Wynn is losing up to $2.6 million a day as Macao casinos close over the coronavirus outbreak
Posted February 7, 2020 3:59 a.m. EST
CNN — Wynn Resorts is losing millions of dollars per day as casinos in Macao remain closed over the deadly coronavirus outbreak.
CEO Matt Maddox disclosed the costs on the company's earnings call Thursday, saying that "while the casino is closed, our operating expense burn rate is roughly $2.4 to $2.6 million a day." The company employs 12,200 people in Macao.
Macao has at least 10 confirmed cases of the coronavirus, which has killed at least 630 people and infected more than 31,400, mainly in China. The government in Macao ordered the suspension of gambling and other related industries for about two weeks after one of Macao's confirmed coronavirus patients was discovered to have worked in the gambling industry.
That's bad news for casino operators. Gambling is the lifeblood of Macao, a semi-autonomous Chinese territory that depends on millions of visitors from mainland China. But the recent global health emergency has scared away tourists, and threatened the business model at the heart of Macao's economy.
Wynn has more at stake than other major casino operators. The company "has the highest relative exposure" to events in Macao, compared to rivals such as Sands or MGM, mainly because it has typically generated more of its overall revenue there, according to analysts at Moody's Investors Service.
Wynn brought in $6.6 billion in operating revenue for the full year of 2019 — roughly 70% of which came from two properties in Macao.
Wynn shuttered its casino operations at midnight Wednesday, and since then executives have been in "daily conversations" with authorities about efforts to contain the outbreak, Maddox said.
He kicked off the earnings call Thursday by providing an update on the recent events in Macao, saying the company is "currently focused almost solely on the health and safety of our employees, our customers and the Macao community at large."
The company still has a hotel and some restaurants open "for the few remaining guests that are in Macao," the CEO noted.
But executives "did not provide a definite date" for the casino in Macao to reopen, nor did they outline any plans to trim staffing costs, analysts at Jefferies wrote in a report to clients Friday.
"The virus will remain a headwind until [the] outbreak is controlled," they added.
Shares of Wynn Macau, the Hong Kong-listed subsidiary of Wynn Resorts, slid 1.2% Friday. Wynn stock also fell 1.6% in after-hours trading in New York.