Afternoon, and welcome to the Wynn Resorts First Quarter 2014 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. Thank you. I would now like to turn the call over to Louis Fanger, Vice President of Wynn Resorts.
You may begin.
Thank you and good afternoon everyone. Welcome to the Wynn Resorts Q1 2014 earnings call. Joining the call on behalf of company today are Steve Wynn, Matt Maddox, John Stremp, Kim Sinatra, Steve Coote, Marissa Wooden and Scott Peterson here in Las Vegas as well as Gamal Aziz, Ian Collin, Frederic Luvazuto, Robert Gansmo and Frank Casella dialing in from Wynn Macau. With that said, I would like to turn the call over to Matt.
Sure. Before we get started, I just need to remind everybody, we will be making forward looking statements under the Safe Harbor Federal Securities Law and those statements may not come true.
Steve? Okay. So you've got the numbers. We're very happy with the performance of the company and as we start this year. And we're going to today perhaps a little differently than we have done in the past.
I'm going to make a few general statements, but there seems to be a lot of appropriate interest in numbers and metrics at the moment in China as well as Las Vegas, because there's a feeling that change is in the air or that things are happening that are worth discussing in deeper detail. I feel that today a little more than I have in other quarters. So my colleagues and I are going to take a moment or 2 and deal with some of those metrics. But we had a healthy increase in Macau and our business. We had a great year last year and we're up 60% in the Q1.
There's some specifics about some of the data that's available and there are changes that take place every And in the mass casino, we're going to address that in just a moment. But our in China, our VIP business is holding strong. We've seen no change. We're very happy with what's going on in Las Vegas. Construction in Cotai, I will deal with is on schedule.
We cut 6 quarters before the place is open and those numbers hit these conference calls after that. So I think what we're going to do today is we're going to talk first about Las Vegas and some of the things that have happened in the Q1. And Mo,
I'll let Maurice, I'll let you talk about that. Thanks, Steve. So in Las Vegas, we actually felt the growth quarter over quarter year over year in the Q1 from 2013 to 2014. If you look at the hotel, the occupancy was up, RevPAR was up. So occupancy was up approximately 12.6%, Steve.
The RevPAR. RevPAR was up 12.7%. And so our average daily rate was 2.75% and our RevPAR was $2.41 And that made us
the most profitable hotel in Nevada? Correct.
Slots had a significant year over year increase as well. If you look at we actually had some reduction of some of the units on the floor to just create better circulation. And so the slot unit was up 26%. The overall net revenue was up 7.6%.
And our performance on the Strip is regardless of size, whether we have less rooms or more rooms than anyone else. Our profitability on the Strip was the highest as it has been for quite some time. We had a lower hold percentage in the Q1 by about $10,000,000 So if you add the $10,000,000 back, we're up in Las Vegas and we're pacing for a very good year in 2014 as this hotel continues to gather market share and sort of take its place as the hotel of choice on the Strip. So also in the month
of April Steve, so as we continue to look forward into the year, we've seen great pacing. We again are outpacing year over year our numbers and we've seen anywhere from we believe in the Q2 will be 6% to 7% higher than previous year.
The reason I asked Maurice to do that and I made those remarks a moment ago, there's always been a lot of talk the last couple of years from our colleagues up and down the strip about is Las Vegas recovery. And I've been a little reticent to say that we see it. But I must say that this year, the first time, I'm willing to say that I see Las Vegas getting a footing that it hasn't had quite as clearly in the past. So I want to put myself in a category of guidance and say I think Las Vegas is sort of growing into its additional capacity that was added in the past. The opening of the city center properties at the time that they did as well as Encore, they came into the market at the worst possible time in terms of the national economy.
And so we were oversupplied for a while. And finally, I think we're seeing this year that that supplying is getting utilized properly. So much for Maurice or Scott unless you want to add something about Las Vegas. I think I feel good about it better than I have in the past. Let's turn to China.
And Matt, you want to talk about that?
Sure. I'll point out some things on our Macau results. $384,000,000 of EBITDA with a 33% margin. Again, there were no luck impacts in direct or junket play. So that margin is stable.
And what's interesting to point out is the flow through. And if you compare our flow through from revenue to EBITDA with the competitors, it's very, very strong. On the VIP side, 26% increase in turnover, 12% increase in win. On our mass casino, we continue to move new replace tables into from core performing mass areas into premium mass areas. In fact, we're up to 62 premium mass tables.
We had 23% increase in mass revenue for the quarter. However, if you look at April with a lot of the changes we've made just in the last few weeks, April is up 55% in mass revenue, taking the 1st 4 months of mass to over 30 2%. So we're continuing to feel strong and in that market and growing quite well. Slots, again, outpacing the market growth between 30% and 40 percent by 30% to 40%. So our slot win was up almost 13%.
