Good afternoon, and welcome to the Wynn Resorts First Quarter 2012 Earnings Call. Joining the call on behalf of the company today are Steve Winn, Mark Shore, John Stremp, Matt Maddox, Marilyn Spiegel, Scott Peterson and on the phone, Ian Coughlin, President of Wynn Macau and Robert Gansmo, CFO of Wynn Macau. After the speakers' remarks, we will conduct a question and answer Thank you. Now I would like to turn the call over to Mr. Maddox.
Please go ahead, sir.
Thank you, and good afternoon, everyone. Before we get started, I just need to remind everybody, we will be making forward looking statements on this call and those statements may or may not come true. With that, I'm going to go ahead usually try and keep
this short.
Our usually try and keep this short. Our business in Macau was fine. We haven't felt any terrible impact from competition. Our whole percentage on a comparative basis was a little lower. I think everybody knows that both in the United States and in Macau, we get very high play.
And so we experience volatility probably on a little wider or larger scale than others. Sometimes that volatility works against us in short term comparisons and sometimes it works favor of us. If we were to normalize whole percentage, we would have had another $15,000,000 or $18,000,000 in Macau in EBITDA in this 1st 90 day period. And if and in the United States especially, we experienced a premium hold position. As a matter of fact, last year in the Q1 was the largest hold percentage I ever heard in a legalized casino was 31%.
So the comparatives comparative metrics look strange. But at the end of look strange. But at the end of the day in our business short term comparisons are in a volatile kind of casino are not really instructive. At the end of the day, it usually ends up for us in a normal range. So with that in mind, that sort of covers the numbers that we've published in terms of EBITDA for the Q1.
I think everybody knows that we were finally given the green light on our concession in the land concession, which will lead to imminent groundbreaking in the next few weeks. I'm finishing my negotiations with 1 of 2 major builders that can do the job in China. It's a very big job. So I'm taking my time in the final negotiations of the building contract because there's a chance to be a good shopper, so to speak. Is no new news in Ocado legislation or Ocado legal issues that we have to report.
And I think this is probably that generally covers what I think is important today and we can move on now
to questions.
Your first question comes from the line of Joe Greif.
Hello, Joe.
Steve, congratulations on Cote. I know it's something we've been waiting for with beta breath for a while. It's nice to see you getting approved. Can you just talk about other than Brown breaking ground on it, what the other timetables might be with respect to labor? And when do you start to see some acceleration in project capital spend?
I know it's not going to be a lot for some time. And then I know you've had previous comments in prior calls about special dividends, but how do you think about special dividends in the near term given what's going to be some level of spend in Cotai? And then if I can have a part 2 question, we noticed in March that your junkets rolling chip turnover on absolute basis is nicely better than in February or January. Can you talk about what drove that if that's additional junkets or additional marketing? What drove that?
That would be helpful. Thanks guys.
That was a 2 part question, Joe.
Or maybe a little bit more than 2 parts.
Next time maybe you'll give me a multiple choice. But a, timetable. I believe that we will be 36 to 42 months 3.5 years, 42 to 46 months in that range for the shop in Cotai, number 1. Number 2, with regard to that structure, we have spent 28 intense months, my design partner lifetime. 28 months every week to try and make this hotel in Koh Tai, show the public in Asia and around the world something new.
And I hopefully we've achieved that. We've certainly taken enough time and drawn on every spec and every drop of experience that we've had. We've had the benefit of watching our competitors upgrade and improve their designs and presentations to the benefit of Macau, the Venetian's work at Four Seasons and at the Venetian certainly the Galaxy Group and the fellows at Melco have all gone to their strong game. And we've had the benefit of seeing all that, coupling it with our own experience and creative resources and we're going to respond in a very strong way with these 2,000 rooms that we're building on the Cotai land. The property as you know is a landfill.
