MGM Resorts International (MGM) — Q3 2023 Earnings Call Transcript

Good afternoon, and welcome to the MGM Resorts International Third Quarter 2023 Earnings Call. This call is being broadcast live on the internet at investors.mgmresorts.com. We've also furnished our press release on Form 8-K to the SEC. On this call, we will make forward-looking statements under the safe harbor provisions of the federal securities laws. Actual results may differ materially from those contemplated in these statements. Additional information concerning factors that could cause actual results to differ from these forward-looking statements is contained in today's press release and in our periodic filings with the SEC. Except as required by law, we undertake no obligation to update these statements as a result of new information or otherwise. During the call, we will also discuss non-GAAP financial measures when talking about our performance. You can find the reconciliation of GAAP financial measures in our press release and investor presentation, which are available on our website. Finally, this presentation is being recorded. I will now turn it over to Bill Hornbuckle.

Thanks, Andrew, and thank you all for joining us today. In the third quarter, we had fantastic results, as evidenced by our record consolidated net revenues. Despite the disruption across our portfolio, we achieved record same-store ADRs in Las Vegas as well as a record third-quarter regional net revenues on a same-store basis. To say the least, we're off to a strong start prior to the cybersecurity issue. On September 12, we disclosed that we identified a cybersecurity issue affecting certain of our U.S. systems. As a precautionary measure, we proactively shut down certain systems to mitigate risk to customer information, which resulted in disruption at some of our properties. Over the following weeks, we systematically restored and enhanced these systems and were fully operational by the end of September. Following the issues, we have seen incredible resiliency in our business to start the fourth quarter. Going forward, we do not anticipate any further operational disruptions from the incident and it's expected that insurance will cover the losses incurred. We expect to receive insurance reimbursements in the upcoming quarters, and Jonathan will provide more detailed information on the quarterly financial impacts in his remarks. I want to express my deep appreciation once again to our employees for their response during a challenging few weeks. They showed resilience and professionalism, but more importantly, a commitment to our culture of taking care of our guests and each other. We've been humbled by the feedback from many of our guests who took the time to call out the exceptional service they received. We're coming out of this stronger as a team and as a culture, with a focus on the culture of yes from both our guests and employees. One last thing on the employees: We continue to negotiate in good faith with the unions in both Las Vegas and Detroit with the goal of reaching agreements on new record contracts that work for everyone. In Las Vegas, as you know, Caesars Entertainment came to a new tentative collective bargaining agreement this morning, and we are literally in session as we speak, and I believe we'll come to a deal today. We know from listening to our employees that they are looking for a pay increase that combats inflation as well as reduced workloads, among other concerns. This deal, when announced, will do just that and will result in the largest pay increase in the history of our negotiations with the culinary union. As we shift to the fourth quarter, we anticipate the arrival of the Las Vegas inaugural Formula 1 race next week. We are well prepared to welcome our guests for what promises to be an exciting and enduring tentpole event. We sold out our Bellagio Fountain Club and grandstand seats. Cash remits are several multiples ahead of the same week in prior years, and the casino front money deposits indicate Formula One will be an all-time record casino event. As we look into 2024, we see strength in future bookings rate and group pace into the first half of the year, and we're encouraged by a number of tailwinds, including the launch of Marriott's direct bookings in the first quarter; a fully renovated Mandalay Bay Convention Center, which will return 100,000 primary midweek room nights lost in 2023; international baccarat play further coming back; opportunities to enhance our omnichannel marketing offerings to BetMGM and MGM Rewards customers; improving cross-play between regionals and Las Vegas; exceptional high Super Bowl demand; as well as a strong event calendar for the balance of the year, including the return of Formula 1 in the fall of '24. Plus, the recent completion of the bridge connecting the Cosmopolitan to City Center and Bellagio. We've been diligently working on deploying capital in meaningful ways at our existing resorts with numerous hotel, restaurant, and entertainment refreshes. Beyond these domestic operating tailwinds, we are underway in Japan, and