MGM Resorts International (MGM) — Q3 2024 Earnings Call Transcript

Good afternoon, and welcome to the MGM Resorts International third quarter 2024 earnings call. This call is being broadcast live on the internet at investors.mgmresorts.com, and 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 to 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 Jonathan Halkyard.

Thanks, Andrew. Good afternoon, and thanks everyone for joining us today. I’m happy to report that MGM Resorts posted record third quarter consolidated net revenues and record third quarter revenue and adjusted property EBITDA at MGM China. Additionally, we saw record ADRs in Las Vegas and record occupancy at our regional resorts. These outstanding results are a testament to our MGM resource, colleagues worldwide, who are committed to providing outstanding service to our guests every day. Thank you through our dedication, hard work and commitment to operational excellence. All of us on the senior leadership team are proud of what we continue to achieve together. As a team, we continue to raise the bar here in Las Vegas and in our regional properties. In fact, MGM has nearly doubled its EBITDAR in Las Vegas since 2019 and has grown regional EBITDAR by almost 20% over that time period. We've improved our properties and operations to attract new sports and entertainment drivers, and as a result, our business is in a stronger position than ever. Turning to the details of our results, first in Las Vegas. Revenues were up 1% while adjusted property EBITDAR was up 2%. We grew month-to-month during the quarter with many of our key metrics demonstrating strength, including a 3% increase in ADR, an occupancy increase of 250 basis points, and 4% growth in slot handle. The Las Vegas properties this quarter benefited from $37 million in business interruption proceeds related to the cybersecurity incident a year ago. In the fourth quarter here in Las Vegas, we're encouraged by the stability of demand that we're seeing. We're also gearing up for year two of F1, which while not as large as last year's event, still brings significant economics to MGM during what has historically been one of the slowest weekends of the year, no more. Within our operating model, our team is focused on driving organic growth through ongoing cost review and strategic customer pricing initiatives. These activities will combine to further bolster our organic growth story. Now moving to the regional properties, we grew revenues by 3% while adjusted property EBITDAR increased by 2%, driven by strong slot handle and growth in rated days, our best indicators of overall visitation to the properties. Our regional properties this quarter benefit from $15 million in business interruption insurance proceeds. The insurance proceeds we received in the quarter, totaling $52 million, we believe represent less than half of the funds we'll collect ultimately. In Macau, MGM China achieved a record-breaking third quarter with net revenues increasing 14% year-over-year and adjusted property EBITDAR rising 5% resulting in a 26% margin. Our market share for the quarter was 15%. Given our outstanding performance this year, MGM China announced a special dividend, bringing total dividends to MGM Resorts to approximately $200 million in 2024. In digital, I'm very encouraged by BetMGM's third quarter performance. During Q3, we achieved profitability again, record iGaming results, and a 70% increase in first-time depositors while stabilizing market share. I'll conclude, as always, with a few thoughts on our free cash flow algorithm. Through the first 9 months of the year, our revenues have grown by 9%, generating $1.7 billion of cash from operations. With capital expenditures of approximately $750 million, this results in free cash flow of about $944 million. Looking ahead, we plan to build upon this strong foundation with organic growth from our resort operation, building on our longstanding track record of outpacing the escalators on our fixed rent, incremental value from a commercial gaming license in New York, significant value generation from our online operations, both in North America through BetMGM here in the U.S., and globally through MGM International Digital, fixed-rate interest with no near-term maturities and relatively flat maintenance capital, all augmented by opportunistic repurchasing of our shares. Bill, over to you.

