Welcome to the Wynn Resorts fourth quarter 2019 earnings call. All participants are on listen only until the question answer session of today's conference. To ask a question, press star one on your touchtone phone, record your name, and I will introduce you. This call is being recorded. If you have any objections, you may disconnect at this time. I will now turn the call over to Craig Billings, President and Chief Financial Officer. Sir, you may begin.
Thank you, operator. Good afternoon, everyone. With me today in Las Vegas are Matt Maddox and Marilyn Spiegel. Also on the line are Ian Coughlan, Ciaran Carruthers, Frederic Luvisutto, and Brian Gullbrants. 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, welcome everyone to our fourth quarter conference call today. To kick it off, I'd like to start in Macau. We are currently focused almost solely on the health and safety of our employees, our customers, and the Macau community at large right now in Macau. I'd like to commend the government of Macau and China, in fact, for the quick and decisive action that they take and continue to take to contain the coronavirus. We're in daily conversations with the government. It has been extremely transparent, and they have been terrific partners with us as we focus on the safety of everyone in Macau. On February 5th at midnight, we worked with the government of Macau and all operators in Macau to cease our Macau operations on midnight, February 5th. It was a controlled and organized closure.
We do still have our hotel and a couple of restaurants open for the few remaining guests that are in Macau. During the time the casino is closed, our operating expense currently is $2.3 million a day and much of it applies to payroll for our 12,200 employees. Looking back at the fourth quarter, we generated $347.7 million of EBITDA, and like the past quarters, we experienced quick growth in core mass, coupled with compression in the VIP segment. As we reported on the third quarter, October was actually quite strong, generating EBITDA of a little over $4 million a day. We began to see deceleration leading up to the 20th-year celebration handover of Macau back to China on December 20th, just like the entire market.
However, while it's a short period of time, we did notice that beginning on December 23rd through January 10th, in a somewhat normal operating environment, our business jumped right back to $4 million a day in EBITDA between the two properties on a normalized basis. Moving to Las Vegas, we made $80 million in EBITDA with a $20 million negative hold impact during the quarter. On a full year, just to put it in perspective, in 2019, our baccarat volumes were down roughly 30% in 2019 compared to all of 2018. That contributed to more than a $50 million decline in EBITDA year -over -year. Our domestic business continues to be up in the casino and in non-gaming. RevPAR was up over 3% in the fourth quarter, and our retail revenues were up double digits. We're excited about 2020 in Las Vegas.
We have a 430,000 sq ft convention center that's opening in weeks to great fanfare. We have three new restaurants that'll be more social dining-focused and high energy that'll be opening throughout 2020. We'll begin the remodel of Wynn Las Vegas, the 2,700 rooms here in the summer of this year and completing before the end of 2020. We have a lot going on in Las Vegas, and we feel really good about all of the segments of our business as we continue to monitor the Far East segment as it relates to Las Vegas. Looking at Encore Boston Harbor, we doubled our EBITDA from the third quarter to the fourth quarter to $15 million. Our table games business remains healthy. We opened and table games was healthy, and it continues to grow and to be quite strong, actually.
All of the programs that we're putting in place for our slot win, we launched the Wynn Rewards program, which is a first for us in North America, which is a tiered card program. We're starting to see those things work at Encore Boston Harbor. In fact, our win per unit on the slot floor was up a little over 14% compared to the third quarter, and we're continuing to see incremental growth on the slot floor. In 2020, we're focused on continuing to match our food and beverage concepts with our customers. Destination dining for the overnight visitors as we're ramping our hotel business there and providing more quick-serve options for the daily visitors. We feel good about the progress that we're making at Encore Boston Harbor as we continue to ramp that property throughout 2020. With that, I'll turn it over to Craig.
Thank you, Matt. As noted in our release, our Macau operations delivered adjusted EBITDA of $347.7 million on $1.1 billion of operating revenues. The quarter was characterized by strength in mass, with combined property win in the mass segment up 6% year-over-year. Our results in Macau were positively impacted by higher than normal direct VIP hold percentage, which increased EBITDA by approximately $17.5 million from a normalized level, with the hold impact weighted more heavily to Wynn Macau at approximately $12.5 million. The team in Macau has done a great job of controlling costs at both properties.
