Caesars Entertainment Inc (CZR) — Q4 2015 Earnings Call Transcript

Thank you, and good afternoon, and welcome to Caesars Entertainment's fourth quarter and full year 2015 results conference call. Joining me today from Caesars Entertainment Corporation are Mark Frissora, President and Chief Executive Officer; and Eric Hession, Chief Financial Officer. A copy of our press release, certain earnings presentation slides and a replay of this conference call are available in the Investor Relations section of our website at caesars.com. The slides are available for download and will accompany Mark and Eric's prepared remarks for those of you on the phone that would like to follow along. Also, please note that prior to this call we furnished a copy of this afternoon's press release to the SEC in a Form 8-K and will shortly file our most recent Annual Report on Form 10-K. Before we get underway, I'd like to call your attention to certain statements and information on Slides 1 through 4, which we incorporate by this reference. The forward-looking statements Safe Harbor disclaimer in our public documents covers this call and the simultaneous webcast at caesars.com. This call, the webcast and its replay are the property of Caesars Entertainment Corporation. It's not for rebroadcast or use by any other party without the prior written consent of Caesars Entertainment Corporation. If you do not agree with these terms, please disconnect now. By remaining on the line, you agree to be bound by these terms. Today's call will include discussion of certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margin, property EBITDA and certain supplemental financial information. Reconciliations of net income and loss of property EBITDA and net income and loss to adjusted EBITDA can be found in the tables of our press release. As a reminder, Caesars Entertainment Corporation is a holding company with the following consolidated entities, Caesars Entertainment Resort Properties and Caesars Growth Partners, which includes the two reportable segments, CGP Casinos and CIE. CEC also has a majority ownership of Caesars Entertainment Operating Company, but CEC's financial results do not include the results of CEOC and its subsidiaries following its Chapter 11 filing on January 15 of 2015. However, in addition to a review of CEC's reported financial information on this call, we will also discuss certain supplemental financial information regarding CEOC, including certain remarks that combine CEOC's results with those of CEC. This supplemental financial information is non-GAAP and is presented as a benefit for users to understand year-over-year results in a comparable fashion. This information is not preferable to GAAP results provided elsewhere in our presentation. Additionally, the results are not indicative of future performance or the results that would be reported should the Restructuring Support Agreement be successfully completed. As used during this call, the words company, Caesars, Caesars Entertainment, we, our and us refer to Caesars Entertainment Corporation and its consolidated entities, unless otherwise stated or the context requires otherwise. As seen in today's agenda on Slide 5, we'll begin the call today with some high-level remarks by Mark, whose comments will generally relate to the entire Caesars system, including our deconsolidated subsidiary CEOC. Eric will then review our financial results, before Mark wraps up with some concluding comments. We will then open up the call for your questions. I'd like to now turn the call over to Mark.

