Operator:

Good afternoon, everyone, and welcome to the MGM Resorts International Second Quarter 2024 Earnings Conference Call. Joining the call from the company today are Bill Hornbuckle, Chief Executive Officer and President; Corey Sanders, Chief Operating Officer; Jonathan Halkyard, Chief Financial Officer and Treasurer; Gary Fritz, President of MGM Interactive; Kenneth Feng, Executive Director and President of MGM China Holdings; Hubert Wang, COO and President of MGM China Holdings, and Andrew Chapman, Director of Investor Relations. Participants are in a listen-only mode. After the company's remarks, there will be a question-and-answer session. [Operator Instructions] Please also note, today's conference is being recorded. At this time, I'd like to turn the floor over to Andrew Chapman.

Jonathan Halkyard:

Thanks, Andrew, and good afternoon, everyone. Before I get into our quarterly results, I would like to congratulate and thank all of our employees for another great quarter across all of our businesses. Their high level of execution is clearly evident in our results, and I couldn't be more proud of the team for our performance this quarter. Turning to our second quarter results. In Las Vegas, we achieved both top and bottom line growth year-over-year against a strong comparison. Net revenues grew 3%, driven by both higher rate and occupancy. Our strategic relationship with Marriott contributed to our performance this quarter now with over 410,000 room nights booked. The future for hotel bookings in Las Vegas is bright. Looking ahead at our pace, room rates on the books in Las Vegas are up year-over-year for every month in the third quarter and group rooms on the books are pacing up mid-single-digits for the rest of 2024 and 2025. Our success in the quarter was underpinned by our luxury resorts, which are responsible for the vast majority of our top line growth in Las Vegas. We invest meaningfully in our strip luxury offerings as this is where we see the most opportunity for profitable growth. In fact, 75% of our 2024 domestic property capital budget will be focused on these properties. This includes room remodels, which are underway now at the MGM Grand and suite updates across our Las Vegas portfolio. On the technology side, we've now completed the integration of the Cosmopolitan of Las Vegas into our MGM Rewards program, which will now allow our MGM Rewards members to enjoy full benefits at the Cosmopolitan and vice versa. In the regions, net revenues remained stable, driven by relatively flat year-over-year handle with our market share holding steady across each of our markets. We also have seen a full recovery at MGM Detroit, which we all know it faced headwinds since midway through last year. Margins were within our targeted range of the low 30s as we remain vigilant on improving our variable labor effectiveness and executing on revenue initiatives such as our expanded air charter program, just one of many examples. In Macau, MGM China net revenues grew 37% year-over-year, achieving a market share of 16%. Adjusted property EBITDAR reached $294 million for the quarter, marking a 40% increase with margins at 29%. During the quarter, we strengthened MGM China's balance sheet by extending our maturity profile with the issuance of a new $500 million seven and eight notes due 2031. The proceeds of this offering were used to pay down outstanding borrowings under the revolving credit facility. I'll conclude my remarks with some thoughts on the free cash flow algorithm we introduced last quarter. An algorithm that enables us to achieve a mid-teens free cash flow per share compound annual growth rate through 2028. Simply put, we expect to grow our EBITDAR at a faster pace than our rent escalators, interest payments, maintenance capital and taxes, while investing for growth and reducing our share count. First, we'll generate recurring free cash flow from our resort operations by optimizing the operating model to achieve incremental revenue growth and realize cost savings. We'll grow our market share in Las Vegas through reinvestment into our properties with a focus on luxury. We'll maintain our market-leading positions in the regional markets, including an expansion in New York and generating a growing dividend from MGM China. Next, we anticipate generating free cash flow from our digital businesses in the coming years as BetMGM reaches an inflection point and LeoVegas delivers on its numerous market entries. We'll also be investing for long-term growth in Japan and other markets where our development expertise and brand awareness provide a distinct advantage. Finally, we'll repurchase our own shares. Through our strategy of using excess cash for share repurchases, our share count has decreased to around 300 million shares from close to 500 million, an approximately 40% reduction in our float in just three years. Taken together, the increase in free cash flow and reduction in share count would result in a mid-teens free cash flow per share compound annual growth rate by 2028, even without a contribution from MGM Japan. Bill, over to you.

Gary Fritz:

Thanks, Bill. Beginning a couple of years ago, we embarked on a journey with the vision of creating our own proprietary iGaming and sports betting platforms. The goal is to develop a differentiated product capable of capturing market share in both established and emerging markets. The crux of this strategy is based on four pillars and I'll walk through them. The first pillar was for MGM to own its tech ecosystem so that we were not reliant on third parties. A tech ecosystem that is scalable and cloud-based. We achieved this in 2022 through our acquisition of LeoVegas. Not only did we buy the technology, but we acquired an exceptional management team with an aggressive strategic plan that we have been executing. We also recognize the importance of having an owned sports betting platform to further highlight our brands and generate more cross-sell opportunities. We took a large step forward to achieving technical independence with the purchase of Tipico's US sports betting platform, which will close soon and drive important synergies. The second pillar of our strategy was to own our proprietary iGaming content with unique intellectual property. We found this through our acquisition of Push Gaming in 2023. Our strategy with Push is to develop games that are not only exclusive to our owned and operated platforms, but also to create titles that can be marketed to other operators. Since our acquisition, MGM Resort branded games have been our highest performing titles in the Push ecosystem. The third pillar of our strategy is to target organic growth in attractive regulated markets with the BetMGM brand. Just a reminder, we own the BetMGM brand and can use it anywhere in the world outside of the territories that the JV operates in. We do this using our LeoVegas proprietary tech stack. We have already launched the brand in the United Kingdom and the Netherlands, with great early results, and we plan soon to enter Latin America. The final component of our strategy is our Live Dealer product, enabled by our recently announced strategic relationship with Playtech, making us the only US operator to offer live casino content for international markets directly from the Las Vegas Strip. We have already launched at Bellagio and MGM Grand and are thrilled with the positive response, both from our live and online customers. The next phase involves constructing a dedicated space at MGM Grand featuring table games and in the future game shows from well-known third-party brands. We believe the synergy among all of these pillars will yield significant long-term returns, starting with a double-digit stabilized return by 2027. In the near term, after two years of investment, we see the core businesses at LeoVegas and Push Gaming beginning to show positive momentum. Over the next few years, we will focus on expanding our sports platform and making further investments in our new owned and operated fully owned and operated BetMGM markets. Back to you, Bill.

Operator:

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Our first question today comes from Joe Greff from JPMorgan. Please go ahead with your question.

Jonathan Halkyard:

Great question, Joe.

