Welcome to the Wynn Resorts Third Quarter 2020 Earnings Call. All participants are in a listen only until the question and answer session of today's conference. Sir, you may begin.
Thank you, operator, and good afternoon, everyone. On the call with me today are Matt Maddox and Marilyn Spiegel in Las Vegas. Also on the line are Ian Collin, Linda Chen, Chiran Carruthers, Frederick Bubsuuto and Brian Goldbrand. I want to remind you that we may make forward looking statements under Safe Harbor federal securities laws and those statements may or may not come true. I will now turn the call over to Matt Maddox.
Thanks, Craig, and thank you for joining us today, everyone. I'm sure everybody is glued to the television watching these exciting election results right now. So we'll just we'll get right into it on our results here. I'd like to start in Macau. So the Q3 in Macau was really very similar to the second.
There wasn't a lot to talk about. We're still seeing roughly 8% to 10% of our visitor volumes compared to pre COVID levels. And it was really there was just not a whole lot going on. But as everyone has been seeing, the government of Macau with its deliberate approach and steadfastness has been working very hard to continue to open Macau. Macau is probably one of the safest places on the planet, hasn't had COVID case in months months months and everyone there is really excited to see the progress that's going on.
So as an example, in the month of August in Macau, our EBITDA line was negative $40,000,000 because there was very little revenue and we were carrying our cost. Our team is doing a great job saving money where we can, being more efficient while protecting the local employment and all of our employees. However, in October, we started to see those trends change. So we went from 10% of our normal visitor volumes up to almost 30%. And it wasn't just over Golden Week.
It was actually throughout the month. And in fact, I looked at our visitor data from November 2, 3rd 4th at Wynn Palace before I walked in here and we are seeing roughly 6,000 people a day come in the building. Pre COVID, that number was 18,000. So those trends that we saw in early October are continuing into November. From a revenue standpoint in October, mass drop on the table side was roughly 40% of our pre COVID levels.
And on the junket side, which everyone has been talking about the junket business, what's going to happen to it? Is it going to survive? Where is it going to go? Clearly, it's changing. Clearly, it will be smaller even as we come through this than it was before, but it's still very real.
We saw 30%, roughly between 25% 30% in turnover compared to our pre COVID levels in the junket space. So that activity produced actual positive EBITDA for us in October. So if you think about it, we went from a negative $40,000,000 in August, which was normal, somewhere in July, etcetera, to a positive $6,000,000 in October, quite a big swing. And what we are optimistic about in Macau is the way that everything has been handled there, it doesn't appear to be one step forward, one step backward, one step forward. It's been a very deliberate approach, very thoughtful and it just feels like we are and the market is just going to continue to get better.
I don't know at what speed. I don't know at what pace, but the overall mood, attitude and trajectory is quite good. In fact, looking in October at our retail sales, they were roughly flat with last year and our top 5 stores in Macau were up 25% compared to last year. So there is real consumer, pent up consumer demand and it's just going to take time for the market to continue to open. But we feel really good about the current trajectory that's going on there.
Moving to North America, as we talked about on the last call, we are not going to sacrifice our brand or our culture to make an extra few dollars here or there. That means, while we have significantly less staff and approximately 7,400 less staff globally now that we did pre COVID, we are still operating at a 5 star level in Macau and in North America. We are focused on making sure we have the highest room rates in the market. But we have also been focusing on making sure that we continue to breakeven or make money. And in Las Vegas, we made $20,000,000 in the Q3, hold adjusted closer to 28.
Some of the things that are encouraging that we're seeing in Las Vegas is we are taking share in the casino segment. We are seeing new domestic customers that we have never seen before that previously were lifers at some of our competitors. I think for all of the reasons that we've been laying out from our security protocols of checking everyone when they walk in to our COVID protocols to all of our restaurants being open, we are beginning to continue not beginning, we are taking market share on the casino side. Slots in the market were down over 33% during the quarter and we were down 16%. Table drop was down about 35% in the quarter and we were down 25%.
So we are just seeing more business. We are seeing higher end customers, not a lot, but we are seeing that I believe we are gaining share on that front. In October in Las Vegas, we actually had our best month, we generated roughly $14,000,000 of EBITDA in October. We had a little bit of hold luck in there, maybe $2,000,000 But overall, it was a very good month. Now as everyone on the call knows, Las Vegas has seasonality and we're coming into the slow time.
