Wynn Resorts Q3 2026 Earnings Call Transcript

Wynn Resorts (NASDAQ:WYNN) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Wynn Resorts reported mixed financial results with Las Vegas showing a 3% increase in RevPAR and ADR, despite unfavorable hold impacting EBITDA negatively by $24 million.

Encore Boston Harbor faced headwinds due to a labor strike but reached a resolution with union leadership, while Macau’s performance was boosted by VIP hold adding $12 million to EBITDA.

The company is optimistic about future quarters, particularly with strong demand expected during F1 weekend, and ongoing construction projects in Macau and the UAE progressing as planned.

Wynn Al Marjan Island is on track for a September 2027 opening, with significant interest and pre-opening activities underway, despite regional uncertainties.

Management highlighted strong liquidity with $4 billion in global cash and revolver availability and continued capital returns through dividends and stock buybacks.

Full Transcript

OPERATOR

Welcome to the Wynn Resorts third quarter 2026 earnings call. All participants are in a listen-only mode until the question-and-answer session of today’s conference. To ask a question, please press star one on your touchtone phone. Record your name and I will introduce you. Please limit yourself to one question and one follow-up. This call is being recorded. If you have any objections, you may disconnect at this time. I will now turn the line over to Craig Fullalove, Chief Financial Officer.

Please go ahead.

Craig Jeffrey Fullalove (Chief Financial Officer)

Thank you, everybody, and welcome to the Wynn Resorts Q3 earnings call. On the line with us today are Craig Billings and Brian Gilbrandt in Las Vegas. Also on the line are Jenny Holiday, Linda Chen and Frederick Lubosuto. Please note that we published a presentation to provide more color on the company and recent performance ahead of this call. You can find the presentation on our investor relations website. I want to remind you that we may make forward-looking statements under safe harbor federal securities laws and those statements may or may not come true.

I will now turn the call over to Craig Billings.

Craig Billings (Chief Executive Officer)

Thanks, Craig. Good afternoon and, as always, thank you for joining us. You know, this was a complicated quarter with more headwinds than tailwinds. But through all of it, our teams at each property executed very well, given what each of them can control. Here’s what we delivered and how we see things going forward. I’m going to start here in Las Vegas. Wynn Las Vegas generated $158.8 million of adjusted property EBITDA. Unfavorable hold cost us just under $24 million and the summer market was a headwind. Against that, the team delivered a 3% increase in both RevPAR and ADR, and retail lease revenues were up 8%. Those are all indicators that the high-end consumer remains healthy. I’m proud of how the team executed. More recently, October was actually quite strong, with casino drop, ADR, RevPAR and retail tenant sales all up year over year.

In October we opened the Cliff House Grill, the clubhouse and restaurant on the 18th green of the Wynn Golf Club. XS Nightclub has completed its renovation and reopens. The Encore Tower remodel remains on track for completion in the first half of 2027. As we have mentioned several times now, we expect capex in Las Vegas to decline relative to the past several years, with select investments in food and beverage and nightlife in 2027. Looking ahead, the remainder of the fourth quarter looks quite healthy. As is now often the case, we do particularly well when multiple market drivers overlap, and this quarter has F1, a robust convention calendar and the NFL season. F1 weekend is pacing ahead of last year in rate and occupancy, with demand for tickets and rooms still very high. Beyond the fourth quarter, our group and convention business for 2027 has both room nights and rate pacing ahead of where 2026 and 2025 stood at this point.

Turning to Boston, Encore Boston Harbor generated $50.1 million of adjusted property EBITDAR. In Boston, the strike, which kept 1,300 team members out through the whole of September, proved to be a modest headwind. I’m grateful to our team for keeping the property running to our exacting standards throughout the strike, and I’m pleased to announce that we were recently able to reach a framework for resolution with union leadership that is both fair and economically feasible over the long term.

Union leadership has recommended that agreement to its members, and a ratification vote will begin later today. Moving to Macau, Wynn Macau generated $255.3 million of adjusted property EBITDA, with VIP hold adding just over $12 million. The quarter was mixed in Macau, with a soft September, and while the equity markets often take a more binary view of China and Macau, we don’t really focus on whether the market is up 2% or down 2% in a given month. We instead focus on the long-term fundamentals. China is a large, complex economy that has been doubted many times before and keeps adapting.

We’re not betting on a straight line; we’re betting on that adaptation. In October, Golden Week drop, handle and retail sales were in line with last year, and the holiday period then ran longer than usual. Though consistent with reported October GGR figures for the market, volumes declined into the end of the month. In the third quarter, we began construction on three previously announced projects in Macau: the Enclave, the Theater and Event Center. The Theater and Event Center remain on track to open in 2028 and the Enclave in early 2029, adding 432 suites to Wynn Palace, which already runs occupancy in the high 90s.

Finally, Wynn Al Marjan Island construction continues to move quickly, with finishing work underway throughout the property, including the fit-out of all guest rooms. Preopening, hiring and operations planning are advancing well, and we remain on schedule for its September 2027 opening. We acknowledge the uncertainty in the region, but as I’ve said before, we are firm believers in the resilience and adaptability of the UAE. I believe Wynn Al Marjan Island will be the most exciting integrated resort opening globally in over a decade.

Our future remains bright. I’ll now hand it over to Craig Fullalove to run through some additional details on the quarter.