Thanks, Jonathan, and good afternoon, everyone. I'm happy to say that MGM is in a great position today due to the strategic choices we've made over the past decade. These choices have transformed MGM Resorts, giving us a strong financial foundation and unmatched growth opportunities. Our globally recognized brands, prime locations, development opportunities and evolving digital platforms enable us to reach more customers and more markets than any other company in our sector. We operate on a large scale with 18 global casino properties, over 75,000 employees worldwide, and a total addressable market exceeding $150 billion, including both our physical resorts and online markets. As we continue to expand internationally to drive long-term value to our shareholders, we remain bullish on our leading position in Las Vegas in the short term. First, Vegas has consistently grown over the past 30 years plus with the Strip's gross gaming revenues reaching all-time records in about half of those years, even in the face of various macroeconomic conditions. As Jonathan noted, we saw record ADR in the third quarter, which is testament to the strength of this market. We're reinforcing our goal of being the industry leader in groups and meetings and have invested, as you know, over $100 million in the now-complete Mandalay Bay Convention Center, which saw record catering and banquet results in 2024. MGM's omni-channel advantage is now more than meaningful opportunity with the launch in the third quarter of Single App, Single Wallet here in Nevada. Our relationship with Marriott continues to exceed our expectations. Bonvoy guests are driving higher spend to our properties, and we also announced last week plans to rebrand our Delano Tower at Mandalay Bay to a W Resort which has significant brand recognition. Over the past decade Las Vegas has become a major player in the sporting world. While we're already home to many major sports leagues in America, the city continues to build on its impressive track record. A great example was the USC-LSU game in September that saw us sold out of Legion Stadium and demonstrates the growth potential beyond global events like the Super Bowl. We're looking ahead to the relocation of MLB's A's, hosting the NCAA's men's final four in a few years, and are hopeful and are working towards an NBA expansion team. These events will continue to draw more visitors to Las Vegas, and our Prime Strip footprint positions us to capture a greater wallet share, driving the organic growth we are confident Las Vegas will continue to deliver for many years to come. In the regions, we continue to expand stable results across the portfolio, supported by a rational promotional environment and a stable economic backdrop. Looking ahead, we expect our regional properties to remain reliable sources of free cash flow, with almost all of our properties being market leaders, located in affluent areas and operating with relatively low capital requirements. In Macau, we had yet another record quarter of growth, driven by robust mass market volumes. Our exceptional golden week performance, which just concluded with volumes up 20% compared to 2019, underscores the region's post-pandemic recovery and the resilience of the general economy and positive momentum still in Macau. Our team continues to perform at a high level and we remain confident in our long-term ability to sustain market share in the mid-teens. We're also investing in several capital improvements across our properties aimed at protecting our premium mass market position and driving organic visitation. These initiatives include the renovation of Macau's villas and conversion of base rooms and co-tie into suites, increasing our suite count by 25%. Additionally, we're excited around the upcoming launch of our new show, MGM 2049, scheduled to open by the year-end. It's produced and directed by Johnny Mo, the creator of the 2008 Beijing Olympics opening ceremony. And in connection with our government commitments, we're also excited by the new Poly Museum at MGM Macau to further expand on our cultural non-gaming offerings and to drive visitation. In digital, same as in our land-based business, we're also always focused on continuing to enhance the customer experience. This quarter, BetMGM launched a single account, single wallet feature in Nevada for football, and the results were immediate and profound, leading to a doubling of first-time depositors here in the state. We also further integrated Angstrom, enhancing our parlay product offerings, and through the first 8 weeks of the season, we saw a 200 basis point increase in the percent of bets coming from both traditional parlay and same-game parlays. As we move through the football season, we are closely monitoring these increasingly encouraging metrics as first-time deposits, retention, and reactivation to ensure sustained growth and engagement. Internationally, in the third quarter, we entered into a strategic venture with Grupo Globo, Latin America's largest media group based in Brazil. This venture is meaningful as it allows us to leverage MGM's LeoVegas technology and gain access to 70 million people providing invaluable insights into Brazil's consumer market. This aligns with our broader strategy to expand our digital footprint globally and tap into emerging markets. We aim to launch in January of '25 pending licensing approval. In terms of development, we are making significant progress in Osaka, aiming to complete ground preparation and start main construction in the middle of next year. In New York, we continue to advance our zoning requirements and plan to submit our RFA sometime as well in the middle or late next year. Beyond these accomplishments, we are actively pursuing other global growth opportunities, including the UAE and Thailand. These initiatives will fuel future growth and diversify our geographic reach and our earning sources. Our momentum is backed by a solid balance sheet characterized by low debt and significant liquidity ready for strategic deployment. With a strong pipeline of initiatives spanning short, medium, and long-term, we're well-positioned to sustain growth and drive future success all while returning cash to shareholders. Of course, none of these ambitions can be made possible without the commitment and dedication of our people to improving service consistently and delivering operational excellence 24 hours a day, 7 days a week. I am always mindful of their efforts and always grateful for their loyalty to MGM Resorts and our guests. With that, operator, we will now take questions.

