Wynn Revamps Las Vegas Room - Analyst Blog

Wynn Resorts Limited (WYNN), which along with its subsidiaries is a leading developer, owner and operator of destination casino resorts with properties in Las Vegas and Macau, announced recently that it has completed the renovation of the first resort room at Wynn Las Vegas.

The renovation was a part of the company’s plan, under which it expects to remodel almost 2700 rooms at Wynn Las Vegas. The remodeling became a necessity as it was almost five years since the company’s opening. Moreover, Wynn Resorts will also smarten up its baccarat game starting in October, so that it is ready for Christmas and New Year’s. The company plans to spend almost $99 million for this renewal. The entire project will be completed in April 2011.

Wynn Resorts believes that through this reformation it will be able to attract value-conscious customers, who are ready to spend a little bit more.

We believe the company’s strategy to spend on room renovations makes sense as it will improve occupancy percentage. Additionally, Wynn Resorts has the opportunity to increase rates as rooms will be out of service, thus benefiting revenue per available room (RevPAR). We believe this should give Wynn Resorts an advantage over competitors such as Las Vegas Sands Corp. (LVS) and MGM Resorts International (MGM).

Additionally, Wynn Resorts is experiencing an increase in demand with a gradual recovery in global economy. The business travelers are returning, with leisure industry improving as well. Business at Las Vegas, which was worst hit due to the slowdown in economy, appears to be stabilizing. With a rebound in Las Vegas business, occupancy and average daily rate (ADR) will also improve, resulting in higher RevPAR.

Wynn Resorts currently retains a Zacks #2 Rank (short-term Buy rating). We are also maintaining our long-term Outperform recommendation on the stock.