the promotional environment and you talked about at a certain point, you have to raise it - raise your promotional spending to kind of fit market environment, but at certain point it’s gets futile. Can you just talk about you kind of where that could go? And then just a final numbers question for anyone in the room, when you talked about first mass market revenue of 26% of your property in January, was that versus December or was that versus January the prior year. Thank you very much.

January the prior year in just a quick of aspect. Matt, why don’t you deal with that or…

And then promotional type?

Whoever wants to deal with this?

Yes look, again, if you look at our third quarter promotional allowances were $50 million, they were $48 million in the fourth quarter and $48 million year-over-year getting into the mix that it’s gone from 5% to 6% of revenue. I think that’s missing the point. They were flat year-over-year and we’re not seeing any major increase in promotional activity in the industry. Does that help?

That’s all from me, thank you. Yep, thanks, Steve.

Next.

[Operator Instructions] Your next question comes from the line of Harry Curtis with Nomura.

Hi, Harry.

Hi guys. So Steve I wanted to get back to kind of the focus of your target market for Wynn Palace given these policy changes and the uncertainty, has that changed your focus on where your target market is going to be and what your ROIC expectation is? And tied into that is going back two quarters ago you talked about table allocation, it seems to us that the 1,750 remaining are unallocated tables is more prominent than we had thought, and have you amended your view on that topic?

My target market hasn’t changed at all we’re after everybody. It has been the story for 40 odd years. We are looking for everybody, who have the funds and the desire to experience the highest end kind of treatment that they can get. Matt, is there - can you enlarge Harry’s question, answer to him?

Sure, on the table allocation?

Yes.

What we, I thought we dealt with that. We allocate the tables based upon a moving assessment, this weekly. And we reevaluate the activity on our VIP and if we don’t like it, we move it into mass.

And Harry is asking about do you think you'll get your tables for Palace with over 1,750 left.

Well you know, at the end of the day, the government will assign those tables. And they haven’t officially done that yet, and but I might point out that in planning Wynn Palace we were required to submit extensive schedules of how many employees we would need for construction and when we would need them. How many people we would hire from Macau, how many tables we need, everything was included in the submissions that were considered and reviewed by the government extensively for protracted periods of time. And that process was slow, laborious and extended, and then we got our final approval and we commenced construction. The building was designed and the employees and the promises made to the employees were all based upon all of those submissions and those decorations which were then approved and accepted and we were given the green light to go ahead. It seems to me that at the end of the day the government will respect that to talks of caps and all of that thing, all of those sort of things, they occurred after our approvals and after our construction had begun and on the land and so, well, I don’t know what our table total is as we speak today, I have a sense that commonsense and consistency will be the order of the day. I don’t see the government in Macau threatening the security of the employees who live in Macau for our shareholders of our company I just don’t see that, do I sense that in my conversations with the government. So how they allocate those tables is something that’s clearly their own business, but the responsibility for these projects, although we have financed and built them is also their business. And I have confidence that their commonsense and their integrity will – but the end of the day it’d be the last word on the subject. I don’t know how you’d look at it if you change seat with me this afternoon, but that’s my feel about it.

Thank you.

I don’t see the government of Macau scuttling their own industry.

Okay. I appreciate that and then the only other question I had, Steve, would be as you look at Vegas over the next couple of years, what you think is the demand picture looks like particularly as we, as the group business like invention business comes back. Can you talk about your expectations there?

Yes, Maurice is with me. But there is a preemptive moment to that answer. Two projects have been announced directly facing our land. We have over 2,000 feet on this strip and opposing our 2,000 feet are the frontage of the old Stardust and the old Frontier Hotel. The Frontier has been purchased by the interest of James Packer and he has hired people of quality and experience to build and to design and build a facility that is approximately $2 billion. Our KT Lim, an internationally experienced casino developer in Malaysia and Hong Kong and even New York, with the slot machines of Aqueduct, in Singapore and Malaysia and Aqueduct. He has announced a project on the site of the Stardust or the [indiscernible] property again it supposes Encore that is $4 billion. Now, if you say that instead of an empty land and a couple of shell structures, we’re going to have $6 billion worth of construction and eventually in four, five years buildings and employees and guests across The Street with thousands of rooms. That’s worth at least $30 million to $50 million on the bottom line of my company. I love that. And so right away, I see Las Vegas being enhanced going forward by this kind of experienced capital investment. Hopefully, those projects won’t be false starts, they will really happen. And the men who've announced them are people fully capable of keeping the promise. That’s good news for us, in our spot here on the promenade. So my feeling about Las Vegas, it’s still the destination of choice worldwide. Otherwise, why would all the Asians come here as they do on Chinese New Year? Why were they all here on New Year's Eve? They filled - over 2,000 of them filled our ballroom to watch Bruno Mars. And then they shopped and eat and gambled and enjoyed themselves to the Hilton [ph], they have got a great New Years. So nothing's new and I think again so much depends on American domestic political situation. I thought that we were under the gun during the recession with administration policies of more, more of a wet blanket on job formation and economic development and they were constructive, but that was my own personal view. We seem to overcome the administration and the recession and we finally slowly seen to be crawling out of the ditch we were in and maybe things will continue to improve in America. In Las Vegas and at least the Wynn Resorts has comes through it handily. I think the same thing is going to apply in the future.

And so when you look at the kind of year that you come through in Las Vegas as far as room pricing and operating leverage. Do you think that 2015 and 2016 will be just a strong based on kind of the forward bookings that you have?