So COVID cases are picking up in the U. S. Obviously and November, December are quite slow in Las Vegas and have been heavily reliant on group. So our team while so October will not be repeated in November December, But it shows that when there is just a little bit of business with the way we have restructured our expense line, the amount of operating leverage that we have now, revenue quickly converts into EBITDA. And our focus, as things do get a little slower during the winter, is to make sure that we stay EBITDA positive.
That's what we are going to do in Las Vegas. And I would think it's hard to tell, but I think Wynn Las Vegas probably was the most profitable integrated resort casino on strip or if not the most, it was definitely at the top of the list. So our strategy is working. We are maintaining our brand. We are maintaining our culture and we are making a little bit of money.
Moving to Boston, Encore Boston Harbor is really starting to hit its stride. So we generated roughly $26,000,000 in EBITDA, significantly really learned how to be a super regional operator. We focused during the shutdown on how to run Encore Boston Harbor differently than we were because clearly what we were doing was not quite right. And so we have had a laser focus on the casino segment and what it is that those customers want and how we're going to deliver it. And if you look at our results, slot handle per day, just overall volume per day, was actually up over last year.
It's pretty extraordinary when you think about we had 1800 slot machines open during the Q3 compared to 3,000 last year and volume was higher on a daily basis. Wind per unit was over $400 on the 1800 units, so I think $407 compared to $219 last year. So Encore Boston Harbor is really starting to understand how and we are starting to understand what that market is, how to market to those customers and how to monetize there. Massachusetts recently, just this week, announced that starting over the weekend, restaurants, bars, casinos, etcetera, will need to close, COVID related, starting at 9:30 at night. That's clearly a setback for us, but it's very temporary.
And I'm sure it's the right thing to do from a health perspective. The government of Massachusetts has done a terrific job throughout all of this, managing this from Governor Baker to the Massachusetts Gaming Commission. So we view it as a temporary setback, but it's really nothing that we're worried about because our business model is sound and I think that we're going to continue to see increases in revenue and increases in EBITDA out of Encore Boston Harbor. Moving on to one more topic, this is a new one for us. There has been a lot going on in the gaming world concerning sports betting and in particular online sports betting.
We have been very focused on this topic for the last couple of years, but we have been admittedly quiet about it. In 2019, working with Craig Billings, who is helping me run this effort, we decided that we wanted to focus on product first. So how can we have the best product, because that is who we are when it comes to sports betting, online sports betting. We scoured the earth and we found a company in the UK called BetFol. And the founders and the operators of that company, we had a great cultural fit.
They were the founders of Bwin and Party and understand this intimately and they had built a product in the UK that was really very social. So the engagement that they had with their customers was quite extraordinary and therefore their KPIs were really, really good. So when you see your friend making a bet, it will pop up on your phone. Do you want to follow your friend? It's very parlay heavy.
It moves you into chat rooms quickly. It's fun. It's a lot of fun. And their user acquisition cost in the UK and their LTVs were quite attractive relative to industry standards. So we made an investment in that company in 2019 and began working on a U.
S. Rollout with them. We then moved forward and we acquired that company. We own 70% of that company now and they are fully integrated in. We have 150 people inside Win Interactive and we've begun our U.
S. Rollout. So quietly, but we can now talk about it, we have signed market access deals in the United States in 9 states. That represents about 25% of the total addressable market. I think a lot of the analysts on this call say that that's roughly $20,000,000,000 to $30,000,000,000 So we already have access to 25% of that and we are in very active dialogue, definitive documentation in many cases on 7 additional states, which represents another third of that market.
So the way that we are going, we think that we will have more than half of the total addressable market through market access deals underway and in winter active and in fairly short order. We have launched WinBet, our product in New Jersey. We are learning a lot. We have product releases every 2 weeks. And so far and Craig will talk a little bit more about this, our CPAs are quite good and it's encouraging what we are seeing.
So we will be rolling out this product in the various markets where we have access and it's something that we have a lot of focus on. We have invested $80,000,000 within into that company to focus on user acquisition and continued development over the next few months. And we have had lots and lots of interest from various people wanting to co invest, wanting to be a part of it. And what I have been focused on along with Craig is, we are going to build an amazing product and have a real business opportunity and roll it out and that's where we are and feel very good that while currently Wynn Interactive has does roughly $20,000,000 in revenue, but that number is going to grow at an exponential rate as we move forward. So with that, I think I will go ahead and open it up to Craig to talk a little bit more about the quarter.
