Good afternoon, ladies and gentlemen. Welcome to the Wynn Resorts third quarter 2017 earnings call. My name is Ronnie, and I will be your conference operator today. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you'd like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, press the pound key. Thank you. I would now like to turn the conference over to Craig Billings, Chief Financial Officer. Sir, the floor is yours.
Thank you, operator. Good afternoon, everyone. On the call today with me in Las Vegas are Steve Wynn, Matt Maddox, and Maurice Wooden. Also on the line are other members of our management from Macau, Las Vegas, and Boston. I want to remind everyone on the call that we will be making 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 Mr. Wynn.
Hello. Well, you see the numbers. They sort of speak for themselves. I guess the four of us are very happy that Las Vegas had the best third quarter in its existence since 2005. We're particularly happy because our non-casino revenue was so strong. It's the predicate for the development of the golf course, which we'll be talking about today. We're very happy with the progress of Macau. When we began building the Palace rather, and we told everybody about it, Matthew mentioned that we were going to try and get to the $1.3 billion, $1.4 billion level with those two places. We would go from $3 million a day when we started heading, my goal was to get to $4 million. I'd be happy with that before we add more stuff in Cotai, which we will.
We'll be adding more rooms and things like that as we go along. But we got it to $3.5 million. We've been moving every quarter. In October, we're at $4 million, a little better than $4 million a day, because we had a holiday in the month. But we're very happy with the progress. When we started, we had 9% of the market with one hotel, the Wynn Encore, the 1,000 rooms downtown. Now we have 16% of the market. Our ability to capture market share is clearly established, and that, in a matter of speaking, sets us apart, at least on that kind of a metric, from perhaps some of the other places. At any rate, in our own closed world, we're happy with that. Again, I remind everybody that the problems that have beset the Cotai neighborhood that we're in exist as we speak.
We have construction on four sides. We own the whole square. There's four roads that surround our 50-odd acres. The SJM is not scheduled to open till next year. That's our south side. MGM is scheduled to open sometime. The hurricane set them back a little bit, but they're three or four months away from full operation, I would imagine, or maybe they'll open in part, but they're on our west side. The monorail station is still not complete, but I'm happy to say that the city and the builders of the light rail are hard at it. They're doing the street. They've got the bridge open. The cars are about to be tested in the next several weeks, the vehicles themselves, and they're headed for a 2019 completion.
Maybe they'll do better. Perhaps the most egregious part of the blockade, the interference, will begin to disappear as we go into the next quarter. We're hopeful of that. The light rail, of course, is on our north side as well. All of this has constrained the traffic flow into the Palace. You can look at this two ways. You could say it's been a tough break for us to have to live with this our first year of operation. On the other hand, we're doing very well, and it portends even a better result as our neighbors get up and running. We have the benefit of their connections. We will be building connections to them that are pedestrian safe, but we got to wait till they get finished with their own work. That describes my view, at least.
Maurice is here to talk about Las Vegas. Craig and Matt can talk about the more particulars if you're interested. We finally find ourselves at the decision point after two years of design development on the golf course. One of the things that's been so fantastic about this development behind us is there were so many choices because we have 1,000 acre feet of water that came with the Desert Inn Water Company. We have this remarkable proximity to our neighbor, the Sands Expo Center. Of course, we have immediate proximity to the Las Vegas Convention Bureau. I think, accumulated, that's over five, almost 6 million feet of exhibit space, one of the largest conglomerations of exhibit space on the planet. They're adjacent to us on two sides. We're going to play into that wonderful proximity with our development.
I'll give you a chance to answer questions, because I'm sure you have some. Maybe we'll flow into the other discussion. Go ahead, take questions, ma'am. Do we have a call? Have we lost our connection?
No.
If you'd like to ask a question, press star one on your telephone keypad.
Sweet.
Your first question comes to the line with Thomas Allen.
Hey, good afternoon. Great results in Vegas and great ramp at Palace. If people are going to have to nitpick, they're going to point to Wynn Macau, where it seems like you've lost some market share. Can you just discuss performance of that property a little bit? Thank you.
If someone wants to nitpick, they're free to do it. Ian, Kieran, you want to comment on we look at it as one place?
