Colliers' Annual Trends in the Real Estate Market Seminar | Keynote Speaker Steve Wynn

It's 5:30. If you ever get invited to speak at 5:30, bring Red Bull. I promise you guys, I do not have a video. It's a terrible thing Mark Twain said, to be talked to death. I may be the straw that broke the camel's back. Buck up, you guys, it won't take long. Real estate people, hello. I know that when we do projects, us developers, developers disease, everybody in the room has it. Me too. My doctor says that if I keep taking my medicine, I'm no danger to anyone but myself. I think that probably applies to you developers. We have to get entitlements right in order to build. Try this one on for size: in order to get in a position to break ground in Everett, in the greater metropolitan area here, we've had to commit to $130 million in infrastructure improvements, $76 million of it to Boston. We've had to pay $25 million to create the application and go through the licensing process before we were selected. And the application weighed 1,800 pounds, so help me God, I'm not making it up. And then after we got picked, we had to spend another $85 million to have the license, for a total of $110 million, plus the $130 million in infrastructure stuff. We are going to be one of the top five private employers in the history of Massachusetts. We're going to create between 10 and 15,000 direct and indirect jobs, including construction. And the day we open, we create direct revenue to the state of Massachusetts of $50 million a year. And by actual measurement by the Federal Commission on Gaming Impact, done in 1997 by the Congress in Washington, another $50 million a month goes to the related businesses in the community that get the extra touristic impact. $100 million a month the day we open. Now I know that when you do something good, you look for acknowledgement. I don't expect a parade or anything, but maybe a fruit basket would be nice. The mayor is suing about this because it's not enough. But we did get a police escort to the courthouse. Maybe a fruit basket? That's pretty much my summary of humor, my 5:30 attempt at it. I asked myself when Coler was nice enough to invite me, and now of course I want to be more active in Massachusetts and in Boston every chance I get because we're going to be citizens, which is not hard for me because my family are all Bostonians. My mother and father were both born in Revere. I spent my childhood at my Aunt Bessie and my Uncle Haim's house on 11 Dana Street in Revere. My aunt Bessie had a millinery shop on Shirley Avenue. I swam when the tide was out because I was short, at Revere Beach in the cold water, and did the rides at Revere Beach. My father was a sign painter in Revere, never graduated high school. My dad was born in 1916, and so was my mother, in Revere. Neither one of them ever graduated high school. My mother and her mother lived alone because her mother was separated from my mom's dad when my mother was just after she was born. So my mother was raised as a single parent, a Polish immigrant woman, uneducated, and she went to work when she was 15. My father was born in 1916, his mother died when he was a year old, and his father was a 5-foot-6-inch Lithuanian immigrant named Jake who was a violinist. So he put my father in a foster home, the Pansky family in Revere, to be raised, and sent money every month. A very lovely family. My father had foster brothers and was very happy, but he lived in a foster home and had only a passing relationship with his dad, who was on the road dancing and playing Vaudeville theaters. Imagine this. And my dad ends up going to work for Mohan Markets because he was artistic, painting signs for the windows of the Mohan Market. Then he goes to work for Coca-Cola during the Depression. He comes of age in 1932 in the Depression, working in the supermarket when he was 16 years old. And then he found out that during the Depression, if you could paint signs for Coca-Cola, you could get $128 a week, which is an enormous amount of money, but you had to be able to write Coca-Cola freehand for billboards. And his father's name was Jacob Weinberg, and they were notoriously anti-Semitic in those days. They didn't hire Jews. So my father applied to be a sign painter. He taught himself how to write Coca-Cola, and he applied to be a sign painter of Coca-Cola, and he hijacked the name of a great comedian of the era, a friend of Al Jolson's named Ed Wynn. He had a son, Keenan Wynn, that was an actor that died a few years ago. And my father put down on the application Mike Wynn, and he got the job. You can imagine, years later I was CEO of the year jointly with Ralph Larsen of Johnson & Johnson and Roberto Goizueta of Coca-Cola. We were down in Atlanta getting ready to have a panel discussion, and I told that story to Roberto Goizueta, a Cuban immigrant who had taken Coca-Cola from $3 billion in market cap to $135 billion in market cap. And I told him that story, and Roberto Goizueta said to me, "Can you imagine, Steve, life for these white-shoe guys to have to listen to me?" I love these stories. From now on, we are going to be friends. And until Roberto Goizueta died of pancreatic cancer, we were good friends. So I mention all this family history, which at 5:30 is a dangerous thing to do, to ask you to imagine what it's like. If my mother and father, these poor people, and my aunt Bessie and my uncle Haim, I used to play stickball on Dana Street. Can you imagine if they knew that little Stevie was going to have his company build the first grand hotel in a city in America? I say grand hotel, and it be Boston. The kid with the stickball is going to build a grand hotel for a billion and three-quarters. The price has gone up. I said a billion five, but it's a billion 750 now. That's the bad news. In a way, the good news is we're going