Thank you, Brian. I am pleased to report that the company's excellent performance in the first three quarters of 2015 continued into the fourth quarter, culminating in the best full year performance for Caesars Enterprise since 2007. As Eric will discuss later in further detail, at continuing CEC, which excludes CEOC, full year net revenues increased 15% to $4.5 billion and full year adjusted EBITDA increased 46% to $1.3 billion. I will now speak more broadly to enterprise-wide performance, which adds CEOC to CEC. Beginning on Slide 6, you will see that we delivered solid annual improvement year-over-year across three critical measures, financial performance, customer satisfaction and employee engagement. Notably, our enterprise-wide adjusted EBITDA margins rose 662 basis points year-over-year to 26.5%, the highest annual EBITDA margin since 2007 pre-recession and expanded by more than 500 basis points year-over-year in each quarter of 2015. On a continuing CEC basis, adjusted EBITDA margins rose 608 basis points year-over-year. Additionally, we increased our customer satisfaction scores by 300 basis points across the enterprise as well as improved our overall score in our annual Employee Opinion Survey for the 10th consecutive year. These results were delivered amid the backdrop of considerable distractions, including the restructuring of Caesars Entertainment Operating Company and a challenging operating environment, particularly in the regional markets. They highlight the success of our improved operating model and our strategic investments in the business, which position the enterprise for enhanced financial performance going forward. Moving to Slide 7, enterprise-wide net revenues rose 6% year-over-year to $9.1 billion for the full year. On a continuing CEC basis, net revenues rose 15% year-over-year to $4.5 billion for the full year. Revenue growth was driven by higher hotel revenues with cash ADR up double-digits, aided by the expansion of resort fees across all properties and improved pricing in Las Vegas, as well as the full year contribution from Horseshoe Baltimore and The Cromwell and the renovation of the LINQ Hotel and Casino. We also benefited from continued solid organic growth in Caesars Interactive Entertainment and slightly higher gaming revenues, due to favorable year-over-year hold. As I mentioned earlier, the enterprise experienced notable margin expansion across each of the four quarters in 2015, which is detailed on Slide 8. Our ability to drive cost savings initiatives through marketing and operational efficiencies helped deliver an incremental $350 million of EBITDA in the full year, bringing our adjusted EBITDA to $2.4 billion, up $706 million or up 42% versus the prior year. On a continuing CEC basis, adjusted EBITDA growth was a 46% increase versus the prior year. A key contributor has been the reduction of enterprise-wide marketing spend relative to elevated spend in prior years. This has resulted in both reduced free slot play offers and a 4% reduction in casino direct expenses, as we implemented a more targeted approach on complimentary awards to enhance overall customer profitability. As we touched upon last quarter, we are also applying a low-cost high-quality operating model across all of our businesses by implementing Lean Sigma principles, a highly effective efficiency program. We formally rolled out the program at the beginning of the year and are gradually enacting it across the enterprise. Our efforts are focused on identifying process efficiencies, improving the customer service experience and increasing employee engagement. We have already recognized some immediate areas of opportunity, including front desk operations, high transaction food and beverage outlets, laundry facilities and housekeeping. We expect these efforts will steadily ramp up during 2016. The recapitalization of our hotel room product in Las Vegas to market levels over the last two years has been a meaningful driver of topline growth, due to our higher cash ADR. As you see on Slide 9, it has helped us deliver market leading EBITDA margins on the strip for the full year. We have demonstrated that room upgrades are an attractive low-risk opportunity to deploy cash, and we will continue to pursue this opportunity. In 2016 we expect to complete renovations for more than 4,800 hotel rooms in Las Vegas and more than 5,700 owned or managed rooms across the enterprise, representing approximately 20% and 15% of total rooms across Las Vegas and enterprise-wide, respectively. We have several targeted investments, both in Las Vegas and our regional properties on the horizon. On Slide 10 and 11, you can see several of our ongoing capital projects, as we execute against this priority. These property upgrades include the transformation of the original tower at Caesars Palace to create the Julius Tower as well as the renovation of the Augustus Tower at Caesars. Additionally, we will complete room upgrades at Paris, Planet Hollywood and Harrah's in Las Vegas. In our regional markets, we will renovate Harrah's Gulf Coast, Caesars Atlantic City and Horseshoe Tunica. These investments in our infrastructure across the enterprise will enhance our long-term performance and hospitality. Moving to Slide 12, Caesars offers a wide range of leading entertainment shows on the strip. We maintain the highest quality of performance at the Colosseum, including Celine Dion, who played for sold-out crowds during the fourth quarter, as well as The AXIS Theater and the recent opening of Jennifer Lopez's spectacular show in January, which received rave reviews from critics and played to sold-out crowds. On top of these acts, our pool of celebrity talent at our Las Vegas venues continues to appeal to our guests of all age groups and