Good afternoon. My name is Karen, and I will be your conference operator today. At this time, I would like to welcome everyone to the Third Quarter 2016 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
I would now like to turn today's call over to Mr. Steve Cootey, Chief Financial Officer. Please go ahead, sir.
Thank you, and good afternoon. Joining the call on behalf of the company today are Steve Wynn, Matt Maddox, Kim Sinatra, Maurice Wood and myself here in Las Vegas. Also on the phone are the operational management teams of our Las Vegas, Macau and Boston properties. Before we get started, I just wanted to remind everyone that we will be making forward looking statements under Safe Harbor Federal Securities Law and those statements may or may not come true. And with that, I'm going to turn the call over to Mr.
Wynne.
On this call today, we're going to be dealing with a good deal of technical information, and I'll be referring and having input in the call from Mr. Cootey, Mr. Ian Cullen in Macau and Mr. Mattox. I personally have been focused very heavily on the finishing touches of all of our construction and fit outs that are associated with the Massachusetts property and stuff that we're doing here in Las Vegas.
But I think we should start off today by talking about Macau and Wynn Palace and Wynn Macau because the Palace is now several weeks old and underway. The first thing I would mention is that, first of all, we're very happy with the way the property turned out. We finished and completely closed the cost of the place with our contractor, Leighton, at $4,400,000,000 and that is now behind us. There is something about our property in Cotai that I want to frame this conversation today. We are 52 or so acres there is surrounded on all four sides by streets.
On the east is the staging yard for the light rail system that sort of resembles a monorail that seeks to bring people from the airport and the Cotai Ferry Terminal to the various hotels in Cotai. That project has been underway for several years, experienced some developmental complexities and problems and delays and is now scheduled for completion in a few years. The staging area and the construction area for the light rail system covers our entire East side and is across the street from our property, the entire parcel on the east side. Next to it is the airport. The light rail system, it goes from the ferry terminal and the airport along the entire north side of our property and then makes a 90 degree left hand turn and goes down the west side of our property.
Across the street from the west side of our property is the City of Dreams, the Melco development on the right. And then as the light rail proceeds, it passes at the midpoint of our front of our property, a street going perpendicularly west to Venetian. On the other side, representing the half of our Western Front is the construction job of MGM. And then on our South side, we have the construction job of SJM's hotel that's scheduled to open in the future. MGM is scheduled to open this spring at the end of May or the beginning of June at last check.
So what we have is an anomalous situation where all four sides of our property are currently being enclosed by either barricades or construction blockades of one kind or another. It has tended to isolate our property on all four sides and it's made access to the Palace temporarily highly encumbered, crossing the street or getting through these barricades that have been erected by MGM and by the folks who are building the light rail system. And it comes to its first stop with escalators and bridges right in the midpoint of our front yard where our gondola station is. And of course, in the short term, it's turned about to be a disadvantage having all the barricades and the construction on all four sides. But in the long term, of course, it's very advantageous to us.
But in that context, it's representing a handicap in the access that the public has both in buses, in cars or taxicabs. And we have worked in the last month or so in conjunction with the government on trying to mitigate these substantial barricades that enclose our property. And the government has been understanding and sympathetic to our situation and has promised to ameliorate the situation in the next several months. But it is at the moment a handicap for us and one we're forced to deal with. Scheduling for all of this was supposed to be done when we opened at the time that we broke ground on the hotel.
But as I mentioned a moment ago, there had been delays in all of this, both in the construction of our 2 neighboring hotels and of the light rail itself. With that in mind, I still think it would be constructive for us to review the performances of these properties and address issues of cannibalization of startups and ramp ups and that sort of thing. I would add to that conversation one other element from my perspective. For the past 40 odd years that we've been building these hotels and the Cotai Hotel was number 12 for us. We have followed a philosophy of how to open major destination hotels.
And I'll describe it as follows. We open a hotel without any real marketing support or pressure because we're very curious to see what its naked, unstimulated kind of revenues are. And then in the months following the opening, we do sort of a low keyed opening. In the months following the opening, we constructively and with a very targeted approach, ramp up and institute marketing programs, both in hotel occupancy and casino revenue and that sort of thing in a very layered fashion that allows us to protect our price. By not throwing the kitchen sink at a place when we open, we risk less than dramatic instant results, but we also protect our price and instead resort to a more progressive and orderly buildup of our promotional and marketing approaches based upon what we see when we first opened.
With those with that general philosophical framework in mind, I'll let Mr. Maddox, Mr. Coote and Ian Cullen talk about what's happened since August 22. Matt, you want to go first and Steve?
