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Wynn Resorts 1

Wynn Resorts Strategic Plan Case Study

BAM 479 Strategic Management

Siena Heights University

Brittany Brockie
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Wynn Resorts
Case Statement

Wynn Resorts is facing a year-to-year decrease in revenue and intense industry

competition. A poor economy and tough government crackdowns are also threatening the

company’s success. CEO Matt Maddox is in need of a 3-year strategic plan to move the

company forward.

Vision Statement

The authors of the text, Strategic Management: A Competitive Advantage Approach,

were unable to find a vision statement for Wynn Resorts. The following is a newly created vision

statement.

“Our vision at Wynn Resorts is to be a world leader in luxury resorts in the gaming sector, with

unbeatable customer service and keen attention to detail. Wynn Resorts will continuously seek

new opportunities to ensure growth and technological advancements in order to better

accommodate our guests and staff. Wynn Resorts will strive to keep resort and room amenities

unique and fresh to differ our brand from competitors and maximize shareholder wealth.”

Mission Statement

The information on Wynn Resort’s website “About Us” page can be used as the mission

statement.

“Wynn Resorts holds more Forbes Travel Guide Five-Star Awards than any other independent

hotel company in the world. Our resort offers guest award-winning restaurants, exciting

entertainment and nightlife, two award-winning spas, salons, and luxury shopping. Our

commitment to making every visit a once-in-a-lifetime experience to our guests is what makes us

who we are.”

Mission and Vision Statement Evaluation

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Wynn Resorts
The vision statement created for Wynn Resorts gives a good outline of what the resorts

strategic plan should be. While it is a little lengthy, it offers insight into what Wynn Resorts

would like to ultimately achieve and explains the purpose of their existence. The mission

statement was taken from Wynn Resort’s “About Us” section on the company’s website. The

mission statement clearly states what they are, a five-star hotel, and what they offer. While the

statement does mention they strive to make every guests’ experience once-in-a-lifetime, they

could try to be more specific in who its primary customers/guests are.

Milestones

Wynn Resorts owns and operates Wynn Las Vegas, Encore Las Vegas, Encore Boston

Harbor, Wynn Macau, and Wynn Palace, Cotai. Wynn’s properties offer many high-end gaming

options and world-class entertainment, as well as luxurious hotel rooms.

 Wynn Resorts history begins in 2002 when Mr. Steve Wynn and Japanese billionaire

Kazuo Okada agreed to terms on the Wynn Resort property in Las Vegas.

 In 2002, the two purchased the Desert Inn for $270 million and had its IPO.

 Wynn Las Vegas opened its doors in 2005. Followed by Wynn Macau in 2006, Encore in

Las Vegas in 2009, and Encore in Macau in 2010.

 In September 2014, the Massachusetts Gaming Commission approved Wynn Resort’s

proposed $1.6 billion casino to be located in Everett, Massachusetts.

 In August 2016, Wynn Palace opened in Cotai.

 Wynn Resorts CEO Steven Wynn steps down in February 2018

 New CEO Matthew Maddox starts same month

 As of February 2019, Wynn Resorts holds the most Forbes Travel Guide Five-Star

Awards of any independent hotel company, having a total of 19 awards

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Wynn Resorts
 Encore Boston Harbor opens in June 2019.

 Recently, in February 2020, Wynn Las Vegas was named the largest five-star resort in

the world.

External Factor Assessment

Using the External Factor Evaluation Matrix allows for a comprehensive review of Wynn

Resorts’ different opportunities and threats within the industry. The competition within the

luxury resorts and gaming sector industry is exceedingly competitive and can lead to many

challenges.

Key External Factors Weight Rating Weighted

Score
Opportunities
1. Casinos are one of the U.S.’s top .10 4 0.4
industries

2. The hotel industry is one of the biggest .10 4 0.4

business industries known to man in this
era

3. Staying at luxury hotels/casinos is a big .04 3 0.12

trend among middle to upper class

4. Lots of travelers prefer to stay in the .06 2 0.12

U.S. for vacations due to travel warnings
and makes for easier travel

5. Celebrities, famous figures, and .02 2 0.04

influencers often visit hotels, casinos
and other vacation spots

6. The rise in social media marketing .05 1 0.05

allows for hotels and resorts to market to
a larger audience, cheaper

7. Travel websites, like Expedia and .07 2 0.14

Hotels.com, make it easy for consumers
to shop for hotels
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Wynn Resorts
Threats
1. The sharing economy is big right now .10 1 0.1
and consumers are opting to using sites
like Airbnb, VRBO, and Homestay

2. Consumer demands are continuously .10 2 0.2

changing

3. Shortage of experienced staff .05 2 0.1

4. Uncertainty in international travel .07 2 0.14

5. New government regulations and .10 3 0.3

crackdowns

6. Gambling can lead to a form of .10 1 0.1

addiction and monetary problems
7. Virtual gambling and entertainment .03 1 0.03

TOTAL 1.00 2.24

Reflecting on the EFE matrix table above, Wynn Resorts has plenty of solid opportunities

to help move the company forward. The highest scored factors include the fact that the hotel and

casino industries are two of the U.S.’s biggest industries, which offers room for growth and

profit. IBISWorld reported that the market size of the casino hotel industry in the U.S. is

expected to increase 1.5% in 2020. Another considerable opportunity factor is the widespread

use of social media marketing. Statistics show that 55% of social media users purchase products

or services after discovering them on social media (McDermott, 2019).

