Wynn Resorts 5q68o
This document was ed by and they confirmed that they have the permission to share it. If you are author or own the copyright of this book, please report to us by using this report form. Report r6l17
Overview 4q3b3c
& View Wynn Resorts as PDF for free.
More details 26j3b
- Words: 5,258
- Pages: 54
Wynn Resorts, Limited Three Year Strategic Plan for 20092011 Kristin Cook Curtis Jacobs Ryan Melton Hope Wofford
Francis Marion University Florence, South Carolina
Presentation Outline I. II.
III.
IV.
Introduction Mission/Vision Internal Assessment a. Financial Ratios b. Organizational Chart c. Market Positioning Map d. Marketing Strategy e. Value of the Firm f. Strengths/Weaknesses g. IFE External Assessment a. Competitor Analysis b. M c. Opportunities/Threats d. EFE
Strategy Formulation a. SWOT b. SPACE c. BCG d. IE e. GSM f. QSPM g. Recommendations VI. Strategy Implementation a. EPS/EBIT Analysis b. Pro-forma Statements and Ratios VII. Conclusion V.
Company Overview •Formed
in 2002 by leading developer Stephen Wynn •Currently has 3 casino resort destinations
•Wynn Las Vegas: Opened April 28, 2005 •2,716 Rooms •111,00 square foot casino •18-hole golf course on the Las Vegas “Strip”
•Wynn Macau: Opened September 6, 2006 •600 Rooms •205,000 square foot casino
•Encore at Wynn Las Vegas •2,034 Suites •72,000 square foot casino
Vision Statement Wynn Resorts, Limited strives to be the leading provider and choice of elite, luxurious casino and resort experiences worldwide.
Mission Statement Wynn Resorts, Limited targets high net worth individuals by providing a variety of socioeconomic activities in the casino and resort industry. 1,2 With our resorts in Las Vegas and Macau (People’s Republic of China), we aim to reach a global customer base. 3 We continually strive to provide and research new and innovative gaming and lodging amenities to our customers. 4 Wynn Resorts, Ltd. continuously seeks new ventures and opportunities for expansion in order to advance the Wynn brand and maximize shareholder wealth.5,6 We continue to provide the highest quality and unique gaming resort experience to our customers. 7 Investment in the social and environmental well being of communities in which we operate, such as Las Vegas and Macau, is a top priority. 8 Wynn encourages employee growth, training, and development in order to provide the most luxurious and hospitable environment possible for our customers. 9
Mission Statement of MGM The resorts and casinos of MGM MIRAGE are some of the most famous in the world, widely credited for establishing a new generation of excitement in Las Vegas! Our 24 destinations are renowned for their winning combination of quality entertainment, luxurious facilities and exceptional customer service. Our dedicated staff of over 70,000 employees are committed to providing an unsured experience for every one of our guests. We are actively expanding our presence globally, with potential developments in a number of domestic and international markets. At MGM MIRAGE, we are all striving together to deliver our enticing blend of entertainment to every corner of the world.
MGM Mission Statement Analysis -Mission statement includes the majority of the 9 core components of a good mission statement
-Does not mention a concern for public image -This statement gives a platform upon which MGM is able to make strategic decisions.
Financial Ratio Analysis Ratio P/E (TTM) Quick Ratio (MRQ) Current Ratio (MRQ) LT Debt/Equity (MRQ) Total Debt/Equity (MRQ) Net Profit Margin (TTM) Return on Assets (TTM) Return on Investments (TTM) Return on Equity (TTM) Total Asset Turnover (TTM)
Wynn Industry Sector 7.89 0.64 28.81 2.03 4.60 1.14 2.13 4.90 1.49 350.76 8.76 37.25 350.98 9.32 76.63 14.11 0.56 1.20 7.04 1.04 1.16 8.02 1.60 1.69 26.32 2.05 3.72 0.50 0.08 0.48
Current Organizational Chart CEO & Chairman of the Board
CAO & Executive VP
Senior VP & General Counsel & Secretary
COO Las Vegas
President Wynn Las Vegas
CFO & Treasurer
COO
President Wynn International Marketing, Ltd.
Senior VP & CFO Las Vegas
President Wynn Macau
CFO Macau
Problems with Current Organizational Chart -Dual titles of top executives, such as Chairman and CEO -Does not include some of the necessary functional business units, such as research and development -Executive titles are confusing and do not effectively describe the functional area of business of the position -Hard to distinguish a proper chain of command for the different geographic locations
Proposed Organizational Chart CEO
CIO
CMO
CFO
COO
HRM
VP Lodging LV
VP Food LV
R&D
President of Macau Operations
President of US Operations
VP Casinos LV
CLO
VP Entertainment LV
VP Casinos Macau
VP Lodging Macau
VP Food Macau
VP Entertainment Macau
Organizational Chart Titles -CEO- Chief Executive Officer
-COO- Chief Operating Officer -CIO- Chief Information Officer -CFO- Chief Financial Officer -CMO- Chief Marketing Officer -HRM- Human Resource Manager
-CLO- Chief Legal Officer -R&D- Research and Development
Organizational Chart Improvements -Divisional Structure by geographic region
-Eliminates dual titles -Clearly outlines the necessary functional business units -Executive titles more clearly defined and Presidents report only to the COO -Clearly defines reporting relationships -Gives Wynn Resorts a defined unity of command -Allows each geographic unit to adapt to regional trends independently of the other(s)
Succession Plan Create a formal succession plan because currently we do not have a clearly defined or published plan of action in the event of a separation of Stephen Wynn from the company. We suggest the COO, or another top executive, should move up to the position of CEO. Then divisional presidents would move up to replace those individuals. The top executives in the company should have a retreat once a quarter over the next three years for leadership training.
Market Positioning Map Wynn Las Vegas Sands
MGM Mirage
Market Positioning Map Wynn
Las Vegas Sands
MGM Mirage
Current Marketing -Reward system that offers discounted and complimentary meals, lodging, and entertainment -Use integrated database to target specific customers for promotions -Marketing executives located in Tokyo, Hong Kong, Macau, Singapore, Taiwan, Vancouver, and southern California -Types of ment: -Television -Radio -Magazines -Internet -Direct mail -Billboards -Differentiated product from competitors by offering higher standards of luxury -Current Target Market- gaming customers internationally
New Marketing Strategies -Discontinue advertising expenditures on direct mailings and radio -Develop a resort “stimulus package” by offering $1000 gaming vouchers to our customers that live within driving distance of Wynn Las Vegas
-Increase online advertising on gaming websites such as PokerStars.net -Increase marketing in India by 1.5% over the course of the next 3 years. India has the fastest growing number of high net worth individuals (those in our target market).
New Marketing Slogan
Luxury. Style. Elegance. The Wynn Experience.
Map of Operations
Las Vegas Macau
Map of Competitor Operations
Michigan PA Illinois
Las Vegas Mississippi
Louisiana
Macau
Singapore
Website: Wynn Las Vegas
Website Analysis Eye appealing A lot of Photographs Easy to find headings Click-able Links
Can only reserve 3 rooms at a time or up to 8 people Scrolling photo bar not friendly Website requires fast connection speeds to perform optimally
Website: MGM Mirage
Website Analysis Wynn Las Vegas
Can be put in full screen for easier viewing Easier to navigate to other Wynn property sites More pictures of resorts
vs.
MGM’s The Bellagio
Can easily select another language Have show ticket prices listed on website were it is easy to find Includes air/hotel packages on the main page
Company Worth Analysis
Company Worth Analysis (Year-End 2008) Stockholders Equity
$
1,948,159,000
Net Income x 5
$
1,051,030,000
(Share Price/EPS) x Net Income
$
4,579,023,485
Number of Shares Outstanding x Share Price
$
4,581,322,080
5 Method Average
$
3,039,883,641
Strengths •Occupancy rates at Wynn Las Vegas at 96% in 2007 •Occupancy rates at Wynn Macau at 88.8% in 2007 •Net income rose 92% in the first 3 quarters of 2008 •The senior executive teams has on average approximately 25 years of experience. •Wynn Resorts, Limited has over $1 billion in its cash •Wynn Resorts, Limited owns one of only six gaming concessions in Macau •The only resort to receive the Mobil 5 Star Award •Wynn Macau and Wynn Las Vegas table winnings per unit per day are 118% and 27% greater than the market average, respectively •Wynn Macau and Wynn Las Vegas slot winnings per unit per day are 132% and 45% greater than the market average, respectively •Wynn Resorts had 17% of the Market Share in Macau in the 3rd quarter of 2008 (8% greater than the fair share)
Weaknesses •Has outstanding debts of $3.5 billion •Only have 3 locations providing cash flow •Stephen Wynn has the power to select the board of directors •Wynn Resorts relies heavily on the long-term tenure of Stephen Wynn as CEO for company survival •42% of currently outstanding stock is owned by 2 owners: Mr. Wynn and Azure USA •The company has no published vision or mission statement •Wynn Resorts, Limited has no resorts in Atlantic City, one of the highest revenue gaming areas in the world •Shares of Wynn Resorts have fallen 66% since February 2008 •The company has a Beta of 2.36 •Occupancy rates dropped 4.2% in 2008 from 2007
Internal Factor Evaluation Matrix Strengths
Weight Rating Raw Score
Occupancy rates at Wynn Las Vegas at 96% in 2007
0.05
4
0.2
Occupancy rates at Wynn Macau at 88.8% in 2007
0.05
3
0.15
Net income rose 92% in the first 3 quarters of 2008
0.06
4
0.24
The senior executive teams has on average approximately 25 years of experience.
