History

Wynn Resorts, LTD was formed by former Mirage Resorts Chairman/CEO Steven Wynn on October 25, 2002, who currently serves as the Chairman of the Board and CEO of Wynn. His knowledge of the gambling and casino industry is indispensable to Wynn Resorts, as he is accredited to turning the luxury casino industry in Las Vegas into what it is today. Wynn’s mission is: “A commitment to providing an elegant environment, high quality amenities, a superior level of service and distinctive attractions for our customers.” The company currently has operations in both Las Vegas and Macau Peninsula in China. Wynn Las Vegas, the company’s first development, was opened on April 28th, 2005. A year later, the company broke ground on an extension to Wynn Las Vegas, to be called Encore Suites, which is expected to be completed by 2009. While the project was initially envisioned as an expansion of Wynn Las Vegas, after it opened December 22nd, 2008, the hotel and casino quickly took on a life of its own and became a full scale resort, and is adjoined to Wynn Las Vegas. The property, which‐ encompasses 217 acres of land with 111,000 Sq.ft of casino, 137 table games, but also luxury hotel accommodations of 2,674 hotel rooms and suits, 36 fairway villas, and 6 private entry villas. There is an 18 hole golf course, 18 restaurants, bars and nightclubs, nighttime‐ entertainment options, an on site Ferrari and Maserati dealership, over 76,000 square feet of‐ high-end retail space, and of course all the usual casino amenities, but with a layout that is unique to Wynn Resorts. Today, the company competes closely with Bellagio, Caesar’s Palace, Luxor Hotel & Casino, Mandalay Bay Resort & Casino, The Mirage, Las Vegas Sands, New York Hotel & Casino, Treasure Island, The Venetian, The Palazzo and Genting Highlands Resort.

Porters Five Forces Competitive Analysis

In Las Vegas, the competition is moderate. There are many competing hotels, but the market, after some consolidation, resembles an oligopoly. The competitors also have significant investments in developing brand loyalty, especially among the high-rollers.

The barriers to entry are largely related to the location of the property, brand loyalty, and gaming licenses that are awarded by the government. The bargaining power of buyers is muted by high degree of differentiation among competing properties, resulting in some brand loyalty and switching costs.

The bargaining power of suppliers (mostly service staff, specialized gaming infrastructure and equipment), and threat from substitutes is low.

In Macau, the intensity of competition is lower because the government strictly controls the award of licenses, which also acts as an entry barrier. Even so, the casinos that are awarded licenses compete actively among themselves to build a successful franchise. The licenses are given for a fixed period and need to be renewed which introduces some uncertainty in the industry.

Strengths

Wynn Resorts’ competency flows primarily from Steve Wynn’s instincts and vision. Steve Wynn himself is the major strength of Wynn Resorts as he has more than 30 years experience in Las Vegas. This man has contacts, alliances and knowledge that could not be easily replaced.

Wynn resort brand is synonymous with luxury in the casino market. Wynn focuses on high-end customers and differentiated its services towards segmented market.

The company knows how to take care of high-end customers, and keep them loyal to the brand. High-end customers feel pampered and relaxed, and they definitely seem to believe that the visit to Wynn Resorts property is worth it. This translates into millions of dollars of revenue at high margins for Wynn Resorts.

The tip-pooling system, which enables supervisors and dealers to share in the tips, and enables experienced dealers to become supervisors without any loss of income.

Wynn has an experienced management team, who are working to build quality resorts and ensures the resort continues to build world class operation.

Wynn operates in premiere spot on Las Vegas strip, and home to the only golf course in Vegas

They focus on strategic development of its product - luxury, high-end product, high brand value

Wynne is also the holder of one of only four licenses in Macau.

Wynn resorts’ greatest marketing strengths are strategic development of its products.

As Wynn resorts targeting same customer segment, high-end customers in both Wynn Macau and Wynn Las Vegas, they can use cross-marketing strategy to offer customers to travel and vacation in other parts of the world.

Weaknesses

Wynn Resorts completely dependent on Steve Wynn. If Steve Wynn left the company from any reason other than death or a severe disability, the resort would lose all lines of credit.

Wynn only focuses on high-end customers, missing a large customer base of middle income clients.

As Wynn charges high price, as a result they increase rates at a slower percentage than all other competitors on the Strip. As an example, Wynn’s average room rent increased 4.4% from 2005 to 2006, whereas competitors’ rate increased from 5 to 9 percent in that year.

Wynn resort Ltd. being unable to collect its gaming debts of customers from Macau.

Products of Wynn Resorts are non-compulsory. Therefore, propensity to sale these products are subject to volatility of changing in consumption pattern, both in the US and Macau.

Opportunities

Demographic changes, such as- aging population, who are healthy and wealthy are willing to spent on fun and recreations.

Gambling is now socially acceptable and fun recreational activity in many countries which was previously negatively tied to addiction and corruption. So, Wynn can enter into new market where social norms are positively changing in favor of the company.

As few competitors are merging and changing its target market from high-end customers to middle-class gamblers, this could result in additional revenues for Wynn as these high-end customers may switch to Wynn for higher-class amenities.

If other countries of the World allow such licenses as allowed by China (Macau), then there would be an enormous growth opportunity for Wynn, as Wynn has giant experience in the business and have strong customer base.

If the Chinese government loosens its restrictions on travel and currency movement for Chinese citizens, tourism to Macau will grow, and profit potential for Wynn resorts will increase.

Threats

Increased global and local competition becomes great concern for Wynn resorts to sustain its high brand image to attract new customers and retain “whale”, customers.

In the resort casino industry, the ability to find land and licenses in legal areas is very difficult because many countries have strict regulations about gaming resorts. This can be a barrier to expand their business by entering in new markets.

The concession period for Wynn in Macau will expire in June, 2017 at which time Macau government has the right to take over the operation of the company

By doing business in Macau, which is an emerging market, there are significant amount of political, economic and social risks for Wynn Macau.

In Macau, the company needs to pay tax on gross gaming revenue, not on net income. They have to pay tax for the gross revenue even if the income is not earned, this happens when Wynn fails to collect gaming debts from its customers. Moreover, they have to pay tax even if they incur loss from operation in a given year.

United States introduced stricter visa and passport requirement due to possible terrorisms after terrorist attack in September 11, 2001. Therefore, they are losing prospective customers from around the globe.

Business Strategy

Wynn Resorts’ business level strategy is focused differentiation with an emphasis on customer responsiveness. It caters to high-rollers who are comfortable spending large amounts of money at casinos and want the best. Wynn Resorts has developed services that provide them with the ultimate in personalized attention including complimentary use of luxury cars and lavish suites.Wynn Resorts’ provides the feeling of exclusivity and offering intimacy and privacy to its customers. Wynn Resorts forgoes other customer segments to service only the high-end customers, focusing on niche marketing strategy. Steve Wynn is personally involved in all aspects of floor operations including the concept of tip-pooling, an incentive system for dealers to become supervisors. His presence on the floor motivates employees to perform at their best, and allows him to model his vision of customer responsiveness to his employees. His presence keeps employees honest, hard-working, and engenders their trust. Steve Wynn pays close attention to his best and frequent customers, knowing them by name and remembering personal details. He uses his passion to build loyalty from both customers and employees.Wynn Resorts’ incentive system, especially tip-pooling, provides incentives to experienced dealers to become supervisors, and provide the best service to their customers to earn higher compensation.

Corporate Strategy

Wynn’s mission is: “A commitment to providing an elegant environment, high quality amenities, a superior level of service and distinctive attractions for our customers.”