There are some external threats facing the Wynn Resorts, such as government

intervention and everchanging consumer demands. “The ownership and operation of casino

entertainment facilities are subject to pervasive regulation under the laws, rules, and regulations

of each of the jurisdiction in which we operate,” (Gaming). The ability of the government to

regulate this industry can create many unexpected issues. Another significant threat to the
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industry is the negative stigma surrounding gambling. In an article published by Scientific

American, gambling addiction is often compared similarly to drug addiction based on

psychology, neuroscience, and genetics studies. Unfortunately, casinos capitalize on a person’s

desire to gamble. The overall score for Wynn Resorts EFE matrix is a weighted score of 2.24.

This score represents a good standing and many opportunities for the company, but there is room

for improvement in order to overcome the possible threats.

Internal Factor Assessment

Using the Internal Factor Evaluation Matrix allows for a comprehensive review of Wynn

Resorts’ strengths and weaknesses. Due to the intense industry competition, a company must be

able to identify its strong and weak internal factors.

Key Internal Factors Weight Rating Weighted

Score
Strengths
1. Founder Steve Wynn has excellent expertise in .05 4 0.2
developing and operating high-quality casino
properties
2. Wynn employees are thoroughly trained to .08 3 0.24
provide guests with luxury service
3. Wynn Resorts offers an extensive reward .04 3 0.12
system that attracts and keeps guest returning
4. Actively looking to build and/or acquire .09 3 0.27
properties in new markets
5. Wynn has a 20-year lease agreement with .09 3 0.27
Macau government
6. Wynn Resorts offer a wide variety of .07 3 0.21
entertainment and experiences for guests
7. Wynn Resorts operates in a very attractive .10 3 0.3
niche of the gaming industry
Weaknesses
1. Wynn Resorts faces competition from Caesars .10 3 0.3
Entertainment and MGM Resorts in Las Vegas
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Wynn Resorts
2. Wynn Resorts faces competition from online .09 2 0.18
gambling
3. Local and state government regulations and .09 2 0.18
restrictions propose an ongoing threat
4. In areas, like Las Vegas, where there are many .05 3 0.15
resorts similar to Wynn, they must constantly
be updating properties, amenities, and games
5. New smoking ban prohibits or limits smoking .05 2 0.1
in casinos/hotels
6. Government crackdown on high-end gambling .08 2 0.16
in China
7. Wynn Resorts concluded its 2014 Q4 with a 32 .07 3 0.21
and 5.8 percent decrease in revenue
TOTAL 1.00 2.89

The above IFE matrix shows that Wynn Resorts dominant strengths include expertise in

the industry, potential for new market growth, and qualified staff. Founder and past CEO, Steve

Wynn, has more than 45 years of experience in the hotel casino industry and he is credited, by

Business Insider, for bringing the megaresort to the Las Vegas strip and taking the luxury

experience to the next level. Wynn Resorts definitely has an advantage being created and led by

Steve Wynn. Wynn Resorts is also seeing new market growth and is one of the most profitable

resorts on the Las Vegas strip (Hoium, 2019). Current CEO, Matt Maddox, and his team are

putting a bigger focus on convention centers and getting more from restaurant business in order

to gain more market share. Having and retaining qualified staff is a strong strength Wynn Resorts

prides itself on. “The Wynn Resorts corporate philosophy is built on the idea that “only people

make people happy.” This philosophy fosters an employee culture uniquely designed to deliver

on the promise of providing a five-star hospitality experience for resort guests,” (About).

A major weakness of Wynn Resorts is the amount of competition they face, particularly

in Las Vegas. Some of its top competitors include Caesars Entertainment, Sands, and MGM
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Resorts (David, 2017). They must work hard to stand out. Government crackdown on high-end

gambling in China has also weakened Wynn Resorts, specifically its locations in Macau. The

Chinese government has been taking action to stop corrupt officials and money-laundering,

which has resulted in Macau’s overall gaming revenues to decrease about 50 percent (Ball,

2015). The overall IFE weighted score for the company was 2.89, which shows the company

does have minor weaknesses, but also minor strengths.

Industry Analysis

Porter Five Forces Analysis

Knowing and assessing the power of the competition is key when analyzing an industry.

Porter’s Five-Forces Model of competitive analysis is a widely used approach that examines

different forces within industries and helps companies develop strategies. According to the

Strategic Management text, the five driving forces that shape an industry are: the competition

within the industry, the potential entry of new competitors, potential development of substitute

products/services, the bargaining power of suppliers, and the bargaining power of consumers.

Wynn Resorts competes in the hotel casino industry.

