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Wynn Palace to lead in price, but slow ramp up

Wynn Palace is expected to price itself at the higher end of the scale with limited discounting said analysts on Friday.

In a hotel survey conducted on June 20, which looks at the period from Aug. 23 to Sep. 4, 2016, Morgan Stanley says Wynn Palace will lead the pack in terms of average room rates with the exception of Ritz Carlton and Banyan Tree.

The brokerage also said Wynn Palace could relieve downward pressure on various price points (such as hotel room rates, minimum bets, etc) for the overall market, however, there is a chance that Wynn Palace may cut prices if the occupancy rate is lower than expected.

It is also expected the casino may give out a number of free rooms initially to premium mass customers to ramp up the business, which will result in a lower margin.

“There is the potential  for short- term stock outperformance between now and Aug 22 (the expected Wynn Palace opening), similar to when MPEL and Galaxy opened their respective new casinos. But consensus expectations of 2017e EBITDA of US$450 - 600 million for Wynn Palace may be missed given soft demand,” said the brokerage.

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