Good afternoon, ladies and gentlemen. Welcome to the fourth quarter 2016 earnings call. My name is Ronnie, and I'll be your conference operator today. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star and the number 1 on your telephone keypad. If you'd like to withdraw your question, press the pound key. Thank you. I would now like to turn the conference over to Steve Cootey, Chief Financial Officer. Please go ahead.
Thank you. Good afternoon. Joining the call on behalf of the company today are Steve Wynn, Matt Maddox, Maurice Wooden, and myself here in Las Vegas. Also on the phone are the operational management teams from our Las Vegas, Macau, and Boston properties. Before we get started, I just want to remind everyone that we will be making forward-looking statements under the safe harbor federal securities laws, and those statements may or may not come true. With that, I'm going to turn the call over to Mr. Wynn.
Very nice to have this call. You've seen our numbers. I have a couple of comments. We opened Wynn Palace in Macau on August 22nd. We opened the Wynn Macau on Labor Day of 2006. It took us about a year to get that property to produce operating profits of $1 million a day. We were able, in September, October, November, and December, to get to over $800,000 a day. The way we operate, we tend to ramp up and put very little marketing pressure on a property to find out what its baseline strength is. I've said this before, it's worth repeating because I'm happy to say that since the first of the year, during that period, the Wynn Macau and Encore properties maintained their levels of revenue without being negatively or adversely affected by the new hotel in Cotai.
That revenue was additive. However, since the first of the year, without Chinese New Year, which is going to begin today, we were able to have the Wynn Palace come up to $1.6 million a day and Wynn Macau at $1.4 million a day. The two hotels have been thrown off about $3 million a day, I'm very glad. It means that our situation is right on target and right on schedule. As a matter of fact, we're a little ahead now with our hotel occupancy at Wynn Palace, ahead of our predictions. We're running in the 90s at rate, we're pushing rates upwards in our occupancy, which has caused us to have very good mass market success in Cotai.
We're still barricaded on four sides by construction, both by the city's light rail system and by construction on two sides by SJM and MGM. At this point, we're not really clear on when those properties will open. We are pretty clear that the light rail and our barricades that have interfered with foot traffic will be relieved by the spring. I think if you're planning and looking at our operation in Cotai, you can pretty much figure that we're going to be barricade-free by the second half of this year, sometime during the second quarter. The fact that we're experiencing this good mass market activity is a function of our high occupancy at Cotai, which produces a higher-end customer consistent with our position in the market, both in the Macau original downtown area and the Cotai area.
Our fourth quarter was satisfactory in Las Vegas. January is operating ahead of last year as we head into Chinese New Year, which kicks in pretty much tonight, tomorrow and this weekend. We expect a happy ending or at least a vigorous ending in terms of casino activity at the end of January going into the Super Bowl in February and the holidays in the first quarter. That's pretty much my take as an overlook on our operations. We've been in construction since July in Boston. Bob DeSalvio is on the telephone. One of the most unusual parts about our business is that our Chinese operations are run by two Irishmen, and Kieran and Ian are both on the call. Matt and I are here with Maurice Wooden, who runs America, to answer any of your questions. We'll be happy to take them now. Questions.
Ma'am, you can begin to take questions on this call. If I'm still on it?
No, you're still on.
Does nobody have any questions today?
Ladies and gentlemen, if you'd like to ask a question, press star one on your telephone keypad. We have a question from the line of Felicia Hendrix.
Good afternoon.
Hi.
How are you? Steve, someone just emailed me to tell me that I should wish you a happy birthday, which is tomorrow.
Oh, thanks. Don't ask me how old I am. It's a full number
I won't ask you if you don't ask me. The colors you just gave us in the opening remarks were very helpful, where Wynn Palace has ramped to EBITDA per day. I was just wondering if you could just talk to us about what has happened at that property since the last quarter to get there. Has it been more tweaking the product, more proactive marketing? Has it benefited from the growth in the market? All of the above? I just think it would be helpful to get some details around what has been driving that. Then, in line with that, regarding the margins that you're generating at the property, the EBITDA margins, have you gotten to above 20%? How long does it take to get to normalized margins at the property?
You know what? I think that Ian is perfect. He got up at 5:30 in the morning to talk to you, and I think we ought to let him do so.
Hi, Ian.