Rivalry Among Competing Firms

Wynn Resort’s competing firms include Caesars Entertainment, MGM Resorts, and the

Las Vegas Sands (David, 2017). Caesars and MGM are both competitive in Las Vegas, but also

have locations around the U.S. and are larger, based on U.S. total revenues. The data given in the

Strategic Management case study shows that Caesars controls about 13 percent of the total U.S.

market share and MGM controls about 11 percent. Wynn Resorts also competes with Las Vegas

Sands in Las Vegas and in Macau, China. Sands has about a 4 percent market share, which is

lower than Caesars and MGM, but their overall profile is very similar with Wynn (David, 2017).
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Wynn also faces external competition from lotteries, online gambling, local and state

government, riverboats, and racetracks. The areas in which Wynn Resorts operate should also be

taken into consideration due to the popularity of hotels and casinos, i.e., Las Vegas, Atlantic

City, Macau. There are a lot of hotels with casinos that offer similar amenities, giving consumers

many options.

Potential Entry of New Competitors

If a company can enter the industry easily, it will increase the competitiveness. However,

the potential for new companies to enter the hotel casino industry is somewhat low for a number

of reasons. The first reason is that casinos are heavily regulated by government policy and

regulations. Secondly, since there are already so many existing hotel casinos already in the

competition, the need for product differentiation is high. Unfortunately, this can be difficult

considering what hotel casinos already offer is so diverse. A third reason potential entry is not a

big concern, as discussed in an article on Market Realist, is because casinos require huge capital

requirements. The heavy amount of capital expenditures in their gaming machines contributes

significantly to the total output generated by a casino operator, which is hard to establish

(Bolton, 2014).

Potential Development of Substitute Products

Not only is the potential entry of competitors threatening, but the potential entry of

substitute products and services is as equally threatening. Some substitutes that already exist, and

are cheaper, to the hotel industry include motels, hostels, home sharing such as Airbnb and

VRBO, and simply staying with friends or family. In a study done by researchers from the

Tepper School of Business, it was concluded that home sharing companies, like Airbnb, are

cannibalizing hotel sales. The research showed that the flexible lodging capacity created by
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home sharing may disrupt traditional pricing strategies and the home sharing market is targeting

business travelers which means higher-end hotels are more likely to be affected (Study, 2019).

However, there is limited potential for new developments in the hotel industry. For the casino

industry, new developments could potentially include newer and more online gambling, an

increase in lotteries, a rise in popularity of riverboats and racetrack betting. The strength for

potential casino substitutes is high.

Bargaining Power of Suppliers

The last two factors revolve around bargaining power. First is the bargaining power of

the industry’s suppliers. There are an endless amount of choices for hotel casino suppliers,

ranging from amusement vendors to surveillance vendors. The Casino City Press Guide is a

comprehensive directory of more than 15,000 casino and gaming industry suppliers, and that

does not even include hotel suppliers. Competition can be intensified when there are few

suppliers, few good substitute raw materials, or when the cost of switching is high. However, this

is not really the case with the suppliers in the hotel casino industry. In this industry there is a

need for suppliers of luxury hotel furnishings, high-end retail, dining options, entertainment

options, and gaming equipment/supplies. There are numerous supplier options for each category.

Bargaining Power of Consumers

The other bargaining power in the five forces is the bargaining power of consumers. In

this industry this can be one of the strongest forces of competition for a variety of reasons. When

it comes to bargaining power in this case, the consumer is able to easily switch to the

competition inexpensively, their decrease in want for hotel casinos can fluctuate greatly, and

they can simply choose whether or not they want to go to these types of places. To counteract the

consumer’s ability to switch among the competition easily, many hotel casinos are utilizing one
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of more of four strategies to set themselves apart. Four important strategies, according to Kolau

marketing company, include using storytelling to differentiate yourself, register your hotel in the

online travel agencies, promote direct reservations through your website, and manage reviews

online. The one power that consumers don’t possess is the power in the pricing of hotel casinos.

Competitive Strategies

SWOT Matrix

After assessing the matrix below, twelve strategies have been identified. There are three

strategies under each of the categories, SO, WO, ST, and WT. Each strategy will be evaluated

and analyzed individually following the matrix.

STRENGTHS WEAKNESSES

1. Founder Steve Wynn has excellent 1.Wynn Resorts faces competition from
expertise in developing and operating Caesars Entertainment and MGM
high-quality casino properties Resorts in Las Vegas

2.Wynn employees are thoroughly 2.Wynn Resorts faces competition from

trained to provide guests with luxury
service
3.Wynn Resorts offers an extensive
reward system that attracts and keeps
guest returning
4.Actively looking to build and/or
acquire properties in new markets
5.Wynn has a 20-year lease agreement
with Macau government
6.Wynn Resorts offer a wide variety of
entertainment and experiences for
guests
online gambling
3.Local and state government
regulations and restrictions propose an
ongoing threat
4.In areas like Las Vegas where there
are many resorts similar to Wynn, they
must constantly be updating properties,
amenities, and games
5.New smoking ban limits or prohibits
indoor smoking at casinos/hotels
6.Government crackdown on high-end
gambling in China