I believe the overall market was around 10%. So we're continuing to take share in the slots business. And all of this the $384,000,000 just to point out in EBITDA is about 25% to 30% more per position than any of our large competitors. So we get more bottom line money out of our units than anybody else. So there's 4.90
and the Wynn Encore 1,000 room complex on the peninsula, we're 6 quarters away from going and adding another 550 2. So we're going to more than double our business. And in terms of the mass premium business, the entire hotel is a suite hotel, which is going to give us a very nice position in Cotai as far as capturing a fair share, if that's a modest term this time, capturing a fair share of the premium market business and we'll take our VIP business into that market as well. So I'm feeling good about the position we're in. We're a little slower in our growth than some of the other guys, because we started a little later as a company.
The fact that we didn't begin this until 2000 and really get in business until 2,005 in Las Vegas and 7 in Macau has put us behind in our maturity and our evolution as a company. Our age made it it disqualified us from participating in Singapore, which was unfortunate. I would love to be able to play that one over again. But we're okay now. We're okay now in our capital structure, our organization.
Gamal and Ian are on the telephone from Macau. Gamal, maybe this would be a good time for you and Ian to give some comments on the Cotai project and anything any observations you make about the Peninsula Ian? Sure. Steve, thank you. As far as Wynn Palace is concerned, I just visited the site early in the week and we're in great shape there.
We're making great progress on many areas, the energy center, the substation, the basement area, the casino area. We're basically completing structures, facade walls and also walked many of the other construction sites. And it looks like we're very, very much organized and right on target. And many of the areas that were supposed to be completed are completed on time. So I feel pretty good about where we stand construction wise.
And then also on the organization for Wynn Palace as far as the staffing and the leadership, we have brought on some incredible talent to be part of the opening and management of Wynn Palace. I feel that our position in Cotai is going to be very powerful as far as the destination that we are working on and we're creating. It's going to be a category killer, if you will. And Kamal, for the sake of the folks that are following us, are we having any trouble finding construction employees so far? Not at all.
We're right on target. We have almost 2,000 construction workers on the site and we should be at 3,000 by the end of October, which is also right on target. We're bringing them when they're supposed to be brought. As I said, I walked the site and the level of activity is really outstanding, organized, clean, on time, Unlike some of the other sites that I walked, there seems to be a little bit of disorientation. But it looks like from a labor standpoint, we absolutely have no problem with that.
Ian, in the Peninsula, you're in construction. I want to mention that we made a decision as a company, myself and Ian Kukhnlin and Gamal and Linda and the rest of the gang that we wanted to make sure that when the Wynn Palace opened up in Kotai in 6 quarters that under no circumstances would the Peninsula go to the back of the bus. That wasn't an acceptable alternative for us. And so we decided to energize and look at everything in the peninsula to make it more than competitive with anything we were doing even in Cotai. And to that end, a year ago, we started planning and drawing a reconfiguration of the casino, the original Wynn Casino on the Peninsula at Wynn Macau.
That construction of new gaming for Chinese New Year for the Q1 in 2015, so that the peninsula is going to have a rather dramatic reveal of new facilities a year before the Wynn Palace opens up. And the things that we're doing in the Wynn Casino in Macau and the Peninsula are going to be I'm going to use the right word, sort of startling in what they offer in terms of VIP gaming. So we're taking and making every energy and every move we know how to do to make sure that in this wonderful market with such smart and clever competitors that we say on our toes and that we react with agility. And we're calling upon all of our reserves of good taste and design originality to make sure that we keep up with very cool competitors we have, who are a group of very smart men and women who are doing a wonderful job. And I think if I'm not mistaken in the next 60 months between Henson Island and Cotai and Macau's Peninsula that the Macau area once the bridge is finished will probably be the most robust destination tourist center in the world competing with Orlando, Las Vegas and any other place on the planet.
I see the future of the Macau area, the South China area that is principally defined by Macau and Anson Island. It's probably the most exciting place to visit on the planet. I think all that is going to be true within the next 60 months. It's a credit to the government of Macau that they saw all this coming and they've cooperated with the government of Quangdong province in this whole Ensign Island business that's underway. It's quite extraordinary.
Coupled with the bridge, if the investment community thinks that it's been exciting so far, you can strap on a seat belt for the next 60 months, because this is really terrific. And I think unless any of my colleagues have anything to add, we'll leave it all now to questions. Go ahead.
Your first question comes from the line of Joe Greff with JPMorgan.
Hello all. Thank you for the detailed information. I thought it was necessary and I think it's perspective putting. And of course, you're giving all that information.
I'm going
to probably ask you some more details about some of that great data. Particularly about your comment, Matt, about April being up 55% in NASH.