we believe we are well positioned to be awarded a commercial gaming license in New York, and BetMGM is now on a positive path. More on those in just a moment. Turning to our regional operations, top-line trends were solid. In fact, as mentioned previously, we had a record third quarter same-store regional net revenues despite the disruption. Margins were expected in the low 30s. In the Macau market, it is clear that business is booming. In fact, it was a third-quarter net revenue adjusted property EBITDAR record and surpassed 2019 in adjusted property EBITDAR, mass GGR, and visitation. To kick off the fourth quarter, we had an amazing Golden Week that led to a market share for October of over 15% and an all-time record adjusted property EBITDAR for the month. Results have been outstanding because of the ingenuity and execution of the team at MGM China. Looking forward, we are still laser-focused on three key priorities: making opportunistic changes to our casino floor and existing room products to maximize yield; taking care of our mass and premium mass customers; and driving international tourism. At MGM Cotai, we will start remodeling our Platinum area for completion early next year. And at the MGM Macau, we have begun planning for a villa upgrade and the addition of six new villas. BetMGM in the U.S. is now live in 28 markets. The team is making great progress with the integration of Angstrom into our sports products, adding a myriad of betting options not offered before, and a single account, single wallet has launched in all the states except Nevada. The BetMGM team will provide a comprehensive business update next month on their progress. Specific to our international digital efforts, in September MGM Resorts and LeoVegas launched multimedia marketing supporting the BetMGM brand in the U.K., with Chris Rock leading the campaign. The U.K. market is ideal for an initial launch due to its size and the brand recognition of MGM with U.K. customers. Initial KPIs are very encouraging, with first-time deposits much higher than expected. We will leverage our recent acquisition of Push Gaming to bring innovative games to the U.K. and ultimately to BetMGM. We will also look for Push to extend into further international markets through existing B2B relationships. On the development front, we signed our implementation agreement with the City of Osaka in September, and this is effectively our green light to begin the project. The total project cost is JPY 1.27 trillion, of which MGM's expected equity contributions are approximately JPY 300 billion, which at current spot is roughly $2 billion. Costs have inflated through the course of the process, but we have kept the budget unchanged by reducing minor scope around certain areas that will not impact project returns and by locking in very attractive foreign exchange rates. We look forward to breaking ground in Osaka; it will be Japan's first-ever integrated resort. In New York, we have submitted our second round RFA questions to the Gaming Commission and are prepared to submit our application within 30 days of the date at which the Gaming Commission answers those questions. We believe our existing facility, brand recognition, and strong ties with the Yonkers community make us a great contender for one of those three available licenses. In Dubai, our partner Wasl is constructing a luxury development, including 1,400 hotel rooms with the MGM Grand, Bellagio, and Aria brands. We currently have a hospitality management deal requiring no capital from us. That said, we do see a significant opportunity if gaming were to be legalized, first in the UAE and ultimately in Dubai. We believe we have the best gaming hospitality brands in the world with the best location in Dubai, and our existing project could include a world-class gaming component if approved. Finally, we expect the launch of our strategic relationship with Marriott to begin in early 2024, when we will start taking reservations. We have launched the official landing page and will soon announce the exciting loyalty benefits we plan to offer to both MGM Rewards and Marriott Bonvoy members and its 180 million members. In closing, the stability of our domestic business and the focus on margins will be supplemented by BetMGM's approaching profitability as well as by outsized earnings opportunities in Macau as the business continues to ramp further. We also have long-term drivers with our developments in Japan and New York and our international digital strategy with LeoVegas. When you connect each of these prospects for cash flow generation together, add to it a fortress balance sheet with more cash than debt when excluding MGM China, and considering the fact that we have reduced our current share count by approximately 31% in less than three years with our Board recently approving an additional $2 billion share buyback authorization, we are confident that the company is tremendously positioned to grow its free cash flow going forward. With that, and before I lose my voice completely, I will turn this over to Jonathan for more details on the quarter.