Hi, Rich. Good evening. Good morning. We've done a significant amount of work at Wynn Palace after the property opened. We completely reconfigured our main casino floor, that's driven much greater animation and excitement. We've added two themed slot sections, a high-energy promotions area, a new poker area. We've also increased accessibility to our high limits area. We're constructing a new noodle restaurant on the floor, which has made the casino smaller and also helps with the energy. We have increased our marketing activity, both from an awareness perspective and also with general players that are visiting. We had increased headcounts. We've become a member of the much-fabled Cotai Connection, which is bringing in just over 1,000 extra people a day. The ramp-up in occupancy from the low 70s to the mid-90s has been a big help in animating the property.
Just generally, we're finding after you get through the chaos of the first six to eight weeks, a property settles, the true players in Cotai are finding our property and discovering it and visiting us. We were very much helped by exposure over the October Golden Week, particularly Christmas and New Year was a very busy period for us. People are experiencing the property, the right type of players are coming, they're finding it to be their home. There's also been a very active program of re-energizing inactive players that had either split their play from Wynn Macau into the new properties in Cotai, or had moved over to Cotai completely. We've re-energized a lot of those players, they're coming to our property.
We've been helped by a lift in the market also, but it's pretty much everything that Steve covered earlier.
One of the things that is being demonstrated, once again, it's not the amount of tables, it's who's at the table. We're probably a perfect example of that. Wouldn't you say so, Ian?
Yes.
Yeah. I don't know what our market share is going to show, but I suspect that it will climb from the last quarter.
Just before we-
Chinese New Year is a great exposure opportunity for us as well. It's the first prolonged holiday period. We expect very high visitation from people that would normally attend other properties.
If we did our quick math correctly, it looks like VIP versus mass mix is roughly 60/40. Where do you want that property to end up?
What about that, Ian?
We're growing all segments of the business. The interesting thing in the split between Wynn Macau Downtown and Wynn Palace is the strength of our junkets and also the fact that our mass play Downtown hasn't been affected a drop. We're continuing to grow all segments at Wynn Palace. Where the split works out, we'll see, but I think it'll be healthy and pretty similar to our operation Downtown.
Okay.
I should add this. Because we get such big play, volatility plays a role month to month and that sort of thing. Probably more so with us than with some of our neighbors. That's also true in Las Vegas. Having mentioned that, volatility is a factor when you look at our company compared to our colleagues up and down the street here and abroad. Remember, that volatility factor does have a concomitant benefit. We always, year in and year out, run a higher hold percentage than our neighbors. That's a historical fact, and it has to do with the kind of people that come to a place that is geared toward the top end of the market. Even though we have more volatility, we still settle at a higher level than everybody else.
Just on the EBITDA margin question.
30% in Las Vegas. Matt, what is it in China? Pretty close.
Yes. Wynn Macau has always been in that 30% range, your question was, can we get Wynn Palace ramped up over 20%. I think that is certainly going in that direction right now.
That's what I was asking, are you over 20% now? Not in the quarter, through the-
Yes.
Yes.
Yes.
Okay, perfect. Thank you so much.
You're welcome.
Your next question comes from the line of Carlo Santarelli with Deutsche Bank.
Hey, everyone. Thanks for taking my question. Matt, just quickly, in terms of Peninsula, low mass hold, high VIP hold, looked a little lower on VIP at Palace. The net effect of all of that stuff with respect to EBITDA, any kind of guidance on that?
Steve, about $6 million light.
We're $6 million light. Would've been another $6 million.
Would've been another $6 million. Okay, great. Steve, on your comments regarding October, November, December, I think $840 a day was the EBITDA at Palace. You said over $800 a day. Was that for each of the three months?
Ian, is that it? I didn't look at that that way or at least may have forgotten. Matt.
It ramped up in consecutive months.
Great. Okay. That's helpful. Thank you. Then, Ian or Kieran, and just whoever wants to opine, but in terms of what you guys are seeing in the market right now, and I'm speaking more so towards the VIP side. Clearly, from the DICJ results for the fourth quarter, VIP has meaningfully changed. What is your opinion on that as we look out to 2017, and do you think we're at the beginning of a sustained rally in that market?
It's been fits and starts throughout 2016. People talked about a VIP recovery, but we really have seen a recovery over the last two and a half, three months. There's a lot more confidence. There appears to be more liquidity in the market, particularly with the junkets, and it's been sustained. The outlook is pretty promising.
I have said this before, and I want to repeat it again. It is very important to keep the long view of China. The leadership of that country, and this is also true of Macau, it is a meritocracy, and there are smart people running the government. They don't move as fast as we do in the U.S., especially these days with our new administration. There is a steady program afoot. Xi Jinping decided that it was a priority of his administration to eliminate the perception of corruption that was held by the people with regard to government. That effort was vigorous and protracted, and it did have an effect. It seemed to be the right thing to do for the right reasons. It had an effect on luxury brands such as gaming and Louis Vuitton and Chanel and Mercedes-Benz, and that sort of thing.
