Daily operating cost of hotel/casino estimated at $1.45m
THE CHIEF EXECUTIVE of Wynn Resorts signaled on Wednesday that the company needs to rein in costs at the Encore Boston Harbor in Everett, with the casino and hotel reporting a nearly $41.7 million operating loss for the three-month period ending September 30.
During a conference call with financial analysts after the release of the company’s third quarter report, CEO Matt Maddox said Encore Boston Harbor was still ramping up operations and tweaking its business model. But, in response to a financial analyst’s question, Maddox also said there is a need to rein in spending. One analyst estimated Encore Boston Harbor is spending $1.45 million a day to run the property, and wondered if there was some cushion in that number that could be reduced .
“I don’t want to say there’s plenty of cushion, but clearly when you open a property you have more staff than you end up needing when you operate in a very efficient way,” Maddox said. “I would think the $1.4 million will definitely be on a downward trajectory in 2020.”
Craig Billings, the president and chief financial officer of the company, said the $1.4 million daily cost would definitely be the peak amount.
The $2.6 billion Everett casino originally talked about hiring close to 5,500 employees, but that number is believed to be well below 5,000 now.
Overall, Wynn Resorts reported a net loss of $3.5 million for the three-month period ending September 30, compared to net income of $156.1 million during the same three-month period in 2018. Earnings before interest, taxes, depreciation, and amortization was $396.9 million, down 21.3 percent from a year ago. Earnings before interest, taxes, depreciation, and amortization was $7.7 million at Encore Boston Harbor.
The Everett casino has generally been pleased with its table game operations but dissatisfied with its slot machine performance. The third quarter numbers were in sync with those sentiments. Encore Boston Harbor’s table game win per unit per day was $5,631, which was higher than the $3,927 number reported for the company’s Las Vegas casinos. However, the slot machine win per unit per day was $219 in Everett, which was significantly lower than the Las Vegas number of $355.
The third quarter was the first full quarter for Encore Boston Harbor, which opened on June 23. Operating revenue was $175.8 million, consisting of $114.9 million in casino revenues and $60.9 million in revenue from hotel, beverage, entertainment, and retail operations. The room occupancy rate at the hotel was just under 70 percent. One of the company’s financial charts indicated Encore Boston Harbor had a $41.7 million operating loss during the quarter.
Maddox told the financial analysts that the company hopes to launch a sports betting operation in New Jersey in early 2020 and then roll it out across the country. He said the company hopes to deploy it in Massachusetts, calling it a “game-changer.” He said Encore Boston Harbor is currently building out a sports bar that could eventually become a sports book.
Maddox again brought up the 11 acres the company owns across the street from the casino. “Many developers have been talking to us about partnerships where we could have new hotels, retail, etc.,” he said. ““We’ve been thinking about that more as landlords and partners as opposed to outright developers, but first we’re going to ramp up Encore Boston Harbor and then we’re going to watch the neighborhood build up.”