7.Wynn Resorts operate in a very 7.Wynn Resorts concluded its 2014 Q4

attractive niche of gaming industry with a 32 and 5.8 percent decrease in
revenue

OPPORTUNITIES SO STRATEGIES WO STRATEGIES

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1. Casinos are one of the U.S.’s top
industries
2. The hotel industry is one of the
biggest business industries known
to man in this era
3. Staying at luxury hotels/casinos is
a big trend among middle to upper
class
4. Lots of travelers prefer to stay in
the U.S. for vacations due to travel
warnings and easier travel
5. Celebrities, famous figures, and
influencers often visit hotels,
casinos and other vacation spots
6. The rise in social media marketing
allows for hotels and resorts to
market to a larger audience,
cheaper
7. Travel websites, like Expedia and
Hotels.com, make it easy for
consumers to shop for hotels
THREATS
1. The sharing economy is big right
now and consumers are using sites
like Airbnb, VRBO, and Homestay
2. Consumer demands are
continuously changing
3. Shortage of experienced staff
4. Uncertainty in international travel
5. New government regulations
6. Gambling can lead to a form of
addiction and monetary problems
7. Virtual gambling and
entertainment
1. Continue expanding Wynn
Resorts with the help of Steve
Wynn’s expertise and success
(S1, O1, O2)
2. Increase U.S. tourist stay at
the U.S. Wynn Resorts by
offering safe travel options and
superior guest service (S2, S6
O3, O4)
3. Offer rewards and perks to
returning guests and travel
website users (S3, O7)
ST STRATEGIES
1. Conduct staff evaluations to
ensure all employees are up to
date on procedures and uphold
the hotel’s values (S2, T3)
2. Advertise the hotel’s one-of-a-
kind amenities and services as
well at their endless dining and
entertainment options not
available anywhere else (S2, S3,
T1, T2)
3. Purchase existing hotels or
property to build within the U.S.
(S4, T4)
Wynn Resorts
1. Bring in new and exclusive
entertainment options (W1, O5)
2. Install new room furnishings,
new guest services, and enhance
overall look to keep up with
modern trends (W4, O2,
O3)
3. Use social media marketing
efforts to reach a wider audience
and potential markets (W7, O6)
WT STRATEGIES
1. Showcase the advantages to
hotel casinos and the
disadvantages to online
gambling (W2, T7)
2. Update hotel fixtures and
furnishings to keep up on trends
and also setting new trends and
meeting new consumer desires
(W1, W4, T2)
3. Understand and stay up to
date on government policies and
regulations in order to prevent
any unexpected challenges (W3,
T5)
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SWOT Analysis

To summarize, Wynn Resorts has internal weaknesses and faces many threats externally,

but it also possesses internal strengths and chances to varying external opportunities. Wynn

Resorts has the resources and staff to take the company to great heights. They also possess the

strength to enter new markets geographically. The biggest weaknesses stem from competition,

new laws, and government crackdown which could potentially result in a decrease of revenue, as

the 2014 end of year shows. Being a luxury hotel with entertainment, Wynn Resorts is

capitalizing on two major industries. Wynn Resorts has the opportunity to appeal to a variety of

guests by offering one-of-a-kind experiences and trendy entertainment. This industry does face

threats, such as the new home sharing concept that has taken the economy by storm; as well as

the negative perception surrounding gambling.

Matching Strategy to Internal and External Conditions

Using the strengths, weaknesses, opportunities, and threats found when conducting the

EFE and IFE matrixes, a SWOT Matrix was created to help develop four types of strategies.

SO Strategies

The first are SO strategies (strengths-opportunities) in which the company uses its

internal strengths to take advantage of external opportunities. Using a combination of S1, O1 and

O2, it would be wise for Wynn Resorts to continue building upon their success due to the fact

that hotels and casinos are top industries in the U.S. and the founder has knowledge and

experience in the industry. Using Wynn’s S2 and S6 along with O3 and O4, the resorts could

potentially capitalize on promoting U.S. tourists to stay at their U.S. resorts because they provide
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a safe and luxurious environment. O7 presents the ability for Wynn to use their already available

rewards and perks to entice travel website users.

WO Strategies

WO strategies (weaknesses-opportunities) aim at improving a company’s internal

weaknesses by taking advantage of external opportunities. Wynn Resorts could improve their

W1 by using O5 and bringing in entertainment options that are exclusive to their resorts. For

example, they could get a popular band that doesn’t tour anymore to have a residency at their

hotel, and this would attract fans of that band to their resort. O2 and O3 give Wynn a chance to

put themselves in a competitive advantage against their competitors, W4. The company

experienced a decline in revenue, which can be offset by bringing in more revenue. This can be

done by using social media (O6) and reaching more potential guests, which is often cheaper than

traditional marketing techniques.

ST Strategies

Using their strengths to avoid or reduce external threats is known as ST strategies

(strengths-threats). To limit the threat of unexperienced staff, T3, the company should conduct

quarterly staff evaluations to ensure each staff member knows the procedures and has

hotel/casino value knowledge. T1 and T2 can be avoided by using S2 and S3, marketing the

resort’s unique amenities and services that cannot be found elsewhere. To reduce the T4, guest

uncertainty about international travel, the company should use their purchasing strength to search

out future locations within the U.S.