0.07
4
0.28
Wynn Resorts, Limited has over $1 billion in its cash
0.05
4
0.2
Wynn Resorts, Limited owns one of only six gaming concessions in Macau
0.08
4
0.32
The only resort to receive the Mobil 5 Star Award
0.04
3
0.12
Wynn Macau and Wynn Las Vegas table winings per unit per day are 118% and 27% greater than the market average, respectively 0.05
4
0.2
4
0.2
3
0.21
Wynn Macau and Wynn Las Vegas slot winnings per unit per day are 132% and 45% greater than the market average, respectively 0.05 Wynn Resorts had 17% of the Market Share in Macau in the 3rd quarter of 2008 (8% greater than the fair share) 0.07
Internal Factor Evaluation Matrix (cont) Weaknesses
Weight Rating Raw Score
Has outstanding debts of $3.5 billion
0.04
2
0.08
Only have 3 locations providing cash flow
0.05
1
0.05
Stephen Wynn has the power to select the board of directors Wynn Resorts relies heavily on the long-term tenure of Stephen Wynn as CEO for company survival
0.04
2
0.08
0.06
1
0.06
42% of currently oustanding stock is owned by 2 owners: Mr. Wynn and Azure USA 0.03
2
0.06
The company has no published vision or mission statement
0.05
1
0.05
Wynn Resorts, Limited has no resorts in Atlantic City, one of the highest revenue gaming areas in the world
0.04
2
0.08
Shares of Wynn Resorts have fallen 66% since February 2008
0.05
2
0.1
The company has a Beta of 2.36
0.04
2
0.08
Occupancy rates dropped 4.2% in 2008 from 2007
0.03
2
0.06
Total
1
2.82
Competitive Profile Matrix--Wynn Resorts Limited Wynn Critical Success Factors Advertising
Weight Rating
Las Vegas Sands
Weighted Score
Rating
Weighted Score
MGM Mirage Weighted Rating Score
0.085
2
0.17
1
0.085
3
0.255
Management Experience
0.1
4
0.4
3
0.3
2
0.2
Customer Service
0.15
4
0.6
3
0.45
2
0.3
Geographic Diversity
0.085
1
0.085
4
0.34
3
0.255
Product Quality
0.15
4
0.6
3
0.45
2
0.3
Market Share
0.08
2
0.16
3
0.24
4
0.32
Price Competitiveness
0.075
1
0.075
2
0.15
3
0.225
Property Ownership
0.09
3
0.27
2
0.18
4
0.36
Breadth of Product Line
0.085
3
0.255
1
0.085
2
0.17
Customer Mix
0.05
2
0.1
3
0.15
4
0.2
Financial Position
0.05
4
0.2
1
0.05
3
0.15
Total
1
2.915
2.48
2.735
Opportunities •60.4% of target market resides in areas where Wynn currently operates •Atlantic City casino winnings are 390% greater than those in the state of Nevada •Macau casino winnings up 46%, becoming the largest casino market in the world •MGM Mirage facing possible bankruptcy due to possible default on debts •Target market in China expected to increase to 180-200 million people over next 10 years •Top competitor's merging create a wide pool of experienced executives •India experienced 22.1% growth in individuals with $1 million or more in personal assets •East coast U.S. casino and resort venues for 40% of the top 5 casino market revenues •Macau Chief Executive announced freeze on new gaming license to stabilize industry •63% of Americans believe gambling is morally acceptable •Tourism to Macau increased by 23% between 2006-2007 •States considering using the gaming industry to fund budget gaps
Threats •Macaun government has ability to nationalize all operations in the year 2017 •Increase in legalization of casino gaming in or near metropolitan areas •Average daily room rate dropped 7.7% in Las Vegas •Vacancies are at a 20 year high in the U.S. hotel industry •Occupancy rates in U.S. hotel industry dropped by 3.2% in 2008 •Chinese governments reducing the amount of travel visas granted to Macau from 1/month to 1/3 months •Las Vegas strip gaming revenue down 6.7% •Airlines expected to decrease enger capacities 10-15% in 2009 •Profit margins expected to decrease 17-18% in 2009 •Visitors to Las Vegas down 1.1% in 2008 •Political legislation restricting gaming •Construction costs for hotels are up 29% from August of 2007
External Factor Evaluation Matrix Opportunities 60.4% of target market resides in areas where Wynn currently operates Atlantic City casino winnings are 390% greater than those in the state of Nevada Macau casino winnings up 46%, becoming the largest casino market in the world
Weight Rating Raw Score 0.08
4
0.32
0.045
1
0.045
0.08
4
0.32
MGM Mirage facing possible bankruptcy due to possible default on debts Target market in China expected to increase to 180-200 million people over next 10 years
0.03
3
0.09
0.07
3
0.21
Top competitor's merging create a wide pool of experienced executives India experienced 22.1% growth in individuals with $1 million or more in personal assets East coast U.S. casino and resort venues for 40% of the top 5 casino market revenues Macau Chief Executive announced freeze on new gaming licencse to stabilize industry
0.03
1
0.03
0.03
1
0.03
0.035
1
0.035
0.055
4
0.22
63% of Americans believe gambling is morally acceptable
0.025
2
0.05
Tourism to Macau increased by 23% between 2006-2007
0.045
4
0.18
States considering using the gaming industry to fund budget gaps
0.025
1
0.025
External Factor Evaluation Matrix (cont) Threats Macaun government has ability to nationalize all operations in the year 2017
Weight Rating Raw Score 0.08
2
0.16
Increase in legalization of casino gaming in or near metropolitan areas
0.03
1
0.03
Average daily room rate dropped 7.7% in Las Vegas
0.025
4
0.1
Vacancies are at a 20 year high in the U.S. hotel industry
0.03
2
0.06
Occupancy rates in U.S. hotel industry dropped by 3.2% in 2008
0.025
2
0.05
Chinese governments reducing the amount of travel visas granted to Macau from 1/month to 1/3 months 0.045
2
0.09
Las Vegas strip gaming revenue down 6.7%
0.035
4
0.14
Airlines expected to decrease enger capacities 10-15% in 2009
0.025
3
0.075
Profit margins expected to decrease 17-18% in 2009
0.04
2
0.08
Visitors to Las Vegas down 1.1% in 2008
0.025
3
0.075
Political legislation restricting gaming
0.025
3
0.075
Construction costs for hotels are up 29% from August of 2007
0.065
1
0.065
Total
1
2.555
SWOT Matrix SO Strategies
ST Strategies
1) Decrease room rates in Macau by 10%. 1) Increase philanthropic giving in (S2, O11) Macau by 2%. (S3, T1)
2) Open 500 room VIP facility in Atlantic City. (S5, O2) 3) Develop a succession plan that capitalizes on available and experienced executives. (S4, O6) 4) Increase number of slot machines at Wynn Las Vegas and Macau by 10%. (S9, O10)
2) Lower room mates in Las Vegas by 10%. (S1, T3) 3) Host a celebrity poker tournament at Wynn Encore. (S7, O11) 4) Place AED Defibrillators at all locations. 1 per floor and 3 in each gaming area (S7, T5)
SWOT Matrix continued WO Strategies 1) Develop a formalized succession plan in the event of a separation of Stephen Wynn and the company. (W4, O6)
WT Strategies 1) Drop the room rates in the US by 10%. (W10,T3)
2) Pay off debts 5% annually for the next 3 years. 2) Open 500 room VIP facility in Atlantic (W1, O3) City. (W2, T7) 3) Increase the gaming space at Macau by 5%. (W10, O11)
3) Write a vision and mission statement that guides our company towards higher profitability. (W6, T 9)
4) Acquire the Borgata Resort and Casino in Atlantic City, NJ from MGM Mirage. (W7, O4)
4) Distribute $1000 “resort stimulus package” gaming voucher to our middle tier customers that live within driving distance of Wynn Las Vegas. (W10, T8)
SPACE Matrix Data Financial Strength (FS)
Environmental Stability (ES)
Return on Assets (ROA)
4
Rate of Inflation
-4
Leverage
3
Technological Changes
-2
Net Income
4
Price Elasticity of Demand
-5
Brand Name Inventory Turnover
6
Competitive Pressure Barriers to Entry into Market
-5
Financial Strength (FS) Average