Can you
talk about how you're thinking about shifting tables or aiming to yield improvements in table productivity between VIP and mass? When you look back at the 1Q of the 4 92 average tables, what's the split between mass and VIP? Where do you think you can get that? I know it's always optimizing in a moving environment and it's not static. But if you can help us understand that that would be great.
Sure. So in terms of
the table split, we had 2 13 average tables in the Mass Casino in 1Q. And Joe, it's really not how many tables you have in Mass. It's are they in the heavily trafficked areas. And so what we've been doing is converting some of our junket space on the encore side of the casino into premium mass and reshuffling and we're seeing large increases in the premium mass business and April was a good example of that. So it's really more about yielding the floor and having the right product in the right places.
And the team on the ground there is working very hard on also while we're doing this construction project in the original Wynn Casino.
Got it. We're often getting asked by investors about the credit quality. Obviously, in the Q1, you actually had a contra expense reverse on the provision. I'm presuming that was in Macao or can you clarify or talk about that a little bit?
Sure. It was a $5,000,000 credit in Macau, because we collected receivables that were fully reserved past 180 days. So it was no change in the way we account for things. We just collected things that were 100% reserved.
We're conservative, Joe. And that happens quite often with us. We tend to be a little skittish and nervous about credit reserves. And then when the money comes in, our auditors jump on us and make a SME adjustment.
Great. That's all for me. Thank you so much.
Your next question comes from the line of Carlo Santarelli with Deutsche Bank.
Hey, everyone. Good afternoon. Matt, you spent a lot of time talking about the mass details. And just would you guys mind or is it possible to break out now on an LTM basis or even in the quarter? What percentage of your EBITDA at the asset right now is coming from your mass floor relative to your VIP floor?
We haven't given those numbers in the past. And of course we have them. Our competitors are doing it. I think that I can tell you we do very well. That's why we make $384,000,000 of EBITDA.
So we are not buying the business in any of those segments and it's flowing through.
Understood. And just for clarity, I know a lot of times with the mass hold it always becomes an issue on conference calls. Have you guys thought at all and maybe if you could give us some of the color around those thoughts about potentially providing the window purchases in your denominator to give a better sense of how hold is influencing if at all?
We are looking at the right metrics. What I would tell you is just keep focusing on table win per unit and table win, because you're right there are a lot of purchases
in the cages. It's an interesting question to ask, but it doesn't get you any smarter. At least we asked the question and we don't get any smarter. We don't care. It's pretty steady when what the edge is in baccarat, it's probably a 24%, 25% gain.
And at the end of the day, but the drop or the purchase of chips and the like we made the way measure in Las Vegas, it's really not a productive exercise in China. Just look at the wind per table. We've given up on that issue that you're worried about that you're asking about. We don't see it as relevant.
Understood. And lastly, just moving over to Las Vegas. It looks as though the discounts and commission line was significantly down this quarter. It looked a little bit like the 2Q last year when I recall you guys had a credit collection during that period. Was there anything in the quarter in Las Vegas that may have been somewhat helpful?
Well, it's axiomatic that when the customers get lucky, the drop goes down and the markers go down because most understand what happens in Las Vegas. The customers walk up to the baccarat table in the private rooms and we have a very, very strong grip on that business in this town. When they walk into the table and they say to the boss, let me have $1,000,000 and they have established credit. We put up a table marker, a lamer, a little round circle that's visible on television on our continuous taping and we slide the money across. Now the guy plays.
He goes up, He goes down. He wants to go to dinner. He leaves the money in front of him. There's no there is no drop yet. There is no handle.
Until remember handle in the Las Vegas casino is made up of cash in the box and credit slips associated with markers as opposed to credit slips associated with ship returns when the rack is too full. And markers and cash make a drop. We don't have any drop unless the guy loses which in many cases they don't sign the marker till they're ready to leave in 2 days. They leave the money on the table overnight. We lock it up with a case, but they're very superstitious about that.
So there's only a table hammer up. So when a customer let's say plays for 6 hours and at the end of the thing he's up down up down a couple of $1,000,000 but he's up $1,000,000 At the end of his play, he slides the chips back and said take down the mark the table marker and there is no drop. So there is no credit. So when the win is down, credit is also down. When the casino holds a higher percentage, you will invariably see our marker our receivables and our markers go up.
But it's a peculiarity of the playing habits here and the tradition of Nevada that you're seeing when you see these numbers at the end of the quarter. So when we say we're off $10,000,000 in EBITDA because of the lower whole percentage which is in the process of correcting itself as we speak. It will be the same at the end of the year as it always is. That's why you see that strange sort of number for the Q1.
And then really quickly just the extra Cotai parcels, have you guys put any more thought into how you're going to deal with that? And do you plan on doing pilings for that before you open obviously Wynn Palace?
