Wynn Resorts Ltd (WYNN) — Q4 2015 Earnings Call Transcript

Good afternoon and welcome to the Wynn Resorts fourth quarter 2015 earnings call. Thank you and good afternoon. Joining the call on behalf of the company today are Steve Wynn, Matt Maddox, Maurice Wooden, and myself here in Las Vegas. Also on the phone are the operational management teams from both our Las Vegas and Macau properties. Before we get started, I just want to remind everyone that we will be making forward-looking statements under the Safe Harbor federal securities law and those statements may or may not come true. And with that, I'm going to turn the call over to Mr. Wynn.

Well, we released the numbers a few weeks ago and so there are no real revelations to discuss. I think probably what is interesting is to say that January in Macau, if I can anticipate some of the questions, was our best month in a long time. Happy to say so. And Chinese New Year is in progress, but early in the week, it is a little too soon to say, the mass component clearly looks a little stronger than in the past. It is too soon to tell because the weekend is coming up with the VIPs. So that is pretty much the way we feel about China in terms of current first quarter numbers. With regard to Las Vegas, January was terrific and Super Bowl and February are off to a roaring start. And between that and President's weekend, Las Vegas is in an apple pie shape up through the 15th, which will be Monday. The question in Las Vegas will be how is the last 14 days. But as of now, business is pretty good in the United States and holding its own in Macau. With regard to our project, we issued some statements, we are working with our contractor to get them to catch up so that we will have an opening in June. They believe they will make the June 25 date, which was the contract date of our relationship with our builder, and it is possible they could be late, but hopefully they won't be. We are working very closely with them to try and catch up in any areas that need to be caught up. And our fancy hotel will be ready for public display later this year. We’re going to start work in Boston, hard construction. We are doing remediation at the moment. We've come to happy terms with our neighbors in Boston. And that was a relief. And now we are going to proceed with constructing this wonderful destination resort in the Boston metropolitan area in Everett, and benefit I hope people throughout the region, and have a very exciting hotel to boot. And with that, and reminding you that all of us are here to take your questions, we'll begin to do so.

Good afternoon, everyone. Steve, one topic that has been quite noticeable recently is your open market share repurchases, which has attracted a lot of attention. I was hoping to get your perspective on your interest in buying stock at these levels. Is it due to technical factors, or are you seeing something on the fundamental side, especially considering your comments about Macau in January during the Chinese New Year?

I lost a part of your sentence. What did he say, Matt?

He was asking about your open market purchases, what is your view?

Okay. I have a favorable view of Wynn Resorts mainly because I believe the management team is excellent. I'm very fond of the stock and I purchased it when I thought the price was extremely low. This is just my personal opinion; I'm not providing investment advice, and I don't have any insider information about the company. We share everything, including what I just reported for the first week and a half of February. I don’t know anything that you don’t know, Joe. However, I like the company’s long-term outlook, our undeveloped assets in Nevada, our opportunities in Massachusetts, and the long-term potential in China and beyond. I stand by my company, and when it trades at low prices, I'm always ready, depending on my financial situation, to buy more shares. I reserve the right to do that at any time, and I may very well do so. In fact, I think I bought a few shares a few days ago, so that reflects my mindset. I'm clear on this: I might step into the market and buy my own stock whenever I have some extra cash and believe it's a good investment. I definitely believe it is at these levels. So, that's where I stand. Does that answer your question, Joe?

Answers it perfectly. That is all for me. Thank you.

Thank you and good afternoon, everyone. I have a question for anyone willing to answer regarding Macau. As you consider various factors, this may be a two-part question. When thinking about the overall situation in China and the possibility of currency devaluation, how do you assess its implications for the Macau enterprise? Additionally, could you discuss the broader outlook for your operations after the opening of Cotai? I know you will be engaged in the construction of Boston, but could you provide insights into any other potential developments or how you plan to use cash flow once Cotai is operational?