Craig Jeffrey Fullalove (Chief Financial Officer)

Thank you, Craig, and good afternoon everyone. Let me walk you through the financials for the quarter, starting in Las Vegas. Wynn Las Vegas generated $158.8 million of adjusted property EBITDA on $575.2 million of operating revenue for a 27.6% margin. Unfavorable hold was a significant headwind, costing us just under $24 million in the quarter. On the cost side, opex excluding gaming tax ran $4.3 million per day, up 0.4% year on year. That slight increase is reflective of our continued discipline in managing costs, including FTEs, despite the inclusion of Zero Bond and Satyano’s, which continue to ramp on full staffing levels.

Over to Boston. Encore Boston Harbor delivered $50.1 million of adjusted property EBITDA on $194.7 million of revenue for a 25.8% margin. Opex per day came in at $1.11 million, down 4.4% versus the third quarter of last year, partially reflective of near-term cost reductions related to the ongoing labor strike in that region. In Macau, the team delivered $255.3 million of adjusted property EBITDA on $919.2 million of operating revenue for a 27.8% margin. VIP hold ran above our theoretical expectation this quarter, representing a positive impact of just under $12.3 million. On costs, opex excluding gaming tax was approximately $2.9 million per day, up 5% year on year and down 60 basis points quarter over quarter. Similar to Las Vegas, that year-on-year increase is driven partially by deliberate investment in the premium customer experience with the opening of our Chairman’s Club expansion earlier this year, plus normal-course cost of living adjustments.

On Macau capex, as Craig mentioned, we recently began construction on the Theater and Event Center along with the Enclave Tower at Wynn Palace. Spend on these projects in 2026 will be limited to some piling and early development works, with funding for these projects coming from free cash flow generation out of Macau. We continue to expect full-year 2026 expansion capex for Macau to land in the $350 million to $400 million range, as shown on page 23 of our investor deck.

Turning to the balance sheet, our liquidity position remains excellent: $4 billion of global cash and revolver availability as of September 30th, split roughly $2.5 billion in Macau and $1.5 billion in the U.S. That strong cash generation gives us the flexibility to keep returning meaningful capital to shareholders on both sides of the Pacific. On the Macau side, the Wynn Macau board approved a 2026 interim dividend of $150 million, up from $125 million in the prior year, which was paid in the third quarter.

We strive to maintain our current practice of capital return via an industry-leading dividend as a means of showing our confidence in the Macau markets, and we’ll continue to revisit that dividend level with the Board as appropriate. At the Wynn Resorts level, we bought back $58.1 million worth of stock in the quarter. Additionally, our Board has approved a cash dividend of $0.25 per share, payable on November 30th to stockholders of record as of November 16th.

In terms of total capex for the quarter, we spent approximately $201.6 million, primarily related to the Encore Tower and spa remodels, Tower Suite spa, XS renovations and construction of the Cliff House Grill in Las Vegas, as well as on some early piling work for the Theater, Event Center and Enclave projects at Wynn Palace. This is in addition to normal-course maintenance across the business. Separately, we contributed $62.2 million of equity to the Wynn Al Marjan Island project during the quarter, bringing our cumulative contribution to just over $1.12 billion.

We’ve also continued drawing on the Marjan construction loan, with $1.76 billion drawn to date. On our 2Q call, we increased the expected budget for Wynn Al Marjan Island by $600 million, of which our 40% share equates to approximately $240 million, and now estimate our remaining share of required equity, including the GNU project, at approximately $465 to $590 million. With that, we’ll open the call up to Q&A.

OPERATOR

Thank you. To ask a question, please press star one on your touchtone phone, unmute your phone and record your name clearly when prompted. Please limit yourself to one question and one follow-up question. To withdraw your question, press star two. Our first question will come from Dan Pulitzer with JPMorgan. Your line is open.

Dan Pulitzer (Analyst at JPMorgan)

Good afternoon everyone, and thank you for the question. Craig, I think it was helpful that you gave some forward-looking commentary on Las Vegas, especially as we think about 2027. Do you think that you have the makings, and the kind of backdrop for the market is supportive enough, to get back to a growth algorithm in Las Vegas? Or do you need to see incremental recovery or kind of strength start to pick up on the leisure side from some of your competitors?

Craig Billings (Chief Executive Officer)

Thank you for the question. I mean, first I think it’s important to talk about, from a high level, what’s happening in Vegas. If you think about it, over the last decade, the city has added pretty significant new demand drivers: the Raiders, the Sphere, F1, expanded and renovated convention center. And so in a quarter with several of those demand drivers, like the fourth quarter that we’re in now, pricing power is very strong and you can really top tick EBITDA.

Summer has the fewest drivers of any period of the year. Corporate business is light, there’s fewer events, the NFL season hasn’t started. So some quarters have many drivers and some have few. But, you know, even in those quarters with few, we’re still well above where we were from an EBITDA perspective five, six years ago. And our own numbers kind of don’t show a consumer issue. I mean, RevPAR and ADR are both up. Retail lease revenue up. October was strong, which is what you’d expect as those drivers return.

So from our perspective, Las Vegas is doing really well and our pricing power remains very strong. Second, the group and convention business, our longest leading indicator, as you know, also looks strong in 2027. 2027 is pacing ahead of where 2026 and 2025 stood at this point. And third, you know, look, we’ve performed so strongly for so long that we have tough comps. And that’s not a comment on demand, it’s just a mathematical fact. So I don’t really think about it as the leisure customer needing to return or come back. We sit in a very unique position, and I feel great about where we are today and I feel good about 2027.

