Wynn Resorts Believes Encore Has More Demand than Allowed

With Encore Boston Harbor closed for all of the second quarter this year, it was to be expected that the earnings report call on Tuesday afternoon would be grim, but CEO Matt Maddox did have one high-point about Encore – saying there was more demand in Boston than they were able to yet provide due to COVID-19 restrictions.

Encore closed down just before the end of the first quarter in March, and then remained closed through the second quarter – so there were literally no earnings and the resort lost $53.8 million during the quarter. That didn’t include the expenditures through the quarter to pay employees their regular wages and benefits, which amounted to $19.3 million over quarter. That amount was a commitment made by Maddox at the closure of the resort, and continued through mid-June.

That said, since opening on July 12 – which is in the third quarter – he said there is more demand than the state will allow them to provide due to tough COVID-19 restrictions.

“Total volumes are off and probably disproportionately in Massachusetts compared to some jurisdictions because of the very tough restrictions in place,” said Maddox. “As an example, Craps and Roulette are still not open…and the number of positions at the gaming tables are restricted. We are working with the Gaming Commission on that. I do think there is more demand and demand for future growth in the market and it is limited by our continued restrictions the market.”

Craig Billings, Wynn CFO, said he believes they can break even at Encore in the coming third quarter, especially given their reductions in costs and staffing.

“We can obviously break even in this environment,” he said. “As the volume comes back, we believe we’ll have a positive (earnings), especially with reducing costs. A good chunk of what we’ve done (with costs) is more permanent in nature and we won’t open up anything unless it’s revenue generating.”

The report indicated that since opening on July 12, slot handles are up compared to the 4th quarter in 2019, but table games are down significantly due to restrictions on games and gaming positions.

An interesting conversation revolved around groups and conventions returning to the Las Vegas – and in general the gaming market, including Encore. Prior to COVID-19, Encore had a surprisingly strong convention and group bookings, and when and if such business ever returns to Everett or Las Vegas. Maddox said it was very hard to predict that, and he said many convention bookings are waiting right now until at least spring 2021. That said, he indicated Wynn Resorts is putting a great deal of effort to be ready for Point of Contact testing.

He said the technology isn’t yet approved but would test people 10 at a time for COVID-19 and get results in five minutes.

“There are a couple of exciting technologies in the queue and we are in line to get that if (approved),” he said. “That could bring things back quicker for our groups. Maybe you’re not waiting until next year if you’re using that and assured that everyone in the space is COVID-free. They don’t have approval, but they’re moving fast and the costs for grouping are going down significantly. That’s the bridge we need to get to a place where we’re all together again before we get to a vaccine…”

Encore Boston Harbor will report its third quarter earnings some time in October. The property still does not have a full year of operations even after having been open for more than one year.

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