Wynn vs. Parisian

With the results of both Wynn and Sands China announced earlier this month, speculation continues about which of the two new gaming properties on the Cotai strip is outperforming the other. Recent analysis by Morningstar Senior Equity Analyst Dan Wasiolek notes that Wynn is facing headwinds in driving in and maintaining traffic to the property and casino floor, which could even lead to it changing the layout of its gaming floor.
The plans, says the analyst, are to adjust the ‘wall configuration’, reducing the size of the gaming area. The reason: create the perception that the crowds are thick and compress the tension, mimicking the high-energy environment that analyst say gamers crave.
“We now believe the slow (Wynn) Palace ramp is also due to the design of its large and open casino space, which is leading to the perception of thin crowds,” states the analyst in his report.
Apart from bringing the walls in the operator plans to increase “casual dining options to meet demand”.
The thin-looking casino floor is only one of Wynn Palace’s problems in driving trafficl as also mentioned by previous analysts, physical obstructions blocking access to the property are “impeding visitation to the resort”.
The analyst notes that Wynn Resorts says it is working with the government to “resolve the issue” although there is no immediate timeline for action – but given that the primary obstruction is related to the Light Rail Transit, which the analyst states as being at a “fairly advanced stage”, this could turn out to be only a “near-term headwind”.

In the wake of Wynn and Sands China releasing their third quarter results earlier this month, analysts at Telsey Advisory Group also note that Wynn Palace has seen a “lukewarm opening” due in part to construction obstructions. They also note that “the expected impact from new supply in the market has been less than anticipated for LVS (Las Vegas Sands, parent company of The Parisian operator Sands China),” while analysts at Bernstein are ranking its stock ‘Market Perform’ as compared to Wynn’s ‘Outperform’.
The Parisian, however, benefits from its location, and analysts at Bernstein point out that the “inter-connected properties on Cotai are a key value driver”.
In an environment where the city’s gross gaming revenue for the first 20 days of November hit MOP12.7 billion (US$1.6 billion), according to Bernstein, implying an average daily rate (ADR) of MOP635 million, while last weeks results saw ADR of MOP686 million, about 16 per cent higher year-on-year, there should be enough to go around.
But if an integrated resort opened on August 22 already has to remodel its casino floor to keep up, then its competition is ensuring that it’s staying on its toes.