Thanks, Bill. Before I get into the financial results, I too would like to commend the selfless efforts of all of our employees during our recent cybersecurity issue. I personally witnessed so many people on our teams go above and beyond to support their colleagues and take care of our customers. As you likely saw in the 8-K, we highlighted an estimated adjusted property EBITDAR impact from the cybersecurity event of approximately $100 million in September. Most of this impact was from a loss in revenue from room cancellations in Las Vegas and our service recovery efforts. We expect the Q4 impact to be limited, with some hotel bookings lost in the first part of October and a brief disruption to the direct mail cadence in our calendar, which affects the regionals more meaningfully than Las Vegas. We remain confident that the losses will be covered by our cyber insurance. Now turning to the results for the quarter. Our consolidated businesses generated net revenues of $4 billion, up 16% from last year; net income of $161 million; and adjusted EBITDAR of $1.1 billion, with significant contribution from MGM China. During the quarter, net cash from operating activities was $694 million, and free cash flow was $484 million. It's worth noting that $197 million in cash flow from operating activities and $8 million in capital expenditures related to MGM China were included in the quarter. In Las Vegas, net revenues were $2.1 billion, down $195 million or 8% compared to the prior year. Adjusted property EBITDAR was down 16% to $714 million. Same-store net revenues, which exclude Mirage from last year, were down 2%, and same-store adjusted property EBITDAR was down 11%. Las Vegas adjusted property EBITDAR margins were 34%, and we estimate about 200 basis points of margin impact in Las Vegas was related to the cybersecurity issue. At the start of the third quarter, trends were solid in Las Vegas. July and August combined net revenues on a same-store basis were essentially flat versus 2022. Occupancy for the first two months was up 100 basis points year-over-year but fell to 88% in September, down six percentage points year-over-year. That being said, we drove a sharp recovery in October, with occupancy back up to 95% in Las Vegas. Importantly, while we're still working to negotiate a new collective bargaining agreement with the culinary union, we have been accruing for an increase since June 1. We will not provide the full details of that accrual at this time given that we're still in active negotiations, and we'll look to technology and process improvements to help offset the incremental labor costs we expect. Turning to the regions. In September, the cybersecurity event also affected the regional properties. Prior to this incident, July and August had a strong start to the third quarter with a 2% increase in same-store net revenues versus last year. Full third-quarter revenues of $925 million, though, were down 5% compared to the prior year, and adjusted property EBITDAR was down 9% to $293 million. Same-store revenues, which exclude Gold Strike, were up 1%, and same-store adjusted property EBITDAR was down just 2% or $6 million even with the impact of the cyber incident. In Macau, our adjusted property EBITDAR of $226 million was a 23% increase compared to the third quarter of 2019. We achieved 28% margins, helped somewhat by a benefit of $18 million from hold in the quarter. Casino revenues exceeded third quarter 2019 levels, primarily driven by our main floor win. Discounts and incentives as a percentage of gross win were 600 basis points lower compared to 2019, mainly due to the shift from VIP to mass. BetMGM is well on pace to achieve its forecast of $1.8 billion to $2.0 billion in net revenues from operations for the year. Our 50% share of BetMGM's operating income in the third quarter was $13 million, marking our first quarter of profitability at BetMGM. We now anticipate fourth quarter corporate expense to be roughly $115 million, bringing full year corporate expense less share-based compensation to approximately $450 million. This upward adjustment relates to incentive fees in Japan related to the signing of the implementation agreement, IT and cybersecurity issue-related expenses, as well as costs related to the integration of the Cosmopolitan. On the development front, in Japan, we expect to commit approximately $2 billion over the next five years. Our New York expansion, if approved, will be an all-in project estimated also at $2 billion, of which $1.5 billion will be invested in improvements and $500 million expected for the license fee. We plan to fully fund these projects through free cash flow generated by our operations. I'll conclude with an overview of our free cash flow per share growth algorithm, and it's pretty straightforward. First, we're committed to growing EBITDAR by improving our core operational performance, deploying growth capital in high-return projects, and by focusing on margins. We create operating leverage by growing our EBITDAR more than our fixed 2% rent escalators. Second, we'll continue to buy back our shares, as evidenced by the new $2 billion share repurchase program authorized by our Board. In addition to returning cash to our shareholders, these repurchases turbocharge our free cash flow per share growth. There is more free cash flow growth on the horizon, as we're making significant progress with BetMGM and we have two exciting growth projects in the pipeline. With that, Bill, back to you.