So is Wynn and Macau. It was also Wynn Encore was also on a landfill. And we went down for foundations through 60 meters of landfill to get to rock to anchor our current buildings. This time we're going to go down in the high rise portion at least at a shallow point of 78 meters and at the deepest point 92 meters with caissons that are 3 meters across 10 feet, a lot of deep holes, a lot of concrete and reinforced steel bars. So drying out this land, which was going to drop at a meter or 2 in certain parts because it's wet in some places.
And getting ready for pilings is going to take us several months. The foundation is the most challenging part of this job. Once we get to driving piles and we get up to grade, the building goes very quickly, because it's poured in place concrete and every floor is the same. Even though the podium is very creative and unique and everything in it is unique, getting out of the ground is a trick. After that, it's pretty straightforward and simple and we take advantage of a lot of economies and speed in China that are really not available in America.
It is also true that there's a lot going on in South China, in Macau and Hong Kong in the form of public works and competitive construction. It's a lively part of the world and there's great things going on. And so labor is an issue. The government is cooperating. The way it works in Macau is the government is thoughtful and they take thoughtful direction from the central government I believe if they think they need it.
But the way it works there is that things take a certain amount of time. And then at the end of the period that has just concluded last week when we got our land concession. The government makes a decision that this project shall now go forward. And when they decide that it shall go forward, then they're cooperative and helpful. That has been our experience exclusively through 2 major construction jobs.
And I am confident that that will be our experience again. If the government doesn't want you to build the building, then they don't give you the concession. When they give you the land concession, that means it's time to go, do a good job and get on with it. And that's what we're about to do. So those are my comments about the Cotai project at the eve of its groundbreaking.
And we're going to be going lickety split to get it done as quick as possible. If along the way, we have opportunities to accelerate and foreshorten these periods, I've given you the worst case then we will. But right now, it looks that way to me and I'm not yet ready for a final budget on the building. We're working on that now and we'll have that probably by the next quarter that we had one of these phone calls. Joe, you asked me I think also about our turn.
He asked about special dividends and then
Special dividends. Oh, special dividends or special dividends. Dividends. You take those issues as you find them at the end of the year and you measure all the other factors. My Board weighs our financial condition at the time and the obligations that we've got underway and the more specific schedule of construction.
As you pointed out though, we do have a healthy lead time and a very strong cash flow in China. So we'll discuss special dividends when it seems appropriate to take them under real life consideration. I don't have any intelligent comments to make other than that today. And was there anything about the Q3 that you're seeing
for the month?
Yes. I don't think there's anything interesting going on between January, February March in terms of turnover. What we're seeing all the way up until today is volumes are up over last year. In Macau on the VIP side, the market is still very robust.
I also think that the customers are coming back to Mama. They tried all the other properties some big some big days when Sheldon opened up his new hotels. A lot of people came to town because of the excitement associated with the openings. And we had a $30 odd 1,000,000 a day. Lots
of monster.
We had some monstrous days. So a bunch of 20s 30s was pretty good. But everybody in town did good. If you look at those weekly numbers they publish, We were having these big, big volumes and we were just under 13% of the market. So it shows you that it's still pretty healthy there by any measure that we could see.
Next.
Your next question comes from the line of Shaun Kelley with Bank of America.
Hi, good afternoon everyone. I just wanted to ask about kind of what you're seeing more on the mass floor. You just touched on VIP in Macau. Mass drop this quarter looked like it was only up low single digit percentages. In the market, in the Q1, we saw the market continue to kind of pick up on the mass side.
So just wanted to get your sense of market share wise, I know you have some capacity constraints at the property, but what you're thinking about growth rates on mass was? And then a second one, if I could, would simply be operating expenses in Macau look like they were up
a little bit again sequentially
this quarter. Wondering if, A, there's anything in that that would be this quarter. Wondering if A, there's anything in that that would be non recurring or B, just kind of what how do you think about the
run rate going forward?
Sure. So, Sean, I think one thing to think about in the mass casinos, make sure to look at our table games. If you look year over year, we transitioned a lot of table games from mass to VIP. And so our table win per unit in the mass floor was up 27% year over year. And so what that is really is, is we're just yielding our floor, we've added more VIP tables.