Sure. So I think as Steve said, the ramp up at Wynn Palace is clearly taking a little longer than we expected and likely will due to the circumstances surrounding the property. But when we look at what's going on at Wynn Palace and Wynn Macau, comparing September at Wynn Palace, which was our 1st full month to October, which we just completed, we've seen in our volume metrics that's turnover, mass drop and slot handle, those increased sequentially from September to October by about 20%, which was in line with the market that also increased from September to October by around 19%. So Wynn Palace each day is continuing to gain traction in the Cotai market. Wynn Macau also experienced the same increase from September to October in its volume metrics of about 20%.
So while the process is taking longer, we are maintaining our share in these markets. And in September combined, we were at on a normalized basis, roughly 13.5% market share. In October, we didn't hold as well in the VIP segment, but from a volume standpoint, we've maintained that share. So we are happy with the progress and but believe it is going to take longer than we anticipated due to the challenges in our location.
Ian? We've been open in Cotai for just over 10 weeks. We had a very well executed opening of all facilities. Customer feedback has been overwhelmingly positive. Rooms and food and beverage particularly are a new standard for the market.
Despite all of the challenges that Steve referred to with the light rail and resort buildings around the property visitation has been good, particularly on the weekends. We're very focused on ramping up premium mass, which we believe is a real edge giver given our service and our facility. When we look at VIP turn for the 2 properties over at Wynn Macau and Wynn Palace, we've actually doubled our VIP turn versus the previous 60 days since we opened. So the junkets have managed to backfill downtown very effectively. We have a new junket opening at Wynn Palace on the 5th November.
We're also introducing some casual junkets, so we're building up that side of the business. We're actively bringing back customers that are already in cold side that were previously wind customers. And we're just learning and adapting to a very competitive market. Seeing is believing and people experiencing the property is really going to help us. We've made a number of significant casino floor changes with game mixes.
We're watching how people are adapting to the property, what they enjoy. We've got a lot of new promotions to animate the casino that we've been introducing. We're driving occupancy post the holidays. Occupancy has grown 10 points in October. We finished at 81% and we continue to bring the occupancy up.
Our food and beverage offer and the variety of offer we're altering and changing again to meet the customer need. We've been tackling the bus program. We've effectively doubled our buses that are on the road picking up people from different entry points into Macau and within the city itself. We've introduced a taxi incentive program which has proved to be extremely effective And we are going to be coming part of the Coltais connection which connects all of the properties in Coltais from a bus travel perspective. At the same time, we're looking at post opening cost base management.
When you open, there's always areas that need to be tweaked and cut back on. And looking back downtown at the cannibalization aspect, pretty much what we perceived was going to happen has happened. There's been a fairly significant impact on our direct VIP downtown because we have a lot of win players that wanted to come and experience the new property. The junkets backfill very well as I discussed already. On the mass, we're less affected.
Our customers downtown seem to be very Peninsula downtown centric, while some of them have experienced a new property, they've been very sticky downtown. And overall, downtown is pretty settled and we're just growing business uptown. Our competitors are smart people. A lot of the ways that we bring business to the new property is personalized selling, seeing is believing and we want we will take care of the players that come to the property and bring new people in over the coming months.
Thanks. Steve, do you have anything else?
I think Ian and Matt covered it.
I think Ian and Matt have covered it.
Okay. Is there anything else that I mean, I don't know having discussed China, I would imagine the questions about China would be appropriate at this moment. But I want to remind everybody that Bob DeSalvio is on the call, Massachusetts and can update us on that. Bob, do you want to take a moment before we take questions to tell us where we're at?
Sure. Thanks, Steve. We've gotten off to really good start on construction. As most everyone knows, we began on August 3rd. And at this point, the foundations are done in the areas of the central utility plant, the garage, the hotel, the casino sections of the building and we've now started the mass excavation of the dirt from the parking garage area that represents 3 floors below the main section of the building and that's gone very well.
We're starting to pour the slabs in the back of the house and central utility plan areas And we expect on-site steel deliveries in December. And by Q1 of next year, we'll be standing steel in those the back of the house and the central utility plant areas. So, so far very good fall construction season. Weather has been great, very actually a little bit of rain, and so that's helped us move things along. So, about 325 workers now currently on-site and we're running right on schedule.
So all good news on the construction front, Steve.
We've been polishing our the people we've been polishing the invitations and the food and beverage promenade and all of those things, we've been able to interest some very substantial local personalities with various forms of food and beverage and we're in the process of making room for them to join in so that the facility is very locally oriented at the top end with the kinds of people that are very popular in Boston with the Boston public already. And we think that adds to our general appeal as we go forward in a couple of years with that project. So I think generally that's what's going on. I have spent my time in continuing the planning and the refining of the development of our real estate in Las Vegas. And that planning process is continuing.