We have an upcoming project that will kick off this spring in Las Vegas. We sold our Ferrari dealership to Roger Penske, who also owns the Rolls-Royce dealership here. We're reclaiming that space to relocate poker to Encore. Starting from the casino corner, where the ticket counter is currently located, we plan to create a new retail area and a shopping mall that will occupy the space previously held by Ferrari, featuring a two-story building with an impressive glass roof and an atrium. This development will provide us with 75,000 square feet of rentable space, and we anticipate generating between $20 million and $25 million in additional income, along with around $0.30 in new payroll. This will enhance our EBITDA significantly since we have over 300 feet of valuable unused real estate right on the strip. Coupled with our other Las Vegas properties, this presents a unique opportunity for future development. It’s worth noting that our golf course spans 130 acres, and we have 1,000 acre-feet of water sourced from our own wells acquired with the Desert Inn Water Company in 2000, which I consider a valuable asset. The complexities in China have prompted us to refocus on what we have already under our control. We’re actively working on the strip real estate, with a committed design, and the project will likely cost around $70 million. Our financing costs are below 5%, whether we borrow fully or use cash, and we expect to generate $20 million to $23 million in EBITDA merely by optimizing existing assets. We have many such opportunities, which adds to the company’s allure, and it's a significant reason why I am optimistic about our stock. All our assets are transparent, and the opportunities available to us are well-known and visible. I’m open to discussing them whenever asked. Additionally, I believe the Boston metropolitan area, specifically Everett, offers tremendous potential. We are excited about our new hotel there, which will feature nonstop flights to Boston from every major world capital, thanks to carriers like Hainan Airlines and Cathay Pacific servicing cities like Beijing, Hong Kong, and Shanghai. Our hotel is just 12 minutes from Logan Airport, which fuels my confidence and optimism for our future prospects.

Great, Steve, thank you. And if I could, if anyone from Macau was on, I would love to understand a little bit about the experience with potentially the currency devaluation. And what maybe some of the team has heard from customers as to what it could ultimately mean down the road. And how maybe their circumstances, the impacts it would have on the business in their opinion, if any.

Well, first of all, I think Matt can comment on that or Steve Cootey.

Yes, sure, what I would say is the global currency wars are impossible to predict. Look at what the Fed is talking about interest rates now in the United States. So we look at how we hedge our risks with the debt that we borrow and the denominations of the debt, but there is really nothing we can do about countries trying to devalue their currency.

I think his question is, what impact will it have on our customers in their own Chinese domestic environment. Do you have an opinion about that, Ian?

We haven't had any direct feedback from customers at this point, Steve. It doesn't seem to be troubling people. It is probably too early to call.

Yes. Like any devaluation, if you are buying domestic products, you don't feel it. If you are buying and you are trading internationally, you do feel it. If you are an exporter and a businessman in China and you are one of our customers, and they are, then devaluing the currency increases your ability to sell your products outside China. So a devaluation, which is of course a methodology of supporting the economy, tends to make our customers have more liquidity. And when we talk about devaluation, QE 1, 2, and 3 took the US dollar down by 18% or 20%. So you can judge what a devalued currency impact has on people by taking a look at what happened right here in the United States where we did precisely that with our federal reserve interventions in QE 1, 2, and 3.

That's helpful. Thank you all very much.

Hi. I have a couple of questions. Firstly, there seems to be a growing belief that Macau is starting to recover. I would like to know if any of you share that view, and what indicators beyond gaming we can examine to support this idea. Specifically, what economic factors, visitation numbers, or similar data can we look at that might indicate a recovery? Additionally, I would appreciate some clarification on the $33.8 million decrease in the fair value of the redemption note, which led to net income attributed to Wynn Resorts being around $22 million. This figure should have been recorded on September 30. I'm not quite sure I understand this situation or its implications.

Sure, so where do we want to start?

Do you want to start with the first part of the question or the second part?

