Wynn's Encore Casino Struggling to Fill Rooms During Launch

By: TraderMark Tuesday, December 23, 2008 12:41 PM

Symbols: CROX, DNA, MGM, WYNN

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(not to worry, "in 6 months" everything will be fine again - Ben B will make it so; Obama too)

(re: Encore) "We'll be in the high 80s, low 90s (occupancy percentage) right away," Wynn said. To accomplish that, the company is offering rooms at $199 a night.

"I've always opened up hotels in boom periods. It is a fascinating moment to open a hotel in a market that's extremely tough," he said. Reasonable rates for luxury accommodations at Wynn and Encore will put downward pressure on prices for hotel rooms all along the Strip, the CEO said.

"This is the first time I've said 'fill all 4,700 rooms'... I will trade profit on the hotel business for job protection." Wynn repeated that he has never laid off employees and will do everything he can to make sure that guest satisfaction remains the company's No. 1 priority.

"We can overcome low room rates when the market goes up, but it can take years to rebuild employee morale," he said during the interview, held in the Encore's Frank Sinatra-themed Italian restaurant. "The DNA of this place is in the details ... In the hospitality industry there is nothing left except to do but the basics better."

He also bragged about the 3 percent interest rate on the project, which was secured before the current credit crisis dried up funding. "Imagine that -- we raised the money before we started the project ... the alternative is ridiculous," he said. (no Steve, it is business as usual in America since there is never a rainy day in a world where Alan Greenspan does not allow us to have real recessions - we're conditioned now; the nanny state will stop the business cycle)

Competitors like MGM Mirage and Las Vegas Sands have been caught short by the lack of construction financing, leaving them to raise cash through expensive debt offerings, asset sales like MGM's sale this week of the Treasure Island resort, or even cash infusions from majority owners like Sands' CEO Sheldon Adelson's recent $520 million investment in that company.

The CEO also said that paying down debt "will be all I'll be doing for the next couple of years -- that's our corporate strategy."

A few CEOs remain who do not consider humans a simple commodity. Even in the service industry - imagine that.

One word about hedge fund thesis; one of the sexy themes of the summer 2008 when oil first began to break down (July/August) was "lower oil prices = consumer spending galore" i.e.


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