Jonathan Halkyard:

So first of all, just a couple of -- just to clarify a few of the facts regarding the production we're seeing out of Marriott, that 410,000 booked room nights numbers for a year-to-date as of a couple of days ago. And of that maybe 60% or so have stayed here. The remainder are reservations for nights over the next few months. But we measure it by production. And so that's the production level. It is, in terms of the incremental benefit, it comes from two places. One, the rate at which Marriott customers are paying as compared to those room nights that we're displacing. We are already operating at 96% occupancy. This was not about growing occupancy, it was about growing yield. The second is the increased spend by those customers while on property. Roughly $100 of the benefit per room night comes from the rate premium and about $50 comes from the increased daily spend that we measure through charges to the folio. So it's not a perfect measure, but it's a pretty good proxy. And together those are the incremental benefit from Marriott rooms. In terms of the time line, we got started a little bit later on this because of the cyber incident. We didn't start until February for most of our properties when we originally anticipated starting the end of 2023. So I think it's still a good estimate for the benefit for calendar 2024, even though we started a bit late.

Joseph Greff:

Great. Thank you.

Shaun Kelley:

Hi. Good afternoon everyone. Thank you for taking my questions. Bill, I also wanted to ask a little bit about Las Vegas and then maybe a follow-up on digital. But the question on Las Vegas would be as we, I think this kind of second quarter in a row where we've seen some of the kind of core gaming metrics down a little bit, but obviously, the non-room revenue side continues to kind of drive the story in the narrative, as you just talked about with Marriott. So can you just give us an update on kind of what you're seeing out of the core gaming customer at this point? And so what some of the pros cons might be about where you're kind of targeting your focus around the strip at the moment in terms to drive that gaming customer moving forward? Thanks.

Corey Sanders:

Sure. Shaun, the core gaming customer is still pretty solid. Probably the change in the revenue on the slot side in particular is midweek and tied to the shift in the convention mix. But we continue to see our high-end perform extremely well. Our database perform extremely well. And our focus continues to be on maximizing the right customer in the room, especially during the weekends where we think there's opportunities to yield up to the better customer.

Gary Fritz:

Sure. Thanks for the question. I would say we definitely have portions of the portfolio, especially the core businesses at LeoVegas and Push Gaming which are definitely profitable. I would say it's a modest level of investment is what we have to make around individual market launches. But sort of nothing at the scale of what we've done here at BetMGM in the US.

Operator:

Our next question comes from Carlo Santarelli from Deutsche Bank. Please go ahead with your question.

Jonathan Halkyard:

Sure. The two quarters are quite different from one another in terms of the really the comparables is probably the most important distinction. Third quarter, as I noted, our outlook on the room revenues is pretty strong and everybody knows what we experienced last year in the third quarter. The fourth quarter, it depends greatly on ultimately our performance during F1. It's not the only thing going on. There's a lot of things driving the business in the fourth quarter. But that was an important driver of our performance last year. And so I would say kind of carving out that risk for the moment, we feel very good about the third and the fourth quarter and their ability to grow. But just realistically, the fourth quarter does depend upon the performance of the F1 event.

William Hornbuckle:

No. Carlo, no, I don't think so. I think what was put out in that release is frankly, more than sufficient. And when we pay it with debt, and we do something else, time to tell. What's important for us, we need to continue to be mindful of expenses. But what's important to us is we don't lose iGaming share because it is precious and that we properly relaunched the products we were talking about earlier, and we spend effectively and appropriately into it. Now that's an estimate. Let's see how it plays itself out. But the bigger question of are we going to invest even more money into that. I think what we've identified is plenty of money, and I do not anticipate that.

Operator:

Our next question comes from David Katz from Jefferies. Please go ahead with your question.

William Hornbuckle:

David, obviously, that kind of leads into the conversation of what's the relationship and what to do with Entain, and we're just not going to comment on that in broad stroke. We enjoy where we are with them. We are very hopeful for what will come this fall. And frankly, it's pivotal to the business and to our ability to regain share. That said, we understand the exercise, we understand the long-term. Gary and his team have worked diligently in markets. We think the guys at LeoVegas was an exceptional find. They're a very strong team. We've launched Netherlands with great success. We've launched UK. Obviously, we have our eyes on South America and Brazil. And so there's real upshoot there and real money to be made in an organization that's already making money. So excited about that and I'm excited by the opportunity to frankly play here with the notion of Live Dealer. 15% of all of the bets on BetMGM are Live Dealer. And to the extent we could make it real from emanating from these places, we think is compelling long-term. And we think we can actually have some real fun with that down the road with tying celebrity to it. But I get the longer-term question, I'm just not in a position to want to answer it right now.

Operator:

Our next question comes from Stephen Grambling from Morgan Stanley. Please go ahead with your question.

Andrew Chapman:

Go ahead, Gary.

Stephen Grambling:

Got it. Maybe one other quick follow-up. Just on the bank loan, maybe I missed this, but I guess where is that being financed out of? Is that being guaranteed by either parent?

Stephen Grambling:

Got it. Thank you.

Brandt Montour:

Hey, good evening and good afternoon everybody and thanks for taking my question. So the first question is on Las Vegas. Bill, you mentioned in your prepared remarks supply coming out of the strip across the two properties that's well known. I'm curious if you could just walk us through where you're seeing it, group versus leisure proximity versus price point, what sort of got you excited enough to mention it?

Brandt Montour:

That's helpful. Thanks for that. And then a question on MGM China, the market slowed down by many measures into 2Q slightly. And even your unit production for mass took a slight step back and yet you guys hit a high watermark for margins. Just curious, what you can call out there? Just I'm assuming your hotels are full and you were yield managing. But is there anything else to see through just for that performance?

Hubert Wang:

Yes. I think like when we talk about China or with the economy scale and the population size, there are many dimensions to merit. We, at MGM China, are very focusing on what we should be doing. Basically, we are focusing on the innovative and the customer-centric investments both on CapEx and on OpEx. In July, we basically, our visitation to our property is consistently with the previous quarters. And our revenue share is still maintained at mid-teens. Our EBITDA margin is still in high percentage. I think that's where we are right now.

Hubert Wang:

On the margin, I think that, first of all, I think very disciplined approach towards the reinvestment and the mass component of the revenue mix also increased and that helps with the margin increment as well.

William Hornbuckle:

Thanks.

Daniel Politzer:

Hey, good afternoon, everyone. On Vegas, the last couple of quarters, we've seen room revenues growing high single and low double-digit percentages, whereas this F&B, entertainment, group and other that piece of the business has been growing more slowly. Can you maybe unpack that a bit? Are there any trends in ancillary spend that you're seeing kind of under the surface as it relates to the different growth in these buckets?