And the drop was actually up over 3% year on year with but wind per unit was up 27%. So we're just continuing to see very good volumes on the mass side and also in VIT. So I'm sorry, your other question was about operating expenses?
Yes. It looks like they were up about $10,000,000 sequentially. It may depend a little bit on the day count there. But yes, so just kind of wondering either Q2 in a row in Macao has been a little bit higher. Just kind of wondering what if there's anything in there.
I think last quarter you called out bad debt.
Yes, John, the answer is if you look on the income statement in the press release, you'll see that bad debt expense was up $8,000,000 and that was all in Macau. It's what we said is we had a few large accounts that went past 150 days. We have a very conservative accounting policy It is 150 days we're fully reserved. And so we had a few large accounts go over 150 days. Our bad debt provision went up.
We're 50 5% reserved in Macau right now. And our collections in the Q2 have continued to be very stable and normal.
That's perfect. Thanks, Dan. I appreciate the color.
Your next question comes from the line of Carlo Santarelli with Deutsche Bank.
Matt, I think you largely answered my question with your last response. But if we do look at it on a sequential basis and kind of extrapolate the $8,000,000 that you mentioned against the EBITDA line, could you kind of talk about just general cost pressures at Wynn Macau right now? What you're seeing from labor? What you're seeing from maybe other segments on a fixed basis? That might be helpful.
Thank
Ian, you want to take that? Sure.
We like the rest of the market gave a general cost of living adjustment to our line employees in March, so you would have seen some effect from that. And also we're coming into our 6th year of operations. So repair and maintenance expenses are on the increase, but there's nothing unusual there.
Great. Thanks,
Next question. Do we have no more questions? Did we lose the connection on the line?
Operator?
We seem to have lost the call.
Give us one second.
Ladies and gentlemen, I do apologize. Today's conference will resume momentarily.
Operator, are we back on the call? Operator?
Operator? Yes, we're on.
Okay. Then I Can you please put Felicia through?
Yes.
There was a question that was asked.
Your next question comes from the line of Felicia.
Felicia, one moment. Before this call was interrupted technically, a question was asked of Ian Coughlin and I don't know whether the people on the call heard his answer. But let's repeat that question. It was about additional expenses and any cost pressures in Macao on the labor market and that sort. Ian's answer was that we gave a cost of living like everyone else did earlier this year.
And a part of that to our line employees, part of that filtered in. And we're 6 years old and there may be a little bit more in repairs and replacements, but we didn't say anything abnormal or unusual or nor are we feeling the same. And in case we didn't hear Ian's answer, I just repeated it. Now may I have your question? Operator, are we on the call?
Alicia has not rejoined the queue.
Are we on the call operator?
Okay. Operator, can you take the next question of the person who's on the queue, please?
I sure can. Your next question comes from the line of Stephen Kent with Goldman.
Hi, good afternoon.
Steve, did you hear our last answers? Yes. Were you able
to Yes, I did Steve. Yes.
We're a little mystified now. When the phone goes silent, we're a little confused about what's in and what's out, but we want to make sure we're responsive.
The good news is we got it twice.
All right. You got it twice.
I'm sorry. So we're good. We're good on that one. Hey, Steve, can you just talk about 2 things? One is occupancy in the Vegas property seemed a little bit low.
And I was just wondering if that's a part of your policy to try and hold a premium price or hold rate or did I miss something on number of rooms out or something like
that? We are in fact trying to hold the price. Our occupancy was our cash was okay, but our occupancy was low. And that had to do with a decision that we made and that impacted us in January.
Dropping
in the quarter.
So operator, do you realize you're on our call? Okay. Marilyn, you might want to address that.
Sure. So in the quarter, you saw that we grew rate to $2.55 That's part of the strategy here to continue to push the rate. You could see that in the Q4 of 2011, we had achieved a $2.50,000,000 ADR. And so the 1st month in the quarter, we tried to continue to push rates and verify the strength of the market. And so to have a $15 rate improvement in the Q1, I think is pretty amazing.