One of the most interesting things in the 49 years I've been doing this is that the golf course and the available real estate in the company presents so many options that making these final decisions and choices has been extremely challenging and an awful lot of fun too, with our land, our water and our location. We're seeking to come to a final layout of all of our facilities that put us in a much stronger position to be a very dominant force in all aspects of non casino revenue. I think that I want to share something with the people on the call. Ever since 1989, when we opened the Mirage, the facilities that we built have always broken the record for casino revenue in Las Vegas and in America. Our casinos have won more money than any other gambling floor in the United States and in the world with the exception of Asia, Hong Kong, Macau Market and Singapore.
I have made this point in previous phone calls that in spite of the fact that we break the annual revenue for casino numbers in Nevada. We've always had more non casino revenue, starting with the Mirage, when it went through $500,000,000 we had $600,000,000 in non casino revenue. When we did $700,000,000 at $600,000,000 rather At Bellagio, we did $800,000,000 in non casino revenue. And at Wynn, when we went through $700,000,000 we had $800,000,000 or $900,000,000 in casino revenue. And then finally, over $1,000,000,000 with the Encore Wind facility when the casino revenue went through $800,000,000 So therefore, there's always been this pattern of 48%, 47% casino, 53%, 54% non casino.
In September, in this hotel in Las Vegas, I saw something that was even surprising for me, but very encouraging in a point that I'll make in a moment. In the month of September, our casino revenue was $1,870,000 a day, well over $50,000,000 in that 30 day period. That was probably the biggest number in the world except for Singapore and Macau, dollars 1,870,000 a day. But what was dazzling to me privately and personally was that our non casino revenue was $3,340,000 a day. And if you normalize hold percentage, because we played a little lucky, the ratio of gaming to non gaming in the number one casino in Las Vegas was 2:one.
I take that development as follows. It tells us that these 43,000,000 people a day a year that come to Las Vegas, 800,000 odd people a week, are spending more money and have more disposable income for the non casino aspects, which are really the drivers in our industry. And therefore, I am heartened by the fact that we have almost unlimited possibility of expanding in convention and other related business on our property in Las Vegas. And that has made the design development process even more challenging and exciting as we exploit our undeveloped real estate in various parts of this assembly on the Strip in Las Vegas. Having made that point and hopefully shared that insight with you, I'll turn the questioning over to the folks on the call.
And your first question comes from the line of Joe Greff of JPMorgan.
Just on the topic of Wynn Palace and Steve, you talked about how you're dealing with the handicap of having construction and impediments on all sides of the property. In your earlier comments, you talked about having discussions with the government. Can you share with us how the government can help here? And then with respect to work that you can do without perhaps the aid of the government, does that require meaningful additional CapEx or OpEx to work around those issues?
Well, good question. In our conversations with the government, we've demonstrated with photographs and examples of how critically impaired the whole front approach was from the body from the mass body of Cotai development. And they understood that completely. And we've offered some suggestions on how, especially on the Westside, which is where all the other hotels are at the moment, how they could help us out and in creating crosswalks and opening these barricades and stuff like that. And I think, Ian, you've been you've received a favorable response.
So what's actually happened, Steve, is the construction work that was taking place on the light rail system directly in front of our property had completely stalled, but the government have been assisting us and they fired up the contractor to finish that aspect of the light rail system. There's a station right across the road from us as well, which requires a lot more work. But the actual light rail viaduct is being finished as we speak and that causes a lot of havoc on the road beneath. So I believe in the next 6 to 10 weeks, we'll see quite a bit of progress. So the government have been listening and they're helping us out with the frontage of the property.
The second part of your question about significant CapEx, I spent the month of August there and I've been back again since. And my take on this is that one of the facilities that we have downtown that is extremely well received called Red8, which is casual dining, we did in Cotai, but we did it on a scale that based upon the customer reaction is not adequate. So what we're doing on one side of the mass gaming area is building a larger Red8 to handle the demand that we've had and that's going to take several months to install, but we had the room to do it and we're going to increase that. So as far as the project goes, that restaurant modification represents what I think is an investment we're going to make of several $1,000,000 It's not earth shaking, but it's very significant. We've also added we had 2 spaces in our retail area that we held to ourselves, so that we could do exactly what we're doing now.