Corey Sanders:

No, 2%.

Corey Sanders:

Dan, what I would add, we're definitely feeding more mouse. It's just where they're being fed. Whether it's convention halls or in restaurants. So the food and beverage side is a little bit misleading from that perspective. The entertainment challenge is there is a lot of supply out there. And with the Spirit and their 18,000 seats and their three shows a day. It just puts a lot of pressure on a market that probably has a lot of supply. So we're really focused on making sure we have the right acts in our buildings and are able to track the customers that are looking for those performances.

Jonathan Halkyard:

Well, I'll offer a couple of thoughts. First of all, at these values, we still believe our shares are a very attractive value. I mean just looking on the screen, probably our stake in MGM China is worth $10 to $11 per share. And so it's a very appealing free cash flow yield when you look at the kind of the value of just the operating businesses, not to mention BetMGM and our digital investments. That being said, you're right, we've called out about $800 million in excess cash right now. But that grows with the free cash flow generation. And when we put out things to the end of '25 like a potential license fee for a New York expansion, it does open up the possibility for additional share repurchases. So I do think over time, it tapers off a bit, but these values will still be aggressive purchasers. And finally we would consider additional financial leverage to fund these repurchases. Our lease coverage is growing nicely. And as Bill noted in the opening remarks, net debt is still close to zero. So we're well below our leverage limits and we would consider doing that, but we don't have to right now.

Operator:

Our next question comes from Barry Jonas from Truist Securities. Please go ahead with your question.

William Hornbuckle:

The answer is yes. I don't know if you heard my comment earlier. We've got the Raiders are in town with the game that weekend and that will tremendously support the south end of the strip. And we've already seen that, we've already said that occurring once the schedule is announced. Last year, I think, we did an amazing job scaring the hell out of people in terms of traffic. Obviously, there was -- during the actual event, it was fascinating, there was no traffic. And so the idea of bringing people back to town, focusing them on some of the values that are still here is critical. And I think particularly driven by the game, you'll see the south end of the strip come to life. I want to put it in quantum, too, in terms of what's at stake here. I'm talking $30 million-ish plus or minus. So when we think about the comment and we think about what's at stake and you look at the overall aggregate of the company for the quarter, let's all keep it in perspective. But having said that, we're far from giving up. I'm signaling as it sits today, ticket sales are soft, and therefore, room sales are soft.

Barry Jonas:

Got it. Got it. And then just wanted to follow up for the regionals and kind of ask what you're seeing across the database segments and unrated play. We continue to hear about some softness at the low end or unrated, but obviously, your guys are more luxury focused. Thanks.

Barry Jonas:

Got it. Thanks so much.

John DeCree:

Hi, everyone. Thanks for taking my questions. Maybe to shift the conversation to your development pipeline first on UAE. We've got some guidelines from the GCGRA recently about the licensing process. And so realizing there's probably not a lot of detail you can elaborate on. So a high level question, is there, Bill, anything that you've seen or learned over the last couple of weeks or months for new information that changed your level of enthusiasm one way or another for that prospective opportunity. And then the follow-up specifically would be there's quite a bit of discussion in those guidelines about online gaming. And so most of our conversation with you and others have been around potential IR opportunities. So curious with your international digital business with online gaming in that market, be interesting for MGM? Is that something that you're looking at? And if that opportunity were to come up?

John DeCree:

Thanks, Bill. That's helpful. I think I stuck two or three in there, so I'll hop into the back of the queue. Thank you.

Robin Farley:

Great. Thanks. Just wanted to circle back to your some of the comments you're making about kind of middle high, low end, different consumers. I know Vegas has a lot of puts and takes with the easy comps in Q3 tougher in Q4. But when you look at gaming revenues declining in Q2 and then in the regional markets, some of the softness you've talked about, is there, in your view, to put on your economist hat here, macro factors that you think could change that or may change that over time or do you think it's just getting back to some kind of pre-pandemic normalization before things would return to growth or kind of what's the big picture when you look at the trends. Thanks.

Robin Farley:

Thank you.

Chad Beynon:

Afternoon. Thanks for taking my question. You guys have laid out a number of different items in Las Vegas and the growth, particularly on the non-gaming side, food and beverage, room rates, et cetera, maybe offsetting some of the stability in the gaming business. So has anything changed in terms of how we should think about Las Vegas margins, I guess, in the near term or beyond as maybe that non-gaming piece grows. And then ask maybe separately, what are you seeing just in terms of the expense side of the business, particularly in labor. Is that now under kind of core inflation and manageable to kind of hold margins if non-gaming is growing. Thank you.

Chad Beynon:

Okay. Thank you. And then in terms of the Vegas portfolio and kind of where it stands just from a customer-facing standpoint with Bellagio complete, you mentioned Mandalay Bay. Are there any other projects that you're contemplating, maybe in the next 12 to 18 months? Or given the current situation with some room capacity coming out of the market and you guys running in the mid-90s, does it make sense to maybe defer bill outside of what you were talking about with Bellagio maybe defer some core renovations that you would otherwise think about doing at this time.

Corey Sanders:

And I think our room remodels are spaced out enough where we minimize disruption and make sure that we're able to push some of that business into the right buildings that will also enhance those buildings.

Operator:

Our next question comes from Steve Wieczynski from Stifel. Please go ahead with your question.

William Hornbuckle:

I'll make the headline comment. I think there's further share to take. There's a high-end retail nightlife seen that I'd like to see us go after more aggressively. I think some of the club scene has lost some of its luster. And I don't mean just ours, I mean, in general. And so I think there's things to do, particularly again in this building. I think there's things to do next door in Cosmopolitan, ARIA of note. As we think about ways to enhance the properties and just convince folks that the idea of staying within this compound is impressive and compelling with the amenities that there's no reason to go anywhere. And so we're going to continue to drive on that. And I also believe as we continue to perfect and get better at personalization of data and all of the things that program is beginning to yield, I think we can yield more out of what we've got by making sure we keep folks in our buildings.

Steven Wieczynski:

Okay. Got you. And then second question, Bill, if we switch over to digital real quick. And I ask this in a way that I might get an answer out of you and I'm not trying to be offensive here. But is there a point at some point in the future where if you aren't getting the results that you won out of the digital segment, you would make the tough decision to essentially pivot away from investing there and instead get more aggressive with the core business, which seems like to us that it's pretty undervalued at this point. I hope that makes sense.

Steven Wieczynski:

Understood. Thanks for the color, Bill. Appreciate it.