WT Strategies

Lastly, WT strategies involve defensive tactics directed at reducing internal weakness and

avoiding external threats. The big threat and weakness of online gambling could be overrun by
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communicating to potential guests the disadvantages and missed opportunities when choosing

online gambling instead of staying and playing at one of their resorts. To avoid, or reduce W1,

W4, and T2, the company could update its resorts to incorporate modern trends and what guests

look for. Government regulation plays the role of a weakness and a threat to companies like

Wynn Resorts, and the best way to defend themselves against the government is to stay current

on policies and regulations and prepare for any challenges that may come along.

Financial Analysis

Growth Rates

A company’s growth rate refers to a change in a specific variable within a defined time

period and context. Growth rates typically take into consideration a company’s sales and profits.

Wynn Resorts current sales/revenue growth rate is -1.59%. Since 2016, this rate has

declined considerably. Within the hotel and entertainment service industry, Wynn Resorts scores

low, with the average growth rate being around 5.01% (Hotels, 2019).

A company’s net income is a useful tool for determining how profitable a company is.

Net income tells what a company profits after all expenses are deducted from their revenue.

Wynn Resorts net income for 2019 was $1.92 billion (Wynn, 2020). This puts their net income at

a growth rate of -7.77%, while the industry average rate was 37.3% (Hotels, 2019). Wynn

Resorts net income growth is doing below average, but is not the worst in the industry.

Profitability Ratios/Profit Margins

Profitability ratios are used to determine a company’s ability to generate earnings relative

to different financial variables. These variables include revenue, operating costs, balance sheet

assets, and shareholders’ equity. With most profitability ratios having a higher value compared to

the competitors or past years indicates the company is doing well.

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Wynn Resorts
The gross profit margin ratio is the total margin available to cover a company’s operating

expenses and still yield a profit. Wynn Resorts gross profit margin is 29.03%. The industry

average is 53.07% (Hotels, 2019). This puts Wynn Resorts just below average, but not at the low

end of the scale.

The net profit margin shows the after-tax profits per each dollar of a sale. Wynn Resorts

net profit margin is 4.71%. This net profit margin puts Wynn Resorts slightly below average,

with industry average being 7.94% (Hotels, 2019).

Wynn Resorts average gross margin 5-year annual average is 38.66. This number is

calculated by taking the company’s last 5 fiscal years’ gross margins and finding the average.

The industry’s average gross margin 5-year annual average is 45.86, showing Wynn Resorts is

consistently deficient (WYNN).

Price Ratios

The price-to-earnings ratio (P/E ratio), is used to help investors determine the market

value of a stock compared to the company’s earnings. Wynn Resort’s current P/E ratio is 83.48.

This means that Wynn is trading at 83.48 times its earnings. Their ratio is a match to the industry

average, showing that the market is willing to pay what is expected for its stock based on past or

future industry earnings (WYNN).

Financial Conditions

A company’s financial condition can be evaluated using a number of different methods.

The financial ratios used can be broken down into four categories: profitability, liquidity,

leverage, and operating or efficiency. We will look at Wynn Resorts gross profit margin to
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Wynn Resorts
determine profitability, current ratio to determine liquidity, debt-to-total-assets ratio for leverage,

and inventory turnover for operating efficiency.

Gross profit margin evaluates how much margin is available to a company to cover

expenses while still yielding a profit. As stated above, Wynn Resorts gross profit margin is

29.03% and industry average is 53.07%. Due to the fact that Wynn’s gross profit margin is

below industry average, it can be determined that their financial condition is weaker because

they are not producing a large enough margin to yield an average industry profit.

The current ratio is calculated by taking a company’s current assets and dividing them by

their current liabilities. Wynn Resorts current ratio is 1.44 and industry average is 1.06 (WYNN).

A good current ratio is somewhere between 1.2 and 2. With Wynn having a current ratio of 1.44

means that the company has about 1.44 times more current assets than liabilities to cover its

debts.

The leverage ratio of debt-to-total-assets shows the percentage of total funds provided by

creditors. The higher the ratio, the high the degree of leverage, which consequently means higher

financial risk. Wynn Resorts debt-to-total-assets ratio is 0.72. A ratio higher than 1 shows that a

considerable amount of the debt is funded by assets. By being just below that 1 mark, shows

Wynn Resorts does not have more liabilities than assets, but they are on the higher end and need

to be cautious.

Inventory turnover is a good ratio for determining how efficiently a company is

operating. This ratio tells whether a firm holds an excessive amount of inventory, and whether

they are selling their inventory slower than the industry average. Wynn Resort’s inventory

turnover is 52.44, while the industry average is 7.74 (WYNN). This means that Wynn Resorts

replenishes its entire inventory more than 52 times a year, which industry averages more than 7
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times a year. Typically, a higher inventory turnover could mean that there is effective inventory

management, but it could also indicate inadequate inventory levels.

Investment Returns

An investment return is a common profitability ratio. However, it differs from profit

because returns on investment deals with money that is invested into the company and the

expected and actual return on the money based on the company’s profit.