Thanks, Jonathan. Just some open comments before we talk questions. I'm reminded about the resiliency of this market and our company and our employees. Candidly, this quarter we went to hell and back with what we all went through with the cyber attack. I'm proud of what we've accomplished to put ourselves back on track. More importantly, I think, as an indicator of this market, fundamentals have changed. We've gone from a month ago in distress to getting ready for the biggest event; one of the second worst weekends this city has ever seen in its ongoing history of occupancy to the biggest event we've ever seen with Formula 1. Fundamentally, this marketplace has changed. Macau continues to do exceptionally well. I'm very proud of that team. You've seen the market share that it has gained and it will keep. We ultimately have about 3% of the suite product, and I think we're kicking on all cylinders there and doing the right things. We will look to correct that. If I think about the future, I think about development in Japan in the long haul, hopefully, New York in the midterm, and next year, I think about the ability to unleash 180 million Bonvoy members in Marriott; I get very excited. Ultimately, the balance sheet is important. I think we've been very good fiduciaries. Jonathan has done a great job managing it. We find ourselves in a great position to consider the future and investment opportunities.

Congratulations on the results. Maybe this is a question for Corey, but for anybody who wants to take it. I think that the Mandalay Bay Convention Center coming back is underappreciated as a driver for growth for next year. Can you talk about the group mix for next year and where you think you'll end up for the group mix for this year in Las Vegas?

Yes, Joe, this is Corey. We also think it is a big deal. The convention space will be fully renovated by the second quarter of next year. We expect to pick up about 100,000 extra rooms there next year with still opportunities to increase it. The beauty of that is that's at a high single-digit ADR increase compared to where we are today. So all in all, strategically, as that building goes, it fills the South Strip, which fills Excalibur and Luxor, which is to the benefit of us as a company.

Great. And then I think I might know how you're going to answer this one, Bill, regarding F1. Last night, the Red Rock guys thought that certain casino operator internal expectations for F1 had come down more recently. Can you talk about what you're expecting for F1, if any internal expectations, at least directionally, have been ratcheted down? And I know Caesars in the past had said they thought in isolation F1 would be an incremental 5% of quarterly EBITDAR, if you kind of want to take a stab at maybe where you think the contribution could end up being for you guys in Las Vegas? And that's all for me.

Thanks, Joe. I appreciate the question, because if someone wasn't going to ask it, I was going to answer it anyways. We sold over 10,000 tickets to F1. We've sold out a really cool experience with the Bellagio Fountain Club. I think something extremely unique anywhere in the whole sport, but particularly given its location. Our average rate is over $900 for the company. We're going to do over $60 million in incremental hotel revenue for the weekend. It's 50% above any other event we've had in terms of theoretical win. We all know what could happen to theoretical, knock on wood. But there's been nothing quite like it, and to have it placed in the weekend that it is, we think, it's going to be an incredible opportunity for the company and ultimately for the city long term. It has not been without its challenges. Believe me, I'm a local, I get the traffic and understand what our employees are going through. But I think long term, it's going to be a big winner. We will figure it all out. There's been a great deal of money invested, not only by the properties but ultimately by Liberty and F1. I think it's going to be an exciting week. We'll look back on it and say, yes, we're going to learn some things, but ultimately something to be cherished for a long time.

Joe, what I would add is this is truly a luxury event, and our properties are completely geared up for that. They're in the right location, and we have the right database to make this a premium event for our company.

Bill, you discussed the outlook for next year and mentioned several favorable drivers. Considering the current state of the business and examining non-event periods, how do those compare to last year, especially in light of the disruptions we experienced this quarter due to cyber incidents?

Look, and you know how this works, Carlo, better than most. We have a short window in terms of FIT, but we do know events. When I think about the Super Bowl, I think about Formula 1 coming back, I think about the fact that we have an NFL team in town that's going to guarantee us at least 8 games, etc., it is fundamentally a foundation for business going forward that we haven't had. Back to Corey's prior question around convention, it continues to grow. We continue to get back to the market mix that we were, about 18%, 19% of our base in convention, which is obviously the premium rate. We're excited by all of that. We, through COVID, learned a lot. I think you know this, but generally our casino market share is up, our market mix about 10%. We continue to lean heavily into that. I believe Marriott at scale will make a difference. While it's early to tell, the pressures that are on us, whether they be wage or for insurance or other premiums are real, but I feel every bit of confidence that we can overcome that, particularly here in Las Vegas, and push forward with the kind of results I hope you all expect.