Wynn Macau maintained market share. If you look at the peninsula in general, there has been a gravitational pull to Cotai, and mass has been dropping off while it's been growing as a market. Wynn Macau continues to do more than its fair market share downtown. It continues to be the market leader. It came off a very, very high comparison with quarter two. If you look at quarter one, quarter three, and four last year, it had good growth, and there has been a lot of discussion about cannibalization at Wynn Macau. There hasn't been cannibalization. It's just getting compared to a very, very strong second quarter. If we look at October month to date, it's bounced right back. We're very happy with Wynn Macau.
Much for nitpicking. Next.
Steve, you brought up the golf course. Can you elaborate on that a little bit? Thank you.
Two years of design development, lot of choices. We finally settled. The golf course, for the sake of the golfers, bows out on December 22nd. Earth moving, tree moving, and I guess you could call it construction of the buildings begins the day after New Year's on January 3rd, I think it is on Tuesday this year. We're moving trees and doing the grading of the property so that we can get started with the foundation on the 450-odd thousand feet of exhibit space. Then when we get finished with the convention of the jewelry show in June or the end of May, we'll be demolishing the north villas where the 1,500-room high-rise is going to go, and the casino and the restaurants. The notion, this lagoon is 1,600 feet long and 650-700 feet wide.
It's surrounded by a boardwalk that's one mile long. Along this boardwalk and on the north and the south side, the north, which is towards Desert Inn Road, just for those of you who are familiar with this building, when you're in the Wynn Hotel and you look at the golf course, you're looking from west to east. The Strip is the west, Desert Inn Road is north, Sands Avenue is south, and Paradise Road is the eastern boundary of our property. The lake goes from just past the fairway villas. The lake goes 1,600 feet to the east, and it has an irregular shape. The first 7 to 9 acres is wasted like an hourglass from 600 or 700 feet wide down to 250.
There's a pavilion on the south where all the big convention building is for outdoor events that's over 30,000 sq ft with a roof and columns, although it's open to the outside air. In addition to the 450,000, that 30,000 sq ft is an outside pavilion because we have a lot of events that want outdoors. Opposing that pavilion is another little promontory that comes out that's a carousel that's 103 feet in diameter, and the horses go out, and you go on this carousel by walking from the boardwalk out on a finger dock, and you can step onto the carousel on a 20-foot wide finger. The carousel goes around, and there are booths, the Pullman booths alternating with horses going up and down. There are two rows of those, and the center is a bar. 330 degrees of this carousel are out in the water.
This bar rotates with the music and as a classic carousel, it opposes with this beautiful lit roof, the pavilion on the other side. There are a number of other things that we call in quotation marks, midway. We have decided to take the theme of Carnivale and turn it on its edge, make a series of attractions and interactive experiences that in some ways have their roots in what all of us grew up with carnivals, but are not really that. They're far more. For example, the notion of bumper cars. Remember that when you were a kid? Imagine that there are a whole lineup of bumper cars like in the pit at Indianapolis. You get into the bumper car, but the entire skin is LED lights that are controlled by a system that is linked to contact with the car.
We have this rally every 10 or 15 minutes, you go round and around in these cars, if you touch another car, it triggers an enormous audio response and an electrical response. All these cars are flashing and exploding in color and making crash and explosive noises. You go around this oval, if you win, you get a prize. There are three keystone cops that have their bumper cars, which are dressed up like police cars with flashing red lights, they're in costume. If you get in the lead, they smash into you and cause tremendous crashes. In order to win the rally, you have to overcome our policemen and our traffic cops. It's bedlam in audiovisual interaction. I give you that one example, and there are a number of others because it's the notion of Carnivale.
Also we've taken the word Carnivale, and we put an E on the end, as they do in Rio de Janeiro, and it's Carnivale, sort of highfalutin way of saying it, because every night at the far eastern end, on the southeastern end, there's a ramp that goes to a building of 40-odd thousand feet that is our housing for our floats. We are taking the notion of Carnivale in Rio, and with the help of a number of wonderful consultants and collaborators like Michael Curry, who did the puppets for Lion King and has done work for us in Macau with our Golden Tree, the Lake of Dreams here. We have these floats, these 10 or 12 floats that come out in an audiovisual parade every night right after dark, and that parade is a musical and visual extravaganza. It's not the Rose Bowl parade.
