Analysts Positive on Wynn’s UAE Ambitions but Skeptical on Timing

A plan by Wynn Resorts to develop the first ever integrated resort with gaming in the United Arab Emirates looms as overwhelmingly positive for the company, according to industry analysts, although efforts to launch by 2026 are seen as ambitious.

Note following Wynn’s surprise announcement this week, CBRE Equity Research analyst John DeCree said he remains skeptical on the concept of introducing casino gaming to the UAE despite such rumors being commonplace in recent years.

The US$2 billion integrated resort – a partnership between Wynn, property developer Marjan and local hospitality giant RAK Hospitality Holding – is set to be built on Al Marjan Island in the Emirate of Ras Al Khaimah (RAK), Wynn revealed, and will feature a luxury hotel with more than 1,000 rooms, a high-end shopping mall, state-of-the-art meeting and convention facilities, an exclusive spa, more than 10 restaurants and lounges, an array of entertainment choices and other amenities, plus gaming.

“While we have heard of gaming being rumored in the UAE for a while, we are still skeptical,” De Cree wrote.
“The UAE Civil Code does allow for various types of wagers on things like sporting and racing events, though a number of conditions must be met.”

While DeCree notes that RAK is known to be more progressive than other Emirates, with the Ras Al Khaimah Tourism Development Authority (RAKTDA) also announcing this week the formation of a new division focused on the regulation of integrated resorts, he suggests realizing Wynn’s dream may take longer than expected.

“We often see ambitious plans to authorize gaming by various jurisdictions (Japan IRs, Goa land-based casinos etc) that ultimately take numerous years (or longer) to play out,” he said.

Nevertheless, once it does become reality, the ROI on Wynn’s new IR “could be significant given the limited gaming options and amount of wealth and tourism in the region.”

In a separate note, Bernstein’s Vitaly Umansky said Wynn could generate ROI of between 20% and 30% once fully ramped.

“It is difficult to forecast financial returns, revenue or profitability for the property at present, however we can look to several potential examples,” he said, noting Encore Boston’s annualized run-rate EBITDA of US$250 million-plus and expected EBITDA of US$120 million to US$140 million from Melco Resorts’ ongoing Cyprus development.

“Based on very limited information, Wynn’s UAE property should be able to achieve EBITDA of at least US$250 million once ramped up.”

With Wynn expected to hold both a minority ownership stake while also providing gaming operations on a management basis, Bernstein expects Wynns management fees to be anywhere from US$40 million to over US$80 million per year.

“Assuming [this] … and an investment of US$250 million to US$400 million, Wynn could see ROI of 20% to 30%,” he said.

Source: Asgam


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