That's very helpful. I wanted to follow up on the high table hold we observed in Las Vegas, particularly in baccarat. You performed well, so I have a two-part question. Can you provide any insight into the EBITDA impact during this period from the higher hold? Also, has anything changed, aside from game math from the past, that could lead to consistently higher holds for you in the future? Are there any thoughts about reassessing where those theoretical numbers should stand?

I'll take the second one first and turn it over to either Jonathan or Corey on the broader one, although I don't want to give an explanation just because we won or lost. But having said that, we have more domestic baccarat business than we've ever had. There are three now prop bets, basically, in every baccarat game that people are taking advantage of because they're fun and exciting. No surprise they are to the house advantage. A couple of the bets are 10% bets on behalf of the house. So a little shift in play, definite shift in the market in terms of international versus domestic. I think some of that balances itself out. The other thing we've seen is there's a quantum of very high-end customers who really swing this number more than I've seen historically, versus a balance of customers all the way through mid-tier up to the very high end. I think you're seeing some of that volatility as well, clearly this quarter in our favor.

As it relates, Carlo, to the financial impact of these swings, we've at least domestically tried to get out of the business of giving the puts and takes related to hold. We did, as you noted in my prepared remarks, around Macau, but in the domestic business, we're not going to get into that detail.

I just want to dig into the domestic margins a bit more, if possible. Obviously, a lot going on between hold, which we just talked about, the impact on cyber and everything else, but I think if we try and adjust for some of these, including the union approval, it looks to us like the margin performance was very good, if we kind of stripped this out, both in regional and in Vegas, when we just look at it versus what happened last quarter. Were there any operating expense improvements or things you were able to isolate that helped offset some of the broad inflationary pressure that we hear about out there across the business?

Shaun, it's Jonathan. We agree. We think, both in the Las Vegas market and in the regional markets, when adjusting for the impact of the cyber incident, whether you look at it year-over-year or sequentially from the second quarter to the third quarter, that our margins were flat to up in those comparisons. The impact in Las Vegas on margins was about 200 basis points. There was some impact from the accrual in the third quarter that I mentioned related to anticipated increases in labor costs. So when correcting for those, the margin performance year-over-year and sequentially was pretty good. In the regions, the margin impact from the cybersecurity incident was less severe, less than 100 basis points for a number of reasons. Even with that modest adjustment, you can see that our margins in the low 30s compared pretty well both sequentially and year-over-year despite some continued labor cost increases in the regions and actually some more labor content in that business.

Great. As my follow-up, just quickly, if I could. We've heard more and more about just promotional levels picking up a bit in Macau. I wonder if Hubert's on the line or somebody could comment a little bit more on just what you're seeing over there? It seems like based on the share number you disclosed for October and what you talked about, Bill, in the prepared remarks, you guys are doing really well there; just if you could talk about that competitive climate a little bit and maybe the margin structure around the really highest-end part of premium mass.

Hubert, since we have you up, why don't we kick it to you?

Sure. Thank you, Bill. Yes, Shaun, I think for the most part, the marketing programs, promotion programs in the market remain pretty rational. We haven't seen irrational behavior among all the operators. In terms of our own reinvestment, it stays pretty stable quarter after quarter even at the premium mass level. There are a lot of concerts and events that draw a lot of people into the town. I think that from that perspective, it's incremental to the GGR, not only to the market but also to us as well. I leave it at that.

I wanted to discuss updated views on leverage from a lease adjusted standpoint and how that relates to capital returns. We've been having many conversations with management teams about their desired leverage levels, whether that is 3 to 4, 4 or higher, with many preferring lower levels in some cases. I would appreciate your insights on this matter.

Sure. It's Jonathan. I appreciate the question. It's something we think about a great deal. Right now on a lease-adjusted basis, suggesting the lease payments by a multiple of 8x, our leverage is about 3.5x. It's a full turn below what we've talked about as our leverage cap. A full turn on EBITDAR for us is over $4 billion. We have zero net debt right now. We've been aggressive repurchasers of shares. I will say that at these levels of trading in our shares and the value we think is in there, we would certainly consider taking on some additional financial leverage in order to enable further share repurchases. We have to be mindful, of course, of some investments we have coming up in '24, including in Japan, potentially in New York, depending upon timing. We feel very comfortable with the leverage levels that we are at and that going to a higher level is reasonable due to the increased diversification of our cash flows and the resiliency of the revenues we have seen here.

