WYNN
#At the present time unemployment in Macau is almost 0.
The government wanted us to build highly diversified, non-gaming structures.
We went and did it for $10 billion or more, if you count all of us ---+ the largest being us at $4 billion.
How in the hell can you run those places without employees.
I mean, what are we supposed to do.
Shut down the floor.
Close a restaurant.
Curtail the very thing that they told us that they wanted to see happen ---+ without employees! It so ludicrous that it defies rational conversation.
Some of these places are going to close locally, creating unemployment.
We can absorb them, I think, in the industry.
But still, the extent of the new operations are so comprehensive that in order to operate them appropriately, you still need more people to work.
And the spectacle of these buildings being unattended is beyond ---+ beyond imagination and will have dire consequences in the community on a couple of levels.
The first level will be that it will negatively impact the job security of the local Macau citizens and undoubtedly result in rather severe complaining.
What form that will take, I'm not sure.
The second thing is that the hospitality profile of the city will be severely compromised, and that will take years to recover ---+ years.
You only get one chance to make a good impression.
And if you bogey that impression, if you blow it, it's a long time to fix it ---+ and maybe never.
What is important is that the Macau market, as it's viewed by the world, never loses its viability.
Because the day that it loses its viability, it will lose its long-term longevity.
And the entire thing gets really damaged severely.
That will impact the community of Macau in a very negative way, and that's one of the things that concerns me a lot, because employee attitudes ---+ you know, everybody in the world, including all of us on this call today ---+ it has been established that our present state of mind, our happiness, our sense of security is fundamentally a function of how we view tomorrow or the future.
You tell someone that's feeling poorly, suffering from an ailment or some discomfort, that they are going to be better in three days, and they feel better today.
You tell someone who is feeling great today that they are going to be awfully sick next week, and they get depressed today.
So the attitude of the employees ---+ their since of security, safety ---+ their notion of a positive future for themselves and their families is a critical management responsibility.
Now, to a certain extent we control that within the walls of our buildings.
But every once in a while, depending on public policy, we lose control of that because of factors that are outside of our control.
And my feeling is that Macau at the moment is on the edge of that moment, which should be avoided at all costs.
Well, that's a good question.
And from what we understand, reading the South China Morning Post and other sources of information available to us, President Xi discovered that the people of China felt the government officials were corrupt and feathering their own nest.
And he thought that that was very malignant for the health of his party and the future of his country and made a decision to correct that and have a campaign against corruption.
And considering the amount of people ---+ if you believe the newspapers ---+ that have been charged with misconduct of one degree or another, President Xi did the right thing for the right reasons.
And because of the way mainland China works, every businessman in that country dealt in one way or another with a government official, because the government controls so many aspects of public policy and business interface.
So businessmen who had nothing to hide, as well as those who might've had something to hide, all went into the foxholes or into a defensive posture, because they didn't know if the next shoe was going to drop or what the next thing was going to happen.
And it has caused, across the board, a contraction of all of VIP consumer spending at the higher level, which includes Macau.
And that explains the problem that the junket operators are having, plus the restriction on the credit cards and things like that.
So in one respect the junket operators faced a problem that was part of an intelligent central government policy.
No argument about that.
Corruption is a bad thing, and President Xi did the right thing, just as I would in my Company if I thought there was corruption to that extent.
Fernando Choi, the head of the government of Macau, or President Xi Jinping, or a President of a public company ---+ or a private company, for that matter.
It is bad business to have corruption.
And it should be stopped, because it's unhealthy and goes to the root of the viability of any organization or institution.
So there's something that in our meetings we acknowledged, and we accept as inconvenient, perhaps, in terms of junket operators, but not necessarily a bad thing.
So we adjust to it.
And that was the way we dealt with that in our conversations.
Alternatively, the reason those conversations took 15 or 16 hours is we're juggling the reassessment of our facilities and adjustments to our facilities to cater to the new reality that we face, which, incidentally, is much more like Las Vegas than what Macau was in the past.
And that's fine with me.
I have no argument with it.
But in the process of adjusting, how do we run our facility under the new reality.
And we can do that, but we need tables in the casino to support the restaurants, and the convention and meeting space, and the entertainment.
Of the $4 billion, the casino represents perhaps $400 million of it.
The other $3.6 billion went into other things that weren't part of the old way of looking at things.
So on one hand we understand what went on with the campaign against corruption, and we have no issue with that or the thinking that went into it.
What we have an issue with is the leadership that we need to have in the government to help us make the transition to the new reality.
Yes.
Well, we weren't in the UnionPay card business to the extent of other people.
So it didn't mean that much to us.
And, <UNK>, you should just look at the mass revenues and see how they are doing.
I think that enforcing the rules around UnionPay are overplayed in the media.
Way overplayed.
<UNK>, do you want to deal with that.
Well, we're continuing to see year-over-year where you have a reduction in that high-end play on the international side.
Again, it's like <UNK> said ---+ we're adjusting to it here to make sure that we ---+ we look at all other areas to make sure that we are recovering whatever that loss might be.
We really don't understand what that bottom might be.
We certainly have still a good flow of international business, but it wasn't like 2014 or 2013.
And we're mainly talking on the gaming side.
It's not just Asia.
Latin America, with everything that's going on there in Brazil and in other places ---+ clearly, that's down as well.
So our high-end business was down by about half from a revenue side compared to this time last year.
I'll take the first one.
It's <UNK>.
So, you know, as you see that table mass was up, but that EBITDA increase was offset by ---+ you are exactly right ---+ direct VIP was down, and our slots were down.
So those two offset the increase in table mass.
He asked about holds.
The hold percentage was fairly ---+ was normal in direct VIP.
