Encore Boston Harbor Still Predicts Two-Year Ramp Up

Results from the fourth quarter of 2019 showed mixed success for Encore Boston Harbor, with the casino floor booming, hotel occupancy up a bit, but food and beverage revenues still struggling.

The fourth quarter of 2019 was very good for the Encore Boston Harbor casino floor, as it once again outperformed Wynn’s two Las Vegas casino floors (Wynn Las Vegas and Encore Las Vegas), but company executives said they are still struggling to acclimate the property to what customers want in terms of food and beverage.

The information came during an investor call on Thursday afternoon, Feb. 6, which – however – was dominated by news of the company’s adversity at their Chinese properties in Macau that were shut down by the government on Feb. 5.

During the call, though, CEO Matt Maddox said that while the table games are strong, and the slots are improving, they are still trying to figure out the appropriate food and beverage program.

He said it mimics an issue they encountered when they opened Wynn Palace in China a few years back.

“When we laid out the program at opening day, we talked about a two-year ramp period,” he said. “Admittedly it has launched softer than we though, particularly on the slots side. So, we’re doing a lot of work. What we realized is we didn’t have quite the food and beverage program – particularly around quick-serve – for a day-time slot customer. It’s actually the same thing we went through at Wynn Palace. When we opened, we realized we needed more quick-serve restaurants at Wynn Palace and we immediately closed one-third of the casino and built Red 8 (Restaurant) and five new restaurants in the meantime. So, we’re going through that process in a very fast way at Encore Boston Harbor because when we see a problem, we fix it. I think we’re still in that two-year ramp-up mode.”

Encore Spokesman Eric Kraus said they have already begun to experiment with that using the food truck that is parked on the gaming floor.

“If you want a street taco, you can get it at the food truck and not have to leave the gaming floor,” he said. “There will be more to come like that soon.”

What was particularly good news was that Encore Boston Harbor outdid the Vegas operations for the second quarter in a row.

While both gaming floors in Vegas had a combined $75.66 million in revenues for the quarter, Encore Boston Harbor checked in at $115.96 million in the quarter. That was up $114.9 million from the previous quarter in Boston.

That said, Boston’s strength on the casino floor appears to be the strong showing in table games, as the slot business lags behind the Vegas operations. In Vegas, on 1,773 slot machines, there was a $942.9 million handle during the quarter. With 2,933 slots in Boston, the handle lagged at $856.4 million in the quarter – though monthly revenue figures from the Massachusetts Gaming Commission (MGC) have shown a slow growth in the slot revenues.

Where Vegas trumps Boston in total was in dining and hotel operations.

Interestingly, the Boston hotel averaged a 76 percent occupancy in the fourth quarter, which was up from 69 percent in the third quarter. That was bookended however by a major drop in the average daily rate of rooms in Boston, which sunk to $352. In the third quarter, the average rate was $465, and the predictions at opening were the rates would average $535 per night.

In Las Vegas, the occupancy rate was at 89 percent, and the average daily rate was $322 per night.

Meanwhile, food and beverage in Las Vegas dwarfed that of Boston, coming in at $120.26 million during the quarter. The Boston property continued to struggle in that area with just $28.24 million for food and beverage revenues in the quarter. That was actually down from the previous quarter, when they logged $29 million.

“In 2020 we’re continuing to match our food and beverage concepts with our customers,” said Maddox. “So destination dining for our overnight visitors as we’re ramping our hotel there and providing more quick-serve options for daily visitors. We feel good about the progress we’re making at Encore Boston Harbor as we continue to ramp that property throughout 2020.

“Our table games business remains healthy,” he continued. “They continue to grow and remain quite strong, actually. All of the programs we’re putting in place for our slot win. We launched the Wynn Rewards program, which is the first for us in North America. It’s a tiered-card program. We’re excited to see those things work.”

•The big news for Wynn Resorts, which likely affects the big picture of the company to include the Everett property, was the closure of their Macau operations due to the corona virus.

Maddox said they have been working with the government of Macau and China to keep employees and customers safe, which included closing down the casino indefinitely

“We are currently focused almost entirely on the health and safety of our employees, our customers and the Macau community at large,” said Maddox. “I’d like to commend the government of Macau and of China, actually, for the quick and decisive action they take and continue to take to contain the corona virus…

In fact, Feb. 5 at midnight we worked closely with government of Macau and the other operators in Macau to cease our casino operations…It was a controlled and organized closure of the casino.”

While a few restaurants remain open in their two properties for guests still there, most of the place is a ghost town. Maddox shared they have a “burn rate” of between $2.4 million to $2.6 million for every day the casinos remain closed.

There has been no clue given as to when they can re-open and that is taken day-by-day. However, Maddox said they will continue to invest in the properties and the community despite the circumstances.

“Now is the time to invest in the community,” he said.

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