Sure. Look, there’s a lot of moving parts in China and Macau at the moment. And much like you can’t pin kind of singular narratives on the U.S. economy, it’s hard to pin singular narratives on China and on Macau. The economy is complex. It’s in the midst of change with regional and industrial variation. Just like the U.S., there were well understood effects from the World Cup and seasonality in the quarter that we just reported. There are, you know, tax policies that you mentioned.

But really I wouldn’t try to reduce a very complex economy to a single narrative. I will say if capital controls were the issue, I don’t think we would have seen a Golden Week that looked a lot like 2025.

OPERATOR

Thank you. Our next question comes from Sean Kelly with Bank of America. Your line is open.

Sean Kelly (Analyst at Bank of America)

Good afternoon, everybody. Thanks for taking my question. Just wanted to see if we could touch again on Las Vegas. Craig, the performance there, I think especially on the RevPAR side is quite notable. With RevPAR up relative to market, just wondering if you could talk a little bit about initiatives or pricing strategies you put in place because you clearly held serve really well in what was pretty difficult market conditions. I was just looking for a little bit more color on what drove that outperformance.

Craig Billings (Chief Executive Officer)

Sure. Brian, you want to talk a little bit about rate versus occupancy strategy, how we think about filling the place?

Brian Gullbrants

Sure. We’ve gone to lengths to really model the optimum EBITDA with the balance of rate and occupancy. And this market has always driven occupancy and tanked rate to fill that occupancy in need periods like the summer. And we saw, based on what we put together, that really wasn’t the right model for us, especially where we operate in the market, in the segment within the market. So we drove the right level of occupancy and ADR to maximize EBITDA for us.

That was really also based on the group business that we laid as a base and that the team continues to close business for our future in the base business so we can yield correctly, and we manage segment by segment to make sure that we fill the right guests, the right place at the right time.

Craig Billings (Chief Executive Officer)

And I think you could look at our rates over F1 and get a pretty good sense for where we’re pricing relative to others in the market. We continue to invest in the joint. We continue to focus on service excellence every single day. We manage the place very, very nimbly and very, very aggressively. And we’re able to pick that up in rate and we’re proud of that.

Brian Gullbrants

Yeah, F1’s right now pacing ahead of ’24 and ’25 in both rate and occupancy revenue as well as on the casino side. So the team’s doing a great job getting ahead of it and looking good as we look forward.

Sean Kelly (Analyst at Bank of America)

Glad to hear it. And then maybe just as a quick follow-up on Macau, any color you could provide more on the financial or accounting implications of the subscription agreement? I know it was sort of something that was followed along in there and it applies to every operator in the market. But if we could just get a little bit more color on how it works for Wynn, that would be helpful.

Craig Billings (Chief Executive Officer)

Sure. Let me start and then I’m going to hand it to Craig Fullalove to talk through the accounting. You know, to put, excuse me, to put these subscription agreements in context, you can think about satisfaction. You know, we have 2.6 billion in commitments, concession-related commitments, and you can put them in kind of three buckets: capex, opex, and this fund. Now, we’ll always have a preference for capex. It’s additive to the amenities of the property.

It drives foot traffic for all the obvious reasons. And we have a pretty locked and loaded capex plan, a substantial locked and loaded capex plan that satisfies a giant chunk of that 2.6 billion. Opex and the subscription agreement commitment that you referenced, they’re more fungible. And Craig will talk about the accounting, but those commitments that we’re making go on the balance sheet as opposed to opex, which is obviously better for EBITDA.

So from our perspective, we kind of don’t mind, it may be the way to say it. Craig, do you want to talk a little bit about the accounting?

Craig Jeffrey Fullalove (Chief Financial Officer)

Yes. I mean, from an accounting standpoint, to Craig’s earlier point, the benefit of the fund is that it ultimately will sit on balance sheet as opposed to within opex. So that’s obviously better from an EBITDA standpoint. We’re working through the accounting of it at the moment, but at the end of the day we’re comfortable that it’ll sit on balance sheet. And ultimately for us, we think that’s better than funding through operating expenses.

Sean Kelly (Analyst at Bank of America)

Thank you. Got it.

OPERATOR

Thank you. Our next question comes from Lizzie Dove with Goldman Sachs. Your line is open.

Lizzie Dove (Analyst at Goldman Sachs)

Hey, thanks for taking the question. You gave some really reassuring commentary about October kind of across the board and particularly on Vegas. I was hoping you could kind of pull out the leisure from those statements to the extent that you have seen that recovery as you’ve got kind of more into the event-driven cycle, as you mentioned. And if you feel like that leisure demand has found a bottom over the summer,

Craig Billings (Chief Executive Officer)

I guess. Lizzie, thank you for the question. I guess what I would say, and then I’ll ask Brian to provide his thoughts, is it doesn’t really make sense for us to pull out the leisure demand because the whole point of us being able to top-tick rate is to drive the group base and then drive leisure pricing on the back of that. And so I think my point on the fourth quarter was that when you have the combination of group, you have the combination of these market events, when you have the combination of all of these things, you obviously have the opportunity to really push rates, really push occupancy if you so choose, and really take advantage of every lever.

So for us, we’re not really going to pull leisure out specifically and say are we getting the right leisure rate? We’re getting the right leisure rate because it’s clearing the market, if you know what I mean. Brian, would you add anything?

Brian Gullbrants

Yeah, I’d say the demand drivers actually apply to every segment of our base, so not just on the group side. F1 is a good example where group rate is extremely strong. Leisure and transient are doing very, very well, top of the market. And we’re getting more than our fair share—at least our fair share, I believe—of casino from what it looks like right now. I’d also add that one of the indicators we look at to look at the leisure transient segments are really retail sales or luxury retail sales that we have here. And not only did we pick up in Q3, but in October for us we had another high-end increase which we thought was relatively healthy for this high end of the market. So it continues to roll. We feel good about it and the indicators are still positive for us.