It was the volumes.
And about <UNK> Diamond.
He wondered about the investment.
The government told us that we could continue to develop our land concessions so long as it was Phase II, which it has always been.
And we have designed a remarkable Phase II.
But until we understand about <UNK> Palace, it's ---+ our ability to look into the future and plan financially is, again, compromised at the moment.
My long-term confidence in Macau is still strong.
I love the position we're in in terms of being part of that community.
The issue here has to do with short-term adjustments, not long-term confidence.
At the end of the day I'm in the same position as the head of the Macau government and, for that matter, President Xi Jinping.
My job is to create a stable environment in terms of Human Resources, job security, and a better future for people.
Isn't that, after all, what governments are doing or hopefully doing.
And I say at the 11th hour, the government does the right thing and supports the health of its citizens, as businessmen will support the health of their employees.
Because the ultimate truth is that the only thing that matters is the happiness of the people ---+ whether they are employees or citizens of a community.
And they are the ones that touch the public, because only people make people happy.
Only people make happy communities.
Only people make successful companies.
And the job of leaders are to do everything and anything in their power to create a happy and positive outlook to the future for their constituencies.
And I strongly believe that when the dust settles, leaders of companies and governments do the right thing.
That's the basis for my long-term confidence in the market and my long-term confidence in the leadership of the government.
We all come to the same conclusion when we've had enough time to see.
Hopefully, we come to the right conclusion before we avoid (sic) catastrophic, unpleasant, or disruptive alternatives.
We anticipate certain results and don't let them occur.
So whether you are a CEO of a company or you are the head of a government, you have to have a little bit of an ability to look around the corner and see what's coming ahead of you.
And if that's not good, turn away from it.
Amend your policies.
Learn from experience and come to a more sound conclusion.
That's what I hope for businessmen, and I hope for ourselves and, for that matter, for the government.
There's no mystery as to who those customers are.
They are people from Taiwan, Hong Kong, mainland China, who want to live life in an exciting way for a day, or two, or three on vacation.
They want to be served well, stay in lovely hotels, eat in good restaurants, enjoy entertainment and attractions that they can't get at home.
And ---+ while they are there ---+ play in a casino, which is exciting, and have fun.
Their experience is under the control of the staff that serves them as well as the environment in which this all takes place.
That's the story in Las Vegas.
That's the story in Boston.
That's the story in Macau.
It's the story in Manila.
It's the story in Biloxi, Mississippi.
Nothing changes, nor will it ever be different than that.
Those are the truths of the hospitality industry in any of its variations or iterations, including Macau or any other city on earth.
We build buildings.
I'm sorry, go ahead.
It's already competitive.
It has been competitive for quite some time.
Look at Las Vegas, with the dozens of hotels, the thousands of tables, the tens of thousands ---+ 150,000 rooms.
Millions upon millions feet of convention and meeting space, theaters, cabarets, public entertainment, volcanoes that erupt, fountains that dance, pirate ships that sink, trees that come out of the floor, gondolas that go across dancing fountains for $100 million.
All of this is a fight for the audience that's here.
Discounts given at the tables, complementaries.
It's so intensely competitive in Macau ---+ and has been for a long time ---+ that it will continue in the same fashion that it is enjoying now.
There will still be a stratification of the public.
People who can afford choice and who demand higher levels of service; better food; larger, more sumptuous rooms; better meeting facilities; more fascinating entertainment attractions ---+ they will migrate to places that provide that.
Other places that deal to the economy end of the market, such as Circus Circus in Las Vegas or other places in Macau ---+ they have their own level of competition.
But you know there's Kmart, and there's Louis Vuitton.
There's Macy's, and there's Neiman Marcus.
They compete.
Neiman Marcus competes with other companies of a similar nature.
We do as well.
Louis Vuitton competes with Chanel, and Christian Dior, and Prada; and we're at that level.
We're the five-star operator.
We offer choices for people that want the best.
And when we do that, we to a certain extent give up another part of the market to other people.
So it's good that a place like Macau or Las Vegas has choice for people.
What's wonderful about Macau and Las Vegas is that if you come to that city, you can go from <UNK> to Circus.
You can go to a lower-end casino to <UNK> in Macau, and you can dial up whatever it is that suits you at the moment.
And that's the secret to making a great destination city ---+ is choice.
The bigger the menu, the more powerful the destination resort.
But I assure you that at every level there is competition.
Am I being helpful to you.
And do layoffs.
---+ and they laid off, and they lowered their expenses, and they laid off thousands and thousands of people.
Not here.
Because in the business that I'm in, I cannot juggle my service levels.
I cannot bounce my staff around because the market gets soft.
No, no ---+ we have to have a capital structure that allows us to maintain our service levels, to protect the job security of our employees.
And hopefully at the end of the downturn, we end up with a bigger market share, which is exactly what happened to us.
But in order to do that, you have to have a strong capital structure.
When the government interferes with the viability enterprise, they take that ability for us to protect our employees away from us! A dangerous thing to do from any perspective.
<UNK>, <UNK> <UNK>, <UNK> <UNK>, Mr.
<UNK>, Mr.
<UNK>, would you like to add anything.
No, you said it all, <UNK>.
Okay.
Well, I don't know that this has been the most satisfying quarterly phone call we've ever had, but at least it's the most candid and the most honest one that we could possibly give everybody that is interested in our Company.
And hopefully it sheds light ---+ it sheds real intelligence and insight on the inevitability of anything that interferes with the long-term health of Macau ---+ or Las Vegas, for that matter.
And I've done my best to shine the light on that subject.
I thank you all for your attention.
And we'll see what happens 90 days from now.
Bye-bye.