It's a much edgier kind of thing with huge spiders with spider webs and King Kong and the devil, and these things are 25 or 30 feet tall, and they're animated. What's wonderful is that people, 10 or 12 people, can pay and be part of that parade and get on the floats. They're self-motivated floats. They can drive down the ramp with wheels, and then they can work through the water with their propulsion system. Anyway, there's a Carnivale parade every night. There are zip lines and fireworks and a host of other things that populate the boardwalk. It does leave 40 or 50 or 60 acres of undeveloped property at the far east and north towards the convention center for development in the future as we go forward with several applicants or possibilities that are already in negotiation with us.
Phase one of our convention center and our hotel and our casino and our restaurants and all that sort of thing that goes along with a full-scale destination hotel. This building on the north, where the north villas are now, is a 47-story, 1,500-room hotel with a new room idea that we've come up with that I think is going to be very well-received. There's suites and there's villas and there's all kinds of that kind of stuff, and everything looks over the lake and the boardwalk, and everything is interactive. That's sort of the way it is. I think probably sometime this spring, we may have another conference and show everybody the final model of what we'll be building at the time. It's taken us some months of delightful design development to work through and get to the options that would be easy to monetize.
It's like any other creative process. It's sequential, and you get to the best part towards the end of the process. We're happy with where we are, so we're ready to start building stuff. We'll put budget numbers and all of that sort of thing on probably in the next 90 days. The board of directors is going to see it in a week, and all of us in management have signed off on it, so we're very happy. We're ready to go on some of the buildings. As I say, we're in final stages of getting our building permit to get going. We should be in hard construction by April, March or April, I would say, after we move these trees and the earth. The site, Las Vegas is the whole valley here slopes from west to east downhill, one foot per 100.
The Strip is at 2,075, Paradise Road is 2,045. You can't see a 1% drop, but it's 30 feet down across the length of our golf course. You could see it if you go to Bellagio. You come into the back door of Bellagio on grade, but if you go to the nightclub.
Hyde.
Hyde.
Yep.
You can look down on the water, and you could see that the Strip is lower. We had to pick a level where we wouldn't have to bring in thousands of truckloads of dirt or take out thousands of truckloads of dirt, which would have added a lot of cost. The water level is at elevation 2060. The boardwalk is at 2062. Wynn, the hotel, and Encore are at 2086 because we have a back of the house below the casino. You'll be looking down on the boardwalk about 20 feet, and that allows us to have boardwalk buildings that are below the casino level and below the hotel level. I think that's probably enough information for now. Maybe it was more than you wanted.
No, it sounds amazing. I'll let my peers ask more questions, I'm sure. Thank you.
Sure.
Your next question comes from the line of Stephen Grambling with Goldman Sachs.
Hey, thanks for all the details there. Maybe shifting back to Macau, one of your competitors mentioned some reinvestment is required as the market has matured. Are you seeing any change in the competitive behavior in Macau? What's your perspective on additional growth opportunities in that market?
Well, as a matter of fact, you're talking about Sheldon Adelson. I spoke to him because I saw that announcement. It was interesting. It just shows how progressive and how dedicated to doing the right thing all of us are. Here's a case where Sheldon and his staff want to make Parisian better and update anything that they find that's weak or that could be better. What's fascinating is that today in Macau, an operator as big as the Sands says, "Okay, we're going to do something and improve something, if we have to spend $1 billion, we've got that much faith in the future of the market." I was glad to see it, so much so that I called Sheldon to talk to him about it. He was elaborating on it to me. It's a good thing.
In our business, sort of like the theme park business, if you're not growing, you're shrinking. If you're not getting better, you're slipping. It's a capital-intensive business. What's wonderful about our business is those capital investments are well rewarded. For example, this year, we closed after the Final Four last year in March. The next morning, we closed the whole north end of the casino where the race sports book were located and our delicatessen, Zoozacrackers. We closed it off, spent $11 million, opened it up the day of the exhibition games in August. New screens of the most advanced kind, a brand-new restaurant called Charlie's. New bar, new everything. Brightened and opened the whole north end of this casino for $11 million. Well, we've now assessed it for several months. It looks like we're going to increase our EBITDA by $5 million.
Now, when we keep $2 billion in the bank, we can make 2% maybe. When we can invest in our own business and have a return of 40%, 50%, actually double-digit returns, there's no comparable use of our money. We have a dividend program. The same thing happened when we moved poker over to Encore and turned Botero into Jardin. There we invested $5 million, we made an extra $1.5 million in EBITDA. Like the Sands, in this case, they're doing it on a rather larger scale, we invest in our own business continually to give our guests a better experience. It's a good investment.
Very helpful. I'll jump back in the queue. Thanks so much.