And it's a pattern we followed. We always leave a number of spaces either unassigned or temporarily occupied so that we can react to the surprises or the things we learn after the place opens. And so we had some spaces and we filled them with things that we could move easily that were our own, like a luggage store that we operate ourselves. We actually left 15,000 square feet empty, but shelled in, in a critical location and hit it with a false wall, so that we'd have that capacity and that element to resort to if we wanted to, because each one of these hotels takes on a personality of its own that is in many cases surprising or unexpected after the public gets possession of it. So, the casual dining additions that we're adding don't represent serious capital in the scheme of things, but their alterations we're going to make in terms of casual dining in the months ahead.
Matt, do you have anything you want to
add to that? No, I think that's exactly right. Okay.
That answered my question. Thanks, Steve. And then as a follow-up, but not related to Wynn Palace. There's been recent press in Japan about some desire to restart the casino proposal, which I know has gone really nowhere in the past. Can you give us a sense what your sense is, where that might be going now, if any?
Thanks.
We're following it carefully, Joe, and there does seem to be more momentum now than there has been in the past that the parties seem to be coalescing behind the idea and there seems to be momentum. I can't really tell you if it's going to happen or not, but it does feel like there is definitely more action in Japan now than there have been in the past 6 diet sessions.
Thank you.
And your next question comes from Carlo Santarelli of Deutsche Bank.
Good afternoon. Just as it pertains to the Palace and you guys think about the ramp from here, when you think about kind of your VIP business in the 3Q as well as your mass business, is it fair to kind of look at the VIP segment and say this obviously will ramp faster and we should expect similar drop per day metrics going forward? Or do you think kind of with some junket tweaks and stuff, there's a lot of room to move there? And a similar question on the mass side, just in terms of how you guys expect to build that business going forward, obviously, with some of the construction and some of the other marketing that you'll start to turn on now? How do you anticipate that ramping?
So Joe, this is Matt. I think clearly the VIP business at all openings ramps the fastest, just given the nature of the junket operators and then bringing their customers in and the liquidity in that business that's immediately injected. As Ian laid out, we are planning on growing that business going forward by adding a junket operator and some casual junkets in the relative near term. On the premium mass on the mass side, we're very focused on capturing our fair share, which is or exceeding our fair share of the premium mass business, which is what we've always done. And that's that sort of hand to hand combat acquiring the CoTie players 1 at a time.
And so we're very focused on that. It will take longer to ramp that business up, but as customers come in and experience Palace, we believe that they're going to become Wynn Palace customers.
Great. And then if I could just follow-up on that, when you think about kind of the delta between promos on Cotai relative to the Peninsula, I think you guys were about 25% on Cotai of mass revenue in the quarter. Is that kind of how you're thinking about the strategy there from a promo and discount standpoint with respect to Palace?
Carlo, I'll let Ian jump in. But with only 40 days in the quarter under our belt, we plan on growing both significantly. VIP ramped faster than mass. And Cotai is a little more promotional than the Peninsula, but it's not a lot more promotional.
Yes. I don't think there's a huge there isn't a huge variability between what we've been doing downtown and what we're doing at Wynn Palace. We're seeing what works and what doesn't work as well as we thought and tweaking it. But I don't think it involves huge additional expenditure.
Understood. Karl, this
is Steve.
I mean, year over year promos are effectively flat between Wynn Macau and the Palace.
Yes. I was referring more to just the level at the Palace in future and how you think about that run rate going forward, but I think you guys answered.
Okay. Next.
And your next question comes from the line of Robin Farley of UBS.
Great. I was wondering if you could talk about whether the results in Macau will impact the timing and or budget for your Las Vegas development, the Wynn Park, just kind of how we should think about that relationship?
Gee, I don't know, Robin. From my point of view, they're completely separate conversations. Design development in Macau took place years ago. And although we tweak the property as we go forward, it's fairly mundane compared to the conceptual exercise on the kind of thing we're talking about with Wynn Park.
I guess I meant not so much from a design perspective as just that Macau's cash flow would be what's financing Wynn Park and that does that therefore change your budget if the cash flow is not coming in at maybe where you would have thought it was? Given much?
Well, since Macau is in its the Palace is in its infancy and just beginning to get rolling, I must I've got to remind you that the lead time on design development on the thing like Wynn Park is substantial. I mean, we spend as much as a year or 2 getting to the point where we can budget and start to break ground. And I'm in that 6 months. There are parts of the Wynn Park development that are going kick in very early, there's if we go according to plan, and that has to do with the addition of meeting rooms and ballrooms on property that is part of Wynn and Encore now and not on the golf course as we up our convention profile, our meeting space, convention and ballroom profile substantially. And then there's the lagoon, the new rooms that are going to be available on both the north and south side of Wynn Park and the other features that go around the lake.