Well, we have ground to cover in terms of entitlement from our government. And we are hard at work. We've made some submissions. We are hard at work drawing. I am working probably 4 days a week on it and I have been for several months.
And we're excited about what we're doing. It's all suites, all aimed at the mass premium. Every room we're building in Phase 2 is all living rooms, bedrooms. Every room has got a massage room. Every room has got a huge bathroom.
Every room has a living room and huge television sets. There isn't a single chamber room in any of Phase 2 buildings. Everything are suites. We're planting our flag at that end of the business and we're going to defend our ground strenuously.
Thank you very much.
Your next question comes from the line of Felicia Hendrix with Barclays. Hi, good afternoon. Thank you. On The Peninsula, regarding the casino floor
floor construction there, is
there any reason to be concerned that your mass gaming momentum could be disrupted by the construction?
No, no. Construction has already been I'm sorry Ian you can answer if
you want.
Sure. There's going to
be no disruption to our mass casino business and you can see that we started the construction project 24th March and we had a record mass month in April. So there's been no disruption. We've made sure that we've mitigated any of the construction noise. We've got a very innovative acoustic wall treatment in the casino, which we've been testing on a daily basis and there's been no disturbance. There's been very little fall off in the number of mass tables.
There seems to be a miss out there that we've lost a lot of mass tables in the casino. We haven't. It's in the single digit in terms of occupancy. What we did is
we hijacked the poker tables. Who was the lady that asked the question?
Felicia Hendrix.
Felicia, we hijacked the poker tables to cover it.
Great. Smart, of course, right?
It was easy decision. Moving
to The Wynn Palace, are you you've talked about and you've given us details about the rooms and how those are going be what they're going to be focused on the premium mass market. Are you ready to share the table mix at that property? And how you're thinking about that in terms of percentage of your tables that will go to VIP and to grind mass and premium mass?
Well, Felicia, I think that you're in a position to make the judgment as well as we are. We do the same thing that you all do. We look at our results. We're moving and changing and adjusting tables just the way Mr. Adelson and Mr.
Tracy do or the fellows at Melco and Francis Louis and his people at Galaxy. And our mix, the percentages you're seeing now at Wynn and Concord at the Peninsula represents a pretty intelligent division. We'd probably be pretty close to that again I would imagine. Would you say so Ian? Is Linda on the call?
I think that you're right. This is Gamal Steve. I think you're absolutely right. I mean we're monitoring very closely, but the mix will be similar to what we have here. And we also have the flexibility of moving from one segment to the other.
I mean, as you said earlier, Steve, the way we're building Wynn Palace is going to be extraordinarily beautiful and you can easily move from one segment to the other. For example, we because of the complications of smoking, all of our VIP and high end rooms and Wynn Club all have terraces that are on the lake. They have indoor outdoor space all of them. Well, any one of these big so called junket rooms can become premium mass instantaneously. And they all have food and beverage and they have outdoor balconies and they look at fountains very much like Bellagio and that kind of a thing.
So we have this tremendous flexibility of being able to turn we made a decision in the design of this building. I it's worth saying. We had upfront and we put a huge complicated water feature attraction in front. Now the question came up, who gets it? A couple of our key restaurants, but what else goes on it?
Do we put atriums and other public attractions there? Well, we put a gondola and we made a Disney kind of e ride out of it. But we gave a lot of this beautiful space to gaming. We put our best foot forward with our highest yielding customers. And we've also done it in a way that it's convertible.
Flexibility is a very big thing in a market as dynamic as Macau. And that was one of the challenges that we faced in designing this building that it would be ready to move in any direction in terms of the way it functioned. And that's probably one of the reasons why it took us so long to dope it out. But it's finished now. And I think that most of us are feeling pretty good about the flexibility that we built into it, because we're facing a market that is I say dynamic and changing.
And our competitors have lifted the game in a very intelligent and an alert way, which has made us raise our game flexibility. And we've got not only do we have game flexibility in terms of where we put about the amount of tables and whether they're in mass or they're in premium mass or in their junket or in our own VIP program, but we've got flexibility with positions for these groups of tables that are really double sexy. So and that will make a difference. That will make a difference. When the smoke clears and the rhetoric stops, that will be a big deal.
That's fantastic color. Thank you. And Steve or Ian or Ghamal, when you think about those beautiful premium mass oriented rooms, have you all thought about how you're going to allocate those rooms to the premium mass casino player versus have them being cash rooms?
Well, that's a point we're not sure. You can take a look at our mix now and that represents our best decision. But I think Ian and Kamal and everybody they can talk about it themselves. They may change their mind.
Well, I'm talking about the on the hotel side.
I'll just give you an example. Just in the last 2 weeks, we sat down with Linda and we have migrated some of the VIP tables to premium mass with ease. So it's as Steve said earlier, we really have the flexibility and the beauty of the space itself allows you to move from one segment to the next without any trouble or construction work or any of that. This is really an ideal floor for us to move between a VIP and junkets
and premium mass. I'm sorry, Gamal.