Your next question comes from the line of Joe Greff with JPMorgan.
Hello, everybody. Two questions. One, can you just talk about what trends, what kind of recovery levels that you're seeing in Las Vegas? We've heard comments, obviously, from LVS last night, and Caesars made some comments about Asian play earlier in the week. Then a second question for Craig. If you could just give us hold-adjusted EBITDA for the properties in Macau and Las Vegas, that'd be helpful. Thank you.
We don't have The hold adjustments are not really significant here.
It's a $10 million-$15 million in Macau.
Yeah. They're not significant.
At Wynn Macau, you can see the 3.37% VIP hold the adjustments between $10 million-$15 million.
That Las Vegas?
Two or three. Yeah. Nothing serious. It's just that we've had all this business before. We've always been the principal recipient of international high-end business. It's not only true in the pit with the table games, it's true about the hotel and the restaurants. It's the kind of clientele we have. It's one of the good things about running a sort of a higher-end operation. There's good news and bad news, of course, with every segment of the market. We've enjoyed this kind of international play for a long time, starting in 1989 with The Mirage. We haven't really lost that in spite of whatever location we've been at since The Mirage, Bellagio, and then it came over to Wynn and Encore. It's really nothing new to us. We changed our business plan three years ago in July of 2014. Was it, Maurice?
Yes. It was 2014.
2014 in July. We lost $150 million in Wynn when the campaign of corruption came in Macau. We lost $150 million in Las Vegas, which was about $40 million, $30 million in those days of EBITDA. Maurice Wooden and I and the gang, we all sat down, we redid our business plan. No one had changed the price of gambling in 50 years, in spite of the increase of cost of running the business. We thought it was time to take another look at it. It involved changing the location of the equipment on the floor. Primary locations, we put higher-yielding equipment. Secondary locations, we put in lower-yielding destination things. We took the crap table from in front of the elevator and put it over on the side. We put higher yield games.
We took 50% of our blackjack and went 6 to 5 on blackjack instead of 3 to 2. We went to double odds instead of a higher multiple of odds, unless someone was playing in a high-limit game. We took away the casino block from the hotel. Instead of the casino having a block that it had to give back, the hotel had the block to sell for cash. The casino had to ask for the rooms. We stopped giving discounts at craps and blackjack or any other exceptional promotional allowances. We changed the criteria from average bet and length of play and all those traditional metrics that casino marketing people for decades, half a century, have run hotels.
We went to EBITDA per foot with a cold-blooded attitude that promotional allowances would only be issued on current play, not on what you did last trip or the trip before, but what was your activity now. We told our customers, "Look, if you want to stay here and be treated like a prince, just give us your credit card. We treat everybody that way. If you expect to get free room, free food, or any of those things, we're just a business, it's based upon if you gamble at a level that's acceptable, then, of course, we won't charge you for your dinner or your hotel room. If you don't expect us to give it away free." That's a soft way of putting it, but I assure you that the application is hard as a diamond.
We don't comp people that don't play, period. Therefore, our margin on table games, which historically has been below 20 in this city, is 50. We have the same margin with table games virtually as we do with slot machines in our rooms. Maybe we have a little less business, but we send a lot of non-productive customers over to our neighbors. Because we love our customers, we send them over to our neighbor in a Rolls-Royce.
Joe, the first part of your question is, like everybody, we saw increase in cancellations, et cetera, after the event, but we are pretty much back to normal booking trends here at Wynn for the end of this year through next year.
Actually, one of the groups that canceled was 200 rooms. They rebooked at a different date.
Yeah.
If you're going to ask us what effect did the tragedy at Mandalay have on us, none that we can measure.
Great. Thank you, guys.
Your next question comes from the line of Carlo Santarelli with Deutsche Bank.
Hey, guys. Good afternoon. My question is for Ian or Kieran, whoever may be available to answer. It seems as though you guys kind of hit your stride on the mass floor at Palace in the period. Obviously, your roll, both roll and revenue were up mid to high teens. Obviously, slots were up nicely on a sequential basis. Could you talk a little bit about maybe the experience there, and is this more just a function of, obviously, maybe some seasonality, but also kind of hitting your stride, getting a better sense for who your customers are and what's really having the impact there that allowed you to outperform the market?
Mention when you do the new construction of the Red 8 and what a big deal that is. Go ahead, Ian.