And then the issue is adjacent properties that will be available for smaller operators on Paradise Road and the potential for exhibit space. So balancing all of these things, I don't have a scheduling problem as much as I have a planning problem. But each of these things on our early investigation have overwhelming self justification financially. So we don't really worry about financing them, if that's the direction of your question. Okay,
great. Thank you. Sure. Your next question comes from the line of John Vogue of CLSA.
You were carrying roughly about $100,000,000 of annual excess costs for the Peninsula property before you opened Palace. Could you tell us that since the opening of Palace, are you have you fully shifted the additional cost flow over to Cotai already?
Yes, we have. The Wynn Macau daily run rate is now about 1,100,000 and Wynn Palace is in the neighborhood of 1,500,000. And if you look in the past Wynn Macau was closer to 1.4
Okay. And if I could follow-up with a question on Palace. We've seen some chatter of late that perhaps the VIP play in McCallis picked up a little bit, and that partially explains what we saw in October. Could you comment on whether or not you sense that this is a structural pickup in VIP play? Or is this just a temporary event that is kind of driven by the euphoria of the new opening?
And could you also maybe comment loosely around some of the recent events we saw in China that we saw one of your competitors in Australia where they gone through some issues in China as it relates to VIP marketing. How do you kind of stitch all these mosaic together and how do you read the VIP business as it stands right now? Thank you.
Boy, that's a good one. But I think it's 2 parts. And the first one was the step up in VIP, the junket business euphoric or was it structural? I think that part was the first part of your question. Who wants to take a crack at that one?
There's the both of the elements are correct. When you have new openings in the marketplace, you do get more VIP business and there does appear to have been a lift in VIP generally. We have obviously seen our junket business downtown backfill as we open new junkets with the same operators at Wynn Palace. So it's certainly stronger. How that maintains over the coming months, we'll see.
The opening of new property certainly adds to the euphoria as John described.
We're very close historically to the events you've asked about to have a lot of perspective on them. Time is going to straighten out, I think the answer to your first question. The second one has to do with the remarkable events where 28 people were detained from Crown in Australia. I know very little about that and I think I speak for my colleagues. And because we know so little and because these processes are opaque in many cases, I think the only people that can give you an intelligent fix on that would be the folks at Crown.
We have known, I can add this, we have known for many years, I mean, we've been there 15 years now that marketing and promotion in Mainland China is not permitted. So we don't have our employees doing that. So other than that, I know what I read in the paper, and I think that's the same thing you read in the paper, and I don't have anything constructive to add to it.
Okay. Thank you.
And your next question comes from the line of Harry Curtis of Nomura.
Afternoon. I wanted to go back to your marketing expectations. Do you have for the Palace, do you have any plans to begin dialing up your outreach to wholesalers, groups, associations?
Yes. Yes. So Harry, we are if you look at Wynn Palace, about 30% of the hotel business right now for us is cash business and we are actively engaging travel agents and wholesalers and putting together great packages, not based on price, but on combining food, spa, etcetera, because the Cotai market is between 30% 40% retail. So we are actively moving on that front.
Okay. And that has
on top
of that.
We did do it when we opened. Correct. We did it after.
Seeing is believing. We have scheduled 600 fan trips on the property since we opened between opening and the end of the year. And our tour and travel business is growing very nicely. We ran 81% in October and we believe we can lift that even further.
And my second question just has to do with, if you might maybe give us some way of developing expectations for sequential margin improvement for the property. It was a little lower than we thought at the outset, but that can be explained by just incremental opening expenses. How should what expectations do you have for margin lift over the next nearly 6 to 18 months?
Well, Harry, I think 6 to 18 months, that's the right timeframe to look at this. So composite win Palace's makeup will be lots of premium mass and high margin cash non gaming business. So we would expect our margins to get closer in line with our downtown property in that high 20s EBITDA margins, but that's going to take us time and Ian is doing a lot of work on rationalizing the expenses inside the property as well.
Okay. Very good. I appreciate it. Thank you.
Your next question comes from the line of David Katz of Telsey Group.
Good afternoon, everyone. I wanted to ask about the setup for the PALLAS. And Steve, I appreciate your description of the situation at the beginning. When did it become clear or obvious that the issues that are going on, on each side were evident? Meaning they sound like things that would have been that are long term projects that have been in place for quite some time.
And would we have known about them 6 months or 12 months ago? And essentially, what's changed?
