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Analysts: Wynn Will Be Able to Charge More For Rooms

28 January 2005

Las Vegas Sun

by Liz Benston

LAS VEGAS -- After a preliminary tour of the $2.7 billion Wynn Las Vegas resort under construction, some analysts say the property will be able to charge more for rooms than expected and will command among the highest rates on the Strip.

The property will offer several rooms ranging from standard rooms at $200 to $220 per night, suites at $400 per night, an 1,800 square-foot suite at $750 per night and 18 villas at $2,000 per night, analysts said.

Deutsche Bank Securities analyst Marc Falcone said he estimated the average room rate for Wynn Las Vegas could be $25 to $50 higher than previous estimates of $212 per night, especially given that room rates on the Strip have risen 15 percent to 20 percent over the last several years.

Rates for Wynn Las Vegas are running from $299 midweek to $329 for the weekend during the first week in May, Falcone said in a research note to investors today. That compares with $133 and $174, respectively, for the average Las Vegas Strip room rate last year, he said.

Those rates put Wynn Las Vegas ahead of Bellagio but in line with the Venetian on the weekend, Falcone said.

The average daily room rate in Las Vegas last year through November was $90.40, a 9 percent increase from the prior year.

Venetian and Bellagio were among the Strip's most expensive rooms last year.

Venetian reported an average room rate of $219 and an occupancy rate of 98.3 percent for the nine months ended Sept. 30. Bellagio reported an average room rate of $239 at an occupancy rate of 95.2 percent for the same period.

Falcone also said the property's convention space "has already experienced high demand" could run at full capacity in its first year of operation.

"Rooms and suites will command premium pricing on the Strip," Goldman, Sachs & Co. analyst Steven Kent said in a research note to investors today.

"From a quality perspective, the physical plant was more Four Seasons-like and will redefine the high-end market and set a new standard on the Las Vegas Strip."

Fulcrum Global Partners analyst Joe Greff said he estimates tourists will spend an average of $271 per night for standard rooms from the opening through Nov. 26, "well ahead" of earlier estimates.

Every $10 increase in rates translates into a cent in annual earnings per share or $2 million in earnings before taxes and other fixed costs are paid.

Several days around the opening of the resort and around major conventions in May and June already are sold out, Greff said.

The 2,700-room resort will feature 18 restaurants, an 18-hole golf course, an 111,000 square foot casino, 200,000 square feet of meeting and convention space, a spa and salon, an art gallery, boutiques and two shows.

The restaurants are located on the edge of a man-made lake facing a mountain that will feature a light and entertainment show every 20 minutes.

The suites are accessible through a separate atrium entrance with a private pool overlooking the rest of the resort's pool deck, Falcone said.

All of the meeting rooms look out over either the pool or the golf course to "maximize pricing," Kent said.

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