Jordan Bender:

Great. Thank you. It was sort of touched on, but Jonathan, a big point when you came to the company several years back was want to improve the cross-sell between your assets by setting players to other properties in Vegas. Can you maybe just frame that progress you've seen in recent years and just the future opportunities not in place today that you can help further drive that?

Jordan Bender:

Great. Thank you. And just for the follow-up for online. Last quarter, you talked about the path forward with BetMGM and just some of the long-term targets and the confidence around hitting those targets. With the announcement the other day and just kind of the slight step back, just given the further investment, is there anything to opine on in terms of what changed in that outlook from back in April to today, whether it's competitive from a competitive perspective or an integration perspective? Thank you.

Jordan Bender:

Great. Thank you very much.

William Hornbuckle:

Thank you, operator, and thank you all for joining us today. I will kind of end where we started. It's still compelling and I hope to all of you to think about Las Vegas to think about the company and to think that several records continue to be broken. We're proud of the activity case. We're proud of what we're doing here. Like every business, we have some challenges into this environment. And I think we're meeting and maximizing on most of those. I'm excited by where Gary is going digitally and the longer term of all of that. And so with that said, I thank you all, and have a great evening.

Operator:

Good afternoon, and welcome to the MGM Resorts International First Quarter 2024 Earnings Conference Call. Joining the call for the company today are Bill Hornbuckle, Chief Executive Officer and President; Corey Sanders, Chief Operating Officer; Jonathan Halkyard, Chief Financial Officer and Treasurer; Kenneth Feng, Executive Director and President of MGM China Holdings, Hubert Wang, COO and President of MGM China Holdings; and Andrew Chapman, Director of Investor Relations. [Operator Instructions]. Please also note today's event is being recorded.

Andrew Chapman:

Good afternoon, and welcome to the MGM Resorts International First 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.

Jonathan Halkyard:

Thanks, Andrew, and good afternoon, and thank you, everyone, for joining our call. We've decided to change our approach to these calls in the new year to give you a more focused recap of our results with additional color and commentary around our plans for the future. With that in mind, I'll start the call with a discussion of the quarter and our growth algorithm and then pass it over to Bill for his comments.

William Hornbuckle:

Thanks, Jonathan, and good afternoon and good evening, everybody. I am the color commentary that Jonathan spoke to in his opening comment. And what I want to do and what I hope to do in the future on these, just go through some top line thoughts as we think about the business and reiterate things that I think are important, obviously, in what happened in the quarter, but more importantly, from a go-forward perspective.

Joseph Greff:

Good afternoon, everybody. Bill, the early experience with Marriott and bookings there positive. Obviously, Tony Capuano mentioned that this morning on Marriott's earnings conference call. I was hoping you could just talk a little bit about what you're seeing so far. I know it's early in terms of out-of-room spend with these bookings compared to maybe either the bookings they're displacing or with just MGM, and this is more of a specific Las Vegas stripe question. And then further to this, is it helping more on the high end? Is it potentially serving as a buffer on the low end? You obviously referenced low-end fatigue in your prepared comments?

William Hornbuckle:

And as it relates to group, Joe, we've gotten tens of thousands of referrals. And the fascinating thing is we didn't know, and we thought we're pretty good at this, we have been historically, but we didn't know 80% of those referrals. And the vast majority of that business is going midstream. MGM has been so far -- again, it's very early, the biggest beneficiary of bookings into the group segment. And so we have 13 GSOs, they have 1,300 literally. So it's meaningful.

Jonathan Halkyard:

Sure. I appreciate the question. Clearly, we can't comment on anything like those reports you referenced. But look, we're always looking at the portfolio and to understand how it fits in overall with that strategically. Things that are very important include market positioning in markets that we believe have strong potential for growth. Overall scale because this is a business where most of our properties, including our regional properties are doing north of $200 million annually EBITDAR. So scale matters.

William Hornbuckle:

And Joe, I'll only add one other thing. And those properties that demonstrate beyond just organic growth, real growth potential at some point for various -- each property is a little different, so for various reasons. But if they don't demonstrate that, then we have potentially a different view.

Shaun Kelley:

I was hoping we can maybe just drill in on digital a little bit. So maybe one kind of specific and then one strategic. The specific question would just be, can you help us think about the loss cadence? I think we've been very clear here that 2024 would be an investment year again. So just help us think about how some of those investments may play throughout. And is there some additional marketing, especially in the second half as you get the product to, I think, where you want in the Angstrom integrations kind of done?

William Hornbuckle:

I'll take that first part of that. So when it comes to BetMGM, if you will, I think your comments are pretty relatively spot on, we want to see the product development as it comes out throughout the balance of the year. I think the idea -- we've all talked about the idea of leaning in, if we think where we need to be and want to be by end of the year, particularly through football and beyond. Obviously, for the first quarter, I think digital for all of us was a little rough. Nobody wanted a Super Bowl bet, no one seemed to win a March Madness bet. We're not alone in that. But all that said, I think the plan that we had put forward in discussions to date, you can hold true on.

Carlo Santarelli:

Jonathan, just doubling back to some of your comments earlier in the call. Obviously, good ADR growth in the first quarter, rates pacing up for each subsequent quarter grew pacing well. Obviously, as Bill mentioned, we lapped the big headwind with the union contract, the incremental expenses. As you guys think about the rest of the year and all the puts and takes, be it hold comparisons from last year, easy/hard et cetera, events last year, although that should pretty much normalize right now in the book of business that you currently have with kind of some of the known expenses and where they're going, obviously, going up but less heartily as they have been. Do you look at the outlook for the rest of this year and believe there's potential for Vegas Strip EBITDAR to grow as you work through the year?

Carlo Santarelli:

And then if I could, just -- I know you guys tightened up some of the slide deck materials and stuff and actually, it's very user friendly. Will the Hong Kong filing provide much of the same material that it provided historically on the MGM China piece of the business for modeling purposes?

Carlo Santarelli:

And will that be out at some point this evening?

Operator:

Our next question comes from David Katz from Jefferies.

William Hornbuckle:

I didn't on purpose. There are some contemplated tuck-ins coming down the road. But for now, I'm just going to leave it at that. I think I stated on the earlier call, we're anxious to solidify something in sports. We like content businesses. We're anxious to get into the live dealer business. And so none of that's changed. And so I think you'll see us over the course of time here, do things that will further solidify that strategy and get us deeper into those objectives.