Lizzie Dove (Analyst at Goldman Sachs)

Got it. Great. And then just as one follow-up. So as you mentioned and Sean asked about, you’ve seen some of the best hotel performance that we’ve seen across the board and really strong RevPAR. I guess I’m wondering how do we kind of reconcile that versus cable drop being down year on year. Is it a different type of customer that you kind of saw coming to Vegas, or I don’t know if there was something with the renovations in the base that impacted occupancy or RevPAR at all.

But just curious of the kind of dichotomy there.

Craig Billings (Chief Executive Officer)

Sure, it’s a good question. There’s really two components to my response here. One is pretty technical. The first is one or two players can swing your drop pretty significantly in our business, and that’s just the nature of what we do. And so I don’t kind of look at month-to-month drop numbers and sweat it all that much. You’re looking for broad longer-term trends and are we winning overall? I would also point you to market share. You know, when Nevada releases their numbers and our market share remains very, very healthy, particularly relative to pre-COVID.

The second thing is there is a relationship between low hold and drop. And again, it’s a little bit technical, but, you know, the way that a player plays, a player will take a marker, they’ll hit the table, they’ll draw on that marker, and they have the ability to, if they’re winning, they have the ability to repay that marker and that never goes into drop. And so again, it’s more accounting nuance than it is anything else. But all of those things can affect the drop numbers.

And so in a quarter where one or two players that love us didn’t show up in this quarter, and we had unusual winners where they’re repaying markers at the rim—and therefore that doesn’t end up in drop—you can see swings in drop.

OPERATOR

Does that conclude your question, Lizzie?

Lizzie Dove (Analyst at Goldman Sachs)

Yes, I was on mute. Thanks.

OPERATOR

Thank you. Our next question comes from John Decree with CBRE. Your line is open.

John Decree (Analyst at CBRE)

Hi everyone. Thank you. Maybe to shift gears to Middle East. I know, Craig, you gave us a little bit of commentary in your prepared remarks about Marjan. But, you know, as we think about moving towards opening next year, I was wondering if you could give us a little bit more detail on some kind of milestones over the next nine or ten months as you kind of approach target opening date. You know, some things we should be watching for, you know, from year end as things get completed.

Craig Billings (Chief Executive Officer)

Yeah, sure. We’ll actually start—we’re handing over the building to operations in zones and we’ll actually start handing over the initial zones in the building just after the new year. That means they’ve been fit out, they’re ready for occupancy by the operations team. They can start putting in their FSE, et cetera, et cetera. So we’ll start that early in the new year. Fit out is, as I mentioned in my prepared remarks, well underway. Hiring of the team is well underway.

That handover will continue through July. The ops team will have full control in late July. That provides more than ample time for training and readiness for opening. And then we’ll open on September 27th. The vast majority of hiring will occur in kind of the three-month period—I shouldn’t say hire, we will hire before that. But onboarding of employees will happen in the three-month period leading up to opening. You obviously want a balance between training and minimizing pre-opening expense and cash out the door.

So that will happen in the three months leading up to opening and we’ll open the doors and we’re excited to do so. Not all of that is super evident to outsiders because it’s all happening there within the building and in and around the building. But of course we’re happy to update you on each of our calls over the course of the next several quarters.

John Decree (Analyst at CBRE)

Oh, that’s great, Craig, thank you. And maybe to stick with the development theme, but thinking further out, obviously big project to complete in the UAE. But what’s your latest thinking on other potential opportunities, you know, internationally or even in the U.S.? I guess post elections on Tuesday, there’s some talk that maybe something like Texas might come up as an opportunity in the future. So, you know, I guess international, U.S. development for Wynn—is there anything that would kind of meet your parameters or you’d look for over the next couple of years strategically.

Craig Billings (Chief Executive Officer)

Wait, there was an election? No, I’m just kidding. Yeah, the whole landscape changed. I mean it is pretty fascinating. The way I would say it is this. If the UAE opens as we believe it will open—and of course the election had an impact on the likely trajectory of the conflict in the region as well, which is great—if it opens the way that we believe it will open, then we have a land bank there and we should think about how we’re going to use that land bank because there are significant returns to be earned there.

Across the street, we have started to doodle and think about across the street here in Vegas and what relationship that property might have to our existing assets, and how we might be able to build probably at a lower all-in dollar cost than a freestanding integrated resort by leveraging its relationship to Wynn and Encore. So we started to think about that and, you know, elsewhere in the U.S. Look, Texas is an outlier. Texas is a fascinating market that is very large today.

As we’ve talked about, I think on prior calls, much of that business makes its way across the border into Oklahoma and ends up in nothing that gets publicly reported, really. So it’s kind of a stealth market that is giant, and so of course we would consider opportunities there. I think our brand has resonance there. We have a great database from Texas here in Las Vegas. Beyond that, regional gaming in the U.S.—I mean it’s tough. I mean the number of kind of high-growth markets, the risk of online gaming and potential cannibalization from online gaming. We’re very thoughtful about how we would deploy capital elsewhere in the U.S.

OPERATOR

Thank you. Our next question comes from Robin Farley with UBS. Your line is open.