The long-term thrust of China is inexorable and undeniable. That's why we built what we built, and we're going to build more in the future because we have real estate to do it. We have a very bullish attitude about China long term for our company. As we manage our properties, in anticipation of that kind of movement in the general economy, we're being rewarded. I think it's probably a sound way of looking at China and our business long term.
Great. Thank you. If I could, just one follow-up. I know you mentioned Bob's on the phone. It looks as if costs for Wynn Boston Harbor are up maybe $300 million at the midpoint. Could you talk a little bit about maybe what that relates to?
This is Matt Maddox. We're working through our GMP right now. The previous budget had been in there for a number of years. We put a fairly conservative estimate out in our current earnings release, and I think over the next 90 days, we'll have much more clarity as we finalize our guaranteed maximum price contract.
It's moving along. They're proceeding apace. We've been in construction since July, and we're satisfied with the progress.
It's that we've spent about $467 million to date.
Great. Thanks, guys. I appreciate it.
Your next question comes on the line of Joe Greff with J.P. Morgan.
Good afternoon, everybody.
Joe.
A question on Wynn Palace. I think it was Ian who mentioned about some of the physical changes that you guys are making to the property, amongst some of the things you're doing is maybe marketing differently or to different customers. Can you talk about marketing expenses? Are they elevated relative to what you think might be a normalized level? To what extent do you think they might normalize over time, over what time frame?
That's an interesting question. Ian, do you want to take a crack at that, you or Karen?
Sure.
Robert Hagerman or Frank Casella.
Linked with the opening, marketing expenses were in the range that we anticipated, but they were slightly higher than what we'll have as a run rate for the remainder of the year. We've already seen the marketing expenses start to come down. They're within the Cotai range. It's a different marketplace than downtown. Marketing reinvestment is generally higher in Cotai, but it's where we anticipated it to be.
Great. Karen, welcome to the fun conference calls here. Maybe you can talk about, since you're new, where you see the opportunities for Wynn Palace to improve. Steve Wynn, maybe Steve, you can talk a little bit about maybe some of the opportunities that are more obvious now that were less obvious upon the opening in terms of ways to improve revenue and profitability there from here.
Well-
Go ahead.
Go ahead, Kieran.
No. Good morning, and thank you for the welcome. I'll let Ian talk to the opportunities there for Wynn Palace. As my focus now is going to be to continue to maintain the position and the performance of the downtown Wynn Macau property. Obviously, the Peninsula remains a very solid proposition for a very core market of high-level gamers that are coming into Macau. I think the performance in Q4 as solid as it has been, despite the opening of Wynn Palace, despite the opening of some of the other new properties on Cotai, bodes very well moving forward into the future. Obviously, work to be done to continue to maintain that position, maintain the service standards, and so on.
It's been incredibly welcome in joining the property and seeing just how much commitment there has been, both from Las Vegas in terms of the spend to maintain the physical property, and also the commitment and the hard work of the team of professionals that are there and that provides us excellent service. We've just got to continue to build on that.
Look, the way to look at us, and that'll give you the insight to project us. We have a very definite approach to this whole notion of the gaming business in integrated resorts. Our approach is based upon two solid truths. Number one, better customers, people who have the money to choose, who engage in visiting hotels and facilities of this type, have a common thread that is undeniable, and that is they go where they're treated the best and where the facilities are superior. If you're a player who attends these places, you have a choice, and you always go in the long run, always go where the rooms are better, where the facility is immaculately maintained, and where the staff had invested in it tremendous amount of energy for training and personal attention to the guest.
That is to say we're very customized in the way we treat our people and the way we present our facilities. In the long run, that garners the strongest possible clientele. Again, I point out it's who's in the building, who's sleeping in the rooms that determines the results, both in gaming and non-gaming results. It is true that there is a second approach to this business, which is more akin to Walmart and the mass approach. The Sands and the Galaxy and the Melco people do that beautifully. We come to these people with a different message. That if you have the money and the inclination to visit such places, ours offers the most luxurious environment and the best service and the best food. Our shops are catered to the kind of people we expect to be staying in the rooms.