I will start with – I can – it’s Matt Maddox, I am here with Steve Cootey, we can cover the accounting issue on the note, the redemption note. What happens is, Steve, that is like banks have to do, it is fair value accounting. So you have to go through and look at the yields on your debt and then apply those yields to that parent company $1.9 billion 2% note. And because high yields gapped out, what that meant is that 2% note in theory should have had a higher yield. So you have to reduce the value of the note on the balance sheet and that increases profits through the income statement only to come back around later. And it is non-cash fair value accounting. And, in fact, the FASB is already looking at changing that starting next year. And Bank of America is implementing it where it will run through the balance sheet only because it is destroying financial institutions' income statements.

Okay.

Does that clarify that?

Yes, thanks. So then let's discuss how bottoming out may be something I understand better.

Yes, how about the bottoming out part, Matt?

Well, we've focused on our retail volumes and we are noticing that some of our retailers are starting to stabilize a little bit more compared to last year and the previous quarters. Our hotel occupancies are remaining about the same as they have been and we are seeing some pick up there. And then, Steve, you track all the visitation just like we do from each region. And the visitation also feels like it is stabilizing. So, all the China macro data is confusing for the moment, but what we see in our building and visitation to Macau feels like it has been stabilizing since November. And I think you'd hear that from all the operators.

Okay, thank you.

Hi, thank you very much. It is actually Arpino for Robin. Could you comment at all on the health of the junket system in terms of what you saw through Chinese New Year? What did you guys see that has changed versus let's say a couple of months ago? Any color on further consolidation?

We are seeing a reduction in the number of junket operators. We were at 14 at one point, but now we have around 8 or 9, and it seems we might end up with 4 or 5. The stronger operators with good liquidity and solid balance sheets are performing well, but the newer or less capitalized ones are struggling to remain in business. That’s the general situation we’re observing. We stay in touch with the operators we have, and they are doing fine, but there are definitely fewer of them.

Right.

When they show any weakness we cease relationships with them, and we have done that with five of them already.

And just one real quick question. As you prepare to open Wynn Palace on Cotai, what are some of the return metrics internally that you are looking to meet? Any color on those expectations? What would meet your near-term EBITDA hurdle on a run rate basis? In other words, has anything changed post-Chinese New Year or what you were looking at sort of internally versus now?

Well, we are not post-Chinese New Year yet. As a matter of fact, we haven't really seen Chinese New Year in full bloom until this weekend.

Right.

Okay, I understand that might not directly relate to your question, but Matt, would you like to respond to that?

I don't think anything that has happened in the last few weeks has changed our outlook on Palace. We still believe that it is going to be a market share taker out at Cotai and predicting the Macau market has been hard. All we are saying is the market feels stable right now and we are confident in our product. We don't put out EBITDA projections for new projects.

Right, I was more asking about how those expectations have changed just internally versus a couple of months ago.

They haven't.

They haven't.

They haven't to answer you, now I understand your question. I can answer that. Our expectations haven't changed. The assumptions we have made in the business plan remain the same. Remember, when we got to the point of doing those assumptions, changes already occurred in the marketplace. So we haven't made any changes recently to our assessment.

Great, thank you very much.

Hi, good afternoon everyone. Steve, I wanted to follow up on your prepared remarks regarding the filing with the contractor for Cotai. Considering the significance of this project for the company's next phase, could you provide more insight on the potential impact if there were to be any delays? Are we talking about relatively minor differences at this stage? Any additional details on what could be affected would be appreciated.

Well, it is nothing more complicated than they got a little bit behind. And they have a plan on catching up. We are working very closely with them and there is a very good chance that they will. And even if they don't, it will be close. So that is pretty much the way we see it now. That is a description of where we stand. Now, in the trenches, the work is feverish, there are 9,500 people on the job. And everybody has got their chins down and are paying attention. It is a very, very ambitious extravagant product. I have talked about it over a period of a year or two to all of you in these conference calls. We aimed very high. And that has put pressure on the finishes of the building. Of course, it's a fancy place to say the least. And all of the subs are working to do their best job and they will get there, they will get there give or take a few weeks I think they will be fine. There is not much more you can say about it than that. I mean when they told me they were going to finish early in September they gave us a written notice that they were going to achieve the early completion bonus of $38 million. And so, we shared that with you because they notified us in writing. And then when they told us that that was doubtful because we had shared it with the public, we thought it was incumbent upon us to also share with the public that there wasn't going to be an early bonus or an early completion. But I want to remind everybody that the original contract was for June 25 that we would complete this project in the first half of 2016. And hopefully, that date will stand or right close to it. And that is where we are at the moment.