I meant the hotel rooms in terms
of Every hotel room is a stunning beautiful room. And I think we have the different tiers of room to accommodate VIP premium mass and mass. So we'll be in great shape as far
as But when you percentage will go to I guess I'm trying to ask what percentage do you think will just be cash rooms versus giving them to your casino place?
Well, we've got a cash room that's 700 square feet for that kind of customer. But the vast majority of the rooms are 900 square feet and up. Now they can be for cash or VIP or junkets, but there's 1700 of them. We only have 1,000 in on the peninsula now. These numbers that we're producing are only with a small room base of 1,000.
And we're going to 1700 in Phase 1 and double that in Phase 2. Felicia, obviously, the entire inventory will be looked at with an eye towards yielding for the highest performance every single night. And if you look at our performance in the Q1 here in the Peninsula, you'll see that our occupancy has increased, our ADR has increased, our RevPAR has increased and that comes from an orientation of looking at these rooms and making sure that we're achieving the highest yield per room on every single night. That same methodology and that same approach is going to happen in Cotai. We're basically going to give priority to the casino, but we will also be very aware of the extraordinary demand that's out there to allow some of these rooms to be sold in cash.
So our goal is to achieve the high stock you can see with the highest rate.
That is so helpful. Thank you so much. Your next question comes from the line of Shaun Kelley with Bank of America.
Hey, good afternoon everyone. I just want to return to the subject on the VIP business because we are getting a lot of investor questions about what's going on in the market there. And Matt, as we've discussed this in the past, I think you guys are pretty aggressive about your timeline in terms of settlement with the junkets. I was wondering if you could just give us any color broader specific as to what you're seeing in terms of your collections with some of your big junket operators and kind of any change in behavior or lack thereof that you've seen?
Sure. And so what you call aggressive, I call conservative. So we settle at the end of every month and we do not roll anything. We do not advance more than 30 days and it's settled at the end of every month. We have had no issues with any settlements in any of the months.
And we're not seeing anything that would tell us that it's coming. In fact, we have the May Golden Week coming up here and people seem pretty excited about it.
Thank you, Andy. I think that's good.
I get your question. We haven't seen it. No.
Thanks. I think that'll be helpful for investors to hear. And then to just follow through on that then, could you give us your latest mass versus EBITDA or mass versus VIP EBITDA contribution as you guys are focusing and shifting a little bit more towards mass and premium mass right now? Is that a statistic you could give us either for Q1 or maybe even for April if you would have it?
Yes. Sean, we're people are talking about that a lot. We're not putting those numbers out right now. But we I can tell you there's a significant contribution from mass and slots to our EBITDA as you know.
Great. That's fair. And then last question would just be, I think as people are looking longer term, they're asking us a lot about the theoretical cannibalization between your two properties between what you're doing today at The Peninsula and obviously the huge opportunity on Cotai. So just could you just give us your thoughts on are you really approaching these or viewing these as 2 different markets? And kind of how do you think about or answer that question of the balance between the 2?
That's the $64 question. If you look at the Sands versus the Venetian and Mr. Adelson's new places, you see that the Sands' earnings are nowhere near what they were when he was alone. And therefore, you could make an inductive leap that they cannibalize the business. That's not really what happened.
And it's not my job to talk for the sands. But what I prefer because I think the question comes up because of that comparison or maybe because of the comparison of the place next door to us Star World with Galaxy, right? But look here. Look at this. We opened up the Wynn and the other building years ago.
The Wynn Encore facility has been existing for a while. In the meantime, all these magnificent new hotels by Galaxy and Venetian and all the improvements made by Lawrence Ho have opened, right? And what's happened to our earnings on the peninsula? They went up. They went up.
That is to say the expansion of the wonderful expansion of clever buildings on Cotai hasn't affected us in any way that's visible by any Now if Now if that's true, it means that if you're careful, if you really tender your roses in a property like the Wynn Macau and Encore Macau which were built to last. I remember several years ago on an annual report
back in the days when
we actually used to print annual reports. Cartoon on the cover of the report And the cartoon on the left there were 3 pictures. There was a house of straw with a little pig laying there in a collapsed mode. Then there was a house of wood and the pig was collapsed and laying a pile of wood. And they're smoking a cigar on the roof of a house of bricks was the smart little piggy that built a house of bricks.
I've always thought that 3 Little Pigs was one of the greatest business case studies of all time. And I put on the top of our annual report, we build houses of brick. And the Wynn Macau Encore facility is a house of brick. And it has held its market share against massive multibillion dollar expansions on GoTime and has done nothing but grow as of this morning. So when we add in terms of total footage of tables a rather small increment at Cotai, we believe that our market share will continue to hold its own both at the Peninsula.