That's to say that our facility is, at the end of the day, truly integrated, but it's integrated with a philosophy that's integrated. That tells you our story. That's the Wynn story, plain and simple. It's never been any different, whether it was the Golden Nugget downtown, the Golden Nugget of Atlantic City, Beau Rivage in Mississippi, the Wynn and the Encore in the central part of Macau or the new Palace at Cotai. That will be exactly what happens in Boston. That's going to be our story, and it won't change. You've got a long history of our operations, from Mirage and Bellagio and the Golden Nugget to the buildings that we're operating today. There's nothing mysterious or secretive or, in a certain sense, particularly cunning about what we do. It's very straightforward, right out in the open where everybody can see it.
Our competitors choose to approach their challenge in a slightly different way, and it's certainly valid, based upon the earnings and the results of those places. We slot in somewhere else. In the long run, it gives us tremendous stability and performance that, room for room, foot by foot in any building that we build, they tend to overperform. We're comfortable doing this. Our management team is a collection of men and women who are attracted to the pursuit of excellence. We share a common understanding of who we are and what we present to our guests. We're at least consistent, but we're definitely different in our approach than some of the other places. That's not to say that their approach is less valid than ours, but ours is well-defined and historically consistent.
Steve, can you give us the latest update on Paradise Park and the developments on the golf course?
Well, that takes up most of my time, we're very close to having our choices settled in. We're adding significantly to our non-casino revenue, both in the building of the lagoon and everything that's around that lake. It's 1,000 feet by 1,000 feet, in general terms, close to 20 or 23 acres of space, surrounded by a 4,400-foot-long boardwalk that's 18 feet wide, which is ringed with retail, food and beverage, an additional hotel rooms, convention and meeting space, and various attractions for the 800,000 people a week that come here. It includes a new big theater, a new tower of rooms, a substantial expansion of our convention and meeting space, and related entertainment attractions and customer activities that we think will appeal to a broad range of folks.
Having the ability to have a perimeter that's white sand beaches and a boardwalk seems to us to be pretty fetching in the middle of the southern Nevada desert. We have a unique.
What are you thinking in terms of the timetable?
Matt and I hope to take the business plan to our board of directors in the second quarter. Therefore, be in a position to begin work in the fourth quarter of this year. I say that, we have to have our prices and our business plan all locked down before I go to my board to get their permission to proceed. We keep the board apprised in every meeting and on every telephone call of our latest nuance in that development. The incredible amount of options that were available on this 130 acres with 1,000 acre feet of private water, the choices were numerous. My challenge and my design team that has been with me for over 35 years, has been to make sure that we make the right choices. There've been so many of them, it's been dizzying.
I think that we've nailed it down. We've wrestled it to the ground. Maurice, Matt, all of us have a tremendous amount of confidence that it's the only way forward. I mentioned that last September, for example, very interesting. Last September, there were 30 days in Las Vegas, for example. We won $1,870,000 a day in gaming, that had to be the biggest number in America or anywhere but Singapore and Macau in the world. As good as that was, $1,870,000 a day, that was net of any discounts or promotional allowances, our non-casino revenue was $3,340,000 a day net of comps. That tells you about this causal relationship between non-casino revenue in an integrated resort and casino revenue. It's the non-casino things that bring the folks and determine their choices of where to play the games.
When we approach the design of the golf course property, which sits on our books at a cost of zero, that whole parcel has been written off in prior developments. We think that we want to take our non-casino revenue to enormously high levels because we think that the probability of this 800,000 people a week in this city remaining the same and growing is almost a certainty. That's the fundamental assumption about Las Vegas that leads us to wade in to the convention and non-casino end of the business with a high degree of confidence and entertainment as well.
Thank you.
Yeah.
Your next question comes from the line of Harry Curtis with Nomura.
Two quick questions. Welcome, Karen. I wanted to focus on the growth in VIP in the fourth quarter versus sequentially from the third quarter, just in the market as a whole. At the same time, the overall trend in mass was flat, and I would've thought that there would be an inverse relationship three or four months ago. Wanted to ask you guys why you thought particularly mass has yet or has slowed to take off given the openings.
Understand that question, Matt?
Yeah, I do. I think that if you look back over history, Harry, when new properties open, the junkets ramp up much faster than mass. They get quick injections of liquidity and hit the ground running. The mass market customers with new openings tend to not come right away and then find their way to the market a little more slowly. Junkets pretty much come out of the gate at 100%. That's, I think, what you saw in the fourth quarter with VIP revenue at $4.1 billion compared to $3.5 billion for the market. In the third quarter, as you saw, the new properties really powering the VIP market.