This is Ian. At Wynn Palace, we're seeing the fruits of our labor in terms of the first half of the year. We were looking to gain momentum, particularly in the mass casino. We've done a lot of reworking of services in the mass casino. We've changed a lot of our player programs. We haven't over-invested compared to our competitors, but we've been very focused on service levels and introducing new players. Players get sticky over a couple of visits. It takes times like Chinese New Year, the May Golden Week, to introduce new players and make them comfortable with the property, and we're seeing the benefits of all that work in the first half of the year. We've also significantly ramped up Events at the property. We're holding concerts on a monthly basis, and we've introduced it at Wynn Macau also.
That brings in a lot of players. We do events for up to 1,000 people, and we do a lot of food and beverage events associated with the casino. It's really, in addition to the market lifting, we're also gaining momentum from the initiatives we put in place. We continue to work on new food and beverage offers. We opened Buns & Bubbles in the late summer, which is a mid-entry point offer for families. It's got indoor/outdoor dining space off our retail arcade. That's proven to be very successful. We have a number of other projects coming up, primarily Red 8, which will open, the new Red 8, just before Chinese New Year 2018. We'll have a family section as well. It's a larger restaurant with presentation cooking. The existing Red 8 space will be reconceptualized off the casino into a cafe.
We also have a fast pizza, pasta restaurant coming in our retail arcade. We're really focusing on the customers that are in the building, providing them with more variety in food and beverage experience.
Great, thank you. That was really helpful. One thing you guys didn't mention on the call, maybe it's because it didn't really play much into the quarter, obviously the typhoon was a bigger deal seemingly on the Peninsula than it was on Cotai. I'm assuming everything is back to normal at the property today, any kind of color you can give on maybe the impact that might have had at Peninsula over the period?
It was certainly I'm sorry.
I just said, for example, we closed the Wynn Macau, the original 600-room tower for a period. You go ahead, Ian. Go on.
It had a much bigger impact in downtown Macau just because of the nature of downtown Macau being the older part of the city, it was less prepared. Cotai features a lot of new properties which didn't have as much damage as downtown. We had a lot of services that were cut off downtown. Clearly, the focus was on taking care of residents and areas like the hospitals, et cetera, in terms of power supply and water supply. We were affected downtown. More the image of Macau was affected for a period of time, that did affect bookings. We had tour groups that were essentially cut off from Macau for nearly two weeks, we did see an impact. It's hard to quantify what it means in EBITDA terms, but there definitely was a lull, probably for two to three weeks.
Great. That's helpful. Thank you very much, everyone.
Your next question comes from the line of Shaun Kelley with Bank of America.
Hi, good afternoon. Ian, maybe we could stick with the same line of questioning, but wanted to dig in a little bit more on the gaming operations side as you continue to ramp up Palace. Any things that you could tell us about what you're doing, either on the junket relationship side or how you're configuring the mix between premium mass and grind or base mass right now in terms of just what you saw in terms of player behavior in the quarter and how you continue to see the building ramping from here?
Taking mass first, the lift in mass was in all segments of mass, and as a consequence of a growing market and all the initiatives I described earlier. On the junket side, it's a situation where the players within the junkets are demanding to come to Wynn, and we're seeing the benefit of that. Junket play grows, as the property matures and gets older and people become more comfortable with it. Interestingly, we've had a lot of strong junket interest at Wynn Macau also, where we have a couple of new junkets that are interested in joining us, and we've got expansion of existing junkets. The junket world is very stable. The growth is very measured, and we're getting the benefit of it having two properties that cater to the higher end of the market.
Thank you very much.
Your next question comes from the line of David Katz with Telsey Advisory Group.
Good afternoon, everyone. Steve, you had been, after the tragic events in Las Vegas, made some commentary about issues such as security and the like. I appreciate your comments that business is back to normal it seemed, being present in the market at that point in time. Have you made any changes or has the industry or the Strip as a group had any discussions about preparedness or security going forward that we could know about?
Short answer is yes. I believe that the self-consciousness about security has been continuous with all of the operators in Las Vegas for some time. Now, the nature and the particular nuance of each of these companies' reactions to the threat, I'm not an expert on. I know what we did here because, as one of my competitors described it, Wynn is paranoid. Two years ago, between Thanksgiving and Christmas, we had a series of repeated consultations with consultants, including Kelly from New York, people from SEAL Team from the development group, SEAL Team Six, as they're known to some people. A lot of people came.