to finance it at LIBOR plus 175. We did already, actually. So imagine, the era of the grand hotel is gone. They had a groundbreaking this week here in Boston for a brand new second Four Seasons Hotel, 200 rooms. It's part of a mixed-use development, condos, offices, some retail probably on the bottom. I guess that's the way it's done these days because the cost of construction and room food and beverage revenue don't match up exactly, so you have to have mixed-use buildings. I understand that, and that doesn't mean they're anything but fine. But the era of the grand hotel, the Ritz, the Waldorf, these big wonderful places that you stop at like they used to say in the old days, it's gone. And now by accident of evolution and fate, the state of Massachusetts decides that for a number of reasons, jobs, taxes, and tourism, they want to allow gaming in the state. And in a referendum, the population of Massachusetts said we agree, we want to have gaming. So we'll put one out in the west in Springfield, we'll put one right smack in the middle in the heavily populated Massachusetts area of greater Boston and related and surrounded communities, and then one in the eastern part of the state that will be reserved for Indians at some point in the future. And because there's going to be gaming allowed in the building, my company incidentally never got involved with regional casinos and racinos and that sort of thing. We build resorts that are extravagant and fun and theatrical, and are possible financially because of the existence of gaming as part of the building. But no building that I've ever built except for Macau has gaming ever been more than half of the revenue. It's always been less. It's ironic that all of the hotels we built in Las Vegas, which have broken records sequentially, Mirage, Bellagio, and then Wynn and Encore, every one of those places each year has taken the level of revenue for gaming higher and higher and broken its own previous records. But in each and every one of those hotels, non-casino revenue was bigger than the casino revenue. That's not an accident, it was causal. Nobody cares about slot machines. They come for the experience of living large and having fun, for eating and shopping and vacationing. And at a certain moment in the trip, the excitement and animation of a gaming area, they take their shot against Lady Luck. But the era of the grand hotel, as I said before, I don't want to get off the point, is past because of cost and revenue. But now here's Massachusetts saying, okay, in the metropolitan area you can have a place. 4.6 million people in the greater metropolitan area. And in Everett, this downtrodden site that Mr. Hines mentioned was a Monsanto chemical site, but it's beautiful on the Mystic River and it looks at the skyline of Boston. And the folks in Everett, they have a favorable rating when a poll is taken of the Boston Red Sox by a margin of 70%. When we asked them to vote on our casino, we got 86%. We out-pulled the Red Sox. We're going to bring more people to the facility than the Celtics, the Patriots, and the Red Sox combined. Like I said, a fruit bowl would have been nice. But the era of the grand hotel has been over. But now here in Boston and Everett and Chelsea and Revere, in this great part of Massachusetts, we're going to have hotel rooms that are larger than any hotel rooms in the United States of America except for Las Vegas. Our smallest room will be 630 square feet, bathrooms would be 160 square feet. Shopping, 8 to 10 restaurants, theater, entertainment, spa, indoor swimming pool, and grandeur. A lobby that you walk into and there's a garden in the lobby, one on the left and one on the right, each about 2,000 square feet. In one, a carousel with horses going around and around, calliope music playing as the horses go up and down. On the other garden, a Ferris wheel 26 feet tall going around and around. Both of them 100% made of flowers. Walk through the middle of the two gardens and there's a curved escalator, not curved, Mitsubishi escalators that are parenthetical, if you can see my hands, but instead I turned them around so they're tangent in the middle, one people going up, the other coming down as they pass each other. And where they splay at the bottom, Jeff Koons' sculpture of Popeye, including the spinach. And the elevators behind them going up into the high-rise. All of this kind of stuff sounds like fun, doesn't it? I love doing that. I've been able to do it because of gaming for 40 odd years. But the idea of doing it in Revere or Chelsea and then ending up in Everett was so completely phenomenal as a notion to anybody in my family that I can't help but thinking and dwelling upon that incredible trick of fate. And as I come to Boston every time and I go to Everett and I look around, I shake my head in disbelief how sweet life can be sometimes, in spite of all the other insecurities that we face as citizens these days with the Middle East and all the rest. I guess there's something to be said for a developer that creates a place where people can have fun for a while and maybe take life not so seriously. Developers disease is a pretty good thing to have actually, don't you think? All of you got it. Coler has a good group of speakers for you. They trot me out here at the end, I guess to keep you awake. One of the things that came up tonight was that I would take questions. And usually that's a good idea because all of you were there, and if you cared enough to write something down on a card that you thought I might be able to help you with or answer, I think that's a great idea. So considering the hour of the day, I'm going to ask Mike Weaver or Mr. Hines to come up and we can take some questions. I'll address some questions, maybe we'll have some laughs and get some interesting things out here. What do you say?

