Wynn reports net income falls 90.6 percent in 2Q

By Amanda Finnegan

Thursday, July 30, 2009 | 8:20 a.m.

Wynn Resorts today reported net income fell 90.6 percent in the second quarter of 2009 due to lower casino revenues and the continuing costs of opening Encore Las Vegas.

Also, during a conference call today, Wynn Resorts Chairman and CEO Steve Wynn spoke about the income loss plus other topics, including his up-and-coming competitors, strategies in the growing Asian market, the death of Danny Gans and how President Obama’s remarks continue to affect Las Vegas.

Wynn's remarks followed the company's report this morning that net income for the second quarter that ended on June 30 was $25.5 million, or 21 cent per share, compared to $272 million, or $2.42 per share, in the same period last year.

The report said net revenues for the second quarter declined 12.4 percent to $723.3 million compared to $825.2 million in the same period of 2008.

Casino revenue in Las Vegas rose to $124.3 million compared to $120.7 million in 2008. Non-casino revenues increased 9.4 percent, driven primarily by higher hotel, food and beverage costs resulting from the opening of Encore, Wynn’s second quarter report cited.

Las Vegas hotel revenues grew 12.9 percent to $81.5 million in the second quarter versus $72.1 million in same period of 2008. Average daily room rates fell 28 percent from $302 to $218 during the quarter. Hotel occupancy was 86.6 percent in the second quarter compared to 96.5 percent during the same year period.

Wynn Resorts’ Las Vegas operating results for the second of quarter include Encore Las Vegas, which opened Dec. 22, 2008.

“We’re staring to see that things seem to be stabilizing in Las Vegas and China. We’re optimistic as we can be during times when things in the world are suffering,” Wynn said during the opening remarks of the second quarter earnings conference telephone call.

Wynn, who has been critical of the Obama administration since the president’s remarks about Las Vegas, continued his criticism during today’s conference call.

“The administration is more of a problem than they are help if you’ve been reading the headlines,” Wynn said. “People are more afraid of Washington than they are of the economy. We’ve got people on our backs going to Las Vegas, which is preposterous."

Wynn said small business meetings are still slow during the week at his resorts.

Wynn, who trailed off the topic of earnings at several points of the call, greeted competitors who he believed were on the call.

“I know all our competitors are on this call. Hello Jim Murren, Hello Sheldon (Adelson). Hope you are having a good summer,” Wynn said.

Wynn Resorts will see an increase in competition in the luxury hotel-casino market with the opening of CityCenter later this year. Wynn, who has seen an influx of competitors during his nearly 40 years as a casino owner in Las Vegas, said he can’t change his strategy to compete.

“Somebody does a lot of public relations, beats the drum, uses a lot of hyperbole…tells people this is the best hotel since sliced bread. We’ve heard it before and we’ve all said it ourselves,” Wynn said.

Wynn said he expected visitors to tour the new CityCenter but said when visitors become guests at the new hotel “that’s where the rubber hits the road.” Wynn said he thought services at Encore and Wynn would be what sets his resorts apart from up and coming competitors. Wynn said his emphasis on service is why he has opted to cut employee work hours and pay rather than cutting employees.

In February, Wynn Resorts initiated a cost-reduction program for its Las Vegas properties that includes salary reductions for salaried employees, reduced work weeks for full-time hourly workers, the elimination of 2009 bonuses and a suspension of the company match to employee 401(k) plans. The plan is expected to save the company $100 million a year.

The recent death of Danny Gans has left a hole in Wynn’s Encore Theater. The theater has brought in temporary acts like Garth Brooks and Beyonce, beginning tonight, but a permanent fixture is a “work in progress.”

Wynn said while Gans “tickets made money but not much,” the show brought visitors into the resort's restaurants and casino floor. Wynn called the loss of Gans as a performer at Encore “not a cataclysmic event by any means” from a business perspective “but a personal loss.”

“We’d like to have him around for non-material reasons obviously,” Wynn said of Gans.

Aside from Wynn Las Vegas and Encore Las Vegas, Wynn Resorts owns a 600-room hotel and casino in Macau and is in the development process of the $700 million Encore at Wynn Macau.

Wynn said construction at Encore Macau is “on schedule, on budget.” The resort is expected to be complete in early spring of 2010. Wynn said the company wants to have every piece of the resort complete before opening the resort.

The veteran casino owner called Encore Macau “the best thing we’ve ever built.”