Thanks, Matt. I'd like
to start with a few points on liquidity and operating expense. As of October 31, our global cash and liquidity position was over $3,400,000,000 providing us with significant runway to weather the pandemic. In Macau, we had approximately $2,200,000,000 of available liquidity as of October 31st. In the US, we had total available liquidity of approximately $1,200,000,000 on October 31st, with substantially lower domestic daily cash burn as demand has started to return to each of our markets. Meanwhile, we continue to be very focused on operating expense.
Compared to the Q4 of 2019, our global FTE count has decreased by nearly 7,500 or 30% and our global payroll and non variable expenses have declined by nearly $200,000,000 or 34%, leading to consolidated OpEx per day inclusive of corporate and exclusive of gaming taxes of $4,800,000 compared to $7,600,000 in Q4 'nineteen. While these are often difficult decisions, many of the changes we made to achieve these decreases are permanent will drive operating leverage as business volumes return. It's important to note that the 3Q OpEx numbers I just mentioned and those that I will mention throughout my remarks exclude the benefit of a reversal of certain payroll and incentive accruals totaling approximately $50,000,000 which are reflected in our earnings release.
In Macau, as Matt noted,
we have been encouraged by performance during October as we delivered positive normalized EBITDA during the month, driven by solid gaming and non gaming performance, as well as a continued focus on cost control. Gross gaming revenue per day in October was approximately 33% q4 twenty nineteen with premium mass strengthening into the later portion of the month. With respect to cost controls, our OpEx, again excluding gaming taxes and excluding the reversal of certain performance based incentive accruals in the Q3 was approximately $2,000,000 This is down from approximately $3,000,000 in Q4 'nineteen. At Wynn Las Vegas, we generated $20,300,000 of adjusted property EBITDA or approximately $28,000,000 adjusted for lower than normal hold from a business that is heavily weighted to weekend occupancy. In the casino, we saw broad based strength across key segments with both table drop and or reaching 78% of Q4 2019 levels during the quarter.
We remain focused on cost discipline in Las Vegas with our OpEx per day, excluding gaming taxes and excluding the reversal of those performance based incentive accruals, decreasing to $1,800,000 per day in Q3 2020 from $3,000,000 per day in Q4 2019. In this environment of suppressed group demand, we expect recent trends to generally continue throughout Q1 2021. We believe the combination of meaningful permanent cost saves along with increased group demand position us well to accelerate our recovery as we move into the back half of twenty twenty one. In Boston, we reopened in July with a number of safety related operating restrictions in place. As Matt mentioned, our reopening plan there was focused on operating only those amenities that support the casino.
Overall, we have seen encouraging trends in the casino, particularly in slots with handle per day operating day up approximately 5% versus Q4 'nineteen. Similar to Las Vegas, we made a number of operating and staffing adjustments resulting in daily OpEx down from Q4 twenty nineteen by approximately 40% to approximately $750,000 per day in 3Q 2020. Our CapEx in the quarter was $69,000,000 As noted last quarter, the vast majority of our CapEx plans remain on hold and we are only proceeding with the highest priority project. Finally, in October, we entered into a series of transactions resulting in the creation of Wynn Interactive through the merger of BetBol, our strategic partner for digital gaming and several Wynn owned entities. I'd like to welcome the BetBowl team to the Wynn family.
This new subsidiary Wynn Interactive is 71% owned by Wynn Resorts and positions us well to advance our sports betting and online casino business during 2021. WynnBet, our sports betting and online casino application has been live in New Jersey for several months. And while it's early days, initial returns on our user acquisition spend have been encouraging. Over the next two quarters, we anticipate going live in Colorado, Michigan and Indiana. We have posted a series of slides on our IR website further outlining the Win Interactive business.
We're excited to tell you more about that business as it develops in 2021. With that, we'll now open up the call to Q and A. Operator?
Thank Our first question comes from Carlo Cancarelli from Deutsche Bank. Your line is open.
Hey, guys. Good afternoon and thanks for all the details. As you see kind of Macau starting to ramp up and shape up, obviously, and you guys mentioned it in your remarks, the premium mass performance has kind of picked up through October. When you think about the VIP environment and the premium mass environment, if you look out look over the next 1 to 2 to 3 years, relative to 2019, how would you characterize your expectations for the mix of those 2 segments within the GGR channel?
So, if you look at our business model, Carlos, we are not reliant on 50,000 people coming through our doors a day. We are in the premium business. So we feel quite good about the premium mass and premium slot segment. There is continued customer demand. Lots of people like to point out various issues.