2
3.8 Environmental Stability (ES) Average
Competitive Advantage (CA)
-4 -4.0
Industry Strength (IS)
Market Share
-2
Growth Potential
5
Product Quality
-1
Financial Stability
3
Customer Loyalty
-2
Ease of Entry into Market
3
Technological know-how Control over Suppliers and Distributors
-2
Resource Utilization
5
-3
Profit Potential
6
Competitive Advantage (CA) Average
-2.0 Industry Strength (IS) Average
4.4
SPACE Matrix FS
Conservative
Aggressive
6 5 4 3 2 1 CA
-6
-5
-4
-3
-2
-1
1
2
3
4
-1 -2 X Plot 2.4
-3 -4 -5
Y Plot -0.2
-6 Defensive
ES
Competitive
5
6
IS
BCG Matrix Data Division
Division Name
Revenues
% of Revenue
Profits
% of Profits
1
Casinos
$2,261,932
77%
$771,005
93%
0.6
2
Rooms
$326,655
10%
$248,417
8%
0.16 0.11
3
Food and Beverage
$358,715
11%
$151,434
16%
0.2
4
Entertainme nt, retail and other
$270,065
9%
$108,203
7%
0.17 0.18
5
Less: Promotional Allowances
-$230,043
-7%
-$230,043
-25%
0.28 0.19
Totals:
$2,987,324
100%
$1,049,016
100%
RMSP IGR 0.33
0.13
RMSP High
Medium
1.0
Low
.50
0.0
1 2 (percentage)
Industry Growth Rate
High +20
3 5 Medium 0
Low - 20
4
IFE Matrix Data % of EFE IFE Profits Scores Scores
Division
Division Name
Revenues
% of Revenue
Profits
1
Casinos
$2,261,932
77%
$771,005
93%
3
3.2
2
Rooms
$326,655
10%
$248,417
8%
2.5
3
3
Food and Beverage
$358,715
11%
$151,434
16%
2.5
2.7
4
Entertainment, retail and other
$270,065
9%
$108,203
7%
3
2
5
Less: Promotional Allowances
-$230,043
-7%
-$230,043
-25%
2.8
2.3
Totals:
$2,987,324
100%
$1,049,016
100%
Internal Factor Evaluation Matrix Strong 3.0 to 4.0
Average 2.0 to 2.99 3.00
4.00
Weak 1.0 to 1.99 2.00
I
II
1.00 III
EFE Total Weighted Scores
High 3.0 to 4.0 3.00 IV
1
V
Medium 2.0 to 2.99
4
VIII
3 2
2.00 VII
5
VIII
Low 1.0 to 1.99 1.00
IFE Total Weighted Scores
IX
Grand Strategy Matrix Rapid Market Growth Quadrant II
Quadrant I
Strong Competitive Position
Weak Competitive Position
Quadrant III
Quadrant IV Slow Market Growth
Strategy Strategy One Two Purchase Build new Atlantic City casino Casino from in Atlantic MGM City
QSPM Strengths
Weight
AS
TAS
AS
TAS
1 Occupancy rates at Wynn Las Vegas at 96% in 2007
0.05
0
0
2 Occupancy rates at Wynn Macau at 88.8% in 2007
0.05
0
0
3 Net income rose 92% in the first 3 quarters of 2008
0.06
0
0
4
The senior executive teams has on average approximately 25 years of experience.
5 Wynn Resorts, Limited has over $1 billion in its cash 6
Wynn Resorts, Limited owns one of only six gaming concessions in Macau
7 The only resort to receive the Mobil 5 Star Award Wynn Macau and Wynn Las Vegas table winings per unit per day are 118% and 27% greater than the market average, respectively Wynn Macau and Wynn Las Vegas slot winnings per unit per day 9 are 132% and 45% greater than the market average, respectively Wynn Resorts had 17% of the Market Share in Macau in the 3rd 10 quarter of 2008 (8% greater than the fair share) 8
0.07
3
0.21
4 0.28
0.05
2
0.1
3 0.15
0
0
0.08
4 0.16
0.05
0
0
0.05
0
0
0.07
0
0
0.08 0.04
2
QSPM Cont. Weaknesses
Weight AS
TAS
1 Has outstanding debts of $3.5 billion
0.04
3 0.12
2 0.08
2 Only have 3 locations providing cash flow
0.05
4
0.2
3 0.15
3 Stephen Wynn has the power to select the board of directors
0.04
0
0
0.06
0
0
0.03
0
0
0.05
0
0
0.04
4 0.16
3 0.12
8 Shares of Wynn Resorts have fallen 66% since February 2008
0.05
0
0
9 The company has a Beta of 2.36
0.04
0
0
0.03 1
3 0.09
2 0.06
Wynn Resorts relies heavily on the long-term tenure of Stephen Wynn as CEO for company survival 42% of currently oustanding stock is owned by 2 owners: Mr. 5 Wynn and Azure USA 4
6 The company has no published vision or mission statement 7
Wynn Resorts, Limited has no resorts in Atlantic City, one of the highest revenue gaming areas in the world
10 Occupancy rates dropped 4.2% in 2008 from 2007
AS
TAS
QSPM Cont. Opportunities Weight AS TAS AS TAS 60.4% of target market resides in areas where Wynn currently 1 operates 0.08 4 0.32 3 0.24 Atlantic City casino winnings are 390% greater than those in the 0.13 2 state of Nevada 0.045 4 0.18 3 5 Macau casino winnings up 46%, becoming the largest casino market 3 in the world 0.08 0 0 MGM Mirage facing possible bankruptcy due to possible default on 4 debts 0.03 4 0.12 1 0.03 Target market in China expected to increase to 180-200 million 5 people over next 10 years 0.07 0 0 Top competitor's merging create a wide pool of experienced 6 executives 0.03 0 0 India experienced 22.1% growth in individuals with $1 million or 7 more in personal assets 0.03 0 0 East coast U.S. casino and resort veneus for 40% of the top 8 5 casino market revenues 0.035 3 0.105 2 0.07 Macau Chief Executive announced freeze on new gaming licencse to 9 stabilize industry 0.055 0 0 10 63% of Americans believe gambling is morally acceptable 0.025 0 0 11 Tourism to Macau increased by 23% between 2006-2007 0.045 0 0 12 States considering using the gaming industry to fund budget gaps 0.025 0 0
QSPM Cont. Threats
Weight
AS
TAS
AS
TAS
1 Macaun government has ability to nationalize all operations in the year 2017
0.08
0
0
2 Increase in legalization of casino gaming in or near metropolitan areas
0.03
0
0
0.025
0
0
3 Average daily room rate dropped 7.7% in Las Vegas 4 Vacancies are at a 20 year high in the U.S. hotel industry
0.03
2
0.06
1 0.03
0.025
2
0.05
1 0.025
0.045
0
0
7 Las Vegas strip gaming revenue down 6.7%
0.035
0
0
8 Airlines expected to decrease enger capacites 10-15% in 2009
0.025
3 0.075
2 0.05
0.04
2
0.08
1 0.04
10 Visitors to Las Vegas down 1.1% in 2008
0.025
2
0.05
1 0.025
11 Political legislation restricting gaming
0.025
0
0
12 Construction costs for hotels are up 29% from August of 2007
0.065 1
0.26
1 0.065
2.26
1.71
5 Occupancy rates in U.S. hotel industry dropped by 3.2% in 2008 6
Chinese governments reducing the amount of travel visas granted to Macau from 1/month to 1/3 months
9 Profit margins expected to decrease 17-18% in 2009
TOTALS
4
Recommendations Place AED Defibrillators at all locations. 1 per floor and 3 in each gaming area.
$400,000
Develop a formalized succession plan in the event of separation of Stephen Wynn from the company.
$700,000
Drop room rates in the US and Macau by 10%.
$32,600,000
Increase philanthropic giving in Macau by 2%.
$36,919,500
Purchase 4 ferry boats to run from the Chinese shore to Macau.
$4,000,000
Distribute $1000 "resort stimulus package" casino gaming vouchers to middle tier customers within driving distance of Wynn Las Vegas.
$2,500,000
Acquire Borgata Resort and Casino in Atlantic City, NJ from MGM Mirage Increase gaming space at Wynn Macau by 5% Host a celebrity poker tournament at Wynn Encore.
$425,000,000 $5,000,000 $750,000
Pay off debts 5% annually for the next 3 years.
$175,000,000
Total Cost
$682,869,500
Timeline for Strategy Implementation Place AED Defibrillators at all locations. 1 per floor and 3 in each gaming area.
2009
Develop a formalized succession plan in the event of separation of Stephen Wynn from the company.
2009
Drop room rates in the US and Macau by 10%.
2009
Increase philanthropic giving in Macau by 2%.
2009-2011
Purchase 4 ferry boats to run from the Chinese shore to Macau.
2010
Distribute $1000 "resort stimulus package" casino gaming vouchers to middle tier customers within driving distance of Wynn Las Vegas.
2009
Acquire Borgata Resort and Casino in Atlantic City, NJ from MGM Mirage
2010
Increase gaming space at Wynn Macau by 5%
2011
Host a celebrity poker tournament at Wynn Encore.
2009-2011
Pay off debts 5% annually for the next 3 years.