We beat the bushes to find out everything that we could throw at this problem to harden this as a target, with the idea that if someone was looking at the hotel, they would see that we had met the threat level on a number of ways, they'd move on someplace else, because this would be a tough place to survive for more than three minutes if you had a gun on you. That included every door, profiling, dog sniffers, all this stuff. It became operational in the 1st of May, the end of April of 2016. Since then, we invested all this money.
It was close to $6 million or $7 million a year beyond our normal security for payroll, equipment, and all kinds of. Without going into the details, we did an awful lot of stuff that we never, ever would have thought we would have to do, because I personally felt that we were exposed and that we should send a clear message that there was very little chance of being unnoticed in this building. Having said that, we knew this particular fellow that did the shooting at Mandalay. He's been a customer here since 2006. First started coming, we first pick him up on our records as a typical slot player with a modest credit limit of $50,000. I got to interview, and in the last three years, he's been coming frequently with this lady companion of his.
I had a chance to interview the people in the high-limit slot area. He plays video poker. He did, at a $20,000, $30,000 level, and he never owed a dime. He had a $50,000 credit card. He doesn't owe a dime in Las Vegas. He played at Mandalay and Caesars and here. He was a winner at Mandalay. He was a loser over the six or seven, eight years here. He never owed any money. He didn't meet the profile of a problem gambler or anything like that. He was a very controlled person, and he and his lady ate dinner and played the slot machines in the high limit room in the afternoon, and they went to dinner, tipped very well, played after dinner, went to bed.
They were served by people in this organization over a period of years and could only be described as the most vanilla, unexciting, totally typical couple that has ever walked in this building. When I interviewed the employees that knew them, they were stunned, mystified that the person they knew could have been a person that tried to assassinate hundreds and thousands of people and succeeded in killing 58 of them. My employees were stunned. The police and the FBI are looking for a motive and can't find it, and it's a stupefying kind of event. One of the young men that works for me outside the room, Tyler Tracy, took one in the shoulder and one in his back. Fortunately, he's home and up on his feet, but he got shot twice.
Both of the employees that were wounded in our back are going to survive and be healthy and not have any long-term consequences. The industry is getting together. We're taking complete inventory of all of the damage that was done to the people there. We want to separate minor injuries that were done as people ran from people who actually took fire or got seriously trampled. The gaming industry is taking a complete inventory of the damage done to humanity and the people that have long-term disability and life-changing problems so that we can give some help to them that's real and long-term. We're sort of operating as a group. Some of us are talking to one another, like the Sands and MGM.
We have nothing to add to the explanation of why this maniac did what he did other than he just had a screw loose that snapped or something. As to what other hotels are doing, I'm sure that in every executive suite up and down the Strip and in Reno and everywhere else, and in hotels around the country, everybody's trying to figure out, is there a way, to use local parlance, to lower the odds of a repeat?
I know that even at the level we're operating on for the past two years, Matt Maddox, who's sitting next to me, told me that yesterday he spent the afternoon in a discussion with some technology people that showed him an extraordinary thing that we could do that was unknown to us about what technology will allow in identifying, without actually walking through a metal detector, but stuff that can identify what's on a person and identify where it is on the person on television. My guess is that this sort of thing and vendors that sell this sort of equipment are going to be a good investment if you're a stock picker. Matt, you want to mention anything?
No, Steve, I think you're right. The technology is getting there, and it's catching up. I think that everybody will be looking to enhance security through better technology.
We've had programs of training our employees for two years. Room service housekeeping, audiovisual people that go to fix a TV or a touch screen, they've all been trained for two years. They inspect the rooms. They look at the people. We profile everybody. We sniff the baggage in the baggage room. We don't interfere with people that have pull-along luggage when they come in. We just watch them and look at them and think about them. If there's anything about them that meets our various criteria, they're immediately tagged and followed and observed. We have a whole routine that we do here that's transparent as far as the guest is concerned, but highly articulated on our side. Now, if you're a bad guy, and you were looking at the vulnerability of this hotel, you would probably spot a lot of the things that we're doing.
That's okay with us. It's all right if they see what we're doing in part. Maybe that's a good thing. We don't flaunt it. It's just there.
Thank you for that. If I can just ask one brief follow-up with respect to the development on the golf course, the detail does sound exciting as expected. When we think about what that project can do in and of itself in terms of revenue and profits, apart from what it does in driving business to the property, it's the existing property. Can you talk about the different elements of it that will be revenue and profit centers in and of themselves within it?