William Hornbuckle:

Yes. Look, I think Stella, their new CEO, is the breath of fresh air. She's been extremely transparent, she took Adam Greenblatt, who is the CEO of BetMGM to India to get under the covers, to meet with the design development teams. So she had him speak at a town hall about the importance of BetMGM and all that mattered and so we're excited by that. We think it's movement in the right direction, and it's something that, frankly, heretofore hadn't happened. And so that's all affirmative and positive. Everyone is agreeing to the road map. It's an extensive road map on product development, and it's going to take some time and energy and some investment, particularly in Entain's behalf, and they're fully supportive of that. And so yes, I think things have changed, and I think for the much better.

Brandt Montour:

So first question is on Las Vegas. Maybe you could reconcile or help us reconcile the slot volume trends that you saw in the quarter versus the really strong room rates? And I guess what I'm asking is, is there any sort of behavioral shift for customer trend shift going on under the surface? And what's driving that? Can you talk about the trade-off between those two factors? And how much control you have over that shift?

Brandt Montour:

And my second question is on MGM China. And Bill, you touched on the competitive environment there. Your market share in January was well documented to be high, but your average from the mass table market share over the quarter was obviously lower, it implies a lower exit rate. I'm just curious if you want to double back on the January market share and maybe talk about what happened there? And was it -- I guess it wasn't permanent of course, and how much of [ those hold ]? But what can you say about exit rate on market share heading in the second quarter?

Xiaofeng Feng:

Yes. You were right. And we have also had some VIP place in January. So that was a major reason that we reached 20% market share in January, but definitely [ all of all ] is in mid-teens as we always said in our previous calls.

Chad Beynon:

I wanted to start with capital allocation. So you purchased another $0.5 billion worth of stock in the quarter. Can you just update us. I know you said there's [ 17 ] left on the plan, but how you're thinking about opportunistic versus programmatic over the next couple of quarters?

Chad Beynon:

And then on the regional margins, I know there was a lot of weather interruption in January. Can you help us think about maybe the March exit rate, how that looks from a year-over-year perspective? And if you expect that to be stable on a go-forward basis?

William Hornbuckle:

But I wouldn't suspect that to sustain let's be clear.

Stephen Grambling:

I appreciate the longer-term thought process on the mid-teens free cash flow algo. But hoping you could peel back the onion a bit there as we think about tracking this going forward, what would be the underlying growth that you'd think through in Vegas versus the regions versus MGM China, kind of separating that out from BetMGM or new markets. And I think I heard you say through 2028. And I guess is that the right bookend? Or is that just more of a long-term thing?

Stephen Grambling:

And maybe one other quick follow-up. Just on BetMGM, you've said in the past that it's going to be self-funding from here. Is there anything that you'd be looking for where you'd say this is something that we would want to invest in to contribute to BetMGM or provide them with additional capital for any reason?

Operator:

Our next question comes from John DeCree from CBRE.

William Hornbuckle:

I think at least in terms of the market, I think UAE will come to fruition. I think there's enough indicators there enough work has been done to recognize that either Abu Dhabi of note or one of the other Emirates will come to life. Obviously, [ Winn ] has got a project in the ground and is waiting for national legislation and regulatory framework. So I think that would be the most affirmative.

William Hornbuckle:

I think the notion of omnichannel and the notion of people that play back and forth is about 15% of BetMGM's database give or take. Until we get this single account, single wallet in Nevada, I don't think it's as meaningful as it could and potentially will be. I think that can be very meaningful long term for us because it's a unique position we would have here, particularly over the other leading contenders in this space. And obviously, we see a whole bunch of visitors every year here who have intent. And so for things like Super Bowl, et cetera, it would be important. But we have done a meaningful job and a good job in Super Bowl is the example of inviting, reaching out and making sure that BetMGM's VIP clientele are well catered to, and we hosted several of them during that event in particular, private party tickets to the game, et cetera. And so that activity will continue. It's really when we get single account, single wallet set up, and some more connectivity between MGM Rewards and BetMGM's loyalty system that you really see some traction.

Operator:

Our next question comes from Robin Farley from UBS.

William Hornbuckle:

Yes, I'm sorry, Robin. I often never [indiscernible]. I will go through that in some detail next quarter. And I think you'll find it all very interesting. And so if you could give me the privilege of that time, that would be great.

Daniel Politzer:

We've been hearing more about outbound China picking up more recently. To what extent are you seeing that in Las Vegas? And particularly as it relates to [indiscernible], is that part of that growth outlook that you've kind of laid out here for 2024?

Daniel Politzer:

And then just pivoting to Macau. I think flow through in the quarter was around 30%. I know you've talked in the past a little bit about margins and expectations there. But is that kind of the right way to think about it going forward as we kind of fill out in terms of the recovery?

Xiaofeng Feng:

Yes. I think like basically, as we always said, in our cause, we are targeting about like a high 20s, around 30% of our EBITDA margin. Based on the current business trends, we feel comfortable with such kind of expectations.

Barry Jonas:

I want to start with Macau. Could you maybe talk a little bit about the specific benefits you're seeing with your smart tables there? Should we expect any impact to market share once competitors get those tables? And I guess, is there any opportunity to use that technology in any other of your markets?

Zhi Qi Wang:

There are multiple aspects of the benefits of smart tables. First of all, you have game security. Of course, it's -- everything is tracked, and it's very difficult to cheat the game. It's almost impossible. And we have cases where people thought that they got away. But as soon as the chips come back, they were caught. And also operating efficiency because far less supervision manning. So these are just from a basic operation standpoint. And then because of the capability of tracking [ all these ] play, so it allows us to have a lot more data, which allows us to do precision marketing based on various customers playing level, we can also give them real-time rewards.

William Hornbuckle:

Kenny do you want to add anything?

William Hornbuckle:

Barry, if I could answer that, I wouldn't. But there's always interesting things. Vegas, we have a full plate as you know. And so -- look, the good news is we're in a position that we get advised news of most things that are happening out there. But no, there's nothing imminent that sits there as gee, wouldn't it be great to have at this point in time. So that's why we're focused on new markets and our digital business.

Operator:

And ladies and gentlemen, this will conclude our question-and-answer session. I'd like to turn the conference call back over to Bill Hornbuckle for any closing remarks.

Operator:

Good afternoon, and welcome to the MGM Resorts International Fourth Quarter and Full Year 2023 Earnings Conference Call. Joining the call from the company today are Bill Hornbuckle, Chief Executive Officer and President; Corey Sanders, Chief Operating Officer; Jonathan Halkyard, Chief Financial Officer and Treasurer; Kenneth Feng, President and Executive Director of MGM China; and Andrew Chapman, Director of Investor Relations. [Operator Instructions] Please note, this conference is being recorded.