And more importantly, with about 24,000 room nights less than last year to have our non gaming revenues grow was an indication that we're really focused on having the right people in our building, again people who stay with us, eat with us, see our shows, shop in our stores. And so we continue to try to press the rate.
We had 2 conventions fallout, which it hurt us. We had a couple of technical things that happened during the quarter that probably had they not had happened and they weren't associated with our pricing would have probably taken our occupancy up. I don't know, Marilyn, how many more points?
Probably 2 or 3.
But we've learned to live with little less occupancy to get the right people as the boss said to get the right people in. We don't this place isn't set up for people that go to McDonald's and stay in the rooms. It's just not our clientele.
And Steve, could I just ask you a little bit more? Could you give for the new Cotai project, I know you don't want to give an exact number, but could you at least give us just a general round number of what kind of CapEx? And especially if you're breaking ground in a few weeks, you must have some number in mind maybe similar to what you've stated in the past? I have a number in mind all right.
I thought it was a little high. So we worked to value engineer the property and we have been able to do that. But I haven't confirmed what the revised number is. And I'd hate like heck to give a number on a conference call like this, have it get circulated and then have to back off it. So I think this would be a really good time for us to wait another 90 days and plan our flag on solid ground.
Steve, I really think that's the best thing to do. Okay. We're adjusting some things in favor of reduced cost. And I'd like to confirm that we've done it and that they resulted in the savings we expect then I'd like to put the number out there.
Okay. Fair enough. Thank you.
Your next question comes from the line of Felicia Hendrix with Barclays.
Hi, there. Let's try this again.
Yes, ma'am.
Great. Steve, earlier when you were talking about your Cotai project, you used the word unique. And I was wondering if you could elaborate on that a bit more. Certainly, every property you've built in markets has been unique. So I was wondering if you could maybe give us a better idea and importantly how your property will be differentiated?
2 things come to mind in my response to you. First of all, we've had 6 years now, 6 full years of experience with the Asian customer. We've also had the benefit of watching the learning curve accelerate for our competitors. And they're very bright people. And if they looked at us and like what we were doing in some respects, they picked up on it.
In some cases, they had their own ideas that were developed based upon their experience with these guests and they've incorporated those things. And they've lifted the game. The customer sensitivity, the guest experience, they've lifted the game above and beyond what we would find in the United States except perhaps in our properties meaning Bellagio or Wynn. The stuff that we've done. I have to say that they've lifted the game.
We've taken that into account and we've said to ourselves, we have to make this hotel on Cotai in every sense of the word irresistible to the guests. Now that's an expensive assignment to undertake. And thank goodness Macau is probably one of the few places in the world today where one could accept the challenge of creating the best, the most irresistible place, dedicate the amount of capital it takes to do that and have it be an intelligent investment. We take Macau to be such a place. I'm sure that Sheldon Anderson found Singapore to be such a place.
Asia is where it pays off. Asia is where it's justified. Asia is where it's justified. We have this wonderful piece of property that we've been lucky enough to be given a concession to develop. So for 28 months in anticipation of this dynamic, my design partner DeRider Butler and I in conjunction with Roger Thomas, we've decided that we would take it to another level.
And that meaning that we would take every aspect of this building from the point of view of the employees, the hotel guests, the restaurant tours, the tourists on the outside, everything we would take it to another level and make it delicious. Now at some point here, we're going to have to show everybody exactly what that means. And we'll do it with pictures and words prior to the opening of the hotel while it's under construction. But I think the best time to do it with words is when we have the pictures as well. And we'll probably distribute all that in time for our next conference call and show everybody what we're doing.
When I when we do, I'll be certain that everything is frozen and completely locked in. And it is really in that showing our competitors what we're going to do. And frankly speaking, I'm not in a real hurry to tip them off. There's the MGM people have not announced the project yet and I don't want to show it to them. I'd really love to see them show their hand first, but it probably won't work that way.