Robin Farley (Analyst at UBS)

Great, thanks. Just circling back to Al Marjan for a moment. If we were kind of looking at different milestones, when would rooms go on sale for the September opening? If things were sort of ideally, when would we look for that? And then, Al Marjan, can you remind us, are all of the costs locked in at this point in terms of your property build? Thanks.

Craig Billings (Chief Executive Officer)

Sure. On the second question, the costs are substantially locked in. I mean, look, there’s still a conflict going on, so that’s real and we have to pay attention to that. But a giant chunk of the costs have been bought out. In terms of when rooms will go on sale, actually quite soon. So stay tuned.

Robin Farley (Analyst at UBS)

Okay, great. Thank you.

OPERATOR

Thank you. Thank you. Our next question comes from Brandt Montour with Barclays. Your line is open.

Brandt Montour (Analyst at Barclays)

Hi, everyone. Two quick ones for Las Vegas. Can you remind us what portion of casino revenue or drop or whatever metric you want to give is from a Far East play at this point? Are you seeing any spillover from the dynamics that were seen over in Macau and the greater mainland China? The second question is if you could give us a little bit of a sense on how December’s group calendar is shaping up. That part of the quarter is always a little bit different based on leisure mix, so any color on that would be helpful, too.

Thank you.

Craig Billings (Chief Executive Officer)

Sure. I’ll cover the first one and I’ll ask Brian to talk a little bit about group mix throughout the quarter. On the Far East side, we don’t disclose relative splits. What I would say is that the customer here, the quote-unquote Far East customer here in Las Vegas, tends to be a little bit different than in Asia. And that’s definitely been the case over the course of, say, the past five or six years. They tend to be folks that have established positions either here in the U.S., Canada, in some cases Taiwan.

It’s slightly different. So I wouldn’t expect dynamics to be quite the same between here and Asia. Brian, any views on anything you want to comment on group in December?

Brian Gullbrants

Yeah, I mean, the group mix really varies quarter to quarter, month to month, and we range anywhere from 20 to 30% of our business, so that’s kind of the norm. But history in December is such that you have some group business solid for the first two weeks, and then prior to Christmas and the holidays and post, it’s usually pretty quiet, same as every year.

Craig Billings (Chief Executive Officer)

Okay. It’s a little bit too early to read into the end of December based on sort of the booking lead time for group. The booking lead time finished a month ago. So typically you see group book a year to 18 months out. You do have some short term.

Brian Gullbrants

He’s referring to leisure.

Craig Billings (Chief Executive Officer)

You do have short-term stuff in group and leisure; it’s like a 30-day window. December’s every year, same story, multiple levers. First two weeks, then very quiet leading into Christmas. And then you make a ton of dough at New Year’s. And this year will be no different.

Brandt Montour (Analyst at Barclays)

Understood. Thanks, everyone.

OPERATOR

Thank you. Our next question comes from David Katz with Jefferies. Your line is open. David, your line is open. You may need to unmute yourself.

David Katz (Analyst at Jefferies)

Just getting myself unmuted. Thanks for taking my question. I wanted to get your latest thoughts, and I know there’s been, you know, so much water under the bridge since our visit to Al Marjan Island. You know, if we were to get to, you know, some lower-intensity version of the conflict, I guess what I’m asking is how do you feel about, you know, your underwriting and the details that we talked through—so you know what that property can do?

Craig Billings (Chief Executive Officer)

Sure. Just as a quick anecdote before I answer: Brian, you were in the UAE two weeks ago.

Brian Gullbrants

Yeah. Right.

Craig Billings (Chief Executive Officer)

You stayed at one of the hotels near our place. It was packed with—

Brian Gullbrants

It was full of Russians and Russian families.

Craig Billings (Chief Executive Officer)

So if you think about the market, there’s so many different levers. You’ll recall when we were there at the analyst day, we talked about kind of multiple zones of customers, right? The customer that exists in Dubai, the customer that exists in the region, and the customer that exists internationally. And all of those are levers. And in each case, I would expect, because we have 1,500 keys, demand exceeds supply. And so in one version of a conflict, you are over-indexing to people that are already there.

In a more moderate version of a conflict, you’re over-indexing to people that are already there plus people that are in the region. And in a conflict resolution scenario, I think you have our original hypotheses that underpin demand for that building. None of those are inherently worse than the other. They’re just different. Right. Your midweek trends are different. Your weekend trends are different. Your pricing on weekends versus your pricing midweek is different.

The composition of people in the casino is different. We are opening the only joint for thousands and thousands and thousands of miles. You have an extremely wealthy local population, many of whom are expats, many of whom are accustomed to gaming and casino visitation. You have certain demographics that have no problem traveling there today. That was why I opened with the anecdote that Brian answered. And so we remain pretty bullish on the opportunity. It just is different. And that’s okay. There’s no kind of right or wrong.

There’s just different.

David Katz (Analyst at Jefferies)

Understood. And if I may just pivot back to Vegas, you know, as an issue I’ve been asking about seemingly incessantly about some of the property around there, is my takeaway—should it be that, you know, you’re making some progress and, you know, within, say, a year’s time, you know, we could have something more substantive where people like us could put pen to paper on what you’re doing?

Craig Billings (Chief Executive Officer)

Could be a year, could be three years. Did you think I’d take the bait there, David? I don’t know timing. Look, we have a giant capital project that we’re trying to get open that is a seriously exciting, we believe, high-return project. That’s where we’re focused right now. We are in the privileged position of continuing to do all of our own design and development. It’s one of the core assets of this company. And that attention is focused on Wynn Al Marjan right now.

And if that eases, which is very soon, then we’ll figure out what we’re going to do next.