And I know that Ian Coughlin, my Irish President CEO in China is a brutally competitive man. And I know that he has absolutely no intention of allowing that building to be scavenged or if that's the right word. You hear tackling in the background there. Am I speaking for you, Ian?
No, you're right. You keep writing the checks and I keep the place running, which is great. There's room in the city
for 2 awesome properties, Steve, and the rejuvenation to win
Macau will keep it at
the top. Kamal, what do you say to that? I think we're in phenomenal shape. And I think the question that you just asked, Sean, makes a lot of sense. But if you see the level of demand in Cotai and you see what has been built successfully in Cotai and imagine what Mr.
Win has been describing as Wynn Palace that we're going to open, you realize that we're going to have extraordinary demand for our property there without touching what's happening here on the peninsula. And I feel very, very good about what's happening as far as the diversion between the 2 and the profile of customers that they will attract. Another thing about our Peninsula property, this worth remembering from time to time, we are very lucky and luck is a word for it that we were granted the opportunity to build on the site that we built on the peninsula. We are surrounded on three sides by Stanley Ho's building and Ambroseo and Lewis Ng and Angela, they have the building across the street from us on the main boulevard. Then they're on our right on 24th June, I guess it is, the avenue on every corner that face the doors of our neighbors and the distance that separates us is the width of the street.
This sort of crisscross traffic doesn't exist in Cotai. Everybody has to walk. Even you have to walk between the Venetian and the Four Seasons is a longer walk. So even though all of us over there are building highly integrated facilities with retail, food and beverage, entertainment and gaming, the distances you traverse are much greater than those in the peninsula. So it is the nature of the customer to like to change their luck and to jump from place to place and the junket operators of course have rooms in all the places.
The distance from MGM to Wynn is 70 feet. Same thing with Arc and Star World and SJM. So these are some of the factors that play into the fact that our position in the peninsula is geographically, strategically highly protected. And I think that's part of the reason we've grown so wonderfully in the last few years. I think all these things play into the answer to your question is that we're going to hold our spot and we're going to hold most or all of our EBITDA and then add to it in 6 quarters from now.
Great. Appreciate everybody's feedback on that. Thank you very much.
Your next question comes from the line of Robin Farley with UBS.
Thanks. I heard your comments about how you haven't seen a change in VIP. I wonder
if you could give us
the same color on VIP in April that you did for math in terms of what your percent increase is? And then I have a follow-up
to that. What did you say Robin? I'm sorry. You wanted color on what?
You gave a specific percent increase in mass for the month of April. And I wonder if you could provide similar for VIP given your comments that you have not seen a slowdown of any kind?
Okay. Sure. Well, I know that our EBITDA is say ahead again in April.
And VIP is up around 10%, which is in line. That's where it's been facing. So again, we saw a double digit increase in VIP in April.
But Matt, it's also good to mention that we outpaced the market in April also on the VIP. So we're in great shape.
Great. And then I know you said there hasn't been a change in kind of the repayment cycle with the junkets that you deal with directly. But I guess that wouldn't necessarily be the first sign of any kind of slowdown. So I wonder if you could talk about what you hear from further down the line of Unova Junkets lending out to the agents, lending out to the players. What do they what concerns them about bank liquidity and their own personal liquidity?
Anything along those lines? Not that it would be showing up in your numbers at this point.
I don't think if they have those kinds of thoughts Robin they're keeping it to themselves. We haven't had that discussion. Last time I talked to Linda and I asked her specifically about are they saying anything? What do they feel like? She shrugged her shoulders.
No. So we're not hearing it from them if I understand your question.
Okay. Thank you.
Robin remember, it's not a massive group. It's a group of very successful demographics, the orders of magnitude of People's Republic of China and Hong Kong and Taiwan, we're dealing with a very creamy top end of them. Even in the mass area, we're dealing with a better group in terms of income.
I understood. But in theory, a slowdown in liquidity could still affect their personal liquidity even at the highest.
They're prudent business people and they're watching macroeconomics in China just like we are and they're being careful and prudent and conservative at times. And they've been like that for the 7.5 years that we've been operating.
So the sound remains the same. Chinese GDP has slowed down from 10% to 8% to 7%, but the number is so big 7 is still a robust number. Yes. I think when we talk about the Chinese bubble, which is a subject now that makes the rounds on Wall Street, I'm not sure that we're buying into that. Generally speaking, most people I know in America really don't get China that much.
They're usually behind in their understanding of China, especially a lot of people that pontificate about it. Many of them have been there.
I think one thing that's important to point out, the corporate credit questions and issues that people talk about in China are very different from the consumer credit. And consumers in China and even in Macau are seeing their wages increase by 15% to 20%. So there is there's a very different story with the consumer than there is with these large with the corporate credits. And so I wouldn't get those confused.