2009-2011
EPS/EBIT Analysis Common Stock Financing EBIT Interest EBT Taxes EAT # Shares EPS
EBIT Interest EBT Taxes EAT # Shares EPS
Recession 300,000,000 0 300,000,000 120,000,000 180,000,000 150,812,443 1.19
Normal 450,000,000 0 450,000,000 180,000,000 270,000,000 150,812,443 1.79
Recession 300,000,000 10,243,043 289,756,958 115,902,783 173,854,175 139,172,622 1.25
70 Percent Stock 30 Percent Debt Normal 450,000,000 10,243,043 439,756,958 175,902,783 263,854,175 139,172,622 1.90
Debt Financing Boom 600,000,000 0 600,000,000 240,000,000 360,000,000 150,812,443 2.39
Boom 600,000,000 10,243,043 589,756,958 235,902,783 353,854,175 139,172,622 2.54
Recession 300,000,000 34,143,475 265,856,525 106,342,610 159,513,915 112,013,040 1.42
Normal 450,000,000 34,143,475 415,856,525 166,342,610 249,513,915 112,013,040 2.23
Boom 600,000,000 34,143,475 565,856,525 226,342,610 339,513,915 112,013,040 3.03
Recession 300,000,000 23,900,433 276,099,568 110,439,827 165,659,741 123,652,861 1.34
70 Percent Debt 30 Percent Stock Normal 450,000,000 23,900,433 426,099,568 170,439,827 255,659,741 123,652,861 2.07
Boom 600,000,000 23,900,433 576,099,568 230,439,827 345,659,741 123,652,861 2.80
Projected Financial Statements Wynn Resorts Projected Income Statement (FY 2008-2011) in Thousands
Operating Revenues: Casino Rooms Food and Beverage Entertainment, retail and other Gross revenues Less: Promotional Allowances Net Revenues Operating Costs and Expenses: Casino Rooms Food and Beverage Entertainment, retail and other General & istrative Provision for Doubtful s Pre-opening costs Depreciation and Amortization Contract Termination Fee Property Charges and Other Total Operating Costs and Expenses Equity in income from unconsilidated s Operating Income Other Income (Expense) Interest Income Interest Expense Distribution to convertible debenture holders Increase (decrease) in swap fair value Gain on sale of subconcession right, net Gain (loss) from extinguishment of debt Other Other Income (expense) net Income before income taxes Benefit (provision) for income taxes Net Income
2008
2009
2010
2011
2,261,932 326,655 358,715 270,065 3,217,367 (230,043)
2,533,364 349,521 369,476 282,893 3,535,254 (257,648)
3,420,041 454,377 461,846 339,472 4,675,736 (309,178)
4,104,049 536,165 508,030 383,603 5,531,848 (352,463)
2,987,324
3,277,606
4,366,558
5,179,385 Increase due to opening of two new locations and recommendations.
1,490,927 78,238 207,281 161,862 319,303 49,405 72,375 262,848 32,584 2,674,823 1,353 313,854
1,669,838 83,714 213,498 169,549 350,330 54,081 36,188 288,390
2,254,282 108,828 266,873 203,459 466,724 72,048 72,375 384,205
2,705,138 128,417 293,560 229,909 553,604 85,460 455,724
35,726 2,901,313 1,484 377,777
47,595 3,876,388 1,978 492,147
56,455 4,508,266 Calculated as a % of Net Revenues. 2,346 673,465
21,517
22,593
23,722
(172,693) (31,485) 22,347 (4,257) (164,571) 149,283
(180,493) 58,333 (99,567) 278,210
(252,387) 58,333 (170,332) 321,815
60,923 210,206
(967) 277,243
(1,287) 320,528
24,909 (299,368) 70% of the total recommendation cost @ 5% IR over 3 years. 58,333 (216,127) 457,338 (1,829) Small tax amount due to interest expenses from debts. 455,509
Wynn Resorts, Limited Balance Sheet (FY 2008-2011) in Thousands (except per share amounts) ASSETS Current assets: Cash and cash equivalents Receivables, net Inventories Deferred income taxes Prepaid expenses and other
$ 1,133,904 $ 125,196 $ 120,944 $ 31,047
$ 1,159,202 $ 140,220 $ 124,572 $ 34,152
$ 1,330,394 $ 157,046 $ 128,309 $ 37,567
$ 1,670,241 Increase in cash attributed to new facilities and operation expansion $ 175,891 $ 132,159 $ 41,324
Total current assets Restricted cash Property and equipment, net Intangibles, net Deferred financing costs Deposits and other assets Investment in unconsolidated s
$ 1,411,091 $ 5,105,473 $ 49,049 $ 65,877 $ 106,429 $ 4,696
$ 1,458,146 $ 5,537,373 $ 49,282 $ 62,583 $ 138,358 $ 4,931
$ 1,653,316 $ 5,814,242 $ 49,515 $ 59,454 $ 179,865 $ 5,177
$ 2,019,615 $ 6,104,954 Increase due to Atlantic City acquisition and Encore Macau Opening $ 49,748 $ 56,481 $ 233,825 $ 5,436
Total assets
$ 6,742,615
$ 7,250,672
$ 7,761,569
$ 8,470,058
LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: s and construction payable Current portion of long-term debt Current portion of land concession obligation Income taxes payable Accrued interest Accrued compensation and benefits Gaming taxes payable Other accrued expenses Customer deposits and other liabilities Construction retention Deferred income taxes
$ $ $ $ $ $ $ $ $ $ $
$ $ $
$ $ $
$ $ $
Total current liabilities Long-term debt Other long-term liabilities Long-term land concession obligation Deferred income taxes Construction retention
$ 723,775 $ 4,290,424 $ 124,511 $ 4,433 $ 6,950
$ 789,278 $ 4,449,424 $ 130,737 $ $ 4,433 $ 6,950
$ 814,024 $ 4,608,424 $ 137,273 $ $ 4,433 $ 6,950
$ 901,052 $ 4,767,424 Increase in long term debt b/c of 70% debt financing, $ 144,137 however, 5% being paid off annually, as noted in recommendations $ $ 4,433 $ 6,950
Total liabilities
$ 5,150,093
$ 5,380,821
$ 5,571,104
$ 5,823,996 Liability increase due to an increase in long term debt
$
$
$
Stockholders equity: Preferred stock, par value $0.01; 40,000,000 shares authorized; zero shares issued and outstanding Common stock, par value $0.01; 400,000,000 shares authorized; 124,817,994 and 116,259,411 shares issued; 112,013,040 and 114,370,090 shares outstanding Treasury stock, at cost; 12,804,954 and 1,889,321 shares Additional paid-in capital Accumulated other comprehensive income (loss) Retained earnings (deficit)
2008
232,136 2,685 6,068 1,283 21,485 85,803 66,954 15,820 209,906 78,599 3,036
2009
$ $ $ $ $
266,956 2,670 6,068 967 22,559 83,229 76,001 17,402 230,897 82,529 -
2010
$ $ $ $ $
307,000 2,765 6,068 1,287 23,687 80,732 102,601 19,142 253,986 16,755 -
2011
$ $ $ $ $
353,050 Increase due to construction and renovation in Atlantic City and Macau 2,860 6,068 1,829 Carried over from income statement 24,872 78,310 123,121 21,056 279,385 10,500 -
-
$
1,248
1,334
1,420
1,508 Increase by 30% over 3 years b/c of stock financing
$(1,119,407) $(1,119,407) $ (1,119,407) $ (1,119,407) Continue purchases of Treasury Stock at same rates $ 2,640,667 $ 2,614
$ 2,640,667 $ 2,614
$ 2,640,667 $ 2,614
$ 2,640,667 $ 2,614
$
$
$
665,171
$ 1,120,680
67,400
344,643
Total stockholders equity
$ 1,592,522
$ 1,869,851
$ 2,190,465
$ 2,646,062
Total liabilities and stockholders equity
$ 6,742,615
$ 7,250,672
$ 7,761,569
$ 8,470,058
Projected Financial Ratios Ratio Ratio
Quick Ratio Current Ratio
2009 2009
2010
2011
1.69
2010
2011
1.87
2.09
Quick Ratio
1.69
1.87
2.09
Current Ratio
1.85
1.85 2.03
2.24
2.03
2.24
2.38
2.10 2.38
1.80
2.10
1.80
2.54
2.20
2.54
2.20
Long Term Debt to Equity Long Term Debt to Equity Total Debt to Equity
2.88
Net Profit Margin
0.08
0.07
0.09
Net Profit Margin
Return on Assets
0.04
0.08 0.04
0.05
0.07
0.09
Return on Assets
Return on Equity
0.15
0.15 0.04
0.17
0.04
0.05
Total Asset Turnover
0.45
0.56
0.61
0.15
0.17
Earnings Per Share
2.08
2.26
3.02
Total Debt to Equity
Return on Equity
2.88
0.15
Total Asset Turnover
0.45
0.56
0.61
Earnings Per Share
2.08
2.26
3.02
Francis Marion University Florence, South Carolina
Presentation Outline I. II.
III.
IV.