We certainly knew all during construction that the light rail was under construction. The sequential delays that took place and the problems the governments have had in resolving their own problems with the light rail construction have been a moving thing. And so, and we knew that we certainly saw that everybody knew that SGM was under construction on one side and MGM on the other. MGM thought they were going to be done earlier, as did a lot of the people in our neighborhood. I don't know that it's a bad thing that they're going to open when they open instead of earlier.
But we never had terrific insight as to the status of our competitors scheduling. We can read what they say on their quarterlies, but they're subject to the same kind of contingent events that we were with regard to construction and completion dates in China. So to that extent, we looked around us and everything that was happening was fairly obvious. There wasn't anything we could do about it. There was no dynamic action that was available to us.
And we were hoping that the situation would improve as we approached the summer months when we were getting ready to open the property. I myself didn't realize how critical the blockade was until I went there in August. I was there in the month of August for 3 or 4 weeks before the place opened. And I didn't realize how critical it was until I tried to go across the street to City of Dreams. And you took your life in your hands trying to get through the barricade and cross the street because of the traffic.
There's no crossing. All of that is tied up at the moment at the middle where the construction is taking place for the escalators. See, there's a big terminal for the a big stop right in front of our hotel on the light rail. As I mentioned, it's the first stop from the ferry terminal and they built a bridge that goes from the west side of the street, which is MGM and City of Dreams to the east side of the street, which is us and our gondola station. I didn't realize how big the holes were and how the primitive state of the construction with the walls they've built.
And I guess there's nothing to say except it is what it is. We weren't in charge of that construction. We didn't have a dialogue going with the builder. This situation happened when we were opening the hotel on the Peninsula on the east side of our hotel between us and Starworld and Ark, there was a street that originally was a sewer canal. And they were going to make a street out of it and cover the sewer canal.
And 5 months before our hotel opened, it was still a canal, an open trench. And then all of a sudden, in a space of 12 weeks, a street emerged. It was an amazing rapid transformation, which proved that the Chinese people could do, the Chinese government could do pretty much what it wanted at a speed that was quite remarkable under certain circumstances. Apparently, with this light rail, they haven't been able to get the same kind of acceleration. And I believe they're trying to get that fixed up.
But I didn't really know what to expect as I looked at the construction during the of the surrounding properties and the light rail while we were building our place. We were sort of heavily focused inside on our own problems. I don't know if my answer is helpful to you, but does that deal with your question?
It does. And if I can just follow that up and sort of a 2 part follow-up. I assume it sounds as though you are sort of pleased with or there's nothing that's changed on the inside of the property. And as we think about the ramp up that will have a little different trajectory than we may have thought. If you could just talk about the balance between generating revenue and profitability as this trajectory evolves over the next 5, 6 quarters, just so we can think about our models the right way, that would be helpful.
Thank you.
Well, okay. Here's the way I would approach that. When we opened the Wynn Peninsula, we got to $1,000,000 a day on the 12th month. And starting at $500 a day, dollars 600,000 a day in EBITDA. And it was slower getting to $1,000,000 a day, but it was much quicker getting to 2,000,000 dollars a day or $3,000,000 a day.
And the reason is that this in our kind of property, the acquisition of clientele of customers is done sort of 1 at a time. There's an old phrase, eagles don't flock, you got to catch them 1 at a time. So laying the groundwork for building the clientele for a hotel that is exemplary, that's unique and the Palace turned out to be the most beautiful job we've ever done by far. The rooms are exquisite. The place is absolutely magnificent physically.
Now you introduce such a property to people and they like it or they don't. You asked yourself who are the customers? Who do you build a place for? And you do so with sort of a conviction that when people see something wonderful and special that they'll like it and they'll be loyal to it or they'll come back again and again. So the exposure of the building at first is aggregates, it sort of compounds on itself.
And we got to the 1st day we opened a place, we made $1,000,000 and we're operating at the $5,000,000 $6,700,000 level or something like that in October. And I expect that to climb on a steady basis, because I believe that the people will respond to our product as they have for the past 49 years in Atlantic City, Fremont Street, the Strip in Las Vegas, the Peninsula in Macau and every place else we've ever been. This property is following the same pattern that I've observed in our developments over the years. I guess you have to use your own arithmetic when you do these things. I don't like I don't want to make a lot of promises or puffy statements.
I make one statement that it's the most magnificent hotel we've ever built and clearly, clearly the most dramatically elegant and beautiful hotel in China or maybe anywhere in the world for that matter. Now, what will public acceptance of it be? Well, based upon our experiences so far pretty good. But tackling the mass market and the premium mass market, as Matt mentioned before, is sort of a sequential process. You have to expose the place to people for them to find out what's in it.