Andrew Chapman:

Good afternoon, and welcome to MGM Resorts International Fourth Quarter and Full Year 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.

Joseph Greff:

Starting off with the Las Vegas, Bill, Jonathan and whoever else is in the room there, can you talk about maybe isolating in the fourth quarter the EBITDA contribution from F1? And then you might be still counting your money from the Super Bowl, but do you think the Super Bowl event in Las Vegas is of a larger magnitude than what the EBITDA contribution from F1 was in the fourth quarter? And then sticking to the topic of F1, Bill, you mentioned about maybe you have a better priced F1 this year and in coming years. Do you think year 2 can be bigger than year 1? Or does it have to level off before it can grow?

Corey Sanders:

What I would add, Joe, on F1 in particular, the south Strip in particular, we would treat that probably more like a normal weekend going forward because of the lack of activation there. So we think there's opportunity there. And on Super Bowl, I mean, every cash register, from food and beverage to entertainment, was ringing. So it was much more widespread at every property compared to F1, which was isolated to the luxury.

William Hornbuckle:

No. Look, I was at ICE last week, I met with Stella, our partner. We're still very focused on making sure everyone's focus is on BetMGM. And particularly this is a critical year, I think, for all of us. So it's about product, product, product and focus. And so that remains the focus for now.

Carlo Santarelli:

I respect that you've talked about this previously and not really breaking out kind of impacts from hold, but clearly, in Las Vegas, in the third and fourth quarter, you've experienced much higher than at least what we're accustomed to hold percentages. And I was wondering if, a, you could perhaps provide some impact in the fourth quarter in Las Vegas from the hold; and b, maybe just talk about more quantitatively what's driving it and how sustainable or what you would think, if you had to go back and do it again, normalized hold is in the current environment.

William Hornbuckle:

Let me kick it off, Kenny, I'll turn it over to you. Some of it is simple activity case, to your point, I mean, we have done like all the operatives, a good job going after some of the -- and I'll use our concert that we just had is a great example of an expansion and overhead item, but to drive overall tourism with Bruno Mars, et cetera. So part of it's adhering to that.

Xiaofeng Feng:

Yes. Thanks for the question. Actually, as you can see, like Q4 was a record high in MGM China, basically. We are happy to see that our January performance has continued to grow. So actually, our January performance has exceeded even October levels across all segments, including EBITDA and market share. Currently, we are in the middle of Chinese New Year basically, which is about 8 days' celebration. As to the visitation to the city, it has reached about 90%, 95% of 2019 same-period levels. As to MGM China, 2 properties combined, the visitation, the players count, the table drop, the slot handle as well as the VIP turnover have all well exceeded 2019 same-period levels. So we are confident and we are optimistic with the Chinese New Year as well as the rest of this quarter.

Carlo Santarelli:

Because you mentioned it, in terms of the contra revenues, it looks like they were 21%, 22% at each of the properties, respectively, in the period. Is that kind of a level that you expect maintains as long as business mix as it stands today maintains?

Operator:

The next question is from David Katz with Jefferies.

William Hornbuckle:

Sure, David. I'll take that. Look, I think the answer is yes, you're spot-on. This will be a reinvestment year. Obviously, you've seen we've lost share, literally, in both instances. And the two folks that sit above us were being outspent 2, 2.5 to 1 in terms of raw marketing spend in dollars. We want and need to get our product in a better and different shape. We want more parlays. Obviously, the acquisition of Angstrom by our partner will be a big add to that. We'll be able to stick out more product, we'll have more confidence in it, speed to market will be better, et cetera. And so that's part of what will be developed starting with baseball this year.

David Katz:

And look, it'd be silly for me to ask, as my follow-up, will you or won't you, and so I'm not. But if you could just help us frame out the puts and takes around whether BetMGM could at some point or how it thinks about controlling that entity and being able to drive the trajectory of that product advancement that makes perfect sense, that would be helpful. So it's obviously a matter that's discussed pretty actively.

Operator:

The next question comes from Stephen Grambling with Morgan Stanley.

Jonathan Halkyard:

Yes. Actually, I think that's probably a good way to characterize it. When we look at the drivers of growth this year, and we've talked about a few of them already, a lot of it relates to yielding, pricing, of course, growing demand through this new Marriott partnership and so on.

Jonathan Halkyard:

Yes, and the conventions business. Thank you, Bill. So those are going to be the main drivers of top line growth. As it relates to OpEx, while, of course, we don't provide guidance for either the top line or the bottom line, we are looking at increases, the main increases associated with our new labor agreement here in Las Vegas with a culinary union. So that will be at least a year-over-year factor for the first half of the year, not really in the back half of the year, since we already incurred that in the last 6 months of the year. That will be the main issue for us. We'll be able to offset that in part through some work we're doing around productivity as well as improvement in cost of sales through leverage procurement activities. But I think kind of a low to mid-single-digit OpEx growth rate, I wouldn't be surprised if we incur that this year.

Jonathan Halkyard:

The upper bound of leverage would be 4.5x lease-adjusted leverage, and we're a full turn below that right now. I think I mentioned in the prepared remarks, we retired 14% of our outstanding shares last year. It may have been our largest share repurchase year-to-date. I wouldn't anticipate continuing at that pace this year. But we're still active in the market. We still think that the shares are attractively valued. And we still have a fair amount of dry powder, just augmented with our revolving credit increase, to enable us to do that. So I would say it's likely going to be less than it was in 2023, but we're still being aggressive.

Daniel Politzer:

First, I wanted to drill in a little bit just in the fourth quarter in Las Vegas. I think your same-store revenues were up about 10%, margins down a couple of hundred basis points. I know there's a lot of moving pieces in there in accruals and maybe some cyber impact and hold, but hoping maybe you could just parse that out as it would be helpful for us to think about that 2024 OpEx guide you mentioned.

Daniel Politzer:

Got it. That's helpful. And then I guess, more broadly on Las Vegas, as we think about kind of the remainder of the year, I think March, you have CON/AGG rolling off, March Madness, but you have group, as you mentioned, kind of pacing better. How should we think about kind of baking it all in, in terms of an expectation for growth, or any major tent-pole events to kind of call out for the remainder of the year that we should get excited about?

Corey Sanders:

And from a city perspective, I think the Sphere has been a great addition. The T-Mobile will be programmed more than it was last year. So all in all, I think it's going to be a really strong year. As you think about March, it won't only be CON/AGG, we also have Easter ending in March. So that will have a slight impact in March on the convention business but will be picked up in April.