Introduction Mission/Vision Internal Assessment a. Financial Ratios b. Organizational Chart c. Market Positioning Map d. Marketing Strategy e. Value of the Firm f. Strengths/Weaknesses g. IFE External Assessment a. Competitor Analysis b. M c. Opportunities/Threats d. EFE
Strategy Formulation a. SWOT b. SPACE c. BCG d. IE e. GSM f. QSPM g. Recommendations VI. Strategy Implementation a. EPS/EBIT Analysis b. Pro-forma Statements and Ratios VII. Conclusion V.
Company Overview •Formed
in 2002 by leading developer Stephen Wynn •Currently has 3 casino resort destinations
•Wynn Las Vegas: Opened April 28, 2005 •2,716 Rooms •111,00 square foot casino •18-hole golf course on the Las Vegas “Strip”
•Wynn Macau: Opened September 6, 2006 •600 Rooms •205,000 square foot casino
•Encore at Wynn Las Vegas •2,034 Suites •72,000 square foot casino
Vision Statement Wynn Resorts, Limited strives to be the leading provider and choice of elite, luxurious casino and resort experiences worldwide.
Mission Statement Wynn Resorts, Limited targets high net worth individuals by providing a variety of socioeconomic activities in the casino and resort industry. 1,2 With our resorts in Las Vegas and Macau (People’s Republic of China), we aim to reach a global customer base. 3 We continually strive to provide and research new and innovative gaming and lodging amenities to our customers. 4 Wynn Resorts, Ltd. continuously seeks new ventures and opportunities for expansion in order to advance the Wynn brand and maximize shareholder wealth.5,6 We continue to provide the highest quality and unique gaming resort experience to our customers. 7 Investment in the social and environmental well being of communities in which we operate, such as Las Vegas and Macau, is a top priority. 8 Wynn encourages employee growth, training, and development in order to provide the most luxurious and hospitable environment possible for our customers. 9
Mission Statement of MGM The resorts and casinos of MGM MIRAGE are some of the most famous in the world, widely credited for establishing a new generation of excitement in Las Vegas! Our 24 destinations are renowned for their winning combination of quality entertainment, luxurious facilities and exceptional customer service. Our dedicated staff of over 70,000 employees are committed to providing an unsured experience for every one of our guests. We are actively expanding our presence globally, with potential developments in a number of domestic and international markets. At MGM MIRAGE, we are all striving together to deliver our enticing blend of entertainment to every corner of the world.
MGM Mission Statement Analysis -Mission statement includes the majority of the 9 core components of a good mission statement
-Does not mention a concern for public image -This statement gives a platform upon which MGM is able to make strategic decisions.
Financial Ratio Analysis Ratio P/E (TTM) Quick Ratio (MRQ) Current Ratio (MRQ) LT Debt/Equity (MRQ) Total Debt/Equity (MRQ) Net Profit Margin (TTM) Return on Assets (TTM) Return on Investments (TTM) Return on Equity (TTM) Total Asset Turnover (TTM)
Wynn Industry Sector 7.89 0.64 28.81 2.03 4.60 1.14 2.13 4.90 1.49 350.76 8.76 37.25 350.98 9.32 76.63 14.11 0.56 1.20 7.04 1.04 1.16 8.02 1.60 1.69 26.32 2.05 3.72 0.50 0.08 0.48
Current Organizational Chart CEO & Chairman of the Board
CAO & Executive VP
Senior VP & General Counsel & Secretary
COO Las Vegas
President Wynn Las Vegas
CFO & Treasurer
COO
President Wynn International Marketing, Ltd.
Senior VP & CFO Las Vegas
President Wynn Macau
CFO Macau
Problems with Current Organizational Chart -Dual titles of top executives, such as Chairman and CEO -Does not include some of the necessary functional business units, such as research and development -Executive titles are confusing and do not effectively describe the functional area of business of the position -Hard to distinguish a proper chain of command for the different geographic locations
Proposed Organizational Chart CEO
CIO
CMO
CFO
COO
HRM
VP Lodging LV
VP Food LV
R&D
President of Macau Operations
President of US Operations
VP Casinos LV
CLO
VP Entertainment LV
VP Casinos Macau
VP Lodging Macau
VP Food Macau
VP Entertainment Macau
Organizational Chart Titles -CEO- Chief Executive Officer
-COO- Chief Operating Officer -CIO- Chief Information Officer -CFO- Chief Financial Officer -CMO- Chief Marketing Officer -HRM- Human Resource Manager
-CLO- Chief Legal Officer -R&D- Research and Development
Organizational Chart Improvements -Divisional Structure by geographic region
-Eliminates dual titles -Clearly outlines the necessary functional business units -Executive titles more clearly defined and Presidents report only to the COO -Clearly defines reporting relationships -Gives Wynn Resorts a defined unity of command -Allows each geographic unit to adapt to regional trends independently of the other(s)
Succession Plan Create a formal succession plan because currently we do not have a clearly defined or published plan of action in the event of a separation of Stephen Wynn from the company. We suggest the COO, or another top executive, should move up to the position of CEO. Then divisional presidents would move up to replace those individuals. The top executives in the company should have a retreat once a quarter over the next three years for leadership training.
Market Positioning Map Wynn Las Vegas Sands
MGM Mirage
Market Positioning Map Wynn
Las Vegas Sands
MGM Mirage
Current Marketing -Reward system that offers discounted and complimentary meals, lodging, and entertainment -Use integrated database to target specific customers for promotions -Marketing executives located in Tokyo, Hong Kong, Macau, Singapore, Taiwan, Vancouver, and southern California -Types of ment: -Television -Radio -Magazines -Internet -Direct mail -Billboards -Differentiated product from competitors by offering higher standards of luxury -Current Target Market- gaming customers internationally
New Marketing Strategies -Discontinue advertising expenditures on direct mailings and radio -Develop a resort “stimulus package” by offering $1000 gaming vouchers to our customers that live within driving distance of Wynn Las Vegas
-Increase online advertising on gaming websites such as PokerStars.net -Increase marketing in India by 1.5% over the course of the next 3 years. India has the fastest growing number of high net worth individuals (those in our target market).
New Marketing Slogan
Luxury. Style. Elegance. The Wynn Experience.
Map of Operations
Las Vegas Macau
Map of Competitor Operations
Michigan PA Illinois
Las Vegas Mississippi
Louisiana
Macau
Singapore
Website: Wynn Las Vegas
Website Analysis Eye appealing A lot of Photographs Easy to find headings Click-able Links
Can only reserve 3 rooms at a time or up to 8 people Scrolling photo bar not friendly Website requires fast connection speeds to perform optimally
Website: MGM Mirage
Website Analysis Wynn Las Vegas
Can be put in full screen for easier viewing Easier to navigate to other Wynn property sites More pictures of resorts
vs.
MGM’s The Bellagio
Can easily select another language Have show ticket prices listed on website were it is easy to find Includes air/hotel packages on the main page
Company Worth Analysis
Company Worth Analysis (Year-End 2008) Stockholders Equity
$
1,948,159,000
Net Income x 5
$
1,051,030,000
(Share Price/EPS) x Net Income
$
4,579,023,485
Number of Shares Outstanding x Share Price
$
4,581,322,080
5 Method Average
$
3,039,883,641
Strengths •Occupancy rates at Wynn Las Vegas at 96% in 2007 •Occupancy rates at Wynn Macau at 88.8% in 2007 •Net income rose 92% in the first 3 quarters of 2008 •The senior executive teams has on average approximately 25 years of experience. •Wynn Resorts, Limited has over $1 billion in its cash •Wynn Resorts, Limited owns one of only six gaming concessions in Macau •The only resort to receive the Mobil 5 Star Award •Wynn Macau and Wynn Las Vegas table winnings per unit per day are 118% and 27% greater than the market average, respectively •Wynn Macau and Wynn Las Vegas slot winnings per unit per day are 132% and 45% greater than the market average, respectively •Wynn Resorts had 17% of the Market Share in Macau in the 3rd quarter of 2008 (8% greater than the fair share)
Weaknesses •Has outstanding debts of $3.5 billion •Only have 3 locations providing cash flow •Stephen Wynn has the power to select the board of directors •Wynn Resorts relies heavily on the long-term tenure of Stephen Wynn as CEO for company survival •42% of currently outstanding stock is owned by 2 owners: Mr. Wynn and Azure USA •The company has no published vision or mission statement •Wynn Resorts, Limited has no resorts in Atlantic City, one of the highest revenue gaming areas in the world •Shares of Wynn Resorts have fallen 66% since February 2008 •The company has a Beta of 2.36 •Occupancy rates dropped 4.2% in 2008 from 2007
Internal Factor Evaluation Matrix Strengths
Weight Rating Raw Score
Occupancy rates at Wynn Las Vegas at 96% in 2007
0.05
4
0.2
Occupancy rates at Wynn Macau at 88.8% in 2007
0.05
3
0.15
Net income rose 92% in the first 3 quarters of 2008
0.06
4
0.24
The senior executive teams has on average approximately 25 years of experience.
