Wynn Resorts is poised to further balance its cash flow profile with the development of Wynn Al Marjan Island, according to Deutsche Bank.
In the latest investment report released after Wynn Resorts’ Investor Day, the brokerage notes that over the past few years, the company has witnessed a significant shift in its business mix, largely due to expansions and contractions across its key properties. These include notable growth at Wynn Las Vegas and the ramp-up at Encore Boston Harbor, alongside a modest contraction at Wynn Macau.
In 2019, Wynn’s business was heavily reliant on Macau, with 76 percent of its earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) coming from the region. However, the evolving dynamics of the company, alongside consolidated EBITDAM projections for Wynn Al Marjan Island and 2026 consensus estimates, signal a more balanced future cash flow profile.
Deutsche Bank’s report highlighted a scenario where Wynn Al Marjan Island could contribute meaningfully to Wynn’s earnings. By factoring in “stabilized management and license fees, as well as the 40 percent share of adjusted property EBITDA” from Wynn Al Marjan Island, alongside 2026 EBITDAR forecasts, the analysis suggests that Wynn’s shares are trading with a free cash flow yield range of 14.4 percent to 16.1 percent.
Although this is an attractive range, the bank noted that the analysis included full consolidation of Wynn Macau, which may overstate the figures somewhat. Historically, Wynn’s shares have traded within a yield range of 6 to 10 percent.
Projected growth in UAE
Wynn Resorts also projects significant growth in the UAE gaming market. The company anticipates the total gross gaming revenue (GGR) market size to be between $3 billion and $5 billion, assuming two additional operators eventually enter the market.
Wynn Al Marjan Island, slated to open in the first quarter of 2027, is expected to generate between $1.0 billion and $1.66 billion in GGR.
These estimates assume GGR will range from 0.6 percent to 1.0 percent of the UAE’s GDP, which, while discounted compared to Singapore (1.2 percent) and Australia (1.1 percent), would still represent a premium to the U.S. (0.4 percent).
Additionally, net revenue for Wynn Al Marjan Island is projected to be in the range of $1.375 billion to $1.875 billion, with expected margins of 36 percent to 43 percent, supported by favorable market conditions and lower tax rates compared to Macau.
Analysts Carlo Santarelli and Steven Pizzella indicate that one aspect Wynn has consistently excelled in is accurately forecasting the operating expense structure for greenfield developments. In the case of the UAE, the company expects operating expenses, excluding gaming taxes, to be between $2 million and $2.4 million per day.
This is comparable to Macau’s $2.5 million daily operating cost, but with the added benefit of the UAE’s significantly lower gaming tax rate. This lower tax burden could drive higher margins for Wynn Al Marjan Island, further enhancing profitability relative to Macau.
Projections for Wynn Al Marjan Island
Despite the challenges that come with projecting revenue for new developments in untapped gaming markets, Deutsche Bank believes that the UAE market dynamics, including operational expenditure assumptions and tax rates, lend credibility to the property’s potential. The report notes that Wynn has set an EBITDA target between $500 million and $800 million for Wynn Al Marjan Island.
Wynn Resorts’ proven ability to outperform peers in terms of EBITDA per hotel room also supports this target. For example, Wynn Las Vegas has consistently exceeded expectations in terms of profitability. Based on current assumptions, Wynn anticipates that its Al Marjan Island property could generate between $324,000 and $519,000 in EBITDA per hotel room annually.
For comparison, Wynn Macau’s assets have generated approximately $407,000 per room over the last twelve months, despite facing more competition and a higher gaming tax rate. Meanwhile, Marina Bay Sands, operating in Singapore’s comparable market, has produced $1.05 million per hotel room over the same period.