David Katz (Analyst at Jefferies)

Okey doke. Thank you.

Craig Billings (Chief Executive Officer)

Thank you.

OPERATOR

Thank you. Our next question comes from Steve Wyszynski with Stifel. Your line is open.

Steve Wyszynski (Analyst at Stifel)

Good afternoon, Craig. Sticking with Vegas and actually trying to get a little more specific into the fourth quarter. You noted there’s some positive events happening there in the market, but obviously Encore is still under renovation in the fourth quarter. I think last year you guys held pretty well in the fourth quarter as well, if I remember correctly. So I guess what I’m trying to get at is here, I assume it’s going to be tough to grow EBITDA in Vegas in the fourth quarter, but am I missing anything or any kind of color in terms of a way to help us think about how the fourth quarter could shape up would be super appreciated.

Craig Billings (Chief Executive Officer)

Yeah, we don’t, as you know, we don’t guide. So I’m not going to comment on fourth-quarter expectations specifically. And frankly, the goal of my prepared remarks and the goal of the commentary that we’ve made thus far on Q4 is actually not to get people all bulled up. It’s to tell you exactly kind of what we’re seeing. Like, what we’re seeing is good. And it’s a quarter that has a whole bunch of different demand drivers. That’s when we shine. And so I’m not going to compare it to last year.

I did make a comment earlier that we have performed so strongly for so long that the comps have gotten very, very tough. And that is an absolute fact. But if you look at absolute performance, we’re doing pretty well. So that’s really all I’ll say.

Steve Wyszynski (Analyst at Stifel)

Okay. I thought I’d take a shot at it, but it didn’t work. And then second question for Boston—and look, obviously positive news coming out about the labor side of things and the union side of things, but it doesn’t even sound like that’s finalized yet at this point, but wondering—I don’t know if you can answer this or you cannot answer it—but any way to think about what OPEX might look like for that property moving forward?

Craig Billings (Chief Executive Officer)

Here’s what I would say: the ratification vote is tonight. The history of ratification votes by unions is such that agreements are generally ratified because they’re socialized ahead of time with key membership. We will have a read for you on the next call. What I would say is that we are very happy with where we landed. Okay, thanks, Craig. And we’ll turn that into numbers on the next call.

Steve Wyszynski (Analyst at Stifel)

Okay, understood. Appreciate it.

OPERATOR

Thank you. Our next question comes from Barry Jonas with Truist Securities. Your line is open.

Barry Jonas (Analyst at Truist Securities)

Hey guys, thanks for taking my questions. Just following up on Boston. You know, Craig, your Globe op-ed laid out some of the pressures facing the property. So just in that context, maybe help us think about the longer-term earnings power or if, you know, you think we’re looking at something diminished on a go-forward basis.

Craig Billings (Chief Executive Officer)

Yeah, thank you for the question. I don’t think diminished. I mean, look, Encore Boston Harbor is one of the largest private investments in the history of the state. Okay. We invested $2.6 billion and turned a contaminated site where people used to hang their laundry outside across the street and end up with holes in it from all the chemicals flying around. And we turn that into what doing? We’re 3,000 jobs, more than $1.1 billion in tax revenue since we opened.

And yet we are dealing as many of the regional gaming markets in the U.S. we’re dealing with this persistent threat of iGaming and in the case of Massachusetts historical horse racing and frankly with direct competition, even from the lottery there. And it’s ridiculous. And so that isn’t sustainable. Now. I do think there’s recognition when you look at state houses, certain state houses around the country, I think there is recognition about the impact of that potential incremental legalization, primarily on employment, by the way, because no responsible operator is essentially just going to eat it all in margin. And so I think there is recognition among the savvier legislators about what this means to their constituents, frankly, longer term.

And so I don’t see it as a diminished asset by any means. It’s a beautiful asset that churns out a meaningful amount of EBITDA. I think it’s just important that we speak up and we speak up loudly so that paper cuts don’t become night blooms. And so that was the genesis of the op-ed. It does, yeah. There’s very select markets in the U.S. that we actually, that we actually take a look at. Texas is an obvious one and I would put Georgia in that bucket as well. Thank you.

OPERATOR

Thank you. Our next question comes from James Hardiman with Citi. Your line is open.

James Hardiman (Analyst at Citi)

Hey, good afternoon. Thanks for taking my question. So going back to Vegas, if we sort of take the $24 million hold adjustment and add that back to the third quarter EBITDA, I get to about a 10% EBITDA decline versus last year. Obviously that was short of our expectations coming into the quarter. Maybe how did that land versus your expectations internally? Obviously you don’t give guidance but curious what if anything surprises you? Obviously we’ve been talking a lot about this increased seasonality.

I guess I’m trying to figure out if that is now behind us. Right. This sort of post Covid return to whatever seasonal pattern is the endpoint. Obviously it’s a little bit of a crystal ball question, but as we’re starting to put together our models for next year, you know, regardless of what the full year EBITDA number is, should we continue to expect sort of this make hay while the sun is shining situation where you know, the periods where you have events, if there’s going to be growth, it’s going to be there and we just have to sort of hold on during the summer months and potentially see declines.

Just think it would help to get that sort of in models as soon as possible given, you know, the sky is falling sort of perspective that the street has taken to your stock as of late.