But in order to do that, they have to be able to get there. And right now, that's a bit challenging. And that's temporary, of course, it will go away. And these very things that are complicated our launch are the very things that will underwrite its future. Having that light rail and being the first stop is a cool thing.
So I'm looking forward to it. But in the meantime, we'll deal with the shortfall or the inconvenience of the moment as best we can. Am I responding to you properly?
Absolutely.
I've never spoken to you before, and I want to make sure there's a whole bunch of are sitting around this table. We've got all of the information here. And at moments like this, when you launch a new project, especially one is ambitious and in a market as complicated in many respects as China, you want to try and give as much clarity as possible to the moment and not exaggerate or feather your nest or make promises. Personally, I'd rather under promise and over deliver whenever possible. And I don't know if you want to add anything to it or Steve, You have your own opinions, fellas.
You could say what you think.
I just going back to the light rail itself. Paradoxically, the more progress they make, the more painful it is for us. In order to finish it, they've had to close large sections of that road and make the property difficult to access. So we'll tolerate the pain until the end of the year or the turn of the year, and then things will improve.
By early next year?
They're telling us that there are some things they're going to do rather quickly as far as crosswalks and things like that. We literally couldn't get across. We had to take a very risky approach and dodge cars for me to get to the City of Dreams. I hadn't expected that it would be at this stage when we opened in August, but there it is.
Perfect. Thank you for your answers.
Sure.
And your next question comes from the line of Shaun Kelly of Bank of America.
Hey, good afternoon, everyone. I guess during right after the opening or not too far after the opening, there is a pretty significant management change in Cotai. And I was just sort of wondering if you could comment a little further on, is there any difference in sort of strategy moving forward as you think about balancing what's going on at Peninsula and Wynn Palace? Or is everything generally speaking still as you originally planned it?
Well, yes, everything as we originally planned it. The Cotai property was built to appeal to the most discriminating person that would come to China, the premium mass customer and the VIP and the top end of the mass, even just below what we call premium mass. The idea was that this was going to be the place of choice for people that cared about their choice. And so that was always the program. I think if you ask me to be candid about any adjustment that I thought we needed, that it was that I wanted to see more after the opening, as I looked at our neighbors and I look more closely at our own trade and the response to various outlets in our hotel, I realized because we were so overrun with the casual dining things that we offered that we needed more of them.
I think if anything, I think I might have underestimated with my colleagues the amount of casual dining that we needed compared to the other folks, they have dozens and dozens of these casual dining restaurants throughout Cotai. We had 2 or 3, but I've found out with the mass of people, it's not enough. So we've got to increase that. And we're doing that in 2 specific locations adjacent to the casino straight away. Now we've got to get through the approval of the government to do the work and we're doing the drawings, lickety split as fast as we can to get that job done.
As a matter of fact, we're going to put up construction barricades and get on with it immediately. But if that's I guess if you ask me what surprise or what did I see after the place gave birth and the public came in, I was immediately and the rest of us, Ian, we all recognized, we needed to up our casual dining capacities beyond what we originally thought. And it was pretty easy to do actually because we had sort of anticipated that there would be something that we wanted to add or change after opening, which is why I left those spaces available for it. And now we're going to take advantage of it based upon what we learned since August 22. Great.
It's pretty much the same thing as we thought before.
Great. I appreciate the candor on that. And then as a follow-up, and I know it's been addressed in sort of different forms, but maybe to ask it outright. Matt, I think you mentioned sort of the expense run rates where you're at today with Palace at $1,500,000 a day and Peninsula down to $1,100,000 a day. Is that generally a level that you are comfortable with moving forward?
And is there any change in either staffing or promotions that would be material to those dollar numbers moving forward?
This is Steve. I would add one thing. We're going to add we have the tables, but we find that our mass demand at the Peninsula, we need to increase some more dealers because our utilization is too high. So we want to increase the amount of tables that are actually active during more hours. It's not a significant number.
But I don't know how much that will affect the rate.
Yes, I think that the $1,100,000 down at Wynn Macau, because it is slightly less than that now, will be in range. And then Wynn Palace, we haven't been open long enough. That's currently where we're running between $1,500,000 and 1.6 dollars And I know that we're looking at rationalizing some of those expenses, but I wouldn't expect a very large decline from that level. In particular, as sales ramp up and in the retail outlets and everywhere else, you'll start to see the cost of the variable cost ramp up. So I think that those numbers will likely be in line.
Ian, do you want to comment? That's exactly right. Okay.
Great. Thanks very much.
And your next question comes from the line of Felicia Hendrix. Ms. Hendrix, please announce the name of your company.