Understood. And if I can, just as my follow-up, we also have a number of discussions with management teams around how they're thinking about dividends among your peers, and how they should be sized and their importance and relevance. I'd love your thoughts there, too.

Yes. We have determined that, at least for now and likely into 2024, returning cash to our shareholders through share repurchases will be our primary method. This approach is currently the best way for us to do it rather than through dividends. I do not anticipate any changes to our dividend policy in the next 12 months, but the final decision will rest with the Board.

First, just following the cybersecurity incident in the quarter, any updated way to think about investments in your IT infrastructure or OpEx related to this as we think about next year? And then just as a follow-up along with that cost structure, I mean, other than the labor uptick, are there any other costs that we should be thinking about that you guys plan to offset for next year, whether it's property insurance or anything else that we should be aware of?

Dan, let me start by saying that we have made significant strides in securing our systems. Moving forward, we will evaluate our architecture and design. We anticipate investing around $30 million to $40 million in IT hardware and related capital expenditures next year. Regarding operating expenses, while there are areas to address, I don't see them as very impactful. Much of that will be captured in capital expenditures, which we estimate will be in the $10 million to $20 million range. We usually allocate about $800 million annually to maintain our facilities, and we have a few major renovations planned for next year, so that figure is not expected to change significantly. We are also considering the wage increases being discussed in the culinary sector, and we are currently involved in a strike in Detroit that has similar requests. Insurance will also be a significant factor; it's one of the two main concerns regarding percentage increases. Moreover, our insurance costs, both for cyber incidents and general coverage, have risen significantly since 2019, with Las Vegas insurance doubling and regional casinos seeing quadruple increases. This is something we monitor closely. Overall, while the scale of these issues is noteworthy, we believe they are manageable, especially here in Las Vegas.

Got it. That's helpful. Looking at the bigger picture and the long term, do you see a realistic pathway to getting gaming legalized in Dubai? Additionally, it would be helpful to understand the timing, capital expenditures, ownership structure, or the route to full ownership at a high level.

Yes. We think so. We've got boots on the ground. You all understand our former CEO is now chair of the gaming commission there, which is very real. So they've taken a swag at it; you all know what Wynn is doing. We like Dubai for all the obvious reasons. There's 20-odd million visitors; they've got 140,000 hotel rooms. That sounds familiar. The current structure we have is hospitality management only. To the extent we actually get into casino, it's obviously we're not a management company for a casino. We will look to invest equity or lease the casino; it depends on what a partner and potentially our existing partner wants to do. We literally have someone on the ground today in discussion. It's front and center with us. We think it could be very meaningful for the company and, frankly, the industry, and so we're there at scale.

I had a question about, if I'm understanding the slides correctly, you talked about the decline in Vegas and you said $80 million was due to the cyber issue. I guess total EBITDA was down $91 million and maybe would have been more without some hold. I know you won't quantify it, but if we're thinking about that other $10 million, is there anything else you would call out, because it looks like same-store EBITDA would have been down a little bit even without the cyber issue. So just anything else you'd call out there?

Not in particular, only just differences year-over-year that occur. Sometimes it's in gaming results; sometimes it's in other cost elements, but other than the things that we called out, nothing in particular that we would highlight.

Programming. Obviously, 2022, particularly the third quarter, was an all-time quarter. As a comparative, you've got to keep that in perspective.

Okay, great. That’s helpful. As a follow-up, regarding the level of repurchase, I know you mentioned during the third quarter that you were exploring various international iGaming opportunities. Based on the repurchase figures, can we assume that, if this trend continues, you will have exhausted what you referred to as excess liquidity, leaving just a couple of hundred million by the year’s end? Should we interpret this as a signal that you're less inclined to pursue international iGaming acquisitions?