Sure.
Yeah. Thank you.
The hotel that I described, the 1,500 rooms, that's a complete. That's not just a tower we're adding. It is a complete. We're arguing about the final naming of it as we speak, but it is a complete destination hotel. It has spas, suites, restaurants, gaming, entertainment, showrooms, all that stuff. In addition, it's on the water on the boardwalk with all of that attraction and its things that I described, that go from zip lines to carnival parades and midway, and convention facilities. The 1,500 rooms has its own convention component. In addition to the 450,000-foot building that's going on the sand side and the 30-odd thousand outdoor pavilion that's going on the sand side, the hotel on the north side is a complete destination hotel. It's a profit center unto itself. And of course, it's connected very conveniently.
If you look at the, and you will all know it when you see it. We have a tower on the north called Encore and a tower on the south called Wynn. The new tower is dead in the middle of them. If you were to walk down the showroom, walk down the hallway towards the Encore showroom, and you go straight ahead, you'd be right in the lobby. This new tower, this new hotel is dead in the middle of the other two. And the whole 1,500 rooms is closer to our convention facilities than the two existing buildings are. But it has its own convention facilities, meeting rooms, ballroom, and the full complement of things you'd expect to find if you were building a freestanding hotel. It's a profit center.
The boardwalk and all of its attractions support all three buildings, but also the residual real estate that is adjacent to the boardwalk takes on an enormously enhanced value per acre and is very attractive. Imagine being able to develop on the boardwalk, on the water with its beach and its parades and water attractions and wake surfing and all the boating thing. Imagine that and being directly across the street from the Las Vegas Convention Bureau. How good a location is that? Or how about being directly across the street from the Sands Expo Center? How about being directly across the street from the new forum that they're getting ready to build? We've been in meetings with the folks from Madison Square Garden, The Venetian, and those folks have reached agreement. They're getting ready to start construction there.
They're in the process of getting building and going through that sort of thing. This whole complex of ours is intensely surrounded by major attractions. That Madison Square Garden attraction is 18,000 theatrical seats. It's not another arena for hockey or basketball. It is Irving Azoff and Dolan's idea, like the Forum in L.A., as the major entertainment venue for Las Vegas. And that is directly across from us, face to face on the street, and we own the corner. We own both corners that surround the Madison Square Garden construction. All of this stuff is going to become very interactive between now and 2020 and 2021.
Be a lot going on here, not to mention the football stadium, not to mention the fact that finally it appears as if a Resorts World is going forward with the construction of their resort that was on the site of the former Stardust Resort and Casino. I'm sure that someday something will happen on that Frontier property across from us. Even though it's sort of stumbled for the past several years. I would imagine that somebody will pick it up and do something constructive with it, and we'll be happy to hook up with a bridge if they want to. I'm feeling really great about Las Vegas for the next 20 years, and my company intends, my board of directors is committed to maximizing the non-casino touristic profile of this complex, known as Wynn, in the next 5 years. We'll be in construction continually.
A lot of this stuff will come on within the next 18, 19 months, hopefully, there'll be things happening, in my view, until 2021, sequentially. That's not to mention if somebody shows up that wants to make a deal with us on some of our other property that is on the boardwalk. That too much information for everybody today?
Your next question comes from the line of Robin Farley with UBS.
Hi, guys. This is Rafi on for Robin. Just a couple quick questions from me. On Macau, this is maybe more for Ian. What are you seeing on the promotional side for higher-end play in Cotai and Peninsula? Do you expect any changes to that dynamic in 2018 with new competition?
I think everybody's been very measured. The arrival of Studio City, the Parisian, Wynn Palace, people didn't shift up their investment rates. It's been very steady, both downtown in the Peninsula and in Cotai.
Okay. Just outside of that, can you talk a little bit about Japan and your thoughts on that opportunity?
Maddox.
Sure. It looks like the political environment is stable now after this last election, and we think that there is gaining momentum for the IR legislation for sometime next year. We also know that once legislation's passed, there's a long process of setting everything up. We're monitoring it carefully and spending time there and developing relationships. Over the next couple of years, I think we'll understand the potential opportunity.
All right. Thank you.
There are no more questions at this time.
Thanks, everybody. Talk to you in the next quarter. Appreciate your time.
Ladies and gentlemen, thank you for participating in today's conference call. You may now disconnect.