But when you think about Macau, its position and how important it is in the Greater Bay Area and the development of Macau into a global destination global tourist destination for the Greater Bay Area, we feel very, very good about our in particular on the premium mass side, over the next couple of years. We have the right product. As far as junkets, again, lots of conversation about junkets. That business is not dead, as some people like to say. We saw it get back to 25% to 30% of its previous levels.
I believe it will continue to consolidate with some of the largest operators, and we will continue to participate in it. So I don't anticipate that the junket business will be back to 2019 levels, because it is consolidating and it is shrinking. But the Macau market overall is very well positioned to be one of the top tourist destinations in Asia over the next 3 years. So, I believe that Operator, next question. Our
next question comes from Joe Greff from JPMorgan. Your line is
open. Good afternoon, everyone. Just kind of going back to the trends that you saw in Macau in October and month to date, is there a big difference in terms of the premium asked looking at it versus a year ago in terms of minimum bet, length of time, ability to move around between your Peninsula property and your Cotai property? And is there a big difference in the recovery, whether it's on the Peninsula or on Cotai as well? Just curious about that.
Sure. Ian, why don't you take that answer that question? Sure. We've noticed very strong premium mass pickup in both properties, and they are different destinations, but one hasn't grown at the expense of the other. So we're very encouraged by premium mass activity in Wynn Macau and Wynn Palace.
In terms of the type of player, their wallet size, their length of stay, the biggest noticeable factor has been their length of stay. Previously, it was approximately 2 nights. It's been up to 3 4 nights over the last 6 weeks. So we're very encouraged. Both our properties are niche luxury products that are completely geared for premium mass and VIP and we've really benefited from that.
We've grown market share and looking out to the future, we see premium mass continuing to grow on both properties.
Great. Thank you, Ian. And then Craig, my follow-up question is on Wynn Interactive. Can you talk about future intentions to fund and invest in Win Interactive? And I guess when you look at it now, how sufficiently capitalized is it to fund growth into Colorado, Michigan, Indiana and other markets?
Sure, Joe.
First of all, we're big believers in the segment. The digital business is, as you know, is all about customer lifetime value and marketing spend to obtain that lifetime value. So our marketing plan involves a combination of out of home advertising partnerships like you saw with NASCAR and digital marketing. We seeded the business with $80,000,000 and we'll deploy marketing spend at scale as long as it continues driving the appropriate customer lifetime value.
Great. Thanks.
And Joe, it's Matt. We've had a lot of interest, as you could imagine, from various very large financial investors to other strategics to public markets wanting to be a part of this. And we've been really focused on making sure that we build this business correctly, that we own the vast majority of it. And I am sure over time, there could be other funding sources, but only on our terms.
And just as a follow-up, Matt or Craig, on this, did you have an option to buy out the other 29% under certain conditions or anything like that?
No. We actually love our partners. The founder of Vetval is in that stub equity. Norbert, one of the founders of Bwin is in that stub equity. We're delighted to have our partners.
Thanks, guys.
Our next question comes from Felicia Hendrix from Barclays. Your line is open.
Hi, thank you so much. First, just as a housekeeping, and I know we've kind of moved past this period with the Crown Affenix power in October, but can you just help us know what the hold adjusted EBITDA was in the calendar quarter?
It was essentially as reported.
Okay. So the one offset the other?
Yes. That's right.
Okay. So and Craig, the detail on the OpEx by segment was super helpful. And I know you talked about a lot of the costs that you removed, but I would assume that as we get into a more normalized environment, some of those costs will return. So if we're trying to model out looking into the future, how should we think about the OpEx, again, assuming that some of those costs will return?
Yes, it's a good question, Felicia. Thank you. In the U. S, both properties Q3 OpEx was pretty consistent from reopening through October once you adjust for those accrual reversals that I mentioned. So we think those OpEx levels are reflective of current environment and certainly sustainable for the near term, particularly with the adjusted hours at Encore Las Vegas.
In Macau, we saw a modest increase in variable expenses per day as business volumes returned in October. OpEx was up a little over 10% compared to the $2,000,000 per day I mentioned in Q3, again adjusting for those accrual reversals. Of course, that compares revenues that were up a lot more than that, which is why we were EBITDA positive. Over time, a good chunk of the cost saves that we have implemented will be retained. And that's particularly true in the U.
S, where I think we're actually running our businesses differently, while maintaining the appropriate level of brand standards. So it's a little early to give you guidance on what portion will come back, but a significant chunk will stay out of the business and that's how we'll drive operating leverage as the business returns.