Look, if you're referencing Entain, our position has not changed. If we think about iGaming and the platform, obviously we've gotten aggressive in the U.K., and we're excited by what that opportunity brings. Obviously, it's a highly developed market, but we've taken some share. We have a meaningful brand, and it's good to see our LeoVegas team go up against some competitors and see how they can do. We look to expand internationally. We're looking at Brazil closely. We’re looking at other European countries closely. With the acquisition of Push Gaming, we're in the content business now, both for ourselves, hopefully for BetMGM, and for other customers they had when we acquired them. We'll continue to look to expand internationally. Gary Fritz is leading that effort, mostly through our LeoVegas enterprise, and we'll see where it all goes.

I noticed that last week, Entain mentioned plans to invest more in the joint venture next year, even though you've indicated plans to achieve EBITDA positivity. You didn't highlight that specifically, but should we assume you'll maintain the same level of investment and continue with the 50% stake? If they're planning to increase their investment, are you considering doing the same for BetMGM?

Okay. Thanks, Robin. If they want to invest more than us, that's not the way it's going to work. Yes, we'll invest side by side. We believe in that business, and we recognize, particularly as it relates to sports, that our product over the last 18 months wasn't where it needed to be. You've seen us do a great deal of work around single account, single wallet. Entain bought Angstrom, which we think is a significant boost for us with parlay product for odds, the quantum of odds that we set, and the amount that we can put out there. We’re excited about that acquisition and what it's brought to the business. Ultimately, we will get Entain in Nevada in the first quarter, which will then make our single wallet available across our network. We think that will be meaningful. We will see, once the product is understood, more clearly how much to invest. When you talk about a quantum of dollars and the overall scope of what's been accomplished, it won't be large. But if someone said you need to invest another $50 million to ensure your long-term value, I'm aiming for the end of '25 as a goal. Where are we going to be? Has this truly begun to do the things we all expect and hope it to do? We'll continue to invest accordingly and appropriately with our partners because we believe we remain #1 in iGaming. We have a sizable position to protect and will continue to do so.

I appreciate the commentary on F1 but curious if you can provide any additional color or metrics on how Super Bowl is shaping up?

Yes, I'll start. It's interesting to note that we've seen a significant amount of international single visitation for F1 and Super Bowl, which is largely driven by corporate America. We're seeing this reflected in various groups taking a considerable amount of inventory.

Yes. If you look at the large groups that have booked for programs for F1, we're actually about double for Super Bowl. We're seeing strong demand driving ADR. We're pretty optimistic about what Super Bowl will bring for us from a casino and leisure side.

Great. As a follow-up, as you look across your markets or other parts, are you seeing any noticeable impact from the macro environment we're in?

No, we're not really seeing any. We continue to book at elevated ADRs; the regional trips and rated days of customer values seem to be where they've been in the past.

Barry, I think the discussion will ultimately come down to the regionals and not necessarily the top line but the bottom line in margin. Just keeping those strong. Obviously, we'll wait and see what happens in Detroit here, but we'll come out of that like we always do. It will be about regional margins, I think, in the bottom line more than top line. Anything we can see suggests that.

Maybe one more to shift back to Macau. The trends in recovery in Macau are still trucking along nicely for the market as a whole. There’s a lot of discussion about macroeconomic issues in China. So there seems to be a decoupling. Curious to get your thoughts on that and then, more specifically, the next leg of the recovery as we march forward. Airlift back to Macau and Hong Kong is still a place of recovery. I'd like your views on the differences in Macau and the Chinese consumer more broadly and then how you see the next leg of the recovery playing out.

Hubert, since we have you, why don't we kick it to you?

Yes, thanks, John, for your question. I think that, first of all, I believe that the recovery is going to continue. The government issued their forecast for next year during their budget session. We're looking at a GGR number for next year around USD 27 billion for the entire year. This is quite consistent with our belief, our own expectation and the market consensus as well. Yes, in China, there is some softness in its overall macroeconomic situation. The GDP growth is around 4% to 5%, which is at the trough if you look at the long-term window period. Macau is not an average reflection of the average GDP growth or spending pattern in China. As a town, we cater to about 30 million visitations a year. The unique visitation is probably less than half of that. It's still a very small number in the grand scheme of the population in China. We cater to, I would say, the economic elites in China, the middle class, and upper middle class. There's a recent report that talks about even in China, the consumption between the high-income group and the base mass is very different. You see continued growth on luxury goods purchased at the high-income level, while the mass has seen a decline. Macau is positioned to cater to that high-spending group, and that's what every concessionaire, along with the government, is trying to do: to capture that group and their visitation into the market. I hope that answers your question, John.