Barclays, thank you. So I have a question for Ian and then Steve, I have a question for you. Ian, so if we take kind of everything that you've said on the call and acknowledge that it's an early read for Wynn Palace and also the challenges that you face. I'm just wondering if we like look back to the assumptions that were put forth at the Investor Day this past spring, how reasonable are those EBITDA assumptions for 2017 for Wynn Macau and Wynn Palace? Can you kind of put those in context with what we know today?
Maybe Matt wants to take that call. Sure. I think what we've clearly said today is that the ramp up is happening slower than we anticipated. So while those numbers we still believe in, 20 17 is likely not the year for those numbers. That should be, if you look at the competitors out of Cotai, where these properties, once they settle in, are able to the profits that they're able to generate.
But I think until we get the construction issues settled and some of our new casual dining outlets finished, at that point, we should start to get to those numbers.
Okay. That's helpful and definitely kind of an anticipated answer given everything that you've said so far. Thank you for that.
Ian, do you want to
add anything to what Matt said?
No, I think that's fair. It's going to take us time to ramp up. Everybody's aware of that. We'll have a better read of it by the end of the year.
Okay. Thanks. And Steve, just kind of a bigger picture question. I was just wondering if you could comment on the premier visitor the premier visit to Macau earlier this month, everything that kind of came out of that visit sounded supportive. And just among the policies announced, do you see anything that could benefit the gaming industry per se?
Well, the central government always supports the financial health, the employment security and the welfare of the citizens in the special administrative region. And they repeat that whether it's the premier or Xi Jinping himself. My visits to Beijing only reinforce that with the people that I've had the privilege of discussing China with. I go there on occasion to broaden my perspective on China, because after all Macau is part of it. In terms of the implications to local policy and to a certain extent, Visa policies, I think that you have to look at the arc of all aspects of the central government behavior or actions and take that into account with the local government's reaction and their independent actions.
Because if you're in Beijing, they'll tell you that the SAR is autonomous, that it's self governing. And that although they pay close attention and want to support it, that they look to the government of Macau to run Macau. And we have this interaction with them on a regular basis. Usually, it's on the detailed stuff like trying to fix the roads and things like that. So we're with different parts of the government.
In my conversations with the top level of the Macau government, they definitely want to protect the job security of the people in that are engaged, the Macau citizens and everybody else that are engaged in working at these places. There's a strong preference for protecting the employee base of the industry. When issues that affect them, meaning the employees and the local employees in particular come up, the government is particularly responsive and on point. When we get to more subtle things that have to do, for example, with smoking, then the matter the speed of decision slows down. This conversation about smoking with Secretary Tam and even with the Chief Executive Officer and Secretary Leon has been more protracted.
There's competing interests here. The health and safety of the employees, the strong preference of the customers to have the freedom to smoke. It's very popular in China still. And then there's this whole thing about trying to make people healthier, even if it kills them to do so. So when you get to areas like this that are certainly relevant to our right now, the smoking I'm using this example, the smoking policy is mixed.
Some places have been grandfathered in, other places have tried to take advantage of the interim policy allowing smoking lounges, but yet the final approval of those smoking lounges has been delayed and nobody is sure whether there's going to be a complete ban on smoking regardless of any condition within the buildings or whether they'll be a mitigated or ameliorated compromised position. So when you talk about the policies of the government since the Premier's visit, you really have to separate the general support that Mainland China and Beijing gives the SAR from the intricacies and the more granular aspects of the things that we're interested in that may seem mundane in comparison but are not. You get my drift on this. It's not a simple answer to your question. God lives in the details on this one.
Okay. Well, thanks for the effort to answer.
Do I mean, is there you want to have a follow-up on that? It's a tough question that you asked me.
No, I think it's fair and I think there's still a lot unknowns. So I appreciate it.
There are a lot of unknowns. And the country has 1,000,000,000, 370,000,000 people and managing it and its relations with the SAR, I don't think the SAR is the primary thing in China every day. I think Xi Jinping and the central government have a lot of problems to deal with a lot of decisions. The liaison office is closely monitoring everything that happens in Macau. They were at our opening.
They're very supportive, friendly and warm in every respect. But again, there's this sort of unusual relationship between the announced autonomy of the SAR and the sensitivity of the SAR to the general policies of Mainland China. So and it's very hard for us to understand sometimes what everybody is thinking. It's not a bad thing in any way, but it makes answering your particular question a little tricky.
This does end the question and answer portion of this call. I now turn the call back over to the presenters.
Thank you very much, everybody. We look forward to bringing you up to date in 3 months.
Bye bye.