interests. This includes Mariah Carey, Reba McEntire and Brooks & Dunn at the Colosseum; Britney Spears at Planet Hollywood; Mat Franco's magic show at the newly renovated LINQ Hotel; and the new Rock of Ages show at the Rio All-Suite Hotel & Casino. As a result of our ongoing efforts to be at the forefront of the entertainment space, in 2015 Caesars Entertainment was named one of the three largest live entertainment promoters in North America, based on box office revenue; and the Colosseum was named the top venue in theatres of its size for the 11th time by Billboard Magazine. We remain focused on actively investing in our hospitality business to capture the growth and consumer spending towards these types of activities and ensure that our entertainment offerings are the best on the strip. On Slide 13, along with the expansion of our entertainment offerings, we are also investing in our food and beverage operations, ranging from upscale dining experiences to moderately priced restaurants and buffets. MR CHOW made its strip debut at Caesars Palace, opening in stores in December. In 2016, The LINQ Promenade will add three new exciting tenants, Virgil's Real Barbecue, Gordon Ramsay's Fish & Chips and Amorino Gelato, while looking for a new anchor tenant in what was previously the Kitson location. Additionally, the Beer Park by Budweiser, located in Paris, Las Vegas, opened at the end of January as the strip's first rooftop bar and grill. In Atlantic City, we have remodeled Bally's Wild Wild West Casino, opening it up to the Boardwalk and spanning available indoor and outdoor space, while refreshing our gaming products to create more of an entertainment space to target millennials. This renovation also includes three new food and beverage outlets in 2016, a new bar space with a stage called the Boardwalk Saloon, a counter serving Guy Fieri's award-winning barbecue, and the Atlantic City Snack Shack with a variety of options near the 24/7 happy hour Mountain Bar featuring a mechanical bull and beer pong tables. Another critical investment area for us has been the service technology, as seen on Slide 14. Across guest arrival, hotel, dining and gaming, we are modernizing the customer experience, while lowering costs. During the 2015 renovation of The LINQ Hotel, we centered the guest arrival experience around technology and convenience, and were first to market in Las Vegas with the deployment of a fully integrated self-service check-in program that incorporates email, text, web, mobile app and kiosk. This is another way we are differentiating our hotel offering on the strip. For the first time, customers at The LINQ Hotel, Flamingo and Caesars Palace had a choice to interact with a live front desk team member or visit a kiosk to check-in and receive their keys. On average, using the kiosk versus waiting in line for the front desk reduces check-in time by 40%. Reception from the customers to date has been very encouraging, and we are expanding the Las Vegas rollout to five more properties in 2016. Looking at Slide 15, we continue to focus on game innovation efforts and our strategy is twofold, reenergizing the core slot player and engaging the millennial and Generation X customer base. There are several underlying initiatives in motion to deliver on this strategy. First, we are launching new table game products, including our own proprietary side bets. Second, we are investing in the on-property experience. Third, we are introducing skill-based games. And fourth, we continue to challenge slot manufacturers to innovate. In 2015 we aggressively trialed new table game products, such as side bets and new games, which are now on 15% of our retail tables, as we continually look for exciting new games to enhance the flavor experience and give our customers more choices and chances to win. Specifically, we recognized a growth opportunity in proprietary table game side bets and have made good progress in creating, patenting and launching several new side bet options over the last couple of years. Additionally, in order to engage tech-savvy millennials, we are working to create a more social, on-property experience by evolving our core design. With substantial modernization, we are attempting to create spaces that better integrate gaming and hospitality, and that maximize a group's ability to stay and play together. In addition to the TAG Sports Bar in O'Sheas Casino, Las Vegas, and Bally's Wild Wild West Casino in Atlantic City, we will be building new pilot environments in at least two locations to trial customer experience and engagement in a more social setting. We are also making a concerted effort to expand and enhance our gaming product offerings in these millennial-friendly environments by developing and deploying games with skill-based components. More to come soon on that front. Finally, we believe that the pace of innovation on the part of primary slot manufacturers has been slow and we have been pushing for the modernization of their product offerings. However, there are select new products that are driving improved performance in some of the target demographics we just mentioned. As an example, one of our main manufacturers has been quickly developing slots designed to appeal to younger generations by incorporating some of the biggest, most relevant brands today. While this type of product innovation will not drive meaningful change for our industry, slot games featuring Britney Spears and hit shows such as Game of Thrones and The Big Bang Theory are consistently landing in the top 20 millennial handle pool games on our floors. Therefore, we will continue to invest in the floor where we see meaningful opportunities. Let me now turn the call over to Eric for a more detailed review of the fourth quarter results.