At Palace, our operating expenses excluding taxes were down both year-over-year and sequentially, which drove a 40 basis point increase in normalized EBITDA margin compared to Q3, despite the top-line pressure experienced market-wide. At Wynn Macau, OpEx was flat year-over-year and sequentially, despite incremental payroll expense incurred to staff up the Lakeside Casino. We are well prepared to drive strong operating leverage when the market returns to normal. Our Las Vegas operations produced adjusted EBITDA of $80.1 million in the third quarter on operating revenue of $368.8 million. Our results were negatively impacted by low table hold in both baccarat and domestic tables, costing us about $20 million of EBITDA, as Matt mentioned. While baccarat was soft year-over-year on a tough comp, we saw 4% growth in non-baccarat table drop and slot handle.
On the hotel side, RevPAR increased approximately 3% year-over-year to $288, driving $120.3 million of hotel revenue. Bad debt expense in Las Vegas was $4.1 million compared to $1 million in the prior year quarter, costing us $3 million in comparable EBITDA. The team in Las Vegas also did an excellent job controlling costs in the face of upward pressure on payroll, with operating expenses excluding tax and bad debt down slightly year-over-year. We spent approximately $49 million in project costs on the group space at Wynn Las Vegas in Q4 2019, taking our spend to date to roughly $351 million. Construction is now complete, and the expansion is slated to open in a few weeks. Encore Boston Harbor produced $15.3 million in EBITDA on $169.3 million in operating revenue. Table games hold was in the normal range.
As Matt mentioned, we have a number of initiatives in play in Boston designed to drive revenue growth, and we expect those initiatives will bear fruit over the course of 2020. We have also carefully managed our expense base there, and operating expenses excluding gaming tax in Boston were down approximately 11% quarter-over-quarter. We anticipate making additional investments in the property throughout the year, particularly in food and beverage. While we are not yet ready to quantify the budget for those initiatives, we expect they will be relatively modest. Turning to the balance sheet. During the quarter, we successfully completed a $1 billion 10-year senior notes offering in Macau with strong support from Asia-based long-term investors. We intend to use the proceeds from the notes offering to repay a portion of our term loans in Macau.
As a result, this will reduce our senior secured debt and related leverage ratio while extending our maturity profile at an attractive rate. We ended the quarter with total debt of $10.4 billion, inclusive of the $1 billion of recently issued Macau bonds. We also had total cash and investments of $2.36 billion, including approximately $1.8 billion at Wynn Macau and total company-wide revolver capacity of $1.25 billion. Our liquidity position, particularly in Macau, is very strong. Finally, during the quarter, we returned over $100 million to shareholders through our quarterly dividend payment. With that, we will now open up the call to Q&A. Operator?
Thank you. To ask a question, press star one on your touch tone phone, unmute your phone, record your name clearly after the prompt, and I will introduce you for your question. To withdraw your question, press star two. Our first question comes from Carlo Santarelli from Deutsche Bank. Your line is now open.
Hey, guys. Thanks for the comments. I hate to be generic and more general, but if you can, just big picture, how do you guys think about things here in the near term? Certainly appreciate the color, Matt, on the cost per day here during the closure. How do things look over there at present? What are you hearing in terms of the potential to reopen after the two-week window? Most importantly, what do you foresee on the back end of this?
Carlo, I think it's a little early to try to say when exactly we will reopen. Again, the team on the ground is working with the government on a daily basis and watching very carefully if there will be any continued outbreaks of the virus. So far, we feel like things are fairly well contained, and we're just watching it very carefully. In terms of Macau in general, I think, the way we look at it is there's been so much investment in the region and all the new infrastructure that was just coming to fruition with the high-speed rail coming into Macau and the light rail launching, and it was really set up for a quite extraordinary 2020. We were quite excited about it. I don't want to predict when operations will be back to normal. They will be eventually.