That is helpful. And maybe just one follow-up would be you started to discuss your staffing levels and plans for the casino level employees. Should we expect that this starts to transition and see some cost savings at the Wynn Macau property level sometime in early second quarter? Is that likely given the timeline you have laid out?

That's a great question and it really gets to the core of my instructions. In the past, we have typically had two main paths to consider: one focuses on completing the construction of the building, and the other involves recruiting, training, and onboarding the thousands of staff needed to operate the facility. Ideally, these two paths progress in sync and converge on opening day. If construction falls behind schedule, it’s not a major issue by itself—delays of a few weeks can happen. However, what’s critical is not hiring a large number of people who end up being underutilized while waiting for the building to be ready, as that can have significant financial consequences. A couple of months ago, I worked with Matthew to adjust our plans. I prioritized having key milestones for the building's turnover completed before initiating hiring whenever possible. This way, our hiring timeline will not outpace the construction timeline, minimizing the impact of any delays. Currently, I'm pleased to report that we are maintaining a balanced approach.

Great, thank you very much.

Hey, how are you? So, Steve, in your prepared remarks you said that Las Vegas was an apple pie shape. And if you think about it from where we sit, it seems like the economy is anything but an apple pie shape. So why do you think there is that disconnect and do think it can realistically continue and, if it can, for how long? Thank you.

We are maintaining a strong position and enjoy a privileged customer base. There are pros and cons to operating a high-end luxury resort. For instance, our typical guests are often wealthier and more able to splurge on premium dining, wines, and hotel rates. However, being a preferred location for baccarat among international tourists means that any disruptions impact us significantly, especially since we have more baccarat business than any other venue in Las Vegas. When baccarat play in China is affected, we feel the consequences the most. Nevertheless, we still have a solid customer base, and we remain a top choice, if not the primary choice, for many visitors. We work diligently to uphold that status, and since New Year's, our strategy has been effective. We've achieved better room rates and our casino operations are profitable, despite occasional fluctuations in our performance metrics. We focus more on the bottom line rather than just top-line revenue, assessing our casino based on the contribution to EBITDA from our games. Our aim is to maximize profitability for every square foot of the casino. Over time, our efforts yield positive results, and we are seeing those benefits now. This is why I believe the resort is in good condition, and I'm pleased with our performance. Additionally, our attendance during the New Year's and Christmas season, as well as in January during conventions, is significant. High-profile corporate leaders attending these events prefer to stay with us, which increases their gambling activity as well as their inclination to dine in quality restaurants and shop in premium stores. Thus, I am satisfied with the performance of Wynn Las Vegas and stand by my statement that it is in good shape; I’m pleased with the results.

You did. I mean I guess just following up, if we are going into a recession, how do you think Vegas can hold up? Obviously you have a lot less supply growth this time than we did in ’08 and ‘09? And then as a follow-up also, you did mention you are exposed to more of that high-end baccarat play. Have we seen any signs that stabilized in Vegas over the past few months? Thank you.

Well, Chinese New Year will certainly be interesting and it is not – we are just starting it. We are three days into a seven or eight-day event. I would say baccarat business is off in Las Vegas unquestionably. Is it going to get worse or is it stabilized? I don't know, too soon for me to answer that question. But if there is a recession in America, and it is hard to see why there won't be if we keep going the way we are, then Las Vegas will ultimately reflect whatever is going on in the rest of the United States. It always has. There's sometimes been a delay if conventions are booked and things like that, but at the end we always seem to be just like anybody else, part of America and a big reflection of it. So I don't want you to construe my remarks about a healthy January and a promising February to mean that we're running counter to anything else you're seeing. We're just lucky, that's all. Just luck, we're holding high. I don't want to make too much of it.