No, it's not the consumers and wages probably the mass market more than VIP. But anyway, thanks.
Your next question comes from the line of John Oh with COSA.
Hi. Thank you. If I can just ask you a question on your capital structure. How do you think of it as it evolves over the next couple of years and as we expect the Cotai opening and another $4,000,000,000 to be spent on the second phase of Kotai. How do you think of the right amount of leverage
that you're comfortable in
the balance sheet?
$50,000,000 $50,000,000 bond. We sold it at 5.09 with no covenants non recourse to the parent. And that brought our total financing for Cotai to $3,850,100,000 at an average cost of 3.3 percent or to put it another way, we rented the $3,850,000,000 for 125 $1,000,000 Now on one hand as a businessman, I'm thrilled. I never dreamt that we would see anything so tasty and wonderful as that. On the other hand, it's a reflection of questionable fiscal and monetary policy in the United States that has artificially depressed interest rates because of quantitative easing by the Fed, which is also sort of killing the value of the dollar and the living standard of the working people.
So the good news is if you're a high class borrower with a good credit rating, this is one of the most tasty seasons of all time for two reasons. You're borrowing money at artificially depressed rates and you're most likely going to pay them back with $0.85 It's a perfect storm for a business person, unless you look at the truth of the matter and the impact it has on your customers and your employees. And that's a much darker story. It doesn't lend itself to a sound bite, but it's for every businessman and American and any economist that has their head screwed on, right? It's an ominous situation.
But in terms of our moment in history in commercial history and our projects in Cotai along with our colleagues in the industry, it's nirvana. Capital structure now is these are mostly at the Venetian and it wins things of beauty. They're lovely, better than you could ever want. They've got everything low interest rates, long maturities, low covenants. What else do you want?
I mean, it's great. If you look at it from our point of view, look at it from consumers point of view or a working person's point of view, who's paying for all this, all this cheap money? Well, right now the Fed is I thought Bernie Madoff went to jail for that. But anyway, that's my answer about your capital structure.
Okay, great. If I can
just follow-up with a detail that I think you had in your prepared remarks. You mentioned 552 tables in wind Cotai, if I heard that correctly. How much confidence do you have in that cable account allocation for your Cotai project? And maybe if I can think about it differently, what do you think is the minimum that you would need to achieve the kind of economics to be proportionate to the amount of investment you put together?
I'll answer your first question with one word, high. My level of confidence in the 552, high. We don't make these decisions in a vacuum. You understand?
Yes. All right. Maybe I can just push.
I don't know what else to say about this. No, I've answered your question.
Your next question comes from the line of Stephen Kent with Goldman Sachs.
Hi, good afternoon. Steve, could you just talk about the Palace as to what will make it a must see hotel? You gave a little bit of color on it. And I guess what I'm trying to get at, looking at what you've built in the past, Is it is the focus to try and get all people in to see it? Or is it to target the high end?
Is it the ability to bring in mass market to see the property and play? Or the high end to stay and play? And I think that's just a little bit different than what's occurred in Vegas over the years where it was really just to bring everybody in to see the hotels. And I feel like this is a little bit of a different strategy for the hotel. And then specifically on Wynn Macau, occupancy of 98%, RevPAR at threethirty 1, the highest it's ever been.
How are you able to keep that when Cotai fresh and attract that level of occupancy levels? Maybe you could give some specific things that you've changed over the past 6 months that allows that to be the market leader?
The answer to that 2 part question requires an investment conference all of its own.
We're ready to host it for you.
Thank you. But we've always tried to get everybody in to see the property. Why else would you build volcanoes and pirate ships that sink and fountains that dance? This time gondolas that go through the fountains that go into building. Atria on the north and south with floors that open and gorgeous huge sculptures come up of Ferris wheels and merry-go-rounds and peacocks, its tails open and 25 foot tall all floral sculptures of a Faberge egg that opens with a surprise inside that change every month in both atriums.
You'd only do that if you were trying to attract the whole world. Those are public entertainment attractions. That's just where we start with this attempt to attract everybody. I've spent a couple of years designing this hotel with my colleagues, so that it would be the photo op of South China and it will be. That's to get everybody in.
Then when it comes to the inside of the building, we make it user friendly and irresistible at least in our ambition, irresistible in terms of the user friendliness for mass players, shoppers, diners. We entertain. We've made showrooms out of our restaurants with actual stages and walls that open and close with entertainment behind them in restaurants, because people shop and eat and gamble in China. So they don't entertainment in the restaurants. Whole place is an entertainment platform.
