Encore Boston Harbour starting strong

by Administrator

The Boston Globe recently reported that during the first 24 hours that Encore Boston Harbour was open there were thousands of people waiting to enter, the nightclub was sold out and there was a wait to bet at the $100-minimum blackjack tables.

At the least, these anecdotes indicate strong demand at the resort early in its existence.

When Wynn Resorts reports earnings, it’ll be important to look at how those crowds translated to revenue in the resorts’ first few days.

Were hotel rooms full, were people gambling, and were restaurants and clubs busy enough to justify the property’s cost.

With a $2.6 billion price tag, the resort needs to generate a lot of revenue to be considered any kind of financial success.

To make a decent return on investment, investors should look for at least $260 million in annualized property EBITDA, a proxy for cash flow at the property.

This would be a 10 per cent EBITDA return on what was invested and is a good benchmark used to assess resorts.

Assuming an EBITDA margin of 30 per cent, that means the resort needs to generate $867 million of revenue per year, or $2.4 million per day.

That’s a big number considering the resort has just 671 hotel rooms, compared with 4,750 at Wynn Las Vegas.

The price of rooms will likely be higher than in Las Vegas and have been going for more than $1,000 per night at times.

There will be a lot of pressure on the hotel, restaurants, clubs and the casino to generate a lot of cash each day.

Since there’s no baseline for a casino near downtown Boston, it’s hard to know what to expect from the property.

But the $2.4 million per day is a good benchmark to watch for – and a lofty goal considering how small the property is.

Wynn’s latest project was shrouded in controversy before it opened as company founder Steven Wynn was embroiled in scandal.