Well, I’ve raised all the prices on our rooms about 18% August, was in August Maurice?

Yes, it was August it actually was started in Labor Day weekend.

Yes, I decide to raise the prices. Pricing is always one of the art forms of any business. Pricing blackjack, pricing rooms, pricing everything, it’s always - you don’t want to price yourself out of the market, but you don’t want to miss the opportunity to take an increase, especially do you think you’ve got the kind of demand and reputation that will allow you to do it. We’ve been able to do that so far. The business of business is not about homeruns, it’s about ones and singles. And you build the reputation, you create a platform for a business, they can sustain pricing increases over a long period of time because of consistency. Consistency is probably the most important word in politics and business and human relations. Consistency is the most important thing to the future of Macau. Does the world think the China is consistent, the Macau is consistent, but the businesses and the governments will be consistent in their decisions. Consistency allows for a better future and a better life for people. Inconsistency is destabilizing and frightening and then creates all that uncertainty. We live with a certain amount of it on a daily basis. Surely, we do internationally as a nation with the problems in the Mid-East, surely we do politically in America and surely at the moment we do deal with uncertainty in China. The question becomes if the only constant is change in uncertainty then how agile is the company, how agile is it financially, how agile is it in terms of its human resources. It’s very important for CEOs and Senior Management of people in all companies to recognize that flexibility, agility is everything to survival in the modern world and I think that’s probably almost a universal truth these days. That’s the main thing that I see going forward that we maintain the kind of platform that will allows us to deal with change easily and to be agile. And then to trade on our goodwill and our past performance, we got the concession in Macau because of Bellagio and Mirage. And the Government of China decided that they wanted after the takeover to [indiscernible] appeal of Macau as a worldwide destination travel and tourists destination. They went looking for people that they talk to do it. And I think that we got the concession because of our past performance in Las Vegas. And our job in Macau has been to keep that promise going forward with the capital, we have less invested as much in China as we’ve ever made. All our money is back in there, and in spite of the success we’ve had and that is true a Venetian, as well as Galaxy and Melco, we’re all the same in that regard. Everybody, MGM is doing in this well. So I think that all bodes well for the future in spite of short-term uncertainty.

Thanks for the help guys.

We have time for the one final question. Your final question comes from the line of Robin Farley with UBS.

Hello Robin.

Great, Hi how are you? Two questions, one is I don’t know if you have any thoughts on the potential for the smoking ban to be extended to the VIP segment.

Yes, yes, yes the smoking ban will be extended in my view.

And any thoughts on kind of what kind of impact that may have?

Well unintended consequences in our case. For reasons entirely unrelated to the smoking ban, all of our facilities have terraces on the lake that we built with the fountains in the gondola in front of Wynn Palace. So virtually a huge amount of our gaming facilities have terraces so you can get up from a table and walk outside the door and be on a patio outdoors looking at the water. That’s not why we did it, in anticipation of not being able to smoking the building, but it turns out that we got a windfall and our plan in our facility. Robin your question about will the smoking ban be extended to be absolute in the building. The answer is yes. I believe that to be true. What was the second part of the question?

Well, part of it was just going to be the impact on before Wynn Palace opens on your date to business and whether there's anything you can do to kind of make adjustments, to minimize the impact from that? And then I did have question.

Let’s just take one at a time, in terms of the impact so long as it’s the same for everybody very little impact. So go ahead Robin.

So my other question was about margins. When you look at the fourth quarter, I guess more of your business came from Mass was a bigger percent of your business versus VIP from a year ago for some of your total business and we usually think of the margins being so much higher in the Mass business. And just kind of looking at EBITDA margins of the property year-over-year, you’re still down a bit. I guess I wonder if you can talk about maybe some of the cost pressures in the mass business and think that might - you might be able to mitigate as businesses shifting there?

So again cost pressure in the mass business, our margin in the mass areas has been very consistent. Some of the things that you’re picking up are retail revenues are down and when retail revenues are down that goes straight to the bottom line because that’s the least income and very high margin. So for the whole town, everybody is experiencing that. And we’ve always said we think our EBITDA margin given all the various mixes is going to be somewhere in the low 30s and that’s where it’s coming in.

How’s that Robin, is that covered?

That is helpful. Thank you.

Anybody else, we’re going to leave you out. If there is anybody there - another question. That’s a good time to do it. I know there is lot of changes, so even though that was supposed to be the last question, if there is another one I will take it.

You do have a question that came in from the line of Chris Jones from Union Gaming.

Great, thank you. Just real quickly just following upon the late letter that you discussed. Can you just talk about how far off you are from people labor and perhaps what you’re assuming going forward in terms of what you’d have to get in terms of getting back on schedule of these - in mid 2016 opening date? Thank you.

We had two labor requests to finish. It took 7,000 people to fill the building. We had 4,600, 4,700, we needed 2,300, we got 700 were 1,500 was due – 1,500 that 1,000 - that was - request was October, the 700 we got was last week and right around the middle of February, we needed the last 1,500. That request is in. It remains to be seen on how timely that request will be granted, but that would take our work force to 7,000 which is what the latent folks say they needed to finish the building on time and they have vast experience in Hong Kong and Macau and everywhere in Asia. And so when they say 7,000 people, it takes to build six million feet that isn’t wish list, it’s just a simple practical explanation of the requirements. And we’re 1,600 or 1,700 away from that now.

Great, thank you.

That’s it I guess. So thank you everybody, I appreciate your attention. Hope that we’ve been responsive and will wait to see what happens in the next 60 or 90 days.