They'll probably get a peek at what we're doing. SJM is in the same position. SJM is in the same position. And I think that we've historically, we've given enough demonstrations to the other guys to last them for a while. And the new stuff, I'd like him to wait and find out.
So I'm being a little standoffish about it this time. And I think that's probably a good idea. So I'm not crazy about giving you an idea right now to be honest. Sorry.
Okay. We'll just have to wait. But actually talking about MGM and SJM actually gets me to my next question because both of them seem optimistic that they're close to obtaining approval. And I'm just wondering, if you think about Cotai over the next 4 or so years, do you envision seeing lots of cranes? Or do you think the government could stagger new casino construction?
Good question. I know the Galaxy started. They're in Phase 2 and that project is underway. So it's another chunk of development on 1,500,000 or 2,000,000 feet, I guess, something like that. SJM is certainly in a position to do something and they will.
And I suspect if you based upon what Jim Mearns says all the time, they will. I have no reason not to believe in. And I'm sure that one way or another they'll figure out a way getting the money together. It's going to be expensive. The game the price of poker has gone up in China.
And based upon what we're building, if anybody has any real strong ideas about the top end of the market, they're going to have to deal with the new hotel that we're going to build. And dealing with that may be a challenge. And we're lucky to have the size site that we have. We're very fortunate to be in that position. But the other guys will do something sooner or later.
When the government gives them the final Gazette publication is something that is information to which I am not privy. And speaking as someone who's involved in these kind of processes, the government does it when the government is ready to do it. And there are steps in that. They have land contracts, then they have deposits, then they have the Gazette. And there's a sequence that takes place historically at least in Macau.
And maybe you can ask the people at those hotels or those companies where they are in the sequence. I don't know the answer to the question. It took 7 months from a contract through deposit to Gazette publications. So there's a piece of information for you.
Thank you.
Does that mean it's 7 months for everybody? Not necessarily. That's up to the government. But just to give you a little indication of how that's worked in the past. And I think those kinds of time frames have been historically consistent from what I'm told.
But again, these are things that are strictly under the control of the government. And maybe those companies themselves have a clearer idea if they answer honestly and candidly. In many cases, the government prefers that applicants for land concessions not publicize or preempt the government's decision making process and publicity is restricted and statements are restricted until the government has made its decision. The decision occurs when the Gazette is published. Prior to the Gazette publication, you do not have a concession Macau.
Prior to the publication of a Gazette, you do not have the land concession under any
And then Matt just quickly I know that you guys aren't going to discuss how much the project costs right now which is understandable. But if we think about how you'll finance it, should we just assume a 25% to 35% equity piece? Or is it is that not in the ballpark?
It's probably we're always conservative. So it will be between 25% to 40% in equity and the rest will be financing that we'll start working on this year. We're only 2 times levered right now on a net basis. So we're in a great position to put in a good financing package down at Cotai to make sure we have a lot of flexibility.
Great. Thanks a lot.
Sure.
Your next question comes from the line of Bill Warner with Union Gaming.
Hi. Hey, guys. Steve. A question just back to Cotai for a second. When you obviously, the market has more and more strata as it develops customer wise, who aren't you serving now that you might be able to or who's not in the market now customer wise that you've designed the place
for? Well, we certainly radically increased our non casino revenue profile at Cotai, more like the model of Las Vegas where the non casino revenue really grows. Now I know it's very hard to create any kind of a casino where non casino revenue compares to casino revenue in the People's Republic of China in Macau. I mean our gaming revenue last year was $7,000,000,000 $4,800,000,000 It was interesting that with all the volatility that's associated with our American operation, the Gaming Board tells me that our $775,000,000 casino win at WynnEncore last year was the highest win ever recorded in the history of Nevada's licensed gaming operations. The previous record was $724,000,000 which incidentally happened to be win in 2007.
So imagine and then we do $800,000,000 or more in non casino revenue, so we get more non casino revenue than casino revenue.
Revenue than casino revenue. That's not going to happen in Macao
for anybody ever. What will happen however is that a percentage of our total entertainment, the shopping, the food and beverage and the room component. We are having 2,000 rooms that are for all intents and purposes all suites. So I think that we deal to everybody, but some of the promotional allowance is given by our competitors and the giveaways, the freebies attract the lower end of the market more aggressively than we do. And that's okay.
It's not our primary business. But as far as everything above the lowest end of the market, we're in there pitching every day. Got bus programs. We run dozens of buses from the casino promotions to all the junk. We have casino promotions.
We have the best group of junk operators. We're very aggressive provided that we're left with a bottom line that makes sense. So I think that we're pretty much going to be going forward the way we are now.
Okay. Thanks.
Your next question comes from the line of Mark Strong with Morgan Stanley.
Questions have been asked. Thanks.
Also I think I probably should add that there's a convention component that's going to be added to the Cotai to the Cotai property that we'll be able to accommodate a convention component that's much more sizable than anything we've anticipated in
the past.
Your next question comes from the line of Robin Farley with UBS.
Great. Thanks. I wonder if you could give us any updated thoughts on Japan and what you think the potential timing there could be in likelihood in Japan? And then also I know in your initial comments about the dispute with Hokkaido, you said there was no update to that process. I wonder if you could just like to settle?
Or is everybody kind of prepared for this to take the years that a full legal process would take? Or would both parties kind of like to see things settled? I wonder if you could just give us any thoughts on that?
Well, Robin, I don't have any idea. I thought I did, but I don't anymore have any idea what Mr. Okada's mental attitude is towards anything. So I've given up on that. We acted and we have completed our action.
We redeemed the shares. We issued the note and that stands. And in our very, very comfortable opinion, it will stand period. Now Mr. Okada has obviously filed a 100 page mostly foolish countersuit, very much like the foolishness of the gift to the university.
There's nothing we can do about frivolous lawsuits and except sit here and respond to them. And we will. We're totally prepared to do that. And we've also instituted our own lawsuit based upon the discoveries we made about Mr. Okada's behavior while he was on the Board of the Macau Hotel.
And as an officer of an American company Wynn Resorts. As an officer and a director of an American company and he was under a host of legal requirements and laws and statutes. And it will be his problem to deal with those. And we will prosecute our case for violation of fiduciary duty and conflict of interest until they're resolved. And whether Mr.
Okada wants to settle or not and how he would be able to do that is a very serious problem and question for him. And naturally as a company, we don't relish any lawsuits, especially those that were forced to file as plaintiffs. And we certainly don't like being defendants in any lawsuit, but sometimes corporate governance and Pro suit, but sometimes corporate governance and ProBe gave my Board of Directors absolutely no choice based upon the extensive evidence, the irrefutable evidence that was put before us and on which major law firms both in Nevada concerning gaming and suitability and corporate governance and the Foreign Corrupt Practices Act kinds of issues, we were given unequivocal legal advice as a board as an American board that was tantamount to telling us we had no choice. And so the actions taken were really not optional under any rational interpretation of corporate governance as described by the statutes that govern public companies today from Sarbanes Oxley to all the rest. To the Securities Act of 'thirty three as amended in 'thirty four, there was absent the Foreign Corrupt Practices Act.
My Board of Directors had no choice whatsoever, which is why the vote was so unanimous on an issue as inflammatory as doing a redemption. So we did what we had to do in spite of the fact that there would undoubtedly be a counter suit frivolous or otherwise and we did it and it's done. What happens next? Your guess is as good as mine. We will prosecute the case here in Nevada for breach of fiduciary duty and conflict of interest with great gusto, armed with a number of facts that irrefutable.
Mr. Okada will have to deal with that in due course. What his response to all of this is something I can't predict. Was there any more did I miss a part of
the question?
Just on Japan and potential legalization. I don't
have anything to tell you about Japan. The progress of potential legalization in that country has been staccato at best. And
Kim? No, there's really nothing new. And it's not moving along any more quickly than it has for a long time.
It isn't rushing forward. There isn't any major development that I can that we're aware of. Everybody sort of kept track of it, of course.
Okay. All right. Thank you.
Yes. Sure.
Your next question comes from the line of Cameron McKnight with Wells Fargo.
Thanks very much. Steve, a quick question on Cote. When you're sitting down with the contractors that you're talking to, are you aiming for a guaranteed maximum price contract? And are you talking to Absolutely. Okay.
And are you talking to some of the same folks that you used for the construction of Wynn and Encore? And others.
Leighton and others and fine firm like Ammon, which is a joint venture with a British company in Jardine Mathison, old trading company of Hong Kong with a big construction company that builds all over the place in Hong Kong and Macau. Actually Gammon built Venetian. So we're dealing with more than one builder. Great.
Thanks. And when you, Ian and Linda, are speaking to customers in China, what's the body language? What are you hearing and seeing from them?
Good question. Our customers seem to be sanguine. And but they're poker players. If they have felt any differently, I'm not sure they would share it with us. But they seem to be enjoying their disposable income with the same kind of enthusiasm that they have in the past, if that's the right way of expressing this.
Our retail numbers. Our retail numbers, dig this. We have 52,000 square feet of retail in that hotel. It's going to 60. It's in the process of going to 60, but we have 52,000 at year end.
We did over $1,000,000,000 in sales and our rents were in excess of 120,000,000 dollars in a 52,000 foot store group of stores. I mean such numbers are unheard of. The yield per foot is in excess of $20,000 a foot. We're at 40 at the we've got numbers around 40 at Louis Vuitton and Chanel. Each of our stores, I have been told, represents either the best store in the world that they have or the highest yield per foot in the world that they enjoy or the number one store in Asia that they have and it goes on and on that way.
It's extraordinary. In April, we opened up and doubled this. Louis Vuitton last year did $115,000,000 and 2,850 feet. They just doubled this. We gave them the Tiffany space of 2,000 feet because Tiffany moved across the hall.
And now Louis Vuitton for the last 30 odd days has got twice the store and you still can't get into place. We have to put stanchions in the hallway outside the doors to observe fire code occupancy levels within the space of the store. Now if you observe this in person, I don't know if you've been to Macau, it's quite something to see and even more puzzling to explain except this. And I offer this as an explanation about everything in China. If I can take a minute, I'm going to I have to give a little background to my comment.
But I'm welcoming this opportunity to share this with people who invest in my company and who cover gaming. People say that the Chinese people have a most genetic predisposition to gamble. And I want to say that that is not my opinion. My father, my grandfather came to America in the late 1890s along with all the other Europeans through Ellis Island impoverished seeking a better life, works for anything they could get and had children around 1915 1916 before World War I and they had nothing. And those children mostly Frank Sinatra was born in 1915 and Dean Martin both of my parents were born in 2016.
None of them graduated high school I think to speak of. And they never had a good day. They were too young for World War I. They went off to fight in World War II or work in defense industries, but they came of age in the Depression and that generation of Americans that are the parents of the baby boomers basically hadn't seen a good day in their life until after World War II in 1945. And they came home to bump into the greatest period of expansion in American history.
And they worked hard and they were entrepreneurial and they got a taste of the good life. And they were the first ones in all of their family trees to have anything like disposable income of any size. And what did they want? Cadillacs, diamond rings, mixed stoles. They wanted to go to Miami.
They wanted to see casinos. They wanted to see Frank Sinatra and Abbott and Costello and Dean Martin and Jerry Lewis. They wanted the good life because they had heard about it and dreamt about it and for the first time in life they could find and experience the good life. Casino gambling is colorful and dramatic and theatrical. It was part of the good life.
And that generation, my father, my ex wife's dad, they were all gamblers. They shot crap and baseball and football and were rather cavalier about their income for solid reason. They made it themselves. Money was whatever they thought it was because they created their own wealth or their own income. And if they wanted to dispose of it in a way that other people might think was a little free, it's too bad, because they can always go and make more.