Good afternoon, everybody. I'd love to start with Las Vegas. Obviously, numbers here were a little bit soft on the table game volume side. Can you tell me what's going on, or are we just kind of seeing broad normalization in that segment and as we kind of think about the go forward in Las Vegas, so, are we kind of thinking that trend continues and we're sort of looking at this $700 million or a little bit less kind of run rate quarterly EBITDA, with margins that are in the lower 30s versus the mid-30s? That’s what you guys reported here in the 3Q, the insurance proceeds benefit.

Thanks, Joe. It's Jonathan, and I'll address that one. First of all, we continue to believe that our Las Vegas operations can produce margins in the mid-30s on an EBITDAR basis. Regarding your first question, our table game drop was down significantly year-over-year, primarily due to our high-end BAC business. This situation is influenced by the timing of trips from our largest customers, which is not within our control, and as a result, we didn't see the expected performance in the third quarter compared to last year. Additionally, our hold percentage has varied year-to-year but was quite normal during the third quarter. I view these changes as mostly timing issues. There's nothing indicating any softness in the table games business moving forward; we still consider it a strong part of our operations.

And so maybe a couple points of color. Our gross profit on the balance of, take Baccarat out of the equation, on the balance of our database and all of our programs and programming, I think, of course, for the quarter was up 12%. And so I think it shows, you take out the top six or seven players, where there was a substantive swing either between mix, not mix, between hold and not showing up, it accounts for a great deal of the miss. And then maybe another top line, 7 of our 10 properties had revenues up across the board for the quarter. I can assure you it was the top ones because of the blocker audit it did not. But I think to think about it fundamentally, and you think about some of the things we talked about earlier, ADR, slot, handle, all fundamentals are still strong and we're excited by that continuing to move forward.

Just kind of thank you for that. Just to give us some sort of perspective on Baccarat composition within the total table games drop, if we were to look at the trailing 12 months or 2023, what percentage of drop comes from Baccarat? If we were to look at segment margins on that, how do they compare to the rest of either the gaming segment or to the overall Las Vegas strip portfolio?

All right. Corey is looking for the exact number, but maybe I'll put it in perspective. And we hate doing this because every time we do this, we get at the other side of this coin. But look, a hold was off down, although normal 15% from the year before. And between that and this business, it's like an $80 million mission Baccarat for us. So, you can understand the quantum of that number versus anything that's, particularly as comparative to last year. If you look at year-to-date, it's about 30% of our drop is Baccarat.

Thank you.

Hi, good afternoon, everyone. Thanks for taking my question. Bill or Jonathan, I'd like to ask about BetMGM. My main question is regarding the strategy here. Bill, it seems you are optimistic about some of the Angstrom KPIs you’ve observed so far. Could you elaborate on how you are assessing that in the medium term, especially considering that other operators in the market have begun to shift their focus more towards the iCasino side with some success? How do you view the progression of the two business lines, OSB versus iGaming, and how do you plan to allocate resources between them in the medium term?

Yes, I'll kick it off. Look, we've said, and we still believe this, particularly with the new product lineup coming into the third and fourth quarter for football, that 2024 is going to be an investment year. I think the new product, and I call out our friends at Entain who ultimately delivered this for us, it has done what it needed to do. It is faster. Our parlays are up a couple hundred basis points, as I indicated earlier. Our retention is up, which we think is positive. The top line, the very top line of GGR is up close to 20% for the quarter. And so we find ourselves continuing to want to invest, grow the top line. Our quantum of our gaming business is substantive. And we ultimately could take a different strategy. Remembering and recognizing to get prepared for this launch, we've committed commercially to both terrestrial as well as sponsorships into the third and fourth quarter. They didn't, if we want to stop tomorrow, we couldn't necessarily. So we are studying it. We like what we see early on in terms of these green shoots. We think they're meaningful. We think they'll pay dividends in the long run for sure. And the other surprising thing to me, iGaming, even in a state like New Jersey, is up double digits. And that's a state that's had iGaming, I don't know, 15 years. I can't remember how long it's been, but it's been an extended period. So we continue to see growth there as well. And our business is substantive. The moment we want to turn philosophically to, I think, what others have done, it's there for us. But as long as we're seeing top line growth by 20%, I think for the rest of this year, we're going to be in the mode that we're in.