Thank you, Mark. I'll start by discussing CEC's consolidated results for the fourth quarter of 2015, followed by an overview of the company's reportable segments, and then I'll highlight the supplemental information we've shared on our website regarding CEOC's fourth quarter performance and combined results for continuing CEC and CEOC. Continuing CEC results for the fourth quarter of 2015 show a 9% increase in net revenues to $1.1 billion, and adjusted EBITDA rose by 52% to $305 million. Continuing CEC earned approximately $40 per share compared to a loss last year, mainly due to a $7.1 billion gain from the deconsolidation of CEOC in the first quarter of 2015, slightly offset by a $1.1 billion charge related to restructuring efforts. Thus, our year-over-year performance is best reflected by a strong adjusted EBITDA improvement. Revenue growth was fueled by robust hospitality offerings and success in CIE's social and mobile gaming sector. Notably, the hotel segment benefited from increased room revenues at The LINQ Hotel and a rise in group room nights across our Las Vegas portfolio, contributing to our highest annual group revenue since 2008, alongside resort fees enhancing cash ADR. The year-over-year EBITDA growth resulted from higher net revenues, marketing and operational efficiencies, and a better hotel customer mix. Caesars Entertainment Resort Properties saw net revenues grow by 3% to $517 million in the fourth quarter, driven by strong hotel performance, including increased resort fees, better hotel prices, higher food and beverage revenues, and the positive impact of the newly opened Harrah's Atlantic City Waterfront Conference Center. Adjusted EBITDA rose by 41% to $145 million, with margins expanding 745 basis points year-over-year due to marketing and operational efficiencies, along with a decrease in bad debt expenses. This quarter had a minor negative impact of less than $5 million from hold, whereas the full year had an estimated favorable impact of $12 million to $17 million. Turning to Caesars Growth Partners, the business performed well with fourth quarter net revenues up by 14% to $600 million and adjusted EBITDA increasing by 52% to $157 million, with adjusted EBITDA margins expanding by 662 basis points year-over-year. This revenue growth was bolstered by renovation-driven increases in room revenues at The LINQ Hotel, the rise of resort fees, strong organic growth in CIE's social and mobile games, and improved casino revenues at Horseshoe Baltimore. Examining the CGP Casino segment, fourth quarter net revenues reached $392 million, marking a 6% growth driven by strong room revenues at The LINQ and the expansion of resort fees, despite ongoing revenue challenges from Harrah's New Orleans due to a smoking ban. Adjusted EBITDA grew by 40% to $80 million, supported by revenue increases and cost efficiencies. The quarter again had a minor negative impact from hold, while the full year estimated hold impact ranged from $10 million to $15 million. Harrah's New Orleans is adapting to ongoing challenges stemming from the smoking ban that took effect in April 2015. Although there have been month-to-month fluctuations, we average a 10% decline in gross gaming revenues. We are actively working to mitigate these impacts with the development of outdoor smoking patios, which require state and city approvals. In the Interactive Entertainment sector, net revenues rose by 33% to $208 million, and adjusted EBITDA grew by 67% to $77 million, with EBITDA margins expanding 753 basis points year-over-year. The average monthly unique paying users grew to about 858,000 from 657,000 in the same quarter last year, with average revenue per user per day increasing to $0.34 from $0.28 over the same period. Additionally, CEOC's fourth quarter performance showed an adjusted EBITDA increase of 44% to $246 million, with EBITDA margins improving by 698 basis points year-over-year. This performance was driven by reduced direct casino expenses due to fewer promotions and lower payroll costs, despite a 2% decline in net revenues to $1.1 billion. The positive quarter hold contributed between $12 million and $17 million, with annualized contributions between $50 million and $55 million. Hospitality amenities at Caesars Palace continued to perform well, though the Julius Tower renovation took over 570 rooms offline during the fourth quarter, causing a slight quarterly drop in hotel revenues. These rooms are gradually returning to service. We are also seeing ongoing challenges in the VVIP environment in Las Vegas and are predicting flat baccarat volumes throughout 2016. CEOC's regional markets faced lower gross gaming revenues due to adjustments in marketing programs over the past nine months, which resulted in notable declines in retail guest visits. Nevertheless, we believe these modifications will enhance profits without deteriorating our market position, as reflected in market share data. As mentioned in the last quarter's call, several CEOC subsidiaries will transfer management responsibilities for Horseshoe Cleveland, Horseshoe Cincinnati, and ThistleDown Racino to Rock Gaming and its subsidiaries by mid-2016. We are collaborating with Rock Gaming to ensure a smooth transition that minimizes customer disruption. While reward credits for total reward members will not be earned at these properties post-transition, existing credits will remain valid at Caesars properties. Finally, regarding the overall enterprise, continuing CEC with CEOC's net revenues increased by 3.6% to $2.2 billion, principally due to strong hotel revenue growth from pricing strength at The LINQ and solid performance in CIE's social gaming sector, alongside favorable year-over-year hold. We have also expanded resort fees system-wide, which significantly contributed to the 12.7% rise in cash ADR during the quarter. This revenue growth, accompanied by ongoing expense reductions, particularly in marketing and labor, led to a 48% rise in adjusted EBITDA to $549 million, with EBITDA margins expanding by 741 basis points year-over-year. The favorable year-over-year hold contributed approximately $10 million to $15 million, totaling between $80 million and $85 million for the year. While we enjoyed favorable hold in 2015, we expect that to normalize in the future. Looking ahead, we anticipate facing challenges from inflation-related cost increases, particularly in salaries and benefits, and will focus on offsetting these pressures through increased productivity. Our marketing and operational efficiency initiatives will become increasingly challenging as they begin to annualize. Additionally, we continue to face adverse impacts from restructuring efforts as we navigate the bankruptcy process, primarily in the form of elevated costs across various areas, which may increase over time. Finally, our quarter-end snapshot of liquidity and capital expenditure highlights that strong cash flow generation enables continued investment in our businesses, and we are committed to deploying capital thoughtfully in high-return projects. I will now hand it over to Mark for his closing thoughts.