The return on total assets ratio (ROA) is the most frequently used ratio to determine

investment return. It is calculated by taking the company’s net income and dividing it by their

total assets. Wynn Resorts ROA is 2.30% (WYNN). This means that for every dollar invested

into Wynn Resorts assets during a year, it produced $23.00 of net income. Within the hotel and

entertainment industry, an average ROA is 4.45% and a low ROA is 1.84% (Hotels, 2019).

Wynn Resort’s ROA falls in between, meaning they should strive to increase their investment

return.

Management Efficiency

Efficiency is a crucial part of any successful business, for both managers and employees.

The concept of being efficient is to use minimal inputs to produce more outputs. The revenue per

employee ratio measures the amount of revenue generated by each employee, on average. This

ratio can be meaningful when evaluating how efficiently a company utilizes their employees.

As of December 31, 2019, sales per employee at Wynn Resorts was $393, 518 (Hotels,

2019). Statistics provided by CSIMarket, show that a low sale per employee amount for this

industry is around $170,000 and a high sale per employee amount is $400,000. In this area,

Wynn Resorts is above industry average, at almost $395,000 in sales per employee. This score is

a strong indicator that the managers are being efficient.

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Five-Year Summary

Between 2014 and 2019, Wynn Resorts has seen both increases and decreases in their net

income. Their net income took the hardest hit from 2018 to 2019, dropping to under $200 million

from almost $600 million (Journal, 2020).

While Wynn Resorts net income growth has seen a 78.52% decrease, according to data

given by WSJ, they are seeing a gradual five-year increase in sales/revenue of about $2 billion.

Also, their earnings before interest and taxes (EBIT) saw an increase from $676 million to $980

million.

QSPM Matrix

Build New
Locations Improve Close
in Boston Existing Macau
and Locations Locations
Macau

Key Factors Weight AS TAS AS TAS AS TAS

Opportunities        
Casinos are one of the U.S.’s top industries
1 0.10 4 0.40 4 0.40 3 0.30
The hotel industry is one of the biggest business industries
2 known to man in this era 0.10 4 0.40 4 0.40 1 0.10
Staying at luxury hotels/casinos is a big trend among middle
to upper class
3 0.04 - - - - - -
Lots of travelers prefer to stay in the U.S. for vacations due to
4 travel warnings and easier travel 0.06 2 0.12 2 0.12 4 0.24
Celebrities, famous figures, and influencers often visit hotels,
casinos and other vacation spots
5 0.02 - - - - - -
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Wynn Resorts

The rise in social media marketing allows for hotels and

6 resorts to market to a larger audience, cheaper 0.05 - - - - - -
Travel websites, like Expedia and Hotels.com, make it easy
7 for consumers to shop for hotels 0.07 - - - - - -

Threats  
The sharing economy is big right now and consumers are
1 using sites like Airbnb, VRBO, and Homestay 0.10 1 0.10 1 0.10 3 0.30

Consumer demands are continuously changing

2 0.10 - - - - - -

3 Shortage of experienced staff 0.05 1 0.05 3 0.30 4 0.40

4 Uncertainty in international travel 0.07 2 0.14 3 0.21 4 0.28

5 New government regulations 0.10 - - - - - -

Gambling can lead to a form of addiction and monetary
6 problems 0.10 - - - - - -

7 Virtual gambling and entertainment 0.03 - - - - - -

Strengths  
Founder Steve Wynn has excellent expertise in developing
1 and operating high-quality casino properties 0.05 4 0.20 4 0.20 2 0.10
Wynn employees are thoroughly trained to provide guests
2 with luxury service 0.08 - - - - - -

Wynn Resorts offers an extensive reward system that attracts

3 and keeps guest returning 0.04 - - - - - -
Actively looking to build and/or acquire properties in new
4 markets 0.09 4 0.36 2 0.18 1 0.09
5 Wynn has a 20-year lease agreement with Macau government 0.09 4 0.36 3 0.27 1 0.09

Wynn Resorts offer a wide variety of entertainment and

6 experiences for guests 0.07 - - - - - -
Wynn Resorts operate in a very attractive niche of gaming
7 industry 0.10 - - - - - -

Weakness  
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Wynn Resorts faces competition from Caesars Entertainment

1 and MGM Resorts in Las Vegas 0.10 3 0.30 4 0.40 4 0.40
2 Wynn Resorts faces competition from online gambling 0.09 - - - - - -
Local and state government regulations and restrictions
3 propose an ongoing threat 0.09 - - - - - -
In areas like Las Vegas where there are many resorts similar
to Wynn, they must constantly be updating properties,
4 amenities, and games 0.05 3 0.15 3 0.15 1 0.05

5 New smoking ban limits or prohibits indoor smoking 0.05 - - - - - -

6 Government crackdown on high-end gambling in China 0.08 2 0.16 1 0.08 4 0.32

Wynn Resorts concluded its 2014 Q4 with a 32 and 5.8

7 percent decrease in revenue 0.07 - - - - - -
TOTAL 2.74 2.81 2.67

Recommendation (Strategy Selection)

The Qualitative Strategic Planning Matrix (QSPM) above determines the comparative

attractiveness of each strategy considered. The QSPM takes strengths, weaknesses, opportunities,

and threats presented in the IFE and EFE matrices and assigns a weight to each factor. An

attractiveness score is also assigned based on the effect, or lack thereof, that each factor could

have on the given strategy. At the bottom of the matrix is the Total Attractiveness Score, which

is a sum that determines the most effective strategy to be represented by the highest sum.