And as far as the VIP, you heard us talk about it extensively earlier in this conversation. We've gone to extraordinary lengths to make a high end player whether he's playing with a junket operator or he's playing on our credit or he's a cash player as a premium mass is the term everybody uses for this customer. The mass market high limit player whose playing areas very much resemble a high limit pit in Las Vegas. We've opened the door to everybody. And that's the answer to the first part of your question.
And to the extent that I had enough room on the peninsula, I tried to do it downtown Macau, but I only had a certain I only had 900 feet of frontage. It was only a 14 acre site. So our ability to stretch out and do theater was a little bit limited, but we still have the tree of prosperity that whole lobby and the fountains in the front. When it comes to the second part of your question, which has to do with how do we keep our occupancy and our RevPARs dynamic. Is that right, Steve?
Is that what you said at Cotai?
Yes. I mean it's
Say to me that the answer to the question is we'll do exactly what we're doing on the peninsula. Working every sector of the market, creating listen, the only thing left to do in the industry that we're in, basics better. I'll say it again. The only way you take this to another level is by doing every little thing better from human resources, every aspect of services, purchasing, interior designing, including lighting, as well as the decorative elements and fixturization of the place. Everything has to be better.
And the only reason our RevPAR and our EBITDA per table is better than the rest of the guys is because we subscribe relentlessly to that principle. So if we build another hotel, whether it's in Japan or Boston or Las Vegas or Macau, we only have one move that we know how to make. And we've always made it. Think of the Golden Nugget of Atlantic City, out earned everybody even though it was the smallest place, out grossed and out earned everybody on the Boardwalk in the peak years. Think of the Golden Nugget downtown, out earned and out grossed had over half of the profits of Downtown Fremont Street.
Think of the day that the Mirage opened. We have owned the leading casino on the Strip every single minute that we've been in business for 47 years. Think of Macau, the most profitable place per foot per table is Wynn Macau. Obviously, there's a common idea that is a thread through all of this. So what is Cotai going to be?
The most expensive, the most carefully thought out and the largest place we've ever built in terms of gaming capacity. Nothing new, Steve, same old stuff, but it's worked every single time without exception. The most successful largest grossing casino on the Gulf Coast is Beau Rivage. Never has changed. We've never dominate we've never not dominated with a facility we built pound for pound any market we've ever been in for 47 years.
But we've never had an organization as clever and as deep and as rich in talent as we do now. All of this thanks to Macau, which has attracted wonderful people not just to our company, but to all the companies. There's a lot of braining executives, men and women at work in Macau, taking advantage of this incredible business opportunity that the government has afforded us. As far as our own company goes, we've got a very simple, very simple track record that has been totally consistent. In 1997, on the cover of a Fortune Magazine, we're the 2nd most admired company in the country.
The reason is that we only have total focus on every single detail of the hospitality business, including the gambling part, which is only part of it. And that's the answer to your question about RevPAR and occupancy. Those are symptoms. Those are effects. The cause is our focus and our energy on the detail.
Thanks, Steve. I appreciate that.
We have time for one Your final question comes from the line of Harry Curtis with Nomura.
Hi, guys. Just a quick question on Japan. Steve, if you could assess your position there please?
Very much like Sheldon Adelson's or KT Lin's or Jim Mearns I would say. We have our top people including ourselves visiting Japan, meeting with members of the government. They are visiting here in some cases. We're meeting with business leaders in various big companies in Japan. We're trying to understand the political realities of the moment and doing our best to position ourselves intelligently, so that when and if we understand the business opportunity, when it matures.
And I think it's well on its way to doing it. I think probably the chances of it happening in Japan are greater today than they ever have been before. I think that we're going to have a very clear understanding of the direction the market takes by June when the diet acts as I believe it may very well do on this study bill, which will then create a setup for the actual process, which will take place in 2015. I think there's some talk that there would be there's some people that would like to have facilities that aid in tourism and excitement up and operating for the Olympics in 2020. That's an ambitious schedule.
The government will have to act with alacrity in order to allow something like that to happen in Tokyo, Osaka or Okinawa. Okinawa. So that's what's going on in Japan. We're all doing the same thing. We're all buzzing around there trying to get ourselves in proper position.
And at the end of the day, it will be about track record. It will be about reputation, capital structure. I think it should be anyway. Who can do the job? Who can prove they can do the job?
That's the question. And there's a couple of companies that can answer that question affirmatively, it would seem to me and that have the capital structure to do it as well. I think Venetian I think Sheldon is listening. He's paid close attention to this. I know KT Lim is paying close attention to it.
I know that MGM is, I guess Caesars as well. They have other problems as far as money goes, but maybe they'll be in position when this happens to put their best foot forward, but everybody is there. I'm sure that the Melco people, Packer and his partner, Lawrence Ho, will put their foot in. We'll see. It's a little early, but it's moving.
That's it.
There are currently no further phone questions.
Thanks everybody. Speak to you next time.