Thanks, Eric. And as I said when I started today, 2015 was a strong year for Caesars, delivering the highest full-year performance post-financial crisis. Looking at Slide 26, you will see that we exceeded our annual CEOC EBITDA target of $1 billion by $100 million, ending the year with $1.1 billion of full-year EBITDA. Additionally, we exceeded our previously stated enterprise-wide goal of achieving an incremental $250 million to $300 million of EBITDA from cost savings and marketing efficiencies, delivering approximately $350 million in incremental EBITDA from these efforts. Amid the background of CEOC's restructuring process, we will continue to execute on our business plan, driving a balanced agenda of enhancing revenue growth and driving productivity gains to further improve margins and cash flow, while at the same time maintaining high levels of employee and customer satisfaction. We improved both our annual Employee Opinion Survey and customer satisfaction scores in 2015 across the enterprise, a good validation that while we manage to drive greater efficiencies, we sustained our quality performance in terms of employee and customer satisfaction. Looking briefly at January 2016 and February to date, we are encouraged by our results, as we have continued to see EBITDA margin improvement across the enterprise, as well as sequential growth in our Las Vegas region, driven by the world-renowned Consumer Electronics Show at the start of the year. However, we experienced weather-related regional pressure, given two brief property closures in the Northeast, due to winter storm Jonas. Based on these continued trends in operating performance to date, we feel confident in our ability to meet our operating goals for the rest of the year. To summarize on Slide 27, with our improved operating model, we are confident that we will continue to drive growth opportunities across our businesses in 2016 and beyond. Our team is beginning to execute on our cornerstone initiatives that will play a pivotal role in strengthening our foundation and positioning us for future value creation. These initiatives include: one, investing in Caesars' infrastructure to enhance long-term value; two, invigorating hospitality and loyalty marketing programs; three, inspiring a sales and service culture; and finally, instituting a continuous improvement-focused operating model. By executing on these strategic initiatives and driving continuous improvement, we continue to expect EBITDA margin expansion opportunities enterprise-wide. We will now open the line for Q&A. At this time, we ask to keep your questions focused on the performance of the business and please do not ask questions about the ongoing restructuring process.