We're not exactly sure when, but Macau is set up for a really great rebound. Tourism was one of the first things that rebound in events like this because people want to get out and move around and get back to normal. We do feel good about the long-term aspect of Macau as soon as the virus is completely contained.
Great. Thank you very much.
Our next question comes from Joe Greff from JP Morgan. Your line is now open.
Good afternoon, everybody. There's a lot of uncertainty in Macau, and I appreciate your comments on it. Can you spend a little bit of time, what you're seeing from that Far East player going into Las Vegas? Can you share with us maybe your experience this past Chinese New Year? I know that segment's been challenged for a while, as you allude to a couple of different times on this call.
You know we don't really comment mid-quarter on what really happened during the quarter, but so far so good. We had our Far East come in. We had a party. We've taken appropriate precautions. The Far East who are in town, they can't get back to China, they are traveling from one location to another location. If they were here first, they may have gone to another casino, and we expect them to come back as they continue to play. Clearly, based upon the results you can see from the fourth quarter, it's still a very choppy market.
Can you also remind us, sticking to Las Vegas, your expectations for room pricing this year with the convention center and some of the other amenity build-outs in Las Vegas? I guess maybe some of which might be impacted by the room refresh this summer. How are you looking at room pricing for the two boxes in Las Vegas, and how much of a multi-year ramp is that both on occupancy and on price when you think about it longer term? That's all for me. Thank you.
Yeah, Joe, the room pricing and occupancy in Las Vegas is a street fight every day, right? Our convention business is very solid. We feel great reception to our product. We have leveraged our hotel rooms for the domestic casino growth that we are experiencing or that you're seeing. The rooms that'll be out of order from June through the beginning of November are going to depress hotel revenue. We will be sure to eliminate the low-end leisure business that often comes to market in the third quarter. It was really planned for that particular time. In terms of what will we end up with occupancy or with rates, that's a story to be written.
Joe, we're still focused, as we've been saying for about a year now, that as the convention center stabilized, and we're seeing lots of interest in it as people are touring, it is booking quite fast. The four to six points of incremental occupancy is still the target as we get into late 2020 and into 2021. I think we ended the year at roughly 87% occupancy, and we want to be in the low 90s six months from now.
Great. Thank you very much.
Our next question comes from Felicia Hendrix from Barclays. Your line is now open.
Hi there. Thank you so much. Ian, for you, I was just curious, did the West Casino renovation open up at the end of the year?
Yeah, it opened up in mid-November, 44 tables, and did exceptionally well. Lifted premium mass was incremental business for Wynn Macau. The marketing and operations team did a great job launching it. We were looking forward to a great Chinese New Year. It had done very well up to that point. We're encouraged. For the future, we still have elements of the facility to open in the first quarter. We have two restaurants coming on board, six retail outlets, and support areas. It's an exciting development for Wynn Macau. Plus, we have all our Encore rooms back after their renovation.
Our next question comes from Shaun Kelley from Bank of America. Your line is now open.
Hi, good afternoon. Maybe for Matt or Ian, just wanted to get your sense on, I think obviously the market was a little disrupted in Macau in December, given the president's visit. Was kind of curious on maybe your bigger picture view on maybe some of the implications of that visit. There were, I think, some really positive reads about what that might have meant for kind of the near medium term, and then, any kind of just initial reads on the new chief executive and how some of those relations are going.
Sure. I'll kick it off, and then Ian, you can chime in. As I said before, we thought Macau was really set up for a great 2020. We're very optimistic about the new chief executive and the direction that he's taking Macau. We feel good about all the infrastructure that's coming in place. Clearly, the visit in December by President Xi was wildly lauded around, really all throughout China, as Macau has done a great job with the one country and two systems. We feel really good about Macau's position going forward. Ian, do you have any thoughts on that?