That's helpful. And then maybe it's just my follow-up, just kind of continue with the same thought. Just I think generally the profit targets giving the investment year imply, that loss in the second half were I think supposed to be similar to what you saw in the first. Obviously, the quarter was pretty good. So should we sort of manage or expect a bigger dip in Q4, just given I think the timing of the way some of the expenses hit, and then any investment in Q1 or early next year around Brazil? Thanks.

Yes, regarding BetMGM, I believe what we mentioned earlier in the year still applies. It's a good perspective on the business. We are preparing to enter a significant market. It’s important to note that our partner, Globo, has made an equity investment rather than a typical sponsorship deal, contributing advertising funds in exchange for equity. This expense is substantial for all involved, and we will handle it differently moving forward. Our role is to provide the technology while they manage the media platform. We are indeed launching in a new country, and we expect that investment to reach tens of millions over the year. However, we will see how it ultimately unfolds, as there will likely be considerable competition, especially since many are already operating in the gray market. We value our partnership with Globo, which has a large presence, controlling about 80% of the viewership in Brazil. We anticipate that our product offering will be significant and impactful.

Thank you very much.

Hey everybody. Good afternoon. Bill, I just wanted to ask about something you mentioned about the $80 million Baccarat swing. Clearly, as we look at the fourth quarter, you guys had tremendous kind of luck, presumably with high-end customers. In the 4Q last year, whole percentage comparison, one of the toughest I could recall in a very long time. Could you guys maybe try and put some parameters around that, whether it's from a well, I guess EBITDA perspective, we could all do the GGR perspective, but to kind of give us a sense for how we should be thinking about just that headwind alone as we think about the fourth quarter?

Sure, Carla, it's Jonathan. We have positive memories of the quarter in 2023. We achieved around $860 million to $870 million in EBITDAR. The straightforward calculation suggests that this benefited us by approximately $70 million throughout the quarter. We are actively working to bring customers back to our properties, including those high-end customers. Additionally, looking ahead to December, we are noticing a strong group environment and favorable pricing for our hotels in Las Vegas. While there are some factors to consider, last year's impact was approximately $70 million.

And I would say, which will be helpful, the Formula One, despite the slow start on rooms and some of that's not catch-up able, when it comes to gaming, we're looking at an equal, if not better, theoretical entry into that event. Now, as you know, anything can happen, but we are excited by at least at the high-end what that event continues to generate for us in terms of people coming in.

Great. And then, as it pertains to the 3Q, it looks like contra revenues promotions in the gaming segment were somewhere in the range of like 46% of your gaming revenue in the period. Is that, that's up year over year, there's clearly moving parts. Obviously, you had a nice hold comparison in the third quarter last year that's going to shift that percentage around a little bit. But is that level of kind of reinvestment, that 44 to kind of 46 window you've been in for the first 9 months of this year, a decent go forward rate, given kind of the mix you're shooting for and of hotel room nights you're shooting for and the, obviously, the maximizing profit within the business?

Yes, I would say it is a pretty decent rate. We had a good level of casino room nights during the third quarter, and that reflects in the contract expenses, but I think that it's a safe level going forward.

Thanks, guys.

Hi, afternoon. Thanks for taking the question. I just wanted to go back to the sort of matter of BetMGM and congrats on the progress there. I think, Bill, if I'm correct in the past you've said that you'd sort of like to own all of it one day if you could. And I just wanted to get a sense for if that's still true, and how you think about that in the context of repurchasing stock versus keeping power drive for that. Thank you. No follow-up question.

Yes, David, that was I think I heard your question but for some reason it's extremely loud. Look our relationship with Entain continues to strengthen. I think I've said it last call, I'll say it again this call. We think the management change has been productive, and I think in the long haul will be good for both their business and ours. We like the product and the direction it's going and what we've done, and so we like where we are with them. There's always room for improvement on both sides of this, but for now, that's our position, and that's really all I'm going to say about it.