Just a quick question on 2016. It looks like you're going to renovate almost 5,000 more rooms in Las Vegas, which seems like it's continuing that accelerated pace, and you certainly have been getting great performance out of the ADR in those renovated rooms. But beyond 2016, will there be a further accelerated pace in '17 or will you revert back to a normal cadence of renovations?

Yes, we expect that the cadence will continue at this kind of pace for probably in the foreseeable future, I'll say, the next three to four years given the under-invested situation, as you know, over the last five years. So there is a lot more that came from and we've got a master plan that drives it by quarter, by year, so it's good for us because we look at it as just an opportunity to invest in low-risk, high-return room refurbishments, which we're pretty good at, and certainly, in Las Vegas and most destination markets, you get a very high return on.

And I may have missed this in all the commentary, but have you stated in those renovated rooms what the incremental room rate you're getting is on a percentage basis?

Sure, I can just give you some context, Kevin. When we renovate rooms substantially and change the branding of the tower, we then tend to be able to charge an enhanced premium of something in the range of $48 to $45. When it's a standard room renovation project where we don't necessarily change the theme of the room or just simply upgrade it, then we're kind of more in that $20 to $25 range, so it's a blend of those two, depending on what we decide to do with the particular tower and property.

Just turning to your comments on skill-based gaming, I believe I heard you mention that you're working to develop skills-based gaming. And I just wanted to clarify is Caesar's directly spending on that initiative or is that just an informal partnership with your gaming equipment vendors?

We are not investing in skills-based gaming and do not have any standalone projects in that area. We are involved in side bets and develop our own table side bet games, some of which we patent, but we are not focusing on skills-based games specifically.

And in your commentary you mentioned that, Las Vegas was up in January sequentially due to CES, but was it also up year-over-year as well?

It was up year-over-year, Kevin.

And just my final question. I noticed the commentary didn't necessarily mention the High Roller. You did touch on the LINQ in terms of the F&B lineup in terms of some new product coming in there, but I guess we've always thought that the wheel would ultimately have some potential for corporate and group events, and I'm not asking for specific performance stats, but can you tell us or give us any color in terms of how you feel about the performance to date and is there a push to get better performance out of that asset?

The wheel, as we mentioned before, Kevin, we provided a glimpse into the number of riders, that's generally consistent with that from the previous period. We do get a significant amount of group business and tour and travel business to join the wheel. One of the areas where we've seen particularly strong traction is with our Happy Half Hour promotion, where we have a bar cart in the wheel. And with it up-sell price on the ticket, customers can ride the wheel and have drinks while they are going around on the ride. So those efforts are definitely underway. It still drives a significant amount of business to the promenade and to the casinos that we have surrounding the wheel. And then from a return on investment perspective, we're pleased with the return from the initial capital investment.

I wanted to start by asking about the unfavorable impact for both CGPH casinos and CERP, which was noted as flat to $5 million. I'm curious why it's stated as flat to $5 million and if there's a more precise figure available.

So I'll address that. If you notice whenever we present a hold impact, we always provide a range. And part of the reason why we provide the range is because predicting hold when you're talking about table games volatility has a number of factors including game mix, rules associated with the game, certain discounts and promotions that we offer, and so we provide a range. It just happens that in this case the hold was modestly negative and our point estimate fell between the $0 million and $5 million range, so that's the range we provided.

And then when you talked about the bad debt expense from last year, can you just clarify exactly in CERP, was that added back? I assume that was added back to EBITDA last year, making it look higher, is that right?

No, it's the other way around. So it was not added back last year. We called it out last year as an item that was negatively impacting it. So this year's performance wouldn't have that associated bad debt expense.

And then just turning to CapEx. Can you help at all with, I guess, when some of these rooms will come out at some of your bigger room renovations?