Okay. Thank you. And then just moving to Boston, Matt, you said that you thought that the curfew would be short lived. As we think about the impact of the curfew, what does your customer mix usually look like at night versus during the day? Is it like more stress during the day or just in the traffic, it's heavier at night?
Just kind of what kind of impact do you think the curfew might have on the property?
Sure. So clearly, it will have an impact. So more than half of our revenue is generated between at night. So closing at 9:30 is going to have quite an impact. We what we're going to do is we're going to have a much lower operating expense.
So we're likely going to see our FTE count go down by somewhere between 670,001,000 people during this. So we will continue I believe we'll continue to be able to be EBITDA positive, but it's unclear how much. We want to stay above 0 during this closure because again more than half of our revenue is generated at the time when we'll be closed. And so I think some of that will come when we're open and we're going to offset it with expenses. Brian, our Property President from Encore Boston Harbor is on.
Brian, do you have anything to add to that?
No, I think in continuing with all our marketing efforts, we're not changing a thing. We're really focused on making sure we're driving business while controlling all expenses. So the team's done a great job and we'll continue to do that through this and adjust as necessary.
Great. Thank you so much.
Our next question comes from Shaun Kelley from Bank of America. Your line is open.
Hi, great. Thanks for taking my question, everyone. Just maybe for Matt or Craig, as we think about Macau a little bit longer term and you're starting to see this rebounding trajectory, I just wanted to kind of think through the segments. And do you think there's any particular reason, just given the product that you have in the market, that you shouldn't be able to return largely to your normal kind of pre COVID market shares? Is there anything that's changing enough that you think that sort of that market share that you've had in the past is no longer plausible?
Or do you think that when some of the junket pieces recover in particular and given the product that you could still do okay there?
Sure. So I think just to be totally fair, our top line market share will likely might not get quite back to 2019 just because the junket business will unlikely get back to where it was in 2019. But when you look at what the EBITDA contribution was out of that segment pre COVID, I'm talking about junket business, it was between 10% 15%. So our EBITDA and EBITDA share, I think, will be able to get back to the pre COVID levels because we were already very premium mass and premium slot heavy and that has been the focus of Linda Chen and Kenny and our full marketing team and they are doing a very good job there. And I think we are really well positioned given that the overall crowds or customers will likely be less.
I don't think Macao will be getting back to 100,000 people a day in the short term. So focusing on the higher end and the premium segment, which is where we are, I think will actually be an advantage in terms of our EBITDA and EBITDA share in the market.
Thanks for that. And sort of as a follow-up on the same theme, Craig, you walked through some of the operating expense statistics and you talked about them for Vegas. But you've also been able to probably optimize Macau a little bit more and appreciate that the headcount piece is not particularly negotiable, but there's going to be some mix shift here as it can relate to mass versus VIP and other things. So do you think there's prospects for sort of higher go forward margins in Macau? And just any insight or color you could provide on how you think at least the non tax OpEx piece is playing out there?
Sure. First of all, the team has done a tremendous job continuing to support local employment, but dealing with controllable OpEx. They've implemented any number of programs with really with a every dollar matters approach. And I can tell you, we're incredibly happy with how they've done that. A number of those saves, which are admittedly less than in the U.
S, because you're right, labor is less flexible, A number of those saves will be permanent. I alluded actually, I stated in my prepared remarks that OpEx came back about a little over 10 percent in October relative to the $2,000,000 per day that we experienced in Q3, which was reflective of some of that variable expense coming back as players came back. But a reasonable chunk of what they've done will provide margin enhancements over time.
Thank you very much.
Our next question comes from Thomas Allen with Morgan Stanley. Your line is open.
Thank you. On the interactive side, there's a lot of discussion about how competitive the New Jersey market is, having operated there for a little while and Craig and the team, the XB Wind team having operated in Europe. Does that concern you at all? And then can you also just talk about the NASCAR partnership a little bit? Thank you.
Sure. Happy to do that. So first of all, this again, this is a business of customer lifetime value and cost per acquisition. And customer lifetime value and cost per acquisition have to make sense in order to deploy marketing spend. We have a tremendous brand.
That brand has will, we believe, and has in our social casino segment allowed us to acquire at a rate that is cheaper than the overall prevailing market. We intend to leverage that brand. We intend to leverage the land based assets that we can bring to bear to be competitive. At the same time, every 2 weeks as we're putting out a release, we're going to make our product better and better and make it befitting of wind standards. And we think that that will drive an outsized customer lifetime value.