Shaun Kelley:

Maybe just sticking with Las Vegas for a moment, Bill, you called out a lot of great commentary and color around the high end, just wondering if you could give us a little bit more color on maybe those core properties kind of outside the high end. What are you seeing on the customer behavior side? What's going to take to drive some growth and improvement at some of those properties as you look out to 2024?

Shaun Kelley:

Great. And just as my follow-up, I think it was called out in the prepared remarks, but $1 billion earmarked across a variety of things, including international, digital, just help us think through what some of the criteria would be there. I mean, again, I know a lot of eyeballs are focused on something more transformative with your partner. But it sounds like this is more along the lines of what you've done with LeoVegas. So maybe just give us some parameters of what could check some boxes for you in terms of that opportunity looking out for this year or next?

Operator:

The next question comes from Brandt Montour with Barclays.

William Hornbuckle:

Kenny, maybe you could speak to this more intelligently, but I can tell you broad stroke, remember, the requirement we have, we have to spend $1.1 billion in 10-year commitment in OpEx driving tourism, and there's about $900 million or so in actual capital expense. So we've got a little over $2 billion commitment to the government, of which the $1.1 billion is pure OpEx. And so a lot of the activity case in driving international tourism and driving tourism isn't necessarily tied to the usual marketing programs that we'd think about in gaming.

Brandt Montour:

Okay. That's perfect. And then circling back on digital and BetMGM specifically, I was wondering, Bill, if you want to comment at all on the sort of newly announced partnership with X, what you can say about how that deal came together, the structure of the deal, and anything from an economic standpoint that you can share and then what you expect the impact to be over time.

Operator:

The next question is from Chad Beynon with Macquarie.

Jonathan Halkyard:

Yes. I would say that certain of our properties were affected by the weather. Springfield comes to mind as one. Empire is another. But we also saw some pockets of strength in January as well. I would say both because of weather effects as well as the calendar a bit coming off of New Year's, January saw some of those impacts in our regional markets.

Chad Beynon:

Okay. Great. Appreciate that near-term color. And then with respect to New York, is there any update in terms of the time line as we get through '24, anything to speak to us about?

Operator:

The next question is from Barry Jonas with Truist Securities.

William Hornbuckle:

Very interesting question. We've been thinking about that, talking about it. For us, obviously, the place to invest capital, first and foremost, if in fact that all happens, is MGM. I mean it's our brand. It's our name's sake. It's on the corner of Las Vegas Boulevard drop. It would literally be adjacent to the stadium, and it needs some love. It's a 30-year-old property. We're going to reinvest in the rooms this year. We've got some new show concepts. We've done a few restaurants. But the front end of the property, as you get closer to Las Vegas Boulevard, needs some attention and some reprogramming. We're waiting to see where that lands. I have to believe, in the next 30 to 60 days, we should find out more. I've been shown three versions of it now in terms of where it will actually sit on the site and how it will connect. Once it settles in, we'll get serious about what we might want to do and how we might want to communicate with it, if you will, in terms of pedestrian traffic, et cetera. But that's how to think about where we might go first is really MGM and see how it all plays out.

William Hornbuckle:

As I think we suggested last year, we spent some time on the ground there, specifically in Abu Dhabi, trying to understand the license in general for U.A.E., but ultimately, the opportunity in Abu Dhabi. We believe it would be on the Yas Island. That opportunity still exists. To the extent there is a submission to be had, we may participate in that. Obviously, we have Dubai. We have our project there, which is an amazing project. It's going to be over a $2.5 billion project without a casino in it. And so if and when both Abu Dhabi itself as the general license granter for all or any of the Emirates goes, and then ultimately, one by one, the Emirates say they would like it, we hope to be positioned either for Dubai or Abu Dhabi, but time to tell. And it may start with digital first, a lottery, potentially digital.

Robin Farley:

I just have two pretty quick ones. One is just if you could clarify, in the regional for Q4, I think it was $60 million, how much of that was just the strike, if we were trying to think about just the kind of nonrecurring piece of that $60 million decline?

Robin Farley:

Okay. Great. And I don't know if you said for Marriott, and I know it's only been a couple of weeks, but did you give any metrics about what percent of room nights or kind of the dollar premium on rooms sold through Marriott, any color like that you could give?

Robin Farley:

Does that mean that it's kind of too early to know what the last 3 weeks? In other words, like at the moment, no change in your expectations? Or are you seeing enough to say that it's delivering those numbers?

Operator:

The next question is from John DeCree with CBRE.

Jonathan Halkyard:

Yes. It's Jonathan. I'll offer a couple of comments. The answer is yes, but really for different reasons. In the regional markets, I think, as Corey mentioned, we've really directed our marketing efforts, and to a certain extent, the property amenities themselves, to higher-worth guests. We've reduced our marketing investments and promotional investments on the lower end. And that really started in the aftermath of the pandemic, and it's carried forward. So the fact is that the increases that we've seen in those regional properties are really predominantly from the higher average daily worth customers.

John DeCree:

I appreciate that color. And then maybe quickly on the growth CapEx plan this year. I think you listed a couple of the projects that go into that bucket, and you guys have this dialed in pretty tight by now. But is there anything that we should think about in terms of disruption? Are any of those projects large enough or the timing of such that we might want to think about any disruption at the assets?

Operator:

The next question is from Steve Wieczynski with Stifel.

Jonathan Halkyard:

Yes. There were a lot of things going on this quarter. I would say that we can do 30% margins in the regions. We do have a number of tools at our disposal, but we're also facing some labor cost increases there. But when we do the forensics on the fourth quarter and look ahead to this year, we believe that, that's achievable.

Steven Wieczynski:

Okay. Great. And then Bill and Jonathan, you've given us a lot of color around the gives and takes for this year in Vegas. So without getting too much into guidance, I'm going to try to ask this question and see if I'll get an answer out of you, but I guess the simple question is, do you think it's actually possible to grow full year EBITDA this year? Are the overall comparisons, the hold comparison, is just going to be too tough to overcome?

Operator:

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Mr. Bill Hornbuckle for any closing remarks.

Operator:

The conference has now concluded. Thank you for your participation. You may now disconnect your lines.

Operator:

Good afternoon, and welcome to the MGM Resorts International Third Quarter 2023 Earnings Conference Call. Joining the call from the company today are Bill Hornbuckle, Chief Executive Officer and President; Corey Sanders, Chief Operating Officer; Jonathan Halkyard, Chief Financial Officer and Treasurer; Hubert Wang, President and Chief Operating Officer of MGM China; and Andrew Chapman, Director of Investor Relations. [Operator Instructions] Please note, this conference is being recorded.