Yes, Hubert, that's great. I appreciate that commentary; very helpful. Maybe one for Bill or Jonathan back on the U.S. as a follow-up. A couple of different questions on OpEx inflation, and property insurance being a big one that a lot of folks have talked about, Bill, you've just commented on that. But looking ahead, excluding labor, which we've talked about, is it your visibility on OpEx? Does it feel like the inflationary impacts are already borne, or what do you expect going forward, your outlook for cost inflation over the next couple of months from where you have visibility?

Yes, setting labor cost aside for a moment, and even insurance, which is more pronounced in a couple of our regional properties than in our Las Vegas businesses, we expect inflation in some of our core inputs to be low single digits. But at the same time, Corey and his team have dozens of initiatives against our cost structure so that we can minimize the overall impact and maintain margins in our Las Vegas businesses in the range they've been for the past several quarters. We have quite a few levers we can use to offset the impact of that. So again, setting the labor aside, we're confident that we can hold the line on those overall costs.

I know a few calls ago, we spent a lot of time on the Marriott strategic partnership, and Bill, you talked about that as a catalyst for '24 when that launches. Can you just give us an update, since it was slightly delayed, just in terms of how we're thinking about the overall impact of replacing those lower-yielding rooms to Marriott direct customers, if we should start to see that real benefit in '24, or does it just appear that the city is busy enough right now where maybe we're not getting the full benefit, and this will be more of a '25 and beyond positive for you guys?

No. I think it's '24, because I think the booking cycle for Las Vegas, even with this group, mirrors Cosmopolitan and is pretty much in line with everything else. They go a little earlier because they want to ensure they can use their points, etc. There's a clear window over the next couple of months. Once we launch, we think it ramps fairly quickly. By the third and fourth quarter of next year, we ought to have a real good feel for what it's going to provide. The group activity that will be part of it is a little different discussion that will take more time due to the obvious nature and cycle of that business. Remember, we're looking for $50 million to $75 million in incremental first-year revenue, and despite the delay, we believe we can achieve that.

Okay, great. Another question about '24 regarding Lunar New Year. I believe it coincides with Super Bowl over the same period. Have you seen any indications just in terms of bookings for some of that international baccarat play? Does that come in a little bit closer to that event? Considering Super Bowl is around the same time, should we expect a lower positive from that?

Yes, they do line up, so I can't change that. One of the few years they do. We've seen increasing international baccarat play as the year has gone on, and I think that will continue into 2024. A lot of folks at the football game may not know much about football, but they’re inviting guests or want to see a spectacle. Yes, there's some overlap. But we feel positive; it's just too early to tell. Most of those customers, outside a holiday period, usually react fairly quickly. We’ll know about 60 to 45 days out what the activity case will look like.

For that holiday, it does expand for a little bit over a week. We will separate the party from the Super Bowl to maximize both opportunities.

We've talked about the A's relocation and if there is a CapEx requirement as part of that. But does it make sense to potentially expand the asset base on the south end of the Strip just given your liquidity position?

So update, I was with their team and their owner yesterday. They are excited to be coming. The vote is on the 16th for the owners. Obviously, they have to get through that. They won their court case this week, which was important. They showed me the design, which was spectacular, I might add. We're all excited by that. You'll see us rethink MGM of note. It's our legacy brand; it's 30 years old and needs some attention at the front end. You'll see us invest there. We’ll invest in the way people move around that corner in concert with the design I saw yesterday. To the extent this goes up, we'd be foolish not to expand if Las Vegas continues to do the kinds of things it's been doing.

Thanks, operator. I made my comments earlier. Again, I just want to call out to our staff here for getting us through this cyber attack. I appreciate everyone's patience with us, your trust in us, and ultimately, anyone coming next week, let's go racing because I want to have some fun for once. I'm tired of this. Thank you all.