0.07
4
0.28
Wynn Resorts, Limited has over $1 billion in its cash
0.05
4
0.2
Wynn Resorts, Limited owns one of only six gaming concessions in Macau
0.08
4
0.32
The only resort to receive the Mobil 5 Star Award
0.04
3
0.12
Wynn Macau and Wynn Las Vegas table winings per unit per day are 118% and 27% greater than the market average, respectively 0.05
4
0.2
4
0.2
3
0.21
Wynn Macau and Wynn Las Vegas slot winnings per unit per day are 132% and 45% greater than the market average, respectively 0.05 Wynn Resorts had 17% of the Market Share in Macau in the 3rd quarter of 2008 (8% greater than the fair share) 0.07
Internal Factor Evaluation Matrix (cont) Weaknesses
Weight Rating Raw Score
Has outstanding debts of $3.5 billion
0.04
2
0.08
Only have 3 locations providing cash flow
0.05
1
0.05
Stephen Wynn has the power to select the board of directors Wynn Resorts relies heavily on the long-term tenure of Stephen Wynn as CEO for company survival
0.04
2
0.08
0.06
1
0.06
42% of currently oustanding stock is owned by 2 owners: Mr. Wynn and Azure USA 0.03
2
0.06
The company has no published vision or mission statement
0.05
1
0.05
Wynn Resorts, Limited has no resorts in Atlantic City, one of the highest revenue gaming areas in the world
0.04
2
0.08
Shares of Wynn Resorts have fallen 66% since February 2008
0.05
2
0.1
The company has a Beta of 2.36
0.04
2
0.08
Occupancy rates dropped 4.2% in 2008 from 2007
0.03
2
0.06
Total
1
2.82
Competitive Profile Matrix--Wynn Resorts Limited Wynn Critical Success Factors Advertising
Weight Rating
Las Vegas Sands
Weighted Score
Rating
Weighted Score
MGM Mirage Weighted Rating Score
0.085
2
0.17
1
0.085
3
0.255
Management Experience
0.1
4
0.4
3
0.3
2
0.2
Customer Service
0.15
4
0.6
3
0.45
2
0.3
Geographic Diversity
0.085
1
0.085
4
0.34
3
0.255
Product Quality
0.15
4
0.6
3
0.45
2
0.3
Market Share
0.08
2
0.16
3
0.24
4
0.32
Price Competitiveness
0.075
1
0.075
2
0.15
3
0.225
Property Ownership
0.09
3
0.27
2
0.18
4
0.36
Breadth of Product Line
0.085
3
0.255
1
0.085
2
0.17
Customer Mix
0.05
2
0.1
3
0.15
4
0.2
Financial Position
0.05
4
0.2
1
0.05
3
0.15
Total
1
2.915
2.48
2.735
Opportunities •60.4% of target market resides in areas where Wynn currently operates •Atlantic City casino winnings are 390% greater than those in the state of Nevada •Macau casino winnings up 46%, becoming the largest casino market in the world •MGM Mirage facing possible bankruptcy due to possible default on debts •Target market in China expected to increase to 180-200 million people over next 10 years •Top competitor's merging create a wide pool of experienced executives •India experienced 22.1% growth in individuals with $1 million or more in personal assets •East coast U.S. casino and resort venues for 40% of the top 5 casino market revenues •Macau Chief Executive announced freeze on new gaming license to stabilize industry •63% of Americans believe gambling is morally acceptable •Tourism to Macau increased by 23% between 2006-2007 •States considering using the gaming industry to fund budget gaps
Threats •Macaun government has ability to nationalize all operations in the year 2017 •Increase in legalization of casino gaming in or near metropolitan areas •Average daily room rate dropped 7.7% in Las Vegas •Vacancies are at a 20 year high in the U.S. hotel industry •Occupancy rates in U.S. hotel industry dropped by 3.2% in 2008 •Chinese governments reducing the amount of travel visas granted to Macau from 1/month to 1/3 months •Las Vegas strip gaming revenue down 6.7% •Airlines expected to decrease enger capacities 10-15% in 2009 •Profit margins expected to decrease 17-18% in 2009 •Visitors to Las Vegas down 1.1% in 2008 •Political legislation restricting gaming •Construction costs for hotels are up 29% from August of 2007
External Factor Evaluation Matrix Opportunities 60.4% of target market resides in areas where Wynn currently operates Atlantic City casino winnings are 390% greater than those in the state of Nevada Macau casino winnings up 46%, becoming the largest casino market in the world
Weight Rating Raw Score 0.08
4
0.32
0.045
1
0.045
0.08
4
0.32
MGM Mirage facing possible bankruptcy due to possible default on debts Target market in China expected to increase to 180-200 million people over next 10 years
0.03
3
0.09
0.07
3
0.21
Top competitor's merging create a wide pool of experienced executives India experienced 22.1% growth in individuals with $1 million or more in personal assets East coast U.S. casino and resort venues for 40% of the top 5 casino market revenues Macau Chief Executive announced freeze on new gaming licencse to stabilize industry
0.03
1
0.03
0.03
1
0.03
0.035
1
0.035
0.055
4
0.22
63% of Americans believe gambling is morally acceptable
0.025
2
0.05
Tourism to Macau increased by 23% between 2006-2007
0.045
4
0.18
States considering using the gaming industry to fund budget gaps
0.025
1
0.025
External Factor Evaluation Matrix (cont) Threats Macaun government has ability to nationalize all operations in the year 2017
Weight Rating Raw Score 0.08
2
0.16
Increase in legalization of casino gaming in or near metropolitan areas
0.03
1
0.03
Average daily room rate dropped 7.7% in Las Vegas
0.025
4
0.1
Vacancies are at a 20 year high in the U.S. hotel industry
0.03
2
0.06
Occupancy rates in U.S. hotel industry dropped by 3.2% in 2008
0.025
2
0.05
Chinese governments reducing the amount of travel visas granted to Macau from 1/month to 1/3 months 0.045
2
0.09
Las Vegas strip gaming revenue down 6.7%
0.035
4
0.14
Airlines expected to decrease enger capacities 10-15% in 2009
0.025
3
0.075
Profit margins expected to decrease 17-18% in 2009
0.04
2
0.08
Visitors to Las Vegas down 1.1% in 2008
0.025
3
0.075
Political legislation restricting gaming
0.025
3
0.075
Construction costs for hotels are up 29% from August of 2007
0.065
1
0.065
Total
1
2.555
SWOT Matrix SO Strategies
ST Strategies
1) Decrease room rates in Macau by 10%. 1) Increase philanthropic giving in (S2, O11) Macau by 2%. (S3, T1)
2) Open 500 room VIP facility in Atlantic City. (S5, O2) 3) Develop a succession plan that capitalizes on available and experienced executives. (S4, O6) 4) Increase number of slot machines at Wynn Las Vegas and Macau by 10%. (S9, O10)
2) Lower room mates in Las Vegas by 10%. (S1, T3) 3) Host a celebrity poker tournament at Wynn Encore. (S7, O11) 4) Place AED Defibrillators at all locations. 1 per floor and 3 in each gaming area (S7, T5)
SWOT Matrix continued WO Strategies 1) Develop a formalized succession plan in the event of a separation of Stephen Wynn and the company. (W4, O6)
WT Strategies 1) Drop the room rates in the US by 10%. (W10,T3)
2) Pay off debts 5% annually for the next 3 years. 2) Open 500 room VIP facility in Atlantic (W1, O3) City. (W2, T7) 3) Increase the gaming space at Macau by 5%. (W10, O11)
3) Write a vision and mission statement that guides our company towards higher profitability. (W6, T 9)
4) Acquire the Borgata Resort and Casino in Atlantic City, NJ from MGM Mirage. (W7, O4)
4) Distribute $1000 “resort stimulus package” gaming voucher to our middle tier customers that live within driving distance of Wynn Las Vegas. (W10, T8)
SPACE Matrix Data Financial Strength (FS)
Environmental Stability (ES)
Return on Assets (ROA)
4
Rate of Inflation
-4
Leverage
3
Technological Changes
-2
Net Income
4
Price Elasticity of Demand
-5
Brand Name Inventory Turnover
6
Competitive Pressure Barriers to Entry into Market
-5
Financial Strength (FS) Average
2
3.8 Environmental Stability (ES) Average
Competitive Advantage (CA)
-4 -4.0
Industry Strength (IS)
Market Share
-2
Growth Potential
5
Product Quality
-1
Financial Stability
3
Customer Loyalty
-2
Ease of Entry into Market
3
Technological know-how Control over Suppliers and Distributors
-2
Resource Utilization
5
-3
Profit Potential
6
Competitive Advantage (CA) Average
-2.0 Industry Strength (IS) Average
4.4
SPACE Matrix FS
Conservative
Aggressive
6 5 4 3 2 1 CA
-6
-5
-4
-3
-2
-1
1
2
3
4
-1 -2 X Plot 2.4
-3 -4 -5
Y Plot -0.2
-6 Defensive
ES
Competitive
5
6
IS
BCG Matrix Data Division
Division Name
Revenues
% of Revenue
Profits
% of Profits
1
Casinos
$2,261,932
77%
$771,005
93%
0.6
2
Rooms
$326,655
10%
$248,417
8%
0.16 0.11
3
Food and Beverage
$358,715
11%
$151,434
16%
0.2
4
Entertainme nt, retail and other
$270,065
9%
$108,203
7%
0.17 0.18
5
Less: Promotional Allowances
-$230,043
-7%
-$230,043
-25%
0.28 0.19
Totals:
$2,987,324
100%
$1,049,016
100%
RMSP IGR 0.33
0.13
RMSP High
Medium
1.0
Low
.50
0.0
1 2 (percentage)
Industry Growth Rate
High +20
3 5 Medium 0
Low - 20
4
IFE Matrix Data % of EFE IFE Profits Scores Scores
Division
Division Name
Revenues
% of Revenue
Profits
1
Casinos
$2,261,932
77%
$771,005
93%
3
3.2
2
Rooms
$326,655
10%
$248,417
8%
2.5
3
3
Food and Beverage
$358,715
11%
$151,434
16%
2.5
2.7
4
Entertainment, retail and other
$270,065
9%
$108,203
7%
3
2
5
Less: Promotional Allowances
-$230,043
-7%
-$230,043
-25%
2.8
2.3
Totals:
$2,987,324
100%
$1,049,016
100%
Internal Factor Evaluation Matrix Strong 3.0 to 4.0
Average 2.0 to 2.99 3.00
4.00
Weak 1.0 to 1.99 2.00
I
II
1.00 III
EFE Total Weighted Scores
High 3.0 to 4.0 3.00 IV
1
V
Medium 2.0 to 2.99
4
VIII
3 2
2.00 VII
5
VIII
Low 1.0 to 1.99 1.00
IFE Total Weighted Scores
IX
Grand Strategy Matrix Rapid Market Growth Quadrant II
Quadrant I
Strong Competitive Position
Weak Competitive Position
Quadrant III
Quadrant IV Slow Market Growth
Strategy Strategy One Two Purchase Build new Atlantic City casino Casino from in Atlantic MGM City
QSPM Strengths
Weight
AS
TAS
AS
TAS
1 Occupancy rates at Wynn Las Vegas at 96% in 2007
0.05
0
0
2 Occupancy rates at Wynn Macau at 88.8% in 2007
0.05
0
0
3 Net income rose 92% in the first 3 quarters of 2008
0.06
0
0
4
The senior executive teams has on average approximately 25 years of experience.
