Wynn's Macao Business Continues to See Improving Demand, While Vegas Is Hindered by Economic Peril

Although policy uncertainty presents a near-term headwind to demand for US Wynn's resorts, the company's focus on a premium offering continues to resonate with consumers. In Macao, demand continues to gradually recover, with Wynn's high-end iconic brand positioned to participate, leading to a midteens percentage gross gaming revenue share in 2025. Long term, we see solid visitation and gaming growth for Macao, aided over the next several years as key infrastructure projects to alleviate the region's congested traffic (Pac On Terminal and Hong Kong Bridge opened in 2018, the light-rail transit in 2019, reclaimed land, and development of Hengqin island) continue to come online, which should expand constrained carrying capacity, thereby driving higher visitation and spending levels. Our forecast for annual mid-single-digit visitation growth over the next decade is supported by China outbound travel that we expect will average high-single-digit annual growth over the next 10 years. The Chinese government has renewed Wynn's Macao gaming license (the source of the company's regulatory intangible advantage) for 10 years, which along with plans to develop further stands to benefit the company with regard to the region's growth opportunity. Still, the Macao market is highly regulated, and as a result, the pace and timing of growth are at the discretion of the government. We expect upcoming developments that add attractions and improve Macao's accessibility will improve the destination's brand, supporting our constructive long-term view on Macao.