Encore Boston Harbor slowed its financial losses as its first year in operation came to a close, but the massive Everett casino reported that revenue from hotel rooms, dining, and entertainment did not keep pace with the modest gains in gambling income.
The casino’s owner, Wynn Resorts, reported that Encore lost $34.1 million in the fourth quarter of 2019, down from $41.7 million in the previous quarter. That improvement was driven by a decline in expenses, as overall revenue at the casino dropped from $175.8 million to $169.3 million.
Though the casino industry is prone to seasonal trends that make it difficult to directly compare the results of different financial quarters, the results provide some degree of clarity on the direction of Encore’s business.
It’s not shocking for a new casino to lose money as it builds a customer base — Wynn Resorts has said it could take two years for the casino to be at full strength. But Wall Street investors will be looking for Encore to show steady improvement as time goes on.
Wynn Resorts’ chief executive, Matt Maddox, acknowledged to analysts on Thursday that the startup had been bumpier than expected. Like other gambling facilities in the region, Encore has struggled to attract slot machine players.
“Admittedly, it has launched softer than we thought, specifically on the slots side,” Maddox said.
Wynn has been looking for ways to get the most out of the $2.6 billion Everett facility. Encore had shown some positive signals about its performance late in the year, telling state regulators that December was its strongest month yet for gambling revenue.
Encore has taken several steps to increase its appeal to customers around Boston, including by adding a loyalty program for regular gamblers.
“We’re starting to see those things work,” Maddox said. Encore has also reduced the minimum bets for table games, made parking free, and added lower-cost, quick-dining options for people who are coming to play slots for the day.
Meanwhile, the company has been seeking to rein in the costs at the casino, where the number of employees declined from 4,800 last fall to 4,500 at the start of the year. Wynn Resorts said operating expenses were down 11 percent.
Occupancy at Encore’s hotels rose during the fourth quarter, from 70 percent to 76 percent, but overall room revenues fell from $18.2 million to $16.4 million as the casino charged lower rates. Food and beverage revenues were also down slightly, at $28.2 million. Other revenues, including entertainment and retail, fell from $13.8 million to $8.7 million.
Casino revenues rose from $114.9 million to $116 million. The numbers are lower than those reported to state regulators because Wynn Resorts deducts expenses such as unredeemed comp dollars and bonuses.
In the same three-month period, Encore told the Massachusetts Gaming Commission that it took in $147 million in gaming revenue. That number remains well off the pace Wynn predicted when it was seeking a gaming license in 2014. Then, the company projected that it would take in $800 million in first-year gambling revenue.
In a conference call on Thursday to discuss Wynn’s financial results, executives spent the bulk of their time discussing the company’s property in Macau, the Southeast Asia gambling destination where casinos have been shut down in the interest of public health amid the coronavirus outbreak.
But Wynn’s strategy for Encore, the state’s largest casino, is being watched closely around the region.
Plainridge Park slots casino in Plainville has seen its business decline amid competition from the giant Everett site, with its gambling revenues in recent months hitting their lowest point since the facility opened in 2015.
In a separate conference call, executives at Plainridge’s owner, Penn National Gaming, said the company expects improved business at its Massachusetts property this year. But it is trying to withstand the ongoing promotional blitz by Wynn as it seeks to attract customers by holding onto its highest-value customers and those who live near Plainridge.
“We’re not going to get into a marketing war,” said Penn National chief executive Jay Snowden. “We wouldn’t win anyway against a two-and-a-half-billion-dollar asset,” he said, referring to Encore.