5 Wynn Resorts, Limited has over $1 billion in its cash 6
Wynn Resorts, Limited owns one of only six gaming concessions in Macau
7 The only resort to receive the Mobil 5 Star Award Wynn Macau and Wynn Las Vegas table winings per unit per day are 118% and 27% greater than the market average, respectively Wynn Macau and Wynn Las Vegas slot winnings per unit per day 9 are 132% and 45% greater than the market average, respectively Wynn Resorts had 17% of the Market Share in Macau in the 3rd 10 quarter of 2008 (8% greater than the fair share) 8
0.07
3
0.21
4 0.28
0.05
2
0.1
3 0.15
0
0
0.08
4 0.16
0.05
0
0
0.05
0
0
0.07
0
0
0.08 0.04
2
QSPM Cont. Weaknesses
Weight AS
TAS
1 Has outstanding debts of $3.5 billion
0.04
3 0.12
2 0.08
2 Only have 3 locations providing cash flow
0.05
4
0.2
3 0.15
3 Stephen Wynn has the power to select the board of directors
0.04
0
0
0.06
0
0
0.03
0
0
0.05
0
0
0.04
4 0.16
3 0.12
8 Shares of Wynn Resorts have fallen 66% since February 2008
0.05
0
0
9 The company has a Beta of 2.36
0.04
0
0
0.03 1
3 0.09
2 0.06
Wynn Resorts relies heavily on the long-term tenure of Stephen Wynn as CEO for company survival 42% of currently oustanding stock is owned by 2 owners: Mr. 5 Wynn and Azure USA 4
6 The company has no published vision or mission statement 7
Wynn Resorts, Limited has no resorts in Atlantic City, one of the highest revenue gaming areas in the world
10 Occupancy rates dropped 4.2% in 2008 from 2007
AS
TAS
QSPM Cont. Opportunities Weight AS TAS AS TAS 60.4% of target market resides in areas where Wynn currently 1 operates 0.08 4 0.32 3 0.24 Atlantic City casino winnings are 390% greater than those in the 0.13 2 state of Nevada 0.045 4 0.18 3 5 Macau casino winnings up 46%, becoming the largest casino market 3 in the world 0.08 0 0 MGM Mirage facing possible bankruptcy due to possible default on 4 debts 0.03 4 0.12 1 0.03 Target market in China expected to increase to 180-200 million 5 people over next 10 years 0.07 0 0 Top competitor's merging create a wide pool of experienced 6 executives 0.03 0 0 India experienced 22.1% growth in individuals with $1 million or 7 more in personal assets 0.03 0 0 East coast U.S. casino and resort veneus for 40% of the top 8 5 casino market revenues 0.035 3 0.105 2 0.07 Macau Chief Executive announced freeze on new gaming licencse to 9 stabilize industry 0.055 0 0 10 63% of Americans believe gambling is morally acceptable 0.025 0 0 11 Tourism to Macau increased by 23% between 2006-2007 0.045 0 0 12 States considering using the gaming industry to fund budget gaps 0.025 0 0
QSPM Cont. Threats
Weight
AS
TAS
AS
TAS
1 Macaun government has ability to nationalize all operations in the year 2017
0.08
0
0
2 Increase in legalization of casino gaming in or near metropolitan areas
0.03
0
0
0.025
0
0
3 Average daily room rate dropped 7.7% in Las Vegas 4 Vacancies are at a 20 year high in the U.S. hotel industry
0.03
2
0.06
1 0.03
0.025
2
0.05
1 0.025
0.045
0
0
7 Las Vegas strip gaming revenue down 6.7%
0.035
0
0
8 Airlines expected to decrease enger capacites 10-15% in 2009
0.025
3 0.075
2 0.05
0.04
2
0.08
1 0.04
10 Visitors to Las Vegas down 1.1% in 2008
0.025
2
0.05
1 0.025
11 Political legislation restricting gaming
0.025
0
0
12 Construction costs for hotels are up 29% from August of 2007
0.065 1
0.26
1 0.065
2.26
1.71
5 Occupancy rates in U.S. hotel industry dropped by 3.2% in 2008 6
Chinese governments reducing the amount of travel visas granted to Macau from 1/month to 1/3 months
9 Profit margins expected to decrease 17-18% in 2009
TOTALS
4
Recommendations Place AED Defibrillators at all locations. 1 per floor and 3 in each gaming area.
$400,000
Develop a formalized succession plan in the event of separation of Stephen Wynn from the company.
$700,000
Drop room rates in the US and Macau by 10%.
$32,600,000
Increase philanthropic giving in Macau by 2%.
$36,919,500
Purchase 4 ferry boats to run from the Chinese shore to Macau.
$4,000,000
Distribute $1000 "resort stimulus package" casino gaming vouchers to middle tier customers within driving distance of Wynn Las Vegas.
$2,500,000
Acquire Borgata Resort and Casino in Atlantic City, NJ from MGM Mirage Increase gaming space at Wynn Macau by 5% Host a celebrity poker tournament at Wynn Encore.
$425,000,000 $5,000,000 $750,000
Pay off debts 5% annually for the next 3 years.
$175,000,000
Total Cost
$682,869,500
Timeline for Strategy Implementation Place AED Defibrillators at all locations. 1 per floor and 3 in each gaming area.
2009
Develop a formalized succession plan in the event of separation of Stephen Wynn from the company.
2009
Drop room rates in the US and Macau by 10%.
2009
Increase philanthropic giving in Macau by 2%.
2009-2011
Purchase 4 ferry boats to run from the Chinese shore to Macau.
2010
Distribute $1000 "resort stimulus package" casino gaming vouchers to middle tier customers within driving distance of Wynn Las Vegas.
2009
Acquire Borgata Resort and Casino in Atlantic City, NJ from MGM Mirage
2010
Increase gaming space at Wynn Macau by 5%
2011
Host a celebrity poker tournament at Wynn Encore.
2009-2011
Pay off debts 5% annually for the next 3 years.