Hi, thanks. Just, I guess, focusing on operating expenses, I think that when we adjust out some of the insurance proceeds, it was around 6% year-over-year in the regions, 3 in Vegas. Was there anything unique in either of these numbers this quarter? And then, as we think about next year, are there any puts, takes to consider in operating expenses as we think about what level of growth you need to hold margins?

So, yes, Stephen, on the expenses, there were some unusual items in both Las Vegas and the regions. In Las Vegas, we had a collections expense of about $20 million over last year in the third quarter, and that is a formulaic exercise that we do looking at our casino receivables. There's nothing that indicates any kind of degradation in the credit quality or the payments of our casino customers. It's just the way the timing worked out. And in the regions, we had about $15 million of unusual expenses year-on-year. Those related to, one was kind of an operational issue we had in Atlantic City in July, and then there was a worker's comp accrual and so on. So about $15 million in the regions. In terms of OpEx for next year, there's really nothing that I would call out right now.

And I would also add …

Go ahead.

I would add that in Las Vegas and in the regions, our FTE count was flat or down by 1% year-on-year.

That's helpful. As a follow-up on BetMGM, just to clarify, I think you said 20% growth in revenue, or maybe that was GGR. Can you clarify what that split maybe looked like between iGaming and OSP?

Yes, hold on one sec. Let me get you the number. It's very small. Sports was a little over, a little over 20. And iGaming was almost at that same point. They're both on par really, interestingly.

Hey, good afternoon everyone, and thanks for taking my question. I have a digital question, more in the direct digital business. Bill, you've talked in the past, I think, around putting about a $1 billion into this endeavor. I guess, where do we sit here today relative to that number? I think you got push LeoVegas, Live Dealer, Grupo Global and along with that when could we expect to see return there. Thanks.

Yes, regarding raw capital, we are fully committed. We do not expect any additional capital needs for BetMGM. There are no anticipated acquisitions related to MGM Interactive, which includes the LeoVegas segment and other initiatives we've discussed. We are currently launching in three markets: the U.K., the Netherlands, and soon Brazil. I believe that by late next year, we will start to see significant developments in these areas. Unless something substantial emerges, I expect that as we move out of 2025, we will have a strong presence overall leading into 2026. Looking beyond that, generating $400 million to $500 million in cash flow seems very achievable. I mentioned earlier that we could tap into those revenues today and potentially push out half of that amount, so I find that to be a reasonable expectation.

Got it. Thanks. Turning to Macau, you've experienced a decline in market share for the second consecutive quarter. Regarding the Londoner, which is currently in the reopening phase, along with the recent market stimulus, when might we expect to see measurable impacts from these factors?

Kenneth or Hubert, you want to handle that one, please?

Okay. This is Kenneth. I think Londoner opened in September. There, and we, as you guys all know, like geographically, Cotai MGM, Cotai is like 4x or 5x smaller compared to Las Vegas Strip. MGM, the Cotai, is always trying to become a destination of this region. When we believe more new products, more newer, more products in the market and MGM Cotai will benefit. And as Bill just commented at the beginning, like our outstanding performance, like a golden week, further proved. When Londoner opened, all of us benefited.

I think we're aiming for a longer-term market share to stabilize around the mid-teen level. This is what we've communicated previously. We're confident that we can achieve this target. In the next year, especially in the second half, after completing our projects to generate additional revenue, we believe we will be in a favorable position. There may even be some positive surprises with the new products launching in the second half of next year.

And then just any comment on the stimulus and when we might be able to see that in the market? And that's all for me. Thank you.

I mean, like China economy, like as we all know, like we still believe the stimulus matters. They are still unfolding. Like Macau is a very special segment of the overall regional economy, particularly like we are very focused on premium mass, like from the visitation and also from the GDR, you can see how resilient they are. So we want to see, like, if there are more measures, like stimulus measures, definitely, like, we will all benefit in the long run.

Thanks so much.

Good afternoon. Thank you for taking my question. My first question is about Las Vegas. I'm interested in whether you observed any different trends throughout the months of July, August, and September in the third quarter. I assume that weather might have affected two of those months. Considering that aspect, but focusing on the stable portions of the business, did you notice any changes during the quarter? Additionally, how do those trends extend into October?

