Since it won a gaming license outside of Boston, Wynn Resorts (NASDAQ: WYNN) has been faced with a number of distractions. It was sued by competitors, fought with the gaming commission, and had to overcome the ouster of founder and CEO Steve Wynn because of sexual misconduct allegations that threw the entire company for a loop.
As June approaches, the company is inching toward the opening of Encore Boston Harbor, a $2.6 billion expansion on the East Coast that should be an exciting development. But after last minute speculation that Wynn would sell the resorts, it's time to get down to business and open the doors of the company's newest property.
According to management, on June 23, at 10:00 a.m. Eastern Time, the Encore Boston Harbor will open its doors to the world. There could be unforeseen delays, but right now it looks like we're still less than a month away from opening.
Don't forget your wallet
The 27-story main tower has only 671 rooms, a fraction of the thousands normally housed in a Las Vegas Strip resort. But the room prices may generate as much revenue as a much larger resort might. As of now, room prices range from a low of $675 on weekdays to $875 on weekends, and higher than that for some dates. If the resort can average $675 in revenue per available room it could generate $165 million in revenue from rooms alone.
There's no question that Wynn Resorts is going after well heeled visitors and gamblers with Encore Boston Harbor. And with room prices starting that high, we can expect restaurants and shows to be very expensive as well.
Can Wynn Resorts make money in Everett?
What we don't know is if this new resort will make enough money to be considered a good investment. In Las Vegas, room revenue is about 30% of Wynn's revenue; if that ratio holds true in Massachusetts, the resort could generate $550 million of revenue each year. With an EBITDA margin of 30%, which would be ideal, it would generate $165 million of EBITDA. That's not a great return on a $2.6 billion investment in a resort, so look for Wynn to try and boost casino and other non-gaming-or-room revenue streams.
What we don't know is whether or not consumers and visitors will want to make the trek from Boston to Everett. A new resort is a draw, but the area doesn't have much entertainment infrastructure today, and visitors may simply come and go from conferences or the hotel. If they don't stay for long, Wynn is taking a big risk on the Boston area, and it may be tough to make a profit on such an expensive resort -- even if hotel rooms regularly go for more than $1,000 per night.
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