reno
reno
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July 31st, 2012 at 8:09:47 AM permalink
It probably shouldn't surprise me, but it does: Wynn's 2nd quarter revenue from Las Vegas food/drink ($138 million) was far greater than their revenue from hotel rooms ($96 million). I find this shocking because the resort's 4,750 rooms have an average nightly rate of $254. They make more money from booze than from hotel rooms? That's a lot of alcohol.
ThatDonGuy
ThatDonGuy
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July 31st, 2012 at 10:35:24 AM permalink
Does that include Encore? Those $50,000 6L bottles of Cristal at Surrender and XS add up.
slyther
slyther
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July 31st, 2012 at 11:07:22 AM permalink
and the non-free drinks at vpoker bars
reno
reno
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July 31st, 2012 at 3:17:32 PM permalink
Quote: ThatDonGuy

Does that include Encore? Those $50,000 6L bottles of Cristal at Surrender and XS add up.



Yes, it includes Encore. $138 million divided by 90 days per quarter = $1.53 million per day in food & alcohol!
pacomartin
pacomartin
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July 31st, 2012 at 3:24:37 PM permalink
Quote: reno

It probably shouldn't surprise me, but it does: Wynn's 2nd quarter revenue from Las Vegas food/drink ($138 million) was far greater than their revenue from hotel rooms ($96 million). I find this shocking because the resort's 4,750 rooms have an average nightly rate of $254. They make more money from booze than from hotel rooms? That's a lot of alcohol.



Room revenues were up 5.6% to $96.2 million during the quarter, versus $91.1 million in the second quarter of 2011. Average Daily Rate (ADR) was up 5.6% to $254 while occupancy of 87.6% was below the 89.2% experienced in the second quarter of 2011.

Food and beverage revenues increased 9.8% to $138.4 million primarily due to the strength in the nightclub business.

I don't think that should come as much of a shock. I am willing to bet that almost everyone who stays in the Wynn Encore also eats and drinks there, and tens of thousands of people who are not staying there also eat,drink and go to the nightclubs.

Plus all of those figures are before promotional allowances. I bet the value of the drinks and food given away is much higher than the value of the rooms given away.

Note that non-casino revenue was 3 times casino revenue in Las Vegas. In Macau casino revenue is over 8 times non-casino revenue.

One important point that keeps getting hammered quarter after quarter. You can't make enough money selling food, drinks and rooms to keep ahead of the massive interest payments that are due on these resorts. It doesn't matter if you sell very expensive food, drinks and rooms. Your costs are high enough that you lose money. To pay the interest you need to have a good quarter at the casino. So Macau always ends up many times more profitable.
reno
reno
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August 1st, 2012 at 9:08:07 AM permalink
Quote: pacomartin

Food and beverage revenues increased 9.8% to $138.4 million primarily due to the strength in the nightclub business.



The nightclubs aren't making as much money on weeknights, so their revenue for Fridays and Saturdays must top $2million. On the other hand, there are (I think) 4 nightclubs in the complex. And yet the whole thing is a money-losing business subsidized by Wynn's property in Macau.
DRich
DRich
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August 1st, 2012 at 9:40:58 AM permalink
I'm not sure why this is surprising to you. My food and drink bill for my wife and I is almost always greater than the cost of the hotel room. Also, many people will go to a destination for dinner, drinks, and clubs even if they aren't staying there.
pacomartin
pacomartin
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August 1st, 2012 at 11:10:34 AM permalink
Quote: reno

And yet the whole thing is a money-losing business subsidized by Wynn's property in Macau.



Encore opened on December 22, 2008. I think the Wynn would have remained profitable if he had never opened the Encore. The Encore introduced massive debt, and increased revenue for rooms, food and beverage, but did almost nothing for additional casino revenue. In 2009 the combined casinos took in almost the same amount of money as the Wynn casino alone.

The construction cost of these buildings cannot be supported by sales of food and drink and rooms.

Net Loss/Income in millions dollars, Calendar Year for Wynn+Encore in Vegas
($95,632), 2011
($348,329),2010
($309,870), 2009
($129,794), 2008
+$124,219, 2007
+$9,808 , 2006

It is why Ceasars expenditure of $550 million on Project Linq will be very difficult to pay back.

=============================
The New York Marriot Marquis in Times Square cost $350 million with 1,892 rooms and 57 suites in 1985. The Encore with 2,034 rooms cost $2.3 billion. Even allowing for 23 years of inflation, The Marquis costs roughly $700 million in 2008 dollars

Marquis has The View Restaurant & Lounge, Crossroads American Kitchen & Bar, Broadway Lounge, and Starbuck's Coffee. They can charge $400 for room night regularly, with $55 parking ($80 valet). Along with incidental retail business it is a profitable operation.

The Encore has more than three times the development cost. It probably brings in much more money from food, retail and entertainment. But all those expensive restaurants have high food costs and labor costs.

Profit margin on a casino is usually extremely high.

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