Again, with mass, we're still hamstrung, Matt, don't you think, by the barriers that surround our property?
We are. Harry, I'm talking about the market overall.
Oh.
Mass was pretty much flat from the third quarter, but that has always, when I look at the data, ramped up more slowly than VIP with new properties opening due to what the junket operators, how they inject the liquidity straight into the market.
That get you, Harry? Does that answer?
It does. Thank you. Steve, a question for you. You commented about how bullish you are about making incremental investments in Macau and China. If you could put that comment into context versus the rhetoric that's been going on between our new administration and Xi Jinping's Beijing administration. It's been strained. What do you think the implications are for Wynn development in China, given this, at least, initial saber-rattling?
I think that's probably a good word for it. I'm of the mind, I have a reason to believe that this position is shared in Washington. As you know, I am acquainted with the administration. Several of us in our business were sitting within 30 feet of President Trump when he took his oath of office on the platform last Friday. We all believe, I mean all of us, that the most overwhelmingly important event geopolitically for the next 50 years is a liaison, a constructive liaison between the People's Republic of China and the United States of America. That truth is undeniable. That dynamic is unquestioned. There are issues that are real between two dynamic economies like China and the United States undeniably. There's a difference between free trade and predatory trade.
The government in China understands that it has to do a better job with intellectual property rights. They do the best they can in China to create jobs and take people out of poverty, and that makes them very dynamic in the management of their economy with that single goal in mind. It affects everything from the way they treat energy to create plants and factories, to how they manage the currency and the movement of currency and their trade policy. The United States has its own point of view on that subject, and the president has been really clear during the campaign that he wants to protect American jobs. That's what they want to do in China as well. There's going to have to be a rapprochement. There's going to have to be an adjustment.
We basically do have intelligent people on both sides dealing with this. My own feeling is that it will resolve itself intelligently. You can make all kinds of examples. China controls its currency. During QE I, II, and III, we devalued the US dollar by close to 20%. When the Fed, in financing a deficit of close to $2 billion a day, increases the money supply, that's the same sort of thing, we just do it differently than they do in a centrally controlled government like in Beijing. A lot of the same things are happening on both sides of the ocean, and they're being done to protect the citizens of those two countries.
There isn't a leader in America or a leader in China that doesn't understand that when the United States and the People's Republic of China come together on an intelligent basis, the world is a better place. I'm in a position to know that that opinion is held in Washington and Beijing, and it gives me long-term confidence in spite of what happened short-term verbally. We mustn't confuse long-term United States policy with the short-term conversations that lead to its development. Do I sound like a politician?
Yes.
That's what happens when you spend four days in Washington and you get brainwashed. It's a sickness, but it's fascinating. The fact that America's going through a change is probably the greatest thing that's happened in my lifetime, because we were so on the wrong track for the past eight years. I've made no secret about that. I think we're in for better times, for sure.
To rein this back in towards Wynn in China. Despite these somewhat strained verbal sparring, you feel confident that additional investment in Macau is coming?
Absolutely.
Okay. Very good. Thank you.
Your next question comes from the line of Thomas Allen with Morgan Stanley.
Hey. Focusing on Macau in the fourth quarter, comparing the Wynn Macau property to Wynn Palace, your VIP turnover was comparable, but your mass drop at Wynn Palace was about 35% lower than Wynn Macau. As you continue to ramp up Palace, how do you think that should change? Thank you.
Directly related to the physical barriers that surround our property. That only gets better with each passing week and month this spring. That's my answer about that. There's an awful lot of people a few hundred yards from our property, but they can't quite get there. They will. They positively will, just like they did in the past. Watch it change. I tell you that it will change. You can believe me or not believe me, but it's as simple as that.
Okay. Thank you.
It's also due to Wynn Macau having had 10 years to build up an incredibly high-limit stable of high-limit players, particularly in Encore, and it will take time to build that at Wynn Palace. Seeing is believing. It gets better every week. We're seeing a build-up in our high-limit players, and that will continue to grow over the coming months.
Perfect. Thank you. Steve, in December, you sold some of your Vegas retail to Crown Acquisitions. Can you just talk about the rationale there? Thank you.
Matt did that deal, which was absolutely perfectly timed for us, I'll let him describe it.
We looked at it for multiple reasons. Number 1, the people that we partnered with are long-time retailers and in the business. We wanted to continue to control our retail. We sold a minority stake. We thought it was a good capital raise at a multiple that's double where we trade on the market. Not only was it the ability to raise capital to fund future projects at a really high multiple, but we brought in partners with a lot of experience in the luxury retail space to complement what we already do. For us, it was really a win-win, and we will still control it and consolidate the profits of the retail space because we have over 50% of the ownership.
