Wynn Macau reported weak non-gaming revenues in its 3Q24 results, reflecting persistent headwinds in key segments such as hospitality and retail, say analysts.
According to Deutsche Bank’s analysis of the company’s quarterly performance, non-casino revenue fell by 8 percent year-on-year, significantly offsetting the gains from the casino segment.
The decline in non-gaming revenue was primarily driven by weaker performance in high-flow-through segments, including hotel and retail, which continue to face pressure. Meanwhile, while Wynn Macau’s market share dipped slightly year-on-year, it showed stability on a quarter-on-quarter basis.
Looking ahead, Deutsche Bank analysts noted that while Wynn’s performance in the gaming segment remained relatively stable, the non-gaming outlook remains less promising.
‘Net-net, the 3Q24 was largely uneventful from a gaming perspective in Macau, with Wynn Macau market share remaining stable on a quarter-on-quarter basis, but falling ~70 basis points year-on-year,’ the note detailed.
As competition in the Macau gaming market intensifies, analysts expect Wynn Macau’s market share to stay largely unchanged until new amenities come online in 2025.
With sluggish trends in non-gaming revenue and annual cost increases, Deutsche Bank revised their Macau projections downward, although they suggested these revisions may still reflect a conservative outlook, given the stagnant environment.
Hotel revenue per available room down 29% YoY
In a separate investment memo, JP Morgan mentioned that, on the downside, Wynn Macau’s hotel revenue per available room (RevPAR) on the peninsula dropped by 29 percent year-on-year, underperforming MGM’s 7 percent year-on-year increase. Cotai also saw a 13 percent year-on-year decline in RevPAR, compared to MGM’s 13 percent year-on-year growth.
Retail rental revenue in Cotai fell by 8 percent quarter-on-quarter, reaching just 74 percent of 3Q19 levels, a worse result than Sands China, which posted an 8 percent overall increase, reaching 97 percent of 3Q19 levels. Notably, 4S (sales, service, spare parts and survey) luxury retail saw no growth quarter-on-quarter, though it still reached 129 percent of its 3Q19 performance.
Wynn Macau’s property EBITDA came in at $263 million, marking a 6 percent decrease quarter-on-quarter and reaching just 87 percent of its 3Q19 levels. This miss was largely attributed to weaker mass market share, which increased by only 10 basis points quarter-on-quarter.
Additionally, higher rebates on VIP volume, up 11 percent quarter-on-quarter, were partially offset by lower VIP win rates, which impacted overall performance. ‘Management noted that October’s Golden Week Mass revenue was up 30 percent year-on-year, outperforming MGM’s 20 percent year-on-year increase,’ JP Morgan added, while noting that industry-wide Gross Gaming Revenue (GGR) was up 24 percent year-on-year.
However, the miss on anticipated results was further driven by Cotai, where EBITDA came in at $162 million, down 12 percent quarter-on-quarter and matching only 100 percent of 3Q19 levels. This decline was more pronounced due to higher VIP rebates, with VIP rolling chip volume rising 14 percent quarter-on-quarter, but VIP luck falling by 1.1 percentage points to 3 percent.
Management also guided that concession-related capital expenditures for Macau would range from $350 million to $425 million through the end of 2024 and into 2025.