I'll start, and Jonathan can fill in any detail or quarry that I miss. But July was, I know you've seen this and know this, some numbers was pretty bad for the entire community, including us. We had eight days in a row of 120 degree heat, compounded with I-15 was relatively close for three days due to a truck rollover with a battery in it that they didn't seem to know how to, didn't know what to do with it. So July was impacted substantively, and then the quarter got better. August was better. We had some substantive convention business in, and then September as well came in well. Ultimately, some of the core things that we'd hoped for, ADR, OCK, slots of note, all produced, leaning into our casino database to make that happen.

The other thing I would add is July did have two less weekend days. The UFC fight the year before was actually in June. It was in July last year, it was in June this year at the end of June, so we didn't get the July 4th benefit there. And there's a pretty big international soccer game at the end of July that we also missed. Then as we got into August, September, and even what we're seeing in October, it feels fairly normal, very similar to what business has been, and I think we're pleased with what we see.

Yes. For October, our occupancy here in Las Vegas will be 97%. Revenues are steady and still seeing the nice growth in slot handle in our regional properties actually having a pretty strong October.

That's all really helpful. Thanks for that. And then just a follow-up on Las Vegas, again. Just looking at a little further, obviously not asking for guidance or anything, but just your feelings on looking out to '25 for the business that you do have visibility in, grouping convention, what the pace that you're seeing so far is for the full year and then any sort of quarters where there's calendar movements or changes of things that we should keep in mind for modeling purposes?

Yes, I think that as we look broadly in 2025, we do see overall cash rates in Las Vegas grow and a couple of key calendar items, I'm sure you're aware of this, we had with the Super Bowl last February, that will impact us year over year, probably to the tune of $60 million to $70 million in the month of February. The only other thing that I would call out as we look to '25 generally is we will be actually already started modestly a renovation of the MGM Grand Hotel standard rooms. So this is 4,000 standard rooms. It's a fantastic property. It's time to do that and that will have an impact in our results, although we'll of course do our best to migrate that demand to our other properties here in the city. But those are probably the only two big 2025 items I would call out.

Really helpful. Thanks everyone.

Hi. Thank you for taking my questions. Maybe one, just kind of capital management to build off of the comments about some of the growth CapEx you're doing. For some of the larger stuff is, in the past, I was at Park MGM was quite large and a full renovation, but is there an opportunity to utilize your REIT partners and do anything of more substance, or given how well Vegas has been growing, you've monetized some of your capital improvements. Is that a kind of a consideration in this financing strategy at all?

John, I think you muffled on the what partners? We didn't catch that.

Oh, sure, your REIT partners. If there are expansion plans, like a major renovation of the rooms at MGM Grand, is financing from them or monetizing some of your growth capital expenditures part of the financial strategy?

Yes, that's a great question and I'm pleased we clarified it. Blackstone and our other partners are excellent collaborators. We do consider them as a potential financing option. While I can't speak for them, I'm confident they would be willing to assist us if we believed it made sense from a capital cost perspective. However, we are likely to avoid that route for renovating the property. If we were to consider expanding one of our businesses in Las Vegas or the surrounding areas, we would definitely explore that option.

Thanks. That's helpful, Jonathan. And maybe one of the Marriott partnership. In prior quarters, you've given us some color about some of the metrics that you've seen in KPIs and how well that's going. And as you look into '25, if anything's changed as you get further along in the partnership, are you kind of seeing continued expansion or utilization of that? And so, just love to get your kind of updated thoughts on how that partnership is going and kind of what you're seeing.

I'll kick it off. So as of last week, we did 2,500 room nights a day, which is an all-time record. We're probably pacing 20% above our own expectation for the year. The group business continues to come in and it's interesting groups. I think I mentioned this last call, but it's not huge groups that we knew because of the business that we're in already, but it's mid-tier, two to 300 room groups, Midwest, stuff we had not focused on, and I think they're going to be a really good opportunity for us to bring in that we might not otherwise have seen and gotten to. And then, the utilization, it's 70% cash, 30% redemption, and we like that, particularly because of the additional spend that these folks bring in. So we're, I think, very pleased with where we are.