Haim Chera and his father, Stanley, and that whole Chera family that makes up the Crown organization, they taught us a few things right off the bat. They gave us a few pointers in the nuance of how we do our leases that immediately increased our profitability.
Yes.
Perfect. That's all I had. Thank you.
Your next question comes from the line of Robin Farley with UBS.
Hi, Robin.
Great. Hi. Thanks. I wanted to ask about you. You've talked about how Wynn Palace is going to ramp up. At your Analyst Day last year, I think you talked about a range of kind of $630 million-$850 million, which is a wide range. Is that still where you're thinking it will ramp? Similarly, I think you had talked about Wynn Macau, that you were maybe factoring in that it would be sort of 20% or 25% cannibalization. Is that still also, do you think that you will maybe sort of ramp to that on the downside at Wynn Macau? I know this quarter was obviously, it was only down 7% in EBITDA, but just thinking about what your expectations were originally.
We don't think there's much cannibalization.
No.
That 25%, where'd that come from?
That was our analyst presentation showing the Wynn Palace, Wynn Macau market study over a year ago, back in April.
You still believe it?
No. What we've seen is Wynn Macau has held up better than we anticipated due to all the reasons we just talked about, the stickiness of the clientele and the 10 years of history. The ramp-up of Wynn Palace, as we talked about in our last call, is taking longer. We actually didn't anticipate all of the artificial barriers, the construction, not being on the Cotai Connection, et cetera. Getting to the $600-plus million in 2017, it's going to take longer to ramp just the net, just like we said on our last call, but Wynn Macau is actually performing better than we expected.
Oh, yeah. No. I wasn't suggesting that that would be the 2017. I understand that the property opened later and the ramp-up issues. I'm just wondering if that is still the range where you think it will ultimately ramp. Similarly, do you think that as that ramps, the Wynn Macau will maybe get a little bit more cannibalization along the lines of what you had originally thought as well?
Well, Robin, with regard to the cannibalization, as Macau, as the Palace has ramped up, we haven't experienced the cannibalization downtown. What we thought before, but what we're seeing now, are slightly different in a better way. The only way that we can really know, Robin, is to watch the ramp-up of the Palace and to continually monitor the performance of the Encore Wynn facility in Macau. You're asking an interesting question. We are pretty much, as you are, an observer of this. So far, it's been good news. The biggest thing we're looking forward to as these barriers and these obstructions come away is the ramp-up of our mass business. I would've thought, Robin, that the cannibalization would have occurred with the junket operators. That's where we thought it would show up, and it didn't, as yet.
If the mass market ramps up in Cotai, I don't think it's going to affect the mass market of downtown. That would've been where we looked for it the least. We would've looked for it the most in the junkets. As you see, that's not what's happening. I think there's more good news in the mass market in Cotai for sure, because of all these other things we've talked about, and I'm encouraged by what we're seeing with the junkets. I think that the Wynn Palace will get where it's supposed to get. I think Wynn Macau may stay better than we thought.
Oh, great. That's helpful.
Is that responsive?
I think what you're saying is that you do still expect that range that you talked about nine months ago is still the range ultimately that you'll get to.
With one exception. With the exception that we may not experience the cannibalization levels we mentioned earlier.
Right. No, that's great. Last thing, just quickly, what % of rooms are sold for cash, at the Cotai property?
What about that, Ian?
What we've experienced is very similar to the Cotai model. Around 60% of our rooms are directly casino-related, more comp-related, and 40% are tour and travel, FIT, and wholesale.
Okay, great. Thanks very much.
Sure.
Your next question comes from the line of Shaun Kelley with Bank of America.
Hi, good afternoon. I just wanted to go back to some of the sequential ramp-up you guys are starting to see into Q1. From our seat, it's always getting a little harder to get a sense of what's going on with the market kind of on a monthly basis. I guess my question is, in terms of that big ramp-up that you're continuing to see so far this year, how much of that would you characterize as the market versus Palace and your properties continuing to take share?
Ian, do you have a feel for that question?
There was a very pleasant surprise at the end of last year and earlier into this year. We had a very strong Christmas and New Year as a market. A lot of holiday travel out of China, revenues were excellent. The sentiment about Chinese New Year is particularly strong. Last year, Chinese New Year, people were pretty dour entering it, not expecting much. This year, at all levels of the business, people are anticipating a very strong Chinese New Year.