Two years ago when the Greater Bay Area was being discussed at a governmental level, and Macau was described as having a seat in one of the VIP carriages as the Greater Bay Area moved forward. After President Xi's visit, it's now positioned Macau in a leading role, which is wonderful for everybody in Macau business and community. Secondly, on the new chief executive, he barely sat in his seat, and he has this huge virus maelstrom. He's been quite amazing in his clear, concise, pragmatic communication with the community and also with business. We've been in daily dialogue with government, and it's been quite remarkable the decision-making that he's done in his first few weeks.
Our next question comes from Thomas Allen from Morgan Stanley. Your line is now open.
Hey, thanks. A couple questions on Macau. How is business interruption insurance going to work? With covenants, I know you've been well under them, you have a ton of cash, will there be concessions given? Finally, the cost containment was really impressive. Can you just talk a little bit more about how you were able to achieve that? Thank you.
Sure, Thomas. It's Craig. I'll take the first two, and then we can talk about the latter. Generally speaking, business interruption insurance must relate to a physical event that caused the business interruption, so a storm or some type of damage. That obviously isn't the case here. We don't expect material business interruption coverage proceeds from the coronavirus event.
To your question on covenants, the vast majority of our debt stack is comprised of long-dated unsecured bonds with no maintenance covenants. The two bank facilities do have maintenance covenants. The U.S. facility has more than ample covenant headroom to sustain a very prolonged period of suppressed business volumes in Macau. The Macau facility does have a maintenance covenant that is sensitive to Macau EBITDA. As I suspect several concessionaires do, we already have a game plan in place to manage that to the extent that the shutdown is extended. It would have to be quite extended. As you rightly pointed out, we have a ton of liquidity. We have a couple billion dollars of availability between cash and revolver in Macau, and that's more than sufficient to last for really any period of closure. Ian, would you kindly comment on the OpEx controls?
Sure. It's just a team effort to collectively look at variable expenses. We were able to bring headcount down. We had a hiring freeze in place, and the teams did a good job parsing expenses, but not hurting the quality of service and the quality of product and facility.
Our next question comes from Harry Curtis from Instinet. Your line is now open.
Hi. Good afternoon. My question goes back to the comments that you made about the light rail system. Was it in operation long enough to get any sense of whether or not it would be effective transporting more visitors to your properties?
Harry, this is Ian. It had only been in operation for three weeks and still going through testing mode. It's a great vehicle transfer situation for us with two stations right outside our property. It's too early to tell in terms of traffic movement, et cetera.
Our next question comes from David Katz from Jefferies. Your line is now open.
Hi. Afternoon. If I can just ask you to go back on one detail. You did make some mention and show some evidence of good cost containment. Can you talk a bit more about what levers and a bit more specificity around what you can do with cost? Are you encouraging vacation or any of those sorts of things that may mitigate some cost impact? Then secondly, I wanted to change the subject and talk a bit about Encore Boston, and just sort of get your updated view about what a ramp to a payback period might be over time, and how you're envisioning that. Thank you.
Sure. This is Matt. On the cost containment side, in a normal operating environment, I think in all of our properties, we've been doing a very good job focusing on costs and being smart and efficient. Right now in Macau, the roughly $1.8 million-$1.9 million a day of payroll, we are not looking at cutting that at all. Now is the time when you invest in your people. You don't do something short-term that will hurt the culture or cause any distraction. We're investing in the community right now because we know this will be temporary, and we think that it's the right long-term investment. For Encore Boston Harbor, when we laid out the program when we opened at Analyst Day, we talked about a two-year ramp period. Admittedly, it has launched softer than we thought, in particular on the slot side.
We're doing a lot of work. What we realized was we didn't have quite the right food and beverage program, in particular around quick serve, for the daytime slot customer. It's actually the same thing that we went through at Wynn Palace. When we opened, we realized we needed more quick-serve restaurants in Wynn Palace. We immediately closed a third of the casino. We built Red 8. We've built five new restaurants in the meantime. We're going through that process in a very fast way at Encore Boston Harbor because when we see a problem, we fix it. I think we're still in that two-year ramp-up mode.
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