And so if you can drive a higher LTV and you can drive a lower CPA, you can scale a business like this and we intend to do so. With respect to NASCAR, we have a long history with NASCAR actually. We've hosted them a number of times at Wynn Las Vegas in the group and convention business. We have a tremendous amount of respect for them as an organization and we were delighted to partner with them in pursuit of a license in Virginia. Today, that relationship is very focused on Virginia, but we'll see where it goes.
And then just on Macau, can you just talk a bit about the competition in the premium mass segment? Are you seeing any increased levels of competition or anyone doing anything irrational? Thank you.
It's Matt. From my perspective, it seems like everyone is being promotions are in check. People are just focused on trying to do what they can and watch the market come back. But Ian, is there anything or Linda that you'd like to add to that? There hasn't been any shift in increased promotional activity.
Everybody's being very measured and careful about it. So nobody's gone crazy at this point. There's enough business going around. Premium mass is the story in the town. We feel particularly encouraged because it's our market and we've got 2 niche properties.
So nothing unusual.
Operator, we'll take one more question.
Our final question comes from Stephen Grambling from Goldman Sachs. Your line is open.
Hi, thanks for speaking me in. Two questions. First on Win Interactive, as you are looking at the very early results, how does the customer base compare, contrast, overlap with your existing customer base? And how does that inform you of the opportunity in sports betting versus potentially interactive gaming?
Greg, do you want to take that? Sure.
Great question. So obviously, we're a casino brand. We're a very strong casino brand. So we think there's a lot of opportunity for us in iCasino. On the customer acquisition side, the brand provides a distinct competitive advantage.
I think that's true for some of our peers as well, but that's particularly true for us given the national recognition
and premium nature of our brand.
So we think that's an our own sports book for many, many years. We understand trade, our own sports book for many, many years. We understand trading. We understand what excites the customer and where the market is. And we are working with the team and the Vet Bowl team that understands that as well as we do.
So in terms of database overlap, I mean, that's not going to be enough to scale any digital sports betting business, to be honest. You have to understand what the customer wants. You have to build product to it and you have to scale into that. And that's what we're in the early stages of doing in New Jersey.
Fair enough. And maybe for a follow-up just on Las Vegas. Can you give any color on what you're seeing or really more what you're anticipating in terms of international demand and or group meeting convention demand recovering?
So, this is Marilyn. The international demand that we're seeing for the casino side is limited to people who are already here in the United States. And so we have been pleased with the Baccarat business that we've seen and we have them returning frequently to us. These may be folks from Southern California, or someplace domestically. In terms of you said convention business international, there is none.
No, no, I guess the question was what percentage of the mix was convention and was international as we think about that effectively at 0 now and you're already seeing a pretty healthy recovery in bedding and really revenue and EBITDA. I'm trying to think about layering that back on at some point and whether you can retain what you have currently.
I do think we can retain what we have. I mean the convention business traditionally was about 30%. And so between casino and leisure and transient, they've all kind of equal it out. But clearly, our casino customers and our higher end casino customers are coming frequently. They are betting more.
They have more sessions.
And Stephen, I would just add, our group bookings for the back half of twenty twenty one, look pretty consistent with what you would expect for the back half of any given non COVID year and we obviously have a lot of capacity in the hotel. You can see that in our occupancy. So we believe we can maintain the momentum that we have and then when you layer group and convention back on, on top of an OpEx base that is lower than it has historically been, it's a pretty good recipe for operating leverage.
And one of the things that we have done is, we will finish this year our own PCR COVID testing lab. And we partnered with a really strong group out of New York on top of a hospital here. It's under construction now. It's not a lot of money. It's a couple of $1,000,000 but we will be able to facilitate 1,000 and 1,000 and 1,000 of saliva based tests with that can be distributed throughout the property and turned around within 5 to 6 hours PCR, we're not talking antibody or antigen test here, with sensitivity rates and the 98% specificity rates over 99%.
So the gold standard in terms of testing and what I have been talking to our elected leaders about is this could be one of our opportunities as we get through this to get entertainment going again, to get conventions going again, that we will be able to test thousands of people in a very short period of time so that they can be together. We will be creating safe zones throughout our property, not for the whole property, but any place like a theater or in a convention where we want to get more people together than 50 or 250. So that's underway. The team is being built. It will be finished this year.
And the best thing would be if we never have to use it. But I'm not sitting around hoping that that will be a good strategy. We're going to be ready and we be the first ones, really probably the first ones in the U. S. To do something like that.
And a lot of people are paying attention to it and I think it's going to be a good blueprint to help get Las Vegas back.