We are as well in Las Vegas. Mo?
Absolutely.
Maurice is here, he can address this next few weeks.
We've actually continued to see a great trend that we saw at the end of last quarter or the last month of last year, into the early part of this year. Our parties and our events are full. As far as the amount of credit coming in, it's been pretty robust. We're pretty confident that we've seen the kind of activity that makes us feel comfortable that we've got the kind of business flow that we've been looking and anticipating for this year.
Great. Maybe just to switch gears for a follow-up. Now that Wynn Palace seems to have stabilized a little bit and the ramp-up is looking pretty secure, could you give me how you're thinking about leverage targets into 2017 and how that might filter through to possibly looking at the dividend policy again, how that sort of fits in your pecking order versus kind of growth capital?
Well, Shaun, it's Matt. If you look at our balance sheet, we have significant cash on the balance sheet. We have projects underway. I would expect debt to remain fairly constant over the next couple of years, but EBITDA is growing. We're not really interested in paying down a lot of debt right now. At the radar, EBITDA is growing, leverage is very comfortable, and we have lots of cash on the balance sheet for future projects.
Matt, does that mean that, I guess to the extent you're generating positive operating cash flow, there is room to bump the dividend? Or would it be more fair to kind of think about being conservative right now given just capital budgets and things that can tend to shift around?
Well, we only have 100 million shares outstanding. Bumping the dividend conservatively doesn't really change our financial posture. We're doing $0.50 a quarter, and I suppose it's possible we could go to $0.75 or something. We haven't discussed that. We've been more focused on Operation and getting it stabilized. B, finishing what we're doing here in planning in Las Vegas. C, putting final touches on everything that Bob DeSalvio is running in Boston. The gaming market in America is subject to change. Things happen, and opportunities present themselves. I think that we probably want to take a look in the next few months and see how all that plays out before we tinker with any of the kinds of things you're talking about, like a dividend or anything like that. The market is moving.
Opportunities may present themselves, and then that would have to be folded into our planning financially.
Maybe-
There's not a hell of a lot more to say than that.
I think that's right.
Perfect. Thank you very much.
Your next question comes from the line of Adam Trivison with Gabelli.
Hi. Thanks for taking my question. Given that you have meaningful operations on both the Peninsula and in Cotai, I'm interested in your thoughts on how the opening of the Pac On Ferry Terminal may affect visitation trends in Macau.
What do you think about that, Ian?
I think any infrastructure that comes online is going to be good for Macau. It allows more visitation. It'll certainly help the Peninsula. Excuse me. It'll help Cotai. The current ferry terminal in Cotai is very temporary in nature and not a good arrival experience. We're looking forward to the opening of it.
Great. That's helpful. As a follow-up, based on some recent filings, it looks like there were some small changes made to the Wynn Boston Harbor floor plans. Can you comment on those changes and maybe the thinking there?
DeSalvio, you haven't said anything today. Why don't you chime in?
Sure. Yeah, I think we got some very good learning off of the opening of Wynn Palace. We've been making shifts in terms of lightening up a little bit on retail, increasing some food and beverage, and meeting space opportunities because we thought that would be the right mix for the property. We made those adjustments, they're going through final drawings, and we think it was the right move.
Great. Thank you very much.
Your next question comes from the line of David Katz with Telsey Advisory Group.
Hi. Hello, everyone. Thanks for taking my questions.
Sure.
I know it's been asked from a couple of different angles, I wanted to ask again about the VIP business and the degree to which there is market lift and specifically how sustainable you believe I think Ian used the word excellent in describing the trends. How sustainable you expect those to be versus how much is the trajectory of ramp-up in that business because you're now open?
Good question, I understand why you ask it again. There's market trajectory, and then there's our trajectory. We have an advantage. You remember a few moments ago, Ian used the word sticky, meaning the customer base was sticky in Wynn Macau. They like it there, and it's hard to pull them out of that place because it appeals to them on many levels. What happens is our trajectory is very much linked to the discovery that customers make of the superiority of our rooms, of the whole place, and how much fun it is to stay there. We tend to get stickier with better players with each passing month. I have to say that we only make money by paying attention to our own business. What the market does is very important, of course, because we're part of it.
We're working on our own trajectory, and we have a definite way of thinking about that and addressing it. If I understand your question correctly.
In other words, you're comfortable with where your trajectory is headed and the market helps to some degree, but it.
Sure.
Yeah.
We spent $4.4 billion making sure that we could feel comfortable.
Right.