Andrew Chapman:

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.

William Hornbuckle:

Thanks, Andrew, and thank you all for joining us today. In the third quarter we had a fantastic results, as evidenced by our record consolidated net revenues. And 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.

Results have been outstanding because of the ingenuity and execution of the team at the MGM China. Looking forward, we are still laser-focused on 3 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 wi start remodeling of 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 6 new villas.

Jonathan Halkyard:

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 cyber security 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.

Joseph Greff:

Congratulations on the results. Maybe this is a question for Corey, but for anybody who wants to take it. I kind of think 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?

Joseph Greff:

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 F1 for you guys in Las Vegas? And that's all for me.

Corey Sanders:

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, we have the right database to make this a premium event for our company.

Carlo Santarelli:

Bill, you talked a lot about kind of the outlook for next year and obviously a lot of favorable drivers. As you look at the business today, and kind of looking at the nonevent times, how do those -- and I get it, in the quarter, obviously, a lot of disruption from the cyber stuff and whatnot, but how do those periods look relative to, say, last year?

Operator:

Next question is from Shaun Kelley with Bank of America.

Shaun Kelley:

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. And I was wondering if yourselves are -- I don't know if Hubert's on the line or somebody could comment a little bit more on just what you're seeing over there?

William Hornbuckle:

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

Operator:

The next question is from David Katz with Jefferies.

Jonathan Halkyard:

Sure. It's Jonathan. And 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.

Jonathan Halkyard:

Yes. We've made -- and our Board has made the determination that at least for the time being, and I think probably into 2024, that returning cash to our shareholders through share repurchases is going to be the predominant method of doing that. And that's the best way for us to do it right now as opposed to the dividends. So I don't expect to see our dividend policy changing in the next -- certainly in the next 12 months. But the Board will ultimately [ decide ].

Daniel Politzer:

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?

William Hornbuckle:

Dan, let me kick it off. As it relates to the -- obviously, we've done a whole lot to lock down systems now. But we're going to look at architecture and how we're designed and how we go forward. And so we're probably looking at some time into next year a $30 million or $40 million capitalization in terms of IT hardware and Cap that goes into it.

Daniel Politzer:

Got it. That's helpful. And then -- just turning bigger picture and longer term, I guess, as you think about Dubai, I mean do you see a realistic path to getting gaming legalized there?

William Hornbuckle:

Yes. I mean, look, we think so. Obviously, we've got boots on the ground. I think you all understand our former CEO is now chair of the gaming commission there, which is very real. And 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.

Operator:

The next question is from Robin Farley with UBS.

Jonathan Halkyard:

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...

Robin Farley:

Okay. Great. Helpful. And then just as a follow-up, looking at the level of repurchase. I know -- I think at times during the third quarter, you talked about sort of potentially looking at different international iGaming opportunities. And should we conclude, given the amount of repurchase, if you continue with this rate, you will have kind of used up -- maybe, I think you even call it excess liquidity or something in your slides -- that that will be down to just a couple of hundred million by the end of the year if you kind of maintain the same rate of repurchase that we saw here. Should we think about that as a sign that you're less interested in making an acquisition in iGaming internationally?

William Hornbuckle:

Okay. Thanks, Robin. And look, I'd love them to invest more than us, but that's not the way it's going to work. So yes, we'll invest side -- purposely side by side. We believe in that business, we recognize, particularly as it relates to sports, that our product over the last 18 months wasn't where it needed to be. And you've seen us do a great deal of work around single account, single wallet. Entain bought Angstrom, which we think will be a very -- not will be, is, and becoming a very good push for us with parlay product for odds, the quantum of odds that we set, the amount that we can put out there. And so we're excited by that acquisition and what that's brought to the business.

Operator:

The next question is from Barry Jonas with Truist Securities. Mr. Jonas, perhaps your phone is on mute.

William Hornbuckle:

Yes, I'll kick it off, but Corey -- it's interesting, where we've seen a great deal of international single visitation on F1, Super Bowl, maybe not to your surprise, is about corporate America. And so it is showing up in multiples, in terms of multiple groups taking -- Corey, if you'd take -- just a great deal of inventory.

Barry Jonas:

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

William Hornbuckle:

Barry, I think the discussion will ultimately come down to the regionals, not necessarily top line but bottom line in margin. And just keeping those things going strong. obviously, we'll wait and see what happens in Detroit here, but we'll come out of that like we always do. And then it will be about regional margins, I think, in bottom line more than top line, at least as -- anything we can see suggests that.

John DeCree:

Maybe one more to shift back to Macau, if Hubert's still with us. The trends in recovery in Macau are still trucking along nicely for the market as a whole. There's obviously a lot of discussion about macroeconomic issues in China. So there seems to be a decoupling.

Unknown Executive:

Go ahead, Hubert.

John DeCree:

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. 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 maybe looking ahead, excluding labor, which we've talked about, is it your visibility on OpEx, does it feel like the inflationary impacts have been borne already? Or what do you expect going forward, I guess, kind of your outlook for cost inflation over the next couple of months from where you have visibility?

Chad Beynon:

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 kind 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 that full benefit, and this will be more of a '25 and beyond positive for you guys?

Chad Beynon:

Okay. Great. Another one with respect to '24 in terms of Lunar New Year. I believe Lunar New Year and Super Bowl are coinciding over the same periods. Have you seen any indication just in terms of bookings from some of that international bacc play? Does that come in a little bit closer to that event? And given that Super Bowl is around the same time, should we expect a lower positive from that?

Chad Beynon:

Hopefully, there's a compounding effect. I appreciate it.

Jordan Bender:

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

Operator:

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Bill Hornbuckle for any closing remarks.

Operator:

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator:

Good afternoon, and welcome to the MGM Resorts International Second Quarter 2023 Earnings Conference Call. Joining the call from the company today are Bill Hornbuckle, Chief Executive Officer and President; Corey Sanders, Chief Operating Officer; Jonathan Halkyard, Chief Financial Officer and Treasurer; Hubert Wang, President and Chief Operating Officer of MGM China; and Andrew Chapman, Director of Investor Relations.

Andrew Chapman:

Good afternoon, and welcome to the MGM Resorts International Second 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.

Just a few weeks ago, we reconfigured an enhanced Pit 7 at MGM Macau, and the Lotus room and MGM Cotai and expect to complete the deployment optimization in Q3 of our tables. In Macau, we are focused on 4 key priorities:

activating our incremental 200 tables; making optimistic changes to our casino floor to maximize yield; taking care of our premium mass customers; and driving international customers to our property through our global branