Steve Wynn continues to Win
Wynn Resorts combine superior design and customer service to drive the industry!
The alignment of Wynn Resorts’ business and operating models is evident through superior financial results and global brand recognition. Wynn’s EBITDA margins and valuation multiples are industry leading, highlighting the quality of the brand and tremendous growth o
pportunities. Wynn Resorts stands apart from competitors by focusing on important details across its operating platform. All casino design and operating features are eventually signed off by the “King of Las Vegas” himself, Steve Wynn. Steve is considered a visionary for creating resort masterpieces in the era of simple gambling houses in Las Vegas. Wynn has a passion to “wow” guests by designing resorts that offer amazing amenities, fine dining, premium retail offerings, and incredible entertainment. With a track record for creating historical properties such as the Golden Nugget, the Mirage, Treasure Island and the Bellagio, Steve continues to develop new and extravagant resorts aimed to please. The Wynn and Encore resorts in Las Vegas and Macau have 5,750 guest rooms and suites and 470,000 square feet of casino space including 730 table games and 2,474 slot machines. The Las Vegas and Macau casinos offer 156,000 square feet of high end retail space including brands such as Bvlgari, Cartier, Chanel, Dior, Ferrari, Gucci and Prada among others. Furthermore, entertainment has always been Steve’s focal point. In an effort to take his customers’ breaths away, Wynn utilizes elaborate fountain shows, Cirque Du Soleil, multiple nightclubs and live concerts without sparing expense.
Wynn’s business model generates revenues from casino, lodging, food and beverage, entertainment and retail operations in Las Vegas and Macau. There are new casino l
ocations opening in Cotai, Macau and Everett, Massachusetts in 2016. Fundamental to the Wynn Resorts operating model is the design and layout of the Resort. Wynn’s newest res
ort, Encore at the Wynn Macau is built around the Pool Garden, a massive pool with beautiful landscaping that brings customers at one with nature. The expansive view of the Pool Garden provides an immediate sense of elegance upon entering the resort. The high end retail partners, tranquil spas and fine dining restaurants with cuisines from around the globe, drive the atmosphere of luxury and relaxation. In addition to superior design, Wynn’s customer service policy cements the ties between the business and operating models. Steve Wynn attributes his success to developing his employees while appreciating their diversity. “Every one of the Wynn’s employees’ names should be on the Wynn Hotel”, he said, and “while their diversity represents a challenge, it also is our strength. We seek a higher ground that allows people to be different while asking that they be at their best.”
Wynn and hi
s team have instituted regular practices that emphasize a customer-centric culture and consistent action. “The people who work at the Wynn achieve notable accomplishments that few are able to attain,” he said, “and they do it with consistency. They achieve this because they apply common sense and consideration of the guest as a person, and this is the most fundamental affirmation a customer can receive. In our business, our line supervisors hold meetings throughout the hotel-casino before every shift, three times a day, seven days a week. These line supervisors are the core of the company. They carry the culture of the institution and know what’s going on in their area and how well their people are doing.”
The operating and business models support each other by providing customers with a unique experience. After enjoying the resort, customers are more inclined to visit repeatedly or recommend Wynn Resorts to their family, friends and coworkers. In such a completive industry, gaming companies must innovate the customer experience to drive occupancy at their resorts and casinos. Steve Wynn’s unique design characteristics are a competitive advantage and therefore, he is able to command better margins and reinvest in his properties. Despite a lagging Chinese economy and increased regulation in Macau, Wynn Resorts continues to “wow” its customers and drive the gaming industry.
Sources:
Wynn Resorts Form 10-K
Capital IQ
http://www.milkeninstitute.org/events/conferences/global-conference/2008/panel-detail/1529
http://barbarakhozam.com/wynn-customers-extraordinary-service-culture/
All makes, sense on how they align the business and operating model (huge fan of the Encore!). How specifically do you think they try to differentiate themselves from the competition? My sense is most have the same types of shops and focus on customer service. Did you think about design at all? E.g., they were a pioneer in having windows on the casino floor, ability to get to room without walking through gaming floor, etc.
With a business model predicated on delivering on the “wow” factor of a guest’s overall experience, it seems that Wynn is not only constant pressure to build new properties, but to constantly update its existing ones. The world of gambling is always evolving, as each hotel/casino aims to out-do the innovations of its competitors. The lifespan of a new design or service is short-lived and susceptible to repetition by competitors. That being said, I wonder how Wynn updates its existing hotels (either its design or customer experience) to an extent that is sufficient to stay cutting-edge while simultaneuosly providing the consumer with a predictable and consistent experience. Keeping up in this industry requires Wynn to be flexible both with how its employees adapt to changes and how it is able to modernize its facilities without sacrificing the quality of a given customer’s experience. Elaborate light displays, fountain shows, and entertainment seem to be the minimum requirements to entry in this business, and its operating model’s ability to keep pace with change is the real differentiator.
Wynn is doing an excellent job at delighting guests through design, customer service, and giving guests a number of entertainment and F&B options. However, I feel that the company puts itself at a huge risk given the level of investment in real estate. Furthermore, it might make it difficult to scale in the future given the huge investment that is required for each hotel.
Wynn might benefit by moving to an Operator model, similar to more typical hotel companies such as Marriott, Starwood or Hyatt. They can partner with investors who are interested in developing a hotel/casino. Wynn can provide design support early on, and then manage the casinos after opening. This will allow Wynn to focus on what they do best, gives them the chance to increase its portfolio, and reduces the risk related to the cyclical nature of gaming.
Great Post and very interesting company to follow over the next couple of years.
From the post I completely understand and agree where the value for all stakeholders is coming from yet I am very concerned about the sustainability of this business model and the hefty margins it enjoys today going forward as the business continues to grow and other properties are developed. I am concerned basically because Wynn Resorts was founded in 2002 and has only developed 4 properties to date which makes me question two things (i) we have not seen the properties perform and remain attractive to guests for more than 15 years in some cases less (ii) if this business model can be replicated to scale given how capital intensive it is to participate in the whole development cycle (purchase real estate, build hotel, operate). I just hope Steve Wynn can deliver on the growth promise he has for the company in a similar way he delivered in the past with Mirage Resorts now MGM resorts.