At least that's the way they thought in their heads. Well, let's take and so that generation gambled. The 2nd generation of that family, guys like myself, the baby boomers had a slightly different we had the benefit of their our parents sending us to college. We were more sophisticated in manner of speaking and our tastes ran differently than our parents and maybe gambling wasn't a priority. Different things became important.
Think of China today. Nobody had any money before 35 or 40 years ago. It's all new money. What you're seeing is an explosion of pent up demand for the good life. And so you want a real Louis Vuitton bag, you want a real Kelly bag for Merr Maze or the Birca bag, you want a real Louis Vuitton or Chanel, You don't we've got a Rolex store that must be 500 or 600 square feet that's $80 odd 1,000 a day.
And yet across the border in Zhuhai, 10 minutes away, you can buy what looks like a Rolex for a $0.01 on a dollar. But they don't want any parts of the Linde, the fake, the copy. They want the real thing. And that's the only logical explanation for what we're seeing in retail sales. And it also spills over and explains why men who've made their way in
the world and made their own money
feel that they have a right to play baccarat, they damn well feel like it. Now 2nd generations have a different mentality and a different sensibility and that shows up in Hong Kong as well. The sons of some of these people don't gamble as much. But Hong Kong and China are making millionaires and new money at a rate that the world has never seen before. So I don't see this diminishing the supply of people that want to have the good life.
And that means that our job is to provide for them. End of presentation. Great. Thanks very much, Steve.
We have time for one more question.
Your final question comes from the line of John Oh with CLSA.
To evaluate incremental investments going forward? And maybe perhaps on Cotai, if you could share on how should we think about a return on investment as a benchmark or as a hurdle? Sheldon Adelson publicly declares that he does not evaluate anything unless it hits the 20% cash on cash ROIC. I wonder if you have any of that that you can share with us on what is appropriate for you? And also broadly on your appetite for incremental investments, how many simultaneous projects do you think are you able to example, do 2 at one time given your understanding of the size of your company and also your appetite for putting on debt onto your books?
Thanks.
That's a good question. We have an enormous amount of capacity. And in terms of I think you say, Shelly said he wants 20% cash on cash. Oh my God. We invested $1,500,000,000 in China.
We made $1,200,000,000 last year. Our cash on cash is 80% or something like that. So I think Sheldon has outlined a very intelligent made a very intelligent remark. I would subscribe to what he said. We wouldn't do it either unless it was 20% cash on cash.
But I think we can handle that number comfortably. Building 2 at once, If when Singapore came up, we had to withdraw because we were 8 months away from opening Las Vegas and about 18 months away from opening or 15 months away from opening Macau.
We had neither hotel.
We had $3,700,000,000 worth of startup and we had no cash flow. It was impossible for us to undertake an assignment in Singapore under those circumstances without being deemed to be reckless. And we are conservative, not reckless. However, that has all changed now. We have capacity.
We have organization. We have outposts in Asia and in America. And the kind of a balance sheet that let us do pretty much take advantage of any opportunity that made sense. Could we do 2 at once? Well, now we could because I've just finished 28 months of design development.
This project now goes into construction mode and the more and the wonderful challenges of staffing and other preparatory things of that sort. But in terms of designing another place, I'm ready. Dear Ryder Butler, who's sitting next to me and I could start right away. The wind design development team is very busy in executing what we're doing now in China. But the first step on another project would be the creation of the concept and we're ready to do that.
So we could handle to it. We could handle another project now and easily anywhere. You won't see us withdrawing from something that we believe in at this stage of our company. But in 2019 in 2,004,003, we were a much different company. To compare us for example to Sheldon Adelson Sands Corp.
His 8 or 9 year head start on us as a company. Remember, Wynn Resorts didn't exist before 2,002. Our current size and everything else about us is only 10 years old. The Singapore business, for example, came when we were almost prenatal. So it's changed now.
We're alive and well. We're jumping teenager. We got our best years in front of us, but it hasn't always been that way. So
Thank you everyone for joining today.
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