I think the upside in particular is the W and what we're doing at the Delano. That property had very little brand recognition and we weren't able to sell it on the Marriott channel. So now with the change of that name, and we believe that will be in place by the beginning of the year, we think there's some upside on the ADRs and the occupancy at that property.

Thanks for that. That's helpful. Bill and Jonathan, thank you very much for fielding all the questions.

Thank you.

Hey, guys. I just wanted to make sure on F1, are you still looking at that sort of $30 million this year, a year, EBITDA headwind or has anything changed at all since Q2 earnings call?

No, I think we're still looking at the same number. The thing that we can't replicate is when it was first announced last year, it sold out relatively quickly, and particularly our hotels. And so the leverage on that kind of yield-type timeframe, we were selling rooms at Bellagio for $2,000 a night. And so it's really the big three that will carry that burden. The other thing is the construction of the fountain club out in front that some of you have maybe seen or experienced. It's incredible. That being said, last year it was capitalized, this year it needs to be expensed. And so you put the combination of those two things together, unless we get really lucky in the casino and all things can happen, we think that number holds.

Got it. Got it. And then just for a follow-up, I wanted to see if there's any updates on some of those other international development opportunities you're looking at, whether that's UAE or Thailand. Thanks.

In Thailand, I've made my third trip. We'll continue to monitor the situation in collaboration with MGM China Holdings. I recently visited there, and the legislation is progressing through their parliament. We hope to have an announcement by early next year. So far, we are pleased with the tax information and investment ratios we’ve heard. It's a favorable location for building, particularly in comparison to other markets, and the cost of doing business is very low. This offers a great opportunity from an operating margin standpoint, but we still have a long way to go before reaching the finish line. In the UAE, we are keeping a close eye on developments. There are other opportunities that may arise, and we are excited about our position in Porto Island, where construction has officially begun and foundational concrete is currently being poured. This project is set for late 2027. We'll see how things develop once the decrees are issued by Emirate, but we are focused on it and are enthusiastic about our Dubai project, especially if it includes gaming.

Great, thank you.

Yes, hey guys. Good afternoon. So, Bill, I fully understand you guys don't give formal guidance, but if we think about next year, can you maybe help us think from a high level how you guys are thinking about your major markets? Essentially, trying to understand if you think you'll be able to grow EBITDA both in Vegas and your regional assets given some of the headwinds and whatnot that you've already called out?

We are indicating that in 2025, especially in those two markets, we expect to see improvements. While it may not be significant, one way we plan to achieve this and restore our margins is through an initiative aimed at generating $200 million from the bottom up. We're considering some additional sources for revenue that go beyond the obvious ones, which we believe will positively impact our margins more than anything else. We anticipate that the markets will continue to grow at a few percentage points. As Jonathan mentioned, we do face certain challenges, such as the Super Bowl and other factors we've discussed. However, given the benchmarks we've set and our current position, we believe there is potential for growth, especially in the long run.

Okay, got you. Thanks for that, Bill. And the second question, if we go back to Macau real quick, if we look at the third quarter, the margin in Macau came in just a little bit, probably a little lower than what we were kind of looking for. Is there anything there you would call out in terms of pressuring the margin in the third quarter and then maybe also a little bit more color on the current promotional environment that's happening right now over there?

Yes, let me start by addressing this and then Kenny can add his thoughts. I brought up the show earlier for a specific reason. It comes with expenses since it's a significant production, and we’re all very excited about it, along with the costs associated with launching a museum. It’s an incredible museum, and once people see it, they will understand. While we are enthusiastic about these projects and are hopeful to meet the commitments we made to the government, they do incur costs. I've been informed that the promotional landscape has actually changed, leading to lower expenses compared to some of the programming we had earlier in the year. Kenny and Hubert, could you provide insights on that regarding costs and your perspective for 2025?

Yes, thank you. This is Kenny. In the third quarter, we incurred a one-time payroll cost and expenses related to entertainment to support our concession commitments. However, we are still targeting an operating margin in the mid to high 20s. As everyone knows, we operate in a very dynamic environment where industry revenue growth, seasonality, hold, sector performance, and scheduling all influence margins. We remain very disciplined regarding gaming promotions and incentives, which we expect to stay steady. Our main focus is on gaining incremental EBITDA dollars. That summarizes our current position.