The long-term goal for Wynn Resorts is to continue moving forward in the face of a year-

to-year decrease in revenue and intense industry competition. Three strategies were considered in

this QSPM Matrix in order to accomplish this goal. The three strategies presented for Wynn

Resorts were build new locations in both Boston and Macau, improve its existing locations, or

close all Macau locations. All three of the strategies have the potential to fulfill opportunities that

could help move the company forward by addressing possible revenue loss and other industry
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issues. However, there was one strategy that scored higher than the other two on the QSPM

Matrix. The strategy with the highest Total Attractiveness Score is for Wynn Resorts to focus on

improving its existing locations. By focusing its efforts on improving the existing locations,

Wynn Resorts may be able to drive up revenue and put themselves ahead of the competition.

This strategy also covers the most factors presented in the SWOT, IFE, and EFE matrices.

Regarding this strategy’s application to reducing the threat of a poor economy and government

crackdown, this strategy still proves to be the best option for the company because it entails the

company to utilize and progress its exisiting sources of revenue.

Implementation Plan

In order for Wynn Resorts to use the selected strategy to increase revenue and push past

competition, in the face of a poor economy and government interference, it must be implemented

properly. The strong implementation plan will include companywide improvements and a set of

expectations, at financial, operational, and marketing levels. Matt Maddox, the Wynn Resorts

Board Director and Chief Executive Officer, will be the first to communicate the strategy plan to

the other board members and senior management. There needs to be a collective meeting of all

members in order to ensure everyone is on the same page in what the strategic goal is. It is

imperative that all top management and board members have a complete understanding of how

the implementation plan will work, who needs to be involved, and what needs to be done, in

order to instruct those employees who, fall under them.

The initial meeting, hosted by CEO Matt Maddox, will introduce the overall strategic

objective; which is to increase revenue and stay competitive by improving these existing

locations:

 Wynn Las Vegas, U.S.

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Wynn Resorts
 Encore Las Vegas, U.S.

 Encore Boston Harbor, U.S.

 Wynn Macau, China

 Encore at Wynn Macau, China

 Wynn Palace, Cotai Strip, Macau, China

It will need to be explained that each of the three major areas, marketing, operations, and

financing, will each have important roles to play in the strategy’s implementation. All three

departments’ tasks with affect the others.

Marketing:

Wynn Resorts marketing team will be directed by President of Wynn International

Marketing, Linda Chen. The first and foremost goal is to identify the most current target

audience by conducting new market research. Once this research is conducted, the team will

focus marketing efforts on building relationships with desirable customers and promoting the

existing locations. The expected cost for the marketing efforts is $70 million. Marketing efforts

should include, but are not limited to, the following objectives:

 Increase Wynn Resorts ability to be found on social media, search engines, and other

media platforms.

 Give customers what they want. The team should be able to identify the different types of

customers, what each segment wants, and what Wynn Resorts can do to successfully

fulfill the wants.

 Market to a younger audience by capitalizing on the trendy use of images and simple text,

as well as social media influencers.

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Wynn Resorts
 Change/update Wynn Resorts reward strategy. Look into the use of private accounts

which proposes the ability to offer personalized rates and how it can retain guests using

segmentation.

 It is important to acknowledge that there will ideally need to be an increase in frequency,

and a decrease in spending. Studies have found that the typical hotel-gaming industry

customer wants to frequently visit for the unique experience, but does not want to spend

the money. This is a challenge that the marketing team should identify a solution for.

Operations:

Wynn Resorts operations will be led by Chief Executive Officer (CEO) Matt Maddox and

Chief Operating Officer (COO) Steve Weitman. Operations will also work closely with the

marketing department. The goals for operations are to manage the inner workings of the

company so it runs efficiently, correct and maintain the overall process of how things are being

done, and control inventory, purchasing, preparation, and labor. It will be vital that the

operations understand and implements the marketing team’s findings and suggestions. The

expected costs incurred by operations is $200 million. The operations team will be in charge of

the following:

 Revising and making any changes to existing procedures. All standard operating

procedures should be revised, including but not limited to, front office, housekeeping,

food and beverage services, engineering and maintenance, sales and marketing, casino,

entertainment, etc. These changes should be made in order to meet the market’s wants

and ensure marketing promises.

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Wynn Resorts
 Assign a lead team member of each sector of employees (hospitality staff, casino staff,

entertainment staff, etc.) to go over the revised guidelines and improvements and see

through that they are implemented.

 Inventory management and inventory control. Conduct data collection, potential demand

research, and forecasting in order to manage the total amount of inventory needed. This

information will be used by financing.