Craig Billings (Chief Executive Officer)

Yes. Thank you. Thank you for the question. I think if we’re being intellectually honest, the way that I would answer that is there’s the market and there’s our place in it. And it’s my opinion, look, I don’t operate the other business. We don’t operate the other businesses on the Strip. So I can only work off the market observations that I have. And I think the comments that I made in my prepared remarks hold true. And I think it’s intuitive. When you have a bunch of demand drivers, the opportunity to drive rate, the opportunity to drive occupancy, the opportunity to drive gaming revenue are there.

And so I think inherently, and again, this is just my opinion, okay, inherently those quarters are going to perform better than quarters that don’t. And the summer has the lowest number of demand drivers. And so it kind of is what it is. Now our position in the market is, I think it’s evidenced in the RevPAR that we turned in. This quarter is a little bit different. We turned in hotel numbers that were up. We also had rooms out of service, which contributed to foregone EBITDA. So you have to realize that as well with the Encore, with the Encore Tower renovation. And so, you know, if you said, if you asked me, hey, do you think summers now are going to be the lowest quarter of the year?

I would say yes. The intellectually honest answer, it’s happened for two years and frankly it always happened in Vegas for eons. And so I think that just is what it is. I think mixed up in this narrative about post Covid new normal is all of the different demand drivers that have been added to the market. And I think to ignore those is a giant mistake. I don’t think it’s as simple as summer comes along and that’s seasonality. And it is what it is.

You’ve had a lot of demand drivers added to this market. It’s impressive actually what this market has been able to do. And we, because of the customer that we serve, tend to benefit from the best customers associated with every single one of those demand drivers. So look, maybe too cerebral of an answer to your question, but that’s the way I would think about it.

James Hardiman (Analyst at Citi)

That’s really good color. Thank you. And then as we think about Al Marjan, I don’t think you’ve touched on this yet, but going back to the, to the analyst day a year ago, two variables that were certainly really important in terms of your ability to have success there, you know, one was third party hotel development and then two was, you know, you being the only game in town. Any sort of update on either of those fronts as we sit here today,

Craig Billings (Chief Executive Officer)

As far as we are aware and we keep our ear very, very close to the ground, we will be the only game in town for a substantial period of time. In terms of ancillary hotel development, the conflict certainly has slowed some of the ancillary hotel development. It’s important to remember that when at that analyst day our perspective was that that was about, that was a long term mid to long term growth driver and that remains true today. And so I don’t think about that with respect to any given published EBITDA number in years 1, 2, 3, et cetera.

I think about that over a five to eight year arc. All of that development continues to happen, all of it. Some of it was subject to the same supply chain issues that we had. And I can tell you life on the ground there is totally normal and investment continues to be made frankly all over the Emirates. And so there is admittedly a delay in some of that development. It doesn’t keep me up at night because really I think about this as a 100 year building.

James Hardiman (Analyst at Citi)

Very helpful. Thanks Craig.

OPERATOR

Thank you. Our next question comes from Trey Bowers with Wells Fargo. Your line is open.

Trey Bowers (Analyst at Wells Fargo)

Hey guys, thanks for the questions. I guess the first one would be, you know, we discussed earlier in the call how some of the election results might result in governments that are state level governments that are more amenable to casino expansion. But I guess the flip side of that is also, you know, blue states generally are a little more amenable to tax increases and maybe a little less friendly on the corporate side. So just curious, your thoughts around Nevada specifically if you see any risk of any kind of state level gaming tax increase.

Craig Billings (Chief Executive Officer)

You know, look, for those of you that I’ve known for some time, I am a student of this industry, right, Goldman. I cover this industry all over the world. There are markets where gaming is the tail and everything else is the dog. And those markets tend to abuse the industry and kind of move taxes willy nilly. The UK is a prime example of that. And then there are markets where the industry is a really important economic driver and is understood and government is empathetic to the industry.

I didn’t say they cater to the industry, I said empathetic. And that’s an important distinction. Nevada is a model for how the state and the industry work together. And so I do not, I will not be up nights worrying about gaming tax increases here. And in fact the outgoing governor from our perspective was tremendous. The incoming governor is someone we know well and have great respect for. And I feel very, very comfortable that governance in Nevada remains as sane as it has for 70 years.

Trey Bowers (Analyst at Wells Fargo)

Great color. And then as a follow up, just swapping over to Macau. These are a few years away, but wondering if any thoughts around when the event center and the theater are done? Macau is kind of the inverse of Vegas that gaming revenue is now the minority of your revenue in the market versus it’s almost all the revenue in Macau. Do you think that shifts over time? Like five years from now? Could we see a market that there’s a much heavier amount of non gaming revenue?

Thanks so much.

Craig Billings (Chief Executive Officer)

Sure. I think I have extensive thoughts on this, but I’ll try to just turn it into a little capsule. How do markets, how do markets adapt and develop? They adapt and develop through capital deployment. People like us deploy capital, some of it works, some of it doesn’t. What works gets replicated and more people deploy capital in similar fashion. And so you are absolutely seeing that in Macau. Right? Capital is getting deployed. Some of it’s going to work, some of it won’t, some of it will drive non gaming revenue, some of it won’t drive non gaming revenue.

That’s normal and that’s okay. The challenge that Macau has is they don’t have enough hotel rooms. Right? So you have a market that does five times the gaming revenue of the Las Vegas Strip, but has 30% of the hotel rooms. So how do you sell a room for cash? That’s tough. And so long term pension is a component of that. Additional room development is a component of that. Perhaps one day the government will actually incentivize room development which they did not do as part of the last concession renewal.