We didn't really leave this to salesmanship or verbalization by a CEO or any of the other senior people in the company. We did this by putting our money where our mouth is and letting the property speak for itself.
Right.
As people discover it, the property speaks with a very loud, affirmative voice and beckons to people. When they discover our rooms, when they see the facility, they say, "Wow. I could stay here.
All right.
Now, it takes a while.
All right.
It takes a while for them to do that, but they do it. They always have done it. In Nevada, in Mississippi, in New Jersey. They'll do it in Boston. It's always been the same. The history of our operations is Straight line story, very much like the one that I keep repeating on these calls. It's the only thing we understand.
Understood. If I can just ask one more about the construction disruption that you discussed at the beginning. MGM is on one side. The degree to which they may be having an impact with construction disruption today versus when they open, which is now later than what was anticipated. If you can just share some thoughts about how you see that impact, or lack thereof, evolving over the remainder of the year, that would be helpful.
You bet I'd like to comment on that. In 1986, I bought the property that is now known as The Mirage. It was big enough to hold Treasure Island and The Mirage over a period of time. We built the hotel right up against the Caesars Palace borderline, on the south end of that assembly, because we wanted to be near our neighbors. We thrive in a competitive environment. We do much better when there's more people around us, not less, because there's a certain percentage of the people that go to these other hotels, to whom we appeal in particular. It doesn't do us any good to be alone or isolated. We want to be snug up against our neighbors, because the more rooms that surround us, the more people, the better chance we have of attracting them.
We anxiously await the arrival of SJM and MGM. The reason that the Wynn Macau was such an overwhelming, whopping success was because of its proximity to SJM, to L'Arc , to, what's the other place, Matt? Something World.
Star World.
Star World. We're surrounded downtown by these people, and it allow us to have an extraordinary, outrageous return on capital. I think we spent $750 million on the Wynn Macau, and we made like $100 million a month at one point there. It's because of our proximity to our neighbors. It's because we're in the midst of so many visitors that we have the opportunity to exploit our competitive advantages of facility and service. We're dying for MGM to open and SJM to get up and running. We welcome our neighbors. We're willing to build bridges between the properties, easy access. That's one of the reasons why the Sands experiences such terrific results. It's because of their connectivity and their proximity to one another.
Right now, we're not enjoying that, but we will, I hope, in 2017, at some point, have the benefit of active, dynamic, well-constructed neighbors who each bring something to the world of visitors that makes Macau more powerful. That's the beauty of this development. Las Vegas and Macau prosper because of development, not in spite of it. We ride that wave like a surfer. We're hopeful that they get open in the fourth quarter or the third, whenever. We haven't heard anything lately. Maybe you have. I haven't heard when SJM is supposed to open. Does anybody in my team know what SJM's announcements are?
No. I haven't heard either.
It's a mystery. Hopefully, maybe when they issue their earnings, they'll talk about it, or the investment community will ask them. Does anybody on this call know when SJM is supposed to be finished? Do you, sir?
I do not.
Yeah. Ian, do you know what the latest completion dates are on our neighbors?
Sometime in 2018 for the Lisboa Palace and all therein, and for MGM, they announced the second half of this year.
It's 2018 for SJM, huh?
Yeah.
They're on our south border. That's the least.
What's going to be interesting is you're going to have a quartet of quality on the west side of Cotai, Steve. You'll have ourselves, MGM, and SJM, and then with City of Dreams across the road with their new Morpheus Tower, you have four high-quality projects all within walking distance of each other. That would become its own hub in Cotai, the first stop on the light rail after the new Pac On Ferry Terminal and the airport. The future's very bright for West Cotai.
I wish it was true in Las Vegas, across the street from us, where Packer was going to build, and where I think the Malaysian folks are going to do it. We love having neighbors. The SJM facility is on the south side of our property, and that's not where the light rail is. The biggest interference we've got is on the west side, which is where Melco and MGM and our front door is. Our lake and our gondola and all of our other access points. We get our biggest slug of relief when MGM opens and when they take down the barricades on the west side in front of our gondola and the front of our presentation. SJM opening in 2018, probably, their construction is the least impactful of the problem that we've dealt with this year in terms of barricades.
It's the west side of the property that really is important to us, and that's where we're looking for good news in the second half or sooner.
Very good. Thank you very much.
Sure.
There are no more questions at this time.
Thank you, everybody. Look forward to talking to you in three months, and we'll have maybe more interesting stuff to talk about then. Meantime, have a nice time.
Thank you for participating in today's conference call.