Yes, as I mentioned previously, I think that some of the projects that we're working on currently, such as expansion of our high-end gaming area at MGM Macau, where the conversion of the renovation of the Villa product at MGM Macau, and also the conversion of the suite at MGM Cotai. I think that they'll put us in a better position competitively in this market. When these projects come into completion and fruition in the second half of next year, we expect the margin to continue to improve.

I would like to add some details about MGM Macau. MGM Macau has been operating for 17 years. In the middle of this year, we initiated several significant projects, including our villas, a mini events center, and updates to our gaming floor and food and beverage outlets. The aim of these developments is to ensure that our offerings align with the latest customer trends. We anticipate completing these projects by the middle of next year, and once they are finished, we believe we will maintain our leadership position in the Macau Peninsula market. On the Cotai side, we expect to finish our villa projects and room conversions by the end of next year. We plan to convert around 160 standard rooms into approximately 60 suites, which will enhance our competitive advantage in that area as well.

Okay, great. Thanks, guys. Appreciate it.

Take care.

Afternoon. Thanks for taking my question. Wanted to ask about Vegas demand. You guys noted the Marriott benefit, but I guess what I'm trying to get at is what you're seeing in the mix of casino guests. At this point, are you seeing any deterioration in terms of what that core group is doing in terms of visitation? And then more importantly, for '25, when you're hoping for growth, will the casino guest piece of the inventory, should we expect that that goes down and they'll be replaced with more group and kind of Marriott business travelers? Thanks.

Chad, this is Corey. I believe what we are observing with the casino guests aligns well with trends from the past few years. It's quite strong. We are effectively utilizing our database and our cross-regional capabilities. I think we have the right mix at the moment, and I don’t foresee significant changes in that for next year. Regarding Marriott, our focus is primarily on transient bookings while also shifting some package business, which will be part of our strategy for next year.

Great, thank you. And then just overall on the bricks-and-mortar side of things, the retail side, has anything changed in terms of M&A opportunities as you kind of look at other markets where the hub-and-spoke could make sense or kind of long-term iGaming? Seems like there's a number of assets in kind of big cities that could potentially fit the portfolio. Thank you.

Thanks, Chad. It's Jonathan. Our criteria are fairly restrictive in terms of the additional assets that we would acquire. We really like our position in Las Vegas with the disposition of the Mirage and the acquisition of the Cosmopolitan. As it relates to regional markets, it would have to be a market we're not currently in. It would have to be a property of significant scale to really make a difference for the consolidated enterprise and have a quality level that's coherent with our brand positioning. So that leaves a pretty small list, but we think we are good operators of regional properties. And so, we remain open to those possibilities. It's just a pretty narrow set.

Thank you very much. Appreciate it.

Thank you, operator. Just a couple of thoughts before we leave. And again, I appreciate everyone's time this evening. Las Vegas and regional trends, as we've hopefully indicated, are solid. They've been solid throughout the years, and we anticipate that to continue. I think in the presentation, you'll see a couple of graphs that are meant to demonstrate that. Macau continues to perform well. We're proud of what we've been able to do in the whole re-ratcheting of the market share. And it's obviously continuing to contribute dividends. And this year we hope we have pulled out $200 million and expect that to continue. Our digital business, we feel is on a path to positive earnings in both the U.S and internationally. And we think there's significant TAM opportunity between the both of those when it's all said and done. And we think that manifests itself late '25 into '26 and beyond. I think our development pipeline is unmatched with properties in Japan, New York and the potential of UAE and Thailand. I think those are going to be incredible opportunities over time for the company. And again, the fundamentals, the question about is Las Vegas, met its match in '23. Well, '23 was an incredible year. The fundamental signs of the business remain strong, whether it's ADR, slot handle, et cetera, we feel really, really good about it. And in Macau, we continue to break records despite our size. So overall, we're exceptionally well diversified and we're very optimistic about both our near, long, near, mid and long-term, and we hope you are as well. So we thank you for your time and have a great evening.