|By Howard Stutz, Las Vegas Review-Journal|
Knight Ridder/Tribune Business News
Mar. 17, 2005 - With six weeks to go before unveiling the $2.7 billion Wynn Las Vegas, Steve Wynn already is planning a second full-scale, $1.4 billion megaresort on the former Desert Inn property, Wynn Resorts Ltd. revealed in a filing with the Securities and Exchange Commission this week.
The project, dubbed Encore by company leaders, originally was envisioned as a $900 million, 1,500-room hotel tower expansion to Wynn Las Vegas. Plans now include more than 2,000 luxury suites and a "significant" increase in casino space from the original concept.
Other amenities for Encore will include restaurants, convention and meeting space, retail offerings, a spa-salon and entertainment venues.
The cost of the project also jumped by $500 million. Final plans and budget are to be approved by Wynn Resort's lenders by June 30, according to the filing.
Ronald Kramer, president of Wynn Resorts, said Wednesday that designers still are working out Encore's details, such as the size of the casino and its overall look. The final design will be subject to approval by the company's board of directors.
In an interview with The Wall Street Journal, company Chairman Steve Wynn said he is designing Encore to surpass Bellagio, now operated by MGM Mirage but built by Wynn in 1998, as the most luxurious hotel on the Strip. He said each Encore suite will be 1,030 square feet with 230-square-foot bathrooms.
"When I fill rooms with suite customers, I get a higher-spending customer," Wynn told The Wall Street Journal, estimating the suites will be priced from $350 to $400 a night.
The Journal reported Wynn also plans to build a concert hall in Encore with special technology that will allow seats to disappear into a 10-foot cavity in the floor, turning the space into a gigantic ballroom suitable for conventions.
Encore's footprint will be situated on the 20-acre parcel that once housed the remaining portions of the Desert Inn, which were demolished in November.
Kramer said several aspects helped steer the company toward constructing a second Strip resort on the property rather than just adding another tower to Wynn Las Vegas.
The project's location and the buildup to the opening of Wynn Las Vegas influenced Wynn's decision to expand the scope of Encore.
"The anticipated demand for rooms at Wynn Las Vegas and the continued strength of the Las Vegas market were the primary reasons to change the Encore concept," Kramer said. "Also, the value of real estate on the Las Vegas Strip and desire to maximize the potential of those assets made sense for us to build a second resort.
"But when Steve looked at the overall Desert Inn property and the scope of that location, developing a full-scale resort was an easy decision to make."
Kramer said Encore would be connected to Wynn Las Vegas through public areas although it also would have its own separate entrances. The two resorts will be managed as one entity.
Construction is expected to begin on Encore this summer, with completion planned in the first half of 2008.
Kramer said based on the projected price of the Encore project, the company will not need to obtain additional financing. It will be built with funds available from existing credit and bond agreements and $300 million in unrestricted corporate cash on hand.
Cash flow from Wynn Las Vegas, which opens April 28, also could be used to fund Encore's development, Kramer said.
The announcement sent shares of Wynn Resorts on a roller-coaster ride on Wall Street on Wednesday, reaching a high of $76.45 before falling back in price. More than 3.3 million shares -- three times the normal volume -- were traded with the price closing at $71.89, down 98 cents, or 1.34 percent.
Deutsche Bank gaming analyst Marc Falcone said Encore, when completed, could add $2 to $3 per share in equity value to Wynn Resorts' stock.
"We continue to believe Wynn Resorts is one of the most exciting stories in the gaming industry," Falcone said in a note to investors, also citing the company's development opportunities in Macau, where it is expected to open a casino in the summer of 2006 even while it is already planning for a second phase.
Wynn Las Vegas, the Strip's first new resort in five years, will open with 2,716 rooms and suites, 111,000 square feet of casino space, 18 restaurants, about 223,000 square feet of meeting space and other amenities, including an on-site Ferrari and Maserati dealership. The SEC filing also unveiled a few details about Wynn Las Vegas.
The focal point of the property is a man-made, lake-mountain feature near the front of the hotel.
The arrival area for hotel guests includes an atrium garden adjacent to the registration desk with a view of the lake-mountain feature, which provides special effects intended to entertain hotel guests and other visitors who come to the resort.
The showroom for the Franco Dragone-produced production show will seat 2,080 guests in a theater-in-the-round setting that surrounds a 1 million gallon performance pool.
In total, Wynn Resorts controls 235 acres bordered by the Strip to the west, Paradise Road to the east, Sands Avenue to the south and Desert Inn Boulevard to the north. About 140 acres are being used for the re-designed former Desert Inn golf course.
Kramer said the company will evaluate plans for the golf course as part of a possible master-planned redevelopment of the entire site.
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