2009-2011
EPS/EBIT Analysis Common Stock Financing EBIT Interest EBT Taxes EAT # Shares EPS
EBIT Interest EBT Taxes EAT # Shares EPS
Recession 300,000,000 0 300,000,000 120,000,000 180,000,000 150,812,443 1.19
Normal 450,000,000 0 450,000,000 180,000,000 270,000,000 150,812,443 1.79
Recession 300,000,000 10,243,043 289,756,958 115,902,783 173,854,175 139,172,622 1.25
70 Percent Stock 30 Percent Debt Normal 450,000,000 10,243,043 439,756,958 175,902,783 263,854,175 139,172,622 1.90
Debt Financing Boom 600,000,000 0 600,000,000 240,000,000 360,000,000 150,812,443 2.39
Boom 600,000,000 10,243,043 589,756,958 235,902,783 353,854,175 139,172,622 2.54
Recession 300,000,000 34,143,475 265,856,525 106,342,610 159,513,915 112,013,040 1.42
Normal 450,000,000 34,143,475 415,856,525 166,342,610 249,513,915 112,013,040 2.23
Boom 600,000,000 34,143,475 565,856,525 226,342,610 339,513,915 112,013,040 3.03
Recession 300,000,000 23,900,433 276,099,568 110,439,827 165,659,741 123,652,861 1.34
70 Percent Debt 30 Percent Stock Normal 450,000,000 23,900,433 426,099,568 170,439,827 255,659,741 123,652,861 2.07
Boom 600,000,000 23,900,433 576,099,568 230,439,827 345,659,741 123,652,861 2.80
Projected Financial Statements Wynn Resorts Projected Income Statement (FY 2008-2011) in Thousands
Operating Revenues: Casino Rooms Food and Beverage Entertainment, retail and other Gross revenues Less: Promotional Allowances Net Revenues Operating Costs and Expenses: Casino Rooms Food and Beverage Entertainment, retail and other General & istrative Provision for Doubtful s Pre-opening costs Depreciation and Amortization Contract Termination Fee Property Charges and Other Total Operating Costs and Expenses Equity in income from unconsilidated s Operating Income Other Income (Expense) Interest Income Interest Expense Distribution to convertible debenture holders Increase (decrease) in swap fair value Gain on sale of subconcession right, net Gain (loss) from extinguishment of debt Other Other Income (expense) net Income before income taxes Benefit (provision) for income taxes Net Income
2008
2009
2010
2011
2,261,932 326,655 358,715 270,065 3,217,367 (230,043)
2,533,364 349,521 369,476 282,893 3,535,254 (257,648)
3,420,041 454,377 461,846 339,472 4,675,736 (309,178)
4,104,049 536,165 508,030 383,603 5,531,848 (352,463)
2,987,324
3,277,606
4,366,558
5,179,385 Increase due to opening of two new locations and recommendations.
1,490,927 78,238 207,281 161,862 319,303 49,405 72,375 262,848 32,584 2,674,823 1,353 313,854
1,669,838 83,714 213,498 169,549 350,330 54,081 36,188 288,390
2,254,282 108,828 266,873 203,459 466,724 72,048 72,375 384,205
2,705,138 128,417 293,560 229,909 553,604 85,460 455,724
35,726 2,901,313 1,484 377,777
47,595 3,876,388 1,978 492,147
56,455 4,508,266 Calculated as a % of Net Revenues. 2,346 673,465
21,517
22,593
23,722
(172,693) (31,485) 22,347 (4,257) (164,571) 149,283
(180,493) 58,333 (99,567) 278,210
(252,387) 58,333 (170,332) 321,815
60,923 210,206
(967) 277,243
(1,287) 320,528
24,909 (299,368) 70% of the total recommendation cost @ 5% IR over 3 years. 58,333 (216,127) 457,338 (1,829) Small tax amount due to interest expenses from debts. 455,509
Wynn Resorts, Limited Balance Sheet (FY 2008-2011) in Thousands (except per share amounts) ASSETS Current assets: Cash and cash equivalents Receivables, net Inventories Deferred income taxes Prepaid expenses and other
$ 1,133,904 $ 125,196 $ 120,944 $ 31,047
$ 1,159,202 $ 140,220 $ 124,572 $ 34,152
$ 1,330,394 $ 157,046 $ 128,309 $ 37,567
$ 1,670,241 Increase in cash attributed to new facilities and operation expansion $ 175,891 $ 132,159 $ 41,324
Total current assets Restricted cash Property and equipment, net Intangibles, net Deferred financing costs Deposits and other assets Investment in unconsolidated s
$ 1,411,091 $ 5,105,473 $ 49,049 $ 65,877 $ 106,429 $ 4,696
$ 1,458,146 $ 5,537,373 $ 49,282 $ 62,583 $ 138,358 $ 4,931
$ 1,653,316 $ 5,814,242 $ 49,515 $ 59,454 $ 179,865 $ 5,177
$ 2,019,615 $ 6,104,954 Increase due to Atlantic City acquisition and Encore Macau Opening $ 49,748 $ 56,481 $ 233,825 $ 5,436
Total assets
$ 6,742,615
$ 7,250,672
$ 7,761,569
$ 8,470,058
LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: s and construction payable Current portion of long-term debt Current portion of land concession obligation Income taxes payable Accrued interest Accrued compensation and benefits Gaming taxes payable Other accrued expenses Customer deposits and other liabilities Construction retention Deferred income taxes
$ $ $ $ $ $ $ $ $ $ $
$ $ $
$ $ $
$ $ $
Total current liabilities Long-term debt Other long-term liabilities Long-term land concession obligation Deferred income taxes Construction retention
$ 723,775 $ 4,290,424 $ 124,511 $ 4,433 $ 6,950
$ 789,278 $ 4,449,424 $ 130,737 $ $ 4,433 $ 6,950
$ 814,024 $ 4,608,424 $ 137,273 $ $ 4,433 $ 6,950
$ 901,052 $ 4,767,424 Increase in long term debt b/c of 70% debt financing, $ 144,137 however, 5% being paid off annually, as noted in recommendations $ $ 4,433 $ 6,950
Total liabilities
$ 5,150,093
$ 5,380,821
$ 5,571,104
$ 5,823,996 Liability increase due to an increase in long term debt
$
$
$
Stockholders equity: Preferred stock, par value $0.01; 40,000,000 shares authorized; zero shares issued and outstanding Common stock, par value $0.01; 400,000,000 shares authorized; 124,817,994 and 116,259,411 shares issued; 112,013,040 and 114,370,090 shares outstanding Treasury stock, at cost; 12,804,954 and 1,889,321 shares Additional paid-in capital Accumulated other comprehensive income (loss) Retained earnings (deficit)
2008
232,136 2,685 6,068 1,283 21,485 85,803 66,954 15,820 209,906 78,599 3,036
2009
$ $ $ $ $
266,956 2,670 6,068 967 22,559 83,229 76,001 17,402 230,897 82,529 -
2010
$ $ $ $ $
307,000 2,765 6,068 1,287 23,687 80,732 102,601 19,142 253,986 16,755 -
2011
$ $ $ $ $
353,050 Increase due to construction and renovation in Atlantic City and Macau 2,860 6,068 1,829 Carried over from income statement 24,872 78,310 123,121 21,056 279,385 10,500 -
-
$
1,248
1,334
1,420
1,508 Increase by 30% over 3 years b/c of stock financing
$(1,119,407) $(1,119,407) $ (1,119,407) $ (1,119,407) Continue purchases of Treasury Stock at same rates $ 2,640,667 $ 2,614
$ 2,640,667 $ 2,614
$ 2,640,667 $ 2,614
$ 2,640,667 $ 2,614
$
$
$
665,171
$ 1,120,680
67,400
344,643
Total stockholders equity
$ 1,592,522
$ 1,869,851
$ 2,190,465
$ 2,646,062
Total liabilities and stockholders equity
$ 6,742,615
$ 7,250,672
$ 7,761,569
$ 8,470,058
Projected Financial Ratios Ratio Ratio
Quick Ratio Current Ratio
2009 2009
2010
2011
1.69
2010
2011
1.87
2.09
Quick Ratio
1.69
1.87
2.09
Current Ratio
1.85
1.85 2.03
2.24
2.03
2.24
2.38
2.10 2.38
1.80
2.10
1.80
2.54
2.20
2.54
2.20
Long Term Debt to Equity Long Term Debt to Equity Total Debt to Equity
2.88
Net Profit Margin
0.08
0.07
0.09
Net Profit Margin
Return on Assets
0.04
0.08 0.04
0.05
0.07
0.09
Return on Assets
Return on Equity
0.15
0.15 0.04
0.17
0.04
0.05
Total Asset Turnover
0.45
0.56
0.61
0.15
0.17
Earnings Per Share
2.08
2.26
3.02
Total Debt to Equity
Return on Equity
2.88
0.15
Total Asset Turnover
0.45
0.56
0.61
Earnings Per Share
2.08
2.26
3.02
Related Documents 171j1w
Wynn Resorts 5q68o
December 2019 77
Resorts In Yelagiri 683h5p
August 2021 0
Bloomberry Resorts V Bir 4c1d5r
April 2020 22
March 2023 0
Xchangeworld Resorts List 2 346i4v
December 2019 30
Types Of Resorts 4v236o
December 2019 28More Documents from "Simone Trice" 563t21
Wynn Resorts 5q68o
December 2019 77
Aval. Diag Port 4ano 2014 465u1u
August 2022 0
Tristi-tropici-riassunto 84k2
August 2021 0
Ementa Didatica Do Ensino Superior 626u32
September 2022 0
Korn - Falling Away From Me (2) 4l581k
May 2022 0