Fabulous thing. We're just about two weeks before the commission is going to make their selection. My business in Las Vegas, 60% of it is international. The Wynn Encore facility is primarily the number one international destination hotel in America. We have offices in Monterey, Rio de Janeiro, Buenos Aires, Mexico City, Taipei, Tokyo, Seoul, various cities all over Asia and in Europe. We fill our hotel and our casino with international business on a very serious level, probably more than any other single hotel in America. What was great is that the two weeks before the commission made its decision this fall, Hainan Airlines and Cathay Pacific announced non-stop service from Shanghai, Beijing, and Hong Kong to Boston. Oh, God is on our side. Whoa, be still my beating heart. I mean, I love it. People will come to Boston, to this city, from all over the world as they do already. This place has everything: 110 universities, the greatest medical and hospital among the best in the world. And if we can jazz it up and have a great hotel, then that'll all fit together. So our customers are going to come from everywhere. Look, I made this point when we had to make a final presentation for the license. You've given 1,800 pounds of paper, you figure they've read it or they haven't, God bless them, but I'm not going to do it twice. So it wasn't going to be a dog and pony show. I thought we'd get to the nitty-gritty. I said, "You created a law to allow a gaming facility here for three reasons: tourism, taxes, jobs." Two of those three things are an effect, one of them is a cause. The jobs and the taxes are an effect. The cause, the driver, is tourism. Tourism in simplest terms is bring people from over there to over here. And in order to get people from over there to come to over here, what's here has to be better than there. Hence, you spend more money here to make it better, you employ more people here. And because people are coming from outside the region into the region, you get constant growth. If all you ever did was cater to a neighborhood in Everett or Chelsea or Revere or Somerville, you'd have a good first year and then it would flatten out because all you had was a local bar. But when you're bringing people from outside the region, you have real growth and prosperity that spreads itself around to everyone in the region. That's been proven by federal studies repeatedly. It's an unequivocal fact. It isn't some hype from a developer like me today. Those are the truth. Divorce rates go down, bankruptcies go down because when people come from outside the region, it is not a zero-sum game. Critics in my industry always thought so. Investigation by the federal government has proven it to be just the opposite. So that's a long answer to a short question.

Saturation? It's not so much in all of our businesses in this room of how many places there are, it's how good they are. At least in the entertainment and hospitality business, it's how good they are. So if we're just talking about a slot machine, every slot machine in the world looks exactly the same to me, even if they're from different manufacturers. Every roulette table in the world is exactly the same with the thing spinning around with the red and the black, who cares? Every blackjack and baccarat table is identical to every other blackjack and baccarat table. A gaming device has no inherent value itself, it's just a thing. It depends on who's in the building and why do they come. If it was for the slot machines, then every casino in the world would be a big hit. And the fact of the matter is, at any given moment, half of them are going broke. It's the non-casino things that bring the folks. It's non-casino things that people get on airplanes and put up with body searches and stuff like that for. That's what gets it. So when we say, are we saturating a market, the question is what are we building? Are we building a destination attraction, or are we just trying to latch on to the fact that hey, there's a slot machine on the corner drugstore? I've never bought into that idea of slot machines. I'm a developer of destination resorts, so I don't worry about saturation. My company has made its mark in the world, and the prosperity that my colleagues and I have enjoyed comes from one thing: we've always been in highly competitive, oversaturated markets, and we do well there because when the more people there are around, we skim off the top level on purpose. I've never been in a monopoly situation. This idea of 4.6 million people in the greater metropolitan area and us being the only game in town, this is the first thing for me. And I'm going to be 73 years old this month. I can't wait to try this out. I'm giddy with the idea that we're going to be alone. I don't know what to do first. Get the drawings done.