Yes. So we have a number of the room renovation projects underway. The Planet Hollywood phase one, which is a modest number of rooms, we expect to be concluded this quarter, and then the large number will be concluded in the fourth quarter of this year. For Paris, again, we have the three projects that are currently underway that will be done also in this quarter and then the larger room products in the third quarter. You've heard us talk about the Julius Tower, and we started the renovation in that in the fourth quarter, and so the rooms are coming back at a regular pace now and we had a sizable percentage back for New Year's of last year. And then at Harrah's, we have a full tower down right now of around 600 rooms, and that's expected to come back in the second quarter of 2016. So what we try to do is to space the room renovations, so that we as a market, from a market-wide perspective, have a relatively constant amount of rooms out of service at any one time such that it doesn't negatively impact our ability to yield the hotel and can still run sizably high occupancies on the weekends when we need the capacity.

And then just turning to the AC Convention Center, if you guys can provide a little bit of color of what you're seeing there? And also are you still expecting to get reimbursement from the CRDA or is that not with everything going on in AC not going to happen?

So to answer that second question, the CRDA reimbursements were done, as the money was spent. So I think it was on every roughly $2 that we would spend, we'd get reimbursed a dollar on a month delay, something like that. And so to the extent that there is risk there, there may be a few dollars remaining as we close up the project, but nothing substantial in terms of risk that we wouldn't get money from the CRDA. Overall, the convention center is performing exceptionally well and beyond our expectations. We continue to see very solid bookings. We anticipate that at the end of this quarter and as we head into the summer, we will start to see the number of actual room nights that are occupied pick up. As you know, convention here usually don't have reluctance to book right around the time of opens of convention centers, because of the risk of delay to their project. But now that we've been open for five or six months, those are starting to come in. And the feedback we're getting continues to be very strong. The demand, as we have mentioned before, is also very strong in the Northeast corridor, and so we expect this project to be a very high-return, high-value project for both Harrah's Atlantic City and for the city.

My last question just has to do with margins, I guess, going into 2016. I know you had cited in one of the slides that you had inflationary cost pressures, but I know you also said margins were up so far. So I guess is there any guidance you can give with regards to what kind of additional improvement you can get from here?

I think we did say that we expected margin expansion, that's probably as aggressive as we want to get at this point in the year, given that the economy and other factors come into place. So we'll just feel good about our performance to date and feel positive enough to say that we expect margin expansion during the year.

I had a couple of questions. First, I wanted to ask about Las Vegas. It seems you are now on par with the Strip in average daily rates after several years of lagging behind. How much more do you think you can increase RevPAR in the Vegas portfolio? Additionally, what is your outlook for Vegas RevPAR in 2016? I have a couple of follow-ups as well.

Sure. We don't provide direct guidance, Dave, so I'll pass on that question. But what I can say is that our ADR increases despite having been quite rapid over the last three years, we're still below our 2007 peak level. We're also below that of our peer set when we look at our comparable assets. We believe there are a number of factors that drive that. Some are our operational efforts that we're undertaking to improve that, but others are capital-intensive, as we've mentioned, and we're addressing the capital as Mark mentioned over the next three to four years and trying to improve the operational aspects that would help us get up to parity as quickly as we can.

The presentation has, I think, $350 million of incremental EBITDA related to cost savings and a lot of the marketing efficiencies. I was curious, if you think there is substantially more savings to come in your findings over the year? And what your thoughts are there? And then I had one last question.

I think that we are focused on improving productivity every year in the company. So we're developing a culture, where we try every year to figure out how to be more efficient. And this is why we had a great last year. Obviously, the rate of improvement is going to slow. But we still expect to find efficiency in our operations. We've got plans to do so. And we think we can find more ways to be efficient both in operations as well as in the marketing area and have plans to do so. We have a healthy set of initiatives this year that are offsetting those inflationary pressures that normal businesses have, and as well as the growth that we have planned for this year. So yes, we're feeling pretty good about productivity, and hopefully this will be something that we'll be able to talk to for years to come.

My last question, I was just curious if you guys consider any bond buybacks in entities outside of CEOC given some of the returns potentially there versus some other uses of capital, any thoughts there given where paper is trading currently? And that's it from me.

Yes. I think unfortunately, David, we can't address that question either. Talking about the capital structure at this point, we'll pass and you'll have to wait until we're done with the restructuring to really address any other capital structure questions.

Well, we'd like to just wrap up and thank everyone for joining us on today's call. And we look forward to checking back in for our first quarter in a few months. Thank you very much.