Very helpful, thanks, Steve.

Hi, good afternoon. I did have a follow-up to Thomas' last question. Do you have any visibility into the second half of the year for Vegas? I mean, if we don't go into recession, what’s on the books that gives you some confidence that you will see some continued pricing power?

The perfect guy to answer that question is sitting next to me, Maurice Wooden, who runs America for us. He is the boss man of Las Vegas and for that matter Wynn America that is where we tucked in Boston. Bob DeSalvio is not on the call, but he is working on construction. Maurice, do you want to come over here and deal with that?

Sure. I mean when we are looking forward into the second quarter, I think we see very stable, very confident business on the books that we believe that for the next quarter will be in good shape, consistent with where we are today with the first quarter. When we look at Las Vegas, the question was asked about baccarat play and others, and I think again it is just too early to tell about the gaming side of it. But on the non-gaming we are very focused on cash contribution and we figured out different ways to make sure that we make up any shortfalls in the casino by looking at other parts of our business, so we believe that we can get that cash contribution.

My question was really focused on the second half. Can you share any data points that give you some confidence as to how that looks?

Sure. And again, looking at second quarter or the second half, it is the very same answer I would give you is that we look at our books and we see what is on the books and we are very comfortable and confident that we have a healthy base of business in the second half of the year.

The fact is we are just lucky to be having bookings at the moment and we see everything that’s on the pages as favorable. We do not see, we don’t sense any trouble as it relates to particular events from convention or others.

Okay, great. Steve, I wanted to switch gears back to the Palace, as it was originally designed for premium players. While there may still be some of those left by the time you open, my question is how have you changed or are you changing your marketing several months before it opens given the focus on attracting more of a broader audience?

I am not entirely convinced that the basis of your question is something I want to accept at face value. I believe our marketing strategy should remain unchanged. While we may not have a large number of junket operators, we do have a significant number of wealthy gamblers and premium mass players in China. We made adjustments to our facility to accommodate some junket areas as premium mass spaces, along with modest improvements in presentation and furnishings. Historically, there has been a substantial revenue flow for the casinos and junket operators in Macau. Although there are now fewer operators, these gamblers will seek locations that meet their expectations. We have designed our venue to be that place. Considering the number of casinos in America and Las Vegas, where we capture a fair share of business, worrying about our share in Macau is unnecessary. I am confident that we can attract the most selective customers available in the market, and we will demonstrate this soon. It's important to remember that not all VIP players have vanished; their numbers may have decreased, but they are still present.

But, Steve, where I was going with this is that we have seen in the last 12 months two casinos open, visitation has not increased. And what I am really interested in is how you plan on reaching deeper into China to increase your odds of having 100% occupancy more times than not. Are you going to be expanding the number of marketing offices, just how are you going to do it?

We are not permitted to promote our offices in China. Our ability to advertise rooms is very limited, and they are extremely cautious about it. I don't believe that a venue like Wynn Palace is suited for mass marketing strategies. For our type of properties, 99% of our marketing relies on word-of-mouth. The market that visits Macau, while significant, is a small fraction of the overall population. Those who travel to Macau are well-informed about every hotel and tend to choose based on their budget or perceived quality. Within 60 to 90 days after Wynn Palace opens, a large portion of that market will be aware of it, and word-of-mouth will play a key role in establishing its reputation, just like Wynn did on the Peninsula. We did not engage in advertising at the Peninsula, the first Wynn Macau, or Encore, yet we filled those 1,000 rooms and could have easily filled 2,000. Now with 1,700 new rooms, I'm uncertain what advertising would truly accomplish. However, it's evident that affluent individuals from places like Beijing, Shanghai, Fuji, Guangzhou, or Dalian already know about us. One advantage of the gaming audience is that they become aware of new grand hotels quickly—think about how quickly people learned about Caesars Palace, Bellagio, and Mirage after their openings. Hence, commercial advertising and traditional marketing are not as crucial for newly launched destination hotels. Coverage and discussions about them will naturally occur, so this isn't a major issue I am focusing on right now.

All right, just as one housekeeping item and then I will be done. Can you give us some estimated date on when you think that Everett might open?

Yes. We start in April and May as we expected to do. What are we thinking, about 28 months?

30.

30 months from April.

Okay, perfect. Thanks a lot.

So that is April ‘16, April ‘17, April ‘18, late fall ’18, before ‘19.

Hi, good afternoon. Thank you. So, Steve, last quarter you expressed your frustration with planning for an opening at Wynn Palace without knowing how many tables you have and so forth. If I may use the word Zen, you sound more Zen about things today. Just wondering if something has changed now, maybe you have more information regarding the size of the casino, maybe we have run scenario analysis that made you more comfortable. If just you could touch on that.

I am more comfortable. Zen was a good word. I am more comfortable. I am feeling good about it. I am convinced that the government of Macau is doing everything in their power to make sure that the citizens of Macau and the employees who are citizens are protected and safe to the extent that they are able to contribute to that process. So that is to say the government of Macau is on the side of the development of Macau and the healthy continuation of the industry. And I think all of us have managed to work our way through some of the complexities and ramifications of that process. And so I am – I have spent a lot of time there in the last few months and I am feeling better about it.

Have they given you some kind of comfort level with the number of tables that you would get or is it more of a general comfort?

Well, we don't have a specific allocation of tables. I have a general confidence that the government wants the operators to be successful and they want these new hotels to take their place as very vibrant successful destination, multi-faceted, diverse tourist attractions that they are in fact designed to be. I am confident that the government wants these places to get off on the right foot. And I think that the government will do what they have to do to see that that happens. And that is the basis of my confidence. I have confidence in the government's ability to take care of the problems that are associated with growth in the market. I think that is probably the best way to express it.

Okay, that is very fair. And if I may, I have a – my second question is a bigger picture question. And Steve, when you add most of your peers talk about Macau and its future, everyone is optimistic about the future growth of Macau. Last quarter you said that your long-term confidence was strong and you said it again on this call. And I am just wondering, given where we stand now or in the midst of a market transition from VIP to mass, there is uncertainty, we talked about some government policies. You are feeling more comfortable now, but there are government policies that have inhibited growth. Just wondering, can you discuss what drives that longer-term optimism? And what do you think the inflection point is? Is it a period of time? Is it an event? Is it a political change? What is driving that optimism longer-term?

That's a very intelligent question. Good for you. It relates to the size of the country and the priority that the central government has placed on the success of both Hong Kong and Macau. The dynamism of China is impressive. The Communist Party operates as a meritocracy, and although individual leaders may vary in approach, they generally want a successful life for the citizens of China, including those in Hong Kong and Macau. The distinct personalities of these cities are well established. Macau serves as a premier resort destination along with Henshan Island, while Hong Kong functions as a financial hub. The role of these cities is widely acknowledged within the Chinese government. Given that the government aims for national success, I am confident they will achieve it. However, the challenges they face are significant, especially considering China's vast population, which is four times that of the United States. Managing a country of this size is a formidable task, and they have capable individuals in place. Our confidence in the future is based on a careful examination of the past, starting with Deng Xiaoping's pragmatic approach in 1979. The Chinese government has successfully lifted hundreds of millions out of poverty, which is unprecedented in history. Clearly, they are doing something right by harnessing the potential of their population. Why would we assume this progress won't continue? In terms of recreation, Macau is a preferred destination. This broader perspective grounded in historical context supports my positive long-term outlook for Macau. I enjoy being part of the Chinese business landscape, though it doesn't mean there won't be short-term challenges. The adjustments we face in the U.S. are similarly complex. Did I help you with that answer? You asked an intelligent question, and I hope my response was up to par.

No, that was very helpful; I appreciate it. Thank you so much.

This may be a follow-up to Harry's question, but I believe there's little disagreement regarding the quality of the buildings you develop and the execution you have shown over the years. However, when we consider the Macau market, and I hesitate to be too focused on the short term, looking at this year and possibly next, we see not only fewer VIP junkets as you've mentioned but also a lot of patrons, albeit fewer in number. Additionally, there are several other properties and hotels vying for their attention. So, I would like to ask what differences in your strategies you are considering, in whatever terms you feel comfortable discussing, to address this increased competition in what can only be described as a challenging demand environment right now.

Well said, compressed demand. You are absolutely correct. If I had a new technique or marketing strategy in mind.

You shouldn't tell us.

I shouldn't tell you, but if I don't have one, it's only honest to say that I don't. However, I do have an answer, regardless of how satisfying or unsatisfying it may be. When aiming to elevate a resort hotel to a superior level, you create a competitive advantage, almost as if you have a secret strategy. Here’s what you would need to do to reach that goal. If we have such a strategy, here it is: to elevate a hotel, you must start with every single minute detail. As you plan the building's design and the human resource management, you need to revisit every assumption from the very beginning, utilizing all your experience to improve each component. If you approach it from the ground up, considering things like the back of the house, the doorway, lighting, hallway width, employee training and compensation, cooking methods, and cleanliness—everything, including what you experience when lying in bed and the views from different room types—then if you are patient and experienced enough to embark on this journey, which would take at least two years before you could begin construction, you would understand the path we took in creating Wynn Palace. That is what we did and how we're doing it. If we are correct, it will succeed; if not, then we will have missed the mark. Does that answer your question?

Very well. Good luck. Thank you very much.

We're going to do what we have always done. We are going to keep trying to make it better in every way. And that, look, the customers aren't going to change. There are people who come to Las Vegas and Macau to live big and have fun. And whoever gives them that product consistently and fully wins the race to the top, I guess is the way to put it, or ends up in first position. Now that doesn't mean that we are going to be bigger than anybody else, it will mean that our hotel will be successful. And we will have a proper return on its investment and that sort of thing. And we will have a loyal and growing clientele. Now we took the long way home at the Peninsula, we weren't the first to open in Macau; we just made the most money when we built the place downtown and that is Wynn Macau now. So I don't see any reason to change our strategy. It is not broke. We don't need to fix it. And in the hospitality business, whether you are in Boston, Macau, Las Vegas or anywhere else, the rules aren't going to change. We know who our customers are, we know what they want. And we're going to try and figure out a better way to give it to them. That’s my ace in the hole. That is my secret.

Thank you, I appreciate it.

Which I just blabbed out, so now everybody knows.

Thank you very much.

With reference to Macau, can you tell us how you are thinking about the positioning of the Peninsula property once Wynn Palace is up and running and more traffic shifts to Cotai?

We will continue to operate as we currently are. There seems to be a distinct market for downtown or the Peninsula, which appears to have its own character and vibrancy. I was reflecting on this during my visit to China last week, specifically examining the changes observed among our competitors after they established themselves in Macau, particularly in Cotai. We focused on Galaxy, which is located right next to us. It's fascinating because there is a specific clientele downtown and in the Peninsula, while the Cotai clientele is different and tends to be more mass-oriented, especially with the influx of people crossing the border. Ian, Gamal, what are your thoughts on the differences between downtown and Cotai? Do you foresee any changes in the Peninsula when Gamal launches the Palace?

Every new joint that’s opened in Cotai has been allegedly the death of downtown and it hasn't happened. So we continue to drive down here. We have history, the history of Macau, old Macau, we’ve got the Lisboa, the Grand Lisboa which is somewhere where everybody visits when they come to Macau. The geography is very different and the scale of the resort is completely different. We run the best joint and it’s ten years old. You continue to reinvest in the property. It looks like it is brand-new and we have got a very strong loyal customer base and it is going to complement Wynn Palace.

Okay, great. Thank you very much.

Only an Irishman would call a $1.5 billion hotel a joint. See how relaxed everybody is in this Company?

I learned that from you.

I know.

Thank you. Everybody else, talk to you next time. See you.