Financing:

The Financial Department will be led by:

 Craig S. Billings (President/ Chief Financial Officer and Treasurer)

 Dean Lawrence (Senior VP and Chief Financial Officer of Wynn Las Vegas)

 Robert Gansmo (Senior VP and Chief Financial Officer of Wynn Resorts Macau)

 Brian Gullbrants (President of Wynn MA)

 Frank Casella (Chief Financial Officer of Wynn MA)

The financial team will be in charge of providing appropriate funds to meet planned

objectives, as well as make the purchases and investments proposed by the marketing and

operation teams. This is expected to cost $30 million. The total cost that will be incurred by

Wynn Resorts to ensure that the strategy’s objectives are met will cost an estimated $300

million, based on the expected cost for employee meetings, new marketing materials, potential

inventory changes, renovation costs, and all other miscellaneous expenses associated with

improving Wynn’s existing locations.

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There are three alternatives for Wynn Resorts to raise its capital: debt, equity, or a

combination of both. To consider the financing options of improving the existing Wynn locations

the following assumptions have been considered in the EPS/EBIT analysis:

 Amount Required – $300 million

 EBIT Range – $0.5 - $2 billion

 Interest Rate – 4.47%

 Tax Rate – 112.48%

 Stock Price – $63.31

EPS/EBIT Analysis (In Billions)

  Common Stock Financing   Debt Financing

  Recession Normal Boom   Recession Normal Boom

2,000,000,00
EBIT 500,000 1,250,000,000 0   500,000 1,250,000,000 2,000,000,000
Interes 13,410,000,00
t - - -   13,410,000,000 0 13,410,000,000

2,000,000,00 12,160,000,00
EBT 500,000 1,250,000,000 0   12,910,000,000 0 11,410,000,000

Taxes 56,240,000 140,600,000 224,960,000   1,452,116,800 1,367,756,800 1,283,396,800

1,775,040,00
EAT 443,760,000 1,109,400,000 0   10,639,350 14,189,350 21,289,350

4,845,587,90 4,845,587,90
Shares 1 4,845,587,901 1   107,000,000 107,000,000 107,000,000

EPS $0.09 $0.23 $0.37   ($107.08) ($100.86) ($94.64)

  70% Stock - 30% Debt   70% Debt - 30% Stock

  Recession Normal Boom   Recession Normal Boom

2,000,000,00
EBIT 500,000 1,250,000,000 0   500,000 1,250,000,000 2,000,000,000
Interes   9,387,000,000 9,387,000,000 9,387,000,000
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4,023,000,00 4,023,000,00
t 0 4,023,000,000 0

3,523,000,00 2,023,000,00
EBT 0 2,773,000,000 0   8,887,000,000 8,137,000,000 7,387,000,000

396,267,040
Taxes 311,907,040 227,547,040   999,609,760 915,249,760 830,889,760

3,126,732,96 1,795,452,96
EAT 0 2,461,092,960 0   7,887,390,240 7,221,750,240 6,556,110,240

3,424,011,53 3,424,011,53
Shares 1 3,424,011,531 1   1,528,576,370 1,528,576,370 1,528,576,370
EPS ($0.91) ($0.72) ($0.52)   ($5.16) ($4.72) ($4.29)

The EPS/EBIT analysis above shows that all but one of the four financing options

produces a negative EPS. The common stock financing is the single option that produces an EPS

above 0, at 0.09 in a recession, 0.23 in normal economic conditions, and 0.37 in a boom

economy. Therefore, in order to finance the strategy, common stock financing is a foreseeable

option.

Projected Financial Statement

Wynn Resorts Pro Forma Projected Income Statement (in thousands)

Prior Year Projected Year Remarks

Fiscal Year 2019 2020

Sales 6,611,099 7,272,208.90 10% increase
Cost of Goods Sold 4,067,053 4,508,769.52 62% of sales
Gross Margin 2,544,046 2,763,439.38

Selling and Administrative Expense 896,670 1,018,109.25 14% of sales

Other Expenses 748,785 799,942.98 11% of sales
Total Operating Expenses 1,645,455 1,818,052.23

Earnings Before Interest and Taxes 898,591 945,387.15

Interest 414,030 414,030
Earnings Before Taxes 488,218 531,357.15

Taxes 176,840 191,288.57 36% rate

Net Income 311,378 340,068.58
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Wynn Resorts

The Projected Income Statement shows data from the past fiscal year, 2019, and

projected data for 2020, which reflects an expected 10% growth in revenue due to the suggested

strategy of improving existing Wynn Resort locations.

Conclusion

In conclusion, the suggested strategy for Wynn Resorts is to focus efforts on improving

the six exisiting locations in the U.S. and China. This strategy can help Wynn Resorts see a 10%

increase in revenue if properly implemented. Every Wynn Resort employee must be on board

and do their part in seeing the strategy through. All exisiting locations must be looked at with a

fresh perspective in order to make the necessary improvements. With the joint forces of

marketing, operations, and financing, providing dedication and customer valuation, Wynn

Resorts will be able to maintain its strong competitive position and this strategy will succeed.