Author Home Author Archives Search Articles Subscribe
Stay informed with the
NEW Casino City Times newsletter!
Newsletter Signup
Stay informed with the
NEW Casino City Times newsletter!
Related Links
Related News
Recent Articles
Rod Smith

Back For More, Encore

1 May 2006

LAS VEGAS, Nevada -- Steve Wynn celebrated the first anniversary of Wynn Las Vegas Friday with a ground-breaking ceremony for the resort's second hotel-tower.

Encore will be a $1.74 billion, 2,054-room hotel-casino project adjacent to the developer's $2.7 billion, 2,716-room Wynn Las Vegas resort.

The new hotel tower and its amenities will take 30 months to complete.

Wynn said the tower will open at the beginning of December 2008, in time to complete trials before the heavy holiday season.

As with previous projects, Wynn said Encore will break ground with never-before-tried hotel features, but he declined to elaborate.

Instead, he shifted his sights to the Wynn Las Vegas, the year-old resort that will provide the foundation for Encore as well as the development of the golf course lands around it that will follow.

Wynn spent much of the past week meeting with his 9,000 employees and reminiscing about the first 12 months Wynn Las Vegas has been in operation.

"Every expectation (for Wynn Las Vegas) has been exceeded, and the metrics for the building -- average room rates, occupancy rates -- have been climbing," Wynn said.

The occupancy of Wynn Las Vegas has been in the 96 percent to 98 percent range and rates have outpaced Strip competitors by $70 to $80 a night, Wynn said.

"The customer response has been most satisfying," he said. "There was an element of risk. I changed the dynamic from the grandeur of looking at the building from the outside.

"Now, the audience is the people in the hotel and the theater is reversed for them. That's a tremendous paradigm change (for Las Vegas resorts)," Wynn added. "The place was risky because guests would have to work to find things. But it lets them reset their clocks and the public loves it."

University of Nevada, Las Vegas professor Bill Thompson, who specializes in gaming studies, said with Wynn Las Vegas added a touch of class to the Strip.

"He's a catalyst again. He's doing his own development, but he's also the force behind the redevelopment craze on the Strip," Thompson said.

Brian Gordon, a partner in the Las Vegas-based financial consultants Applied Analysis, said Wynn Las Vegas raised the bar in the high-end market and appears to have expanded that segment of the Las Vegas market.

One frequent guest from Chicago, who asked not to be named to avoid solicitations, agreed, saying "The Wynn" has become the place to see and be seen.

Not everyone agrees. John Jenkins, a tourist from New York City, said the resort is just too big.

"I like the green space, but it feels cold walking through," he said. "The restaurants are nice, but I'd prefer staying in the center of things."

But Deutsche Bank analyst Andrew Zarnett said the comment misses the point.

"Steve built the place for people who stay there. The people who walk through will come in anyhow, if just to try it out," he said.

The important point is that Wynn met all his promised performance standards, probably a record for any new hotel here in its first 12 months of operations.

"And since opening, not only has Wynn achieved record room rates, but citywide occupancy and room rates continue to rise as well," Zarnett said. "For those who think new competitors don't grow Las Vegas, think again."

Zarnett said the only fair criticism of Wynn Las Vegas was that it was "under-roomed" from the outset.

But analysts warn that there have been some rough spots and more may lie ahead.

Wynn missed fourth-quarter 2005 analyst projections, although the company narrowed its loss and is expected to report a first-quarter profit next week.

In general, however, Wall Street welcomes the newest player on the Strip and the stock which financed it.

Wynn shares closed Friday at $76.11, up 42.3 percent from $53.50 on opening day a year earlier.

Wynn shares are trading near their 52-week high of $80.19 set earlier this month and the stock trades at about 96 times its estimated earnings for 2006, compared with an industry average of about 27, according to Reuters Analytics.