But that’s really the challenge for the market and diversification of the market. The demand is absolutely. There you go there. Look at the strollers running around the place. It’s there. It’s just a question of how you can utilize your rooms. It’s also why the Enclave is such a no brainer. Right. We run 99% occupancy, we tack on 432 suites. That’s obvious. EBITDA. So anyway, if you ever want to sit down over a beer and get the hour long version of that diatribe, I’m happy to do that.

Trey Bowers (Analyst at Wells Fargo)

Sounds great. Thank you.

OPERATOR

Thank you. Our next question comes from Ben Chaiken with Mizuho. Your line is open.

Ben Chaiken (Analyst at Mizuho)

Hey, thanks. Maybe a two parter on Al Marjan. I guess as you begin to prepare for the opening, maybe could you shed some light on the early guest communications to the extent that’s occurring and their reception. And then as a reference to a prior question, have you pivoted at all in terms of the source markets? And if not, when do you need to make that call? Thanks.

Craig Billings (Chief Executive Officer)

Sure. So if you can think about potential guest communication in three buckets. Host, where we started building our gaming hosting team long ago. And so there’s plenty of communication with the players that matter globally, and in fact, the volume of inbounds that we get in other markets is quite healthy. The second is mass marketing, where we will begin to do mass marketing really leading into the opening, which is designed to create consumer awareness. And the third is database build, which we actually started quite early in the market with call-to-action advertising, gathering people’s contact details, things like that. So all of that’s underway.

In terms of source market mix, it kind of goes back to a prior question. We have multiple. One of the beauties of this project is we have multiple source markets from which to draw, a lot of them actually. The receptivity to the UAE ranges from people that live up the street in Dubai who are there already, all the way through to people who might be apprehensive about traveling to the region, probably Western European. And so we have a lot of options and a lot of levers to pull.

It does impact how we open, to your point. And we will make a decision about the format in which we open. We’ll probably make that decision around February, but we have the playbooks for every single iteration of that today. I see, I see your question. Look, think about the addressable population of the UAE and the wealth of that population. If you’re looking for, like, the bottom-line answer, think about the addressable population there in the UAE and think about the wealth embedded in a giant chunk of that population and compare that to the most successful regional casino MSAs in the US, and from that you can get the base business that is probably easiest to address.

Then you can move from there to the fly-to markets that are quite easy to activate. I mean, Emirates is running, what, guys, 85% of their schedule now anyway. And so there will certainly be markets that will take longer to activate, but none of them tragically so. And a giant chunk of the market is immediately actionable.

Brian Gullbrants

Craig, if I can add, when Craig and I were over there, everybody knew about the project in Dubai and they all asked when it was opening. The awareness is strong. It was great.

OPERATOR

Thank you. Our next question comes from Steve Pizzella with Deutsche Bank. Your line is open.

Steve Pizzella (Analyst at Deutsche Bank)

Hey, good afternoon and thank you for taking our questions. Craig, I believe you repurchased approximately 60 million of stock in the quarter. Based on the price-based grid you’ve discussed in the past, it would seem the shares remain attractive to you at these levels. How are you thinking about the opportunity to be more aggressive with repurchases from here?

Craig Jeffrey Fullalove (Chief Financial Officer)

Yeah, you’re right. We do buy on a price-based grid and we think the stock is undervalued. We’re really kind of going through the highest constriction point in terms of our various other capital commitments. I’m not talking about Macau — Macau’s self-funding. I’m talking primarily about Marjan, Vegas, et cetera. And so we’re constantly balancing the repurchases and capex. I think you’ve seen us be a consistent buyer, not a programmatic buyer, but a consistent buyer over the course of the past several years.

And we will continue to take advantage when we think the stock is dislocated. Anything you would add, Craig?

Craig Billings (Chief Executive Officer)

No, I think that’s right. I mean, we’ve bought back since 2022 over 14% of our shares. And we’ll continue to do that when we think the underlying shares are undervalued.

Steve Pizzella (Analyst at Deutsche Bank)

Okay, thank you. And then pivoting back to Las Vegas, opex per day came in below or towards the low end of the range talked about last quarter. Can you talk about what drove the performance and how we should think about that run rate going forward?

Craig Billings (Chief Executive Officer)

Simple management. It’s that simple. And, Craig, do you have any forward-looking?

Craig Jeffrey Fullalove (Chief Financial Officer)

Yeah, going forward, I mean, we continue to expect opex per day to be in the range of $4.4 to $4.7 million. That depends on volumes and event calendar cadence. But to Craig’s earlier point, the team here is doing a phenomenal job in controlling FTEs and managing our opex, despite the inclusion of additional amenities earlier in the year like Zero Bond and Settebello, which continue to ramp on full staffing.

Steve Pizzella (Analyst at Deutsche Bank)

Okay, thank you.

OPERATOR

Thank you. Our last question comes from David Bain with Texas Capital Bank. Your line is open.

David Bain (Analyst at Texas Capital Bank)

Great, thank you. I guess first I’m hoping to get any thoughts on international to Las Vegas as we move into ’27. It looked like there was some July to September capacity and airline passenger positives. And generally, if you could remind us how international margins compare to the domestic database given length of stay and maybe different gaming velocities.

Craig Billings (Chief Executive Officer)

Sure. International is — well, I guess international for us comes in two flavors, right? International, very high-end gaming play where things are fine, and then international leisure. The international leisure business for us is relatively small, Brian. In percentage terms.

Brian Gullbrants

Yeah. And what really drove the growth of international visitation to Vegas was World Cup. Yeah. But in percentage terms, if you think about our business, under 20 — 20%. Twelve to fifteen percent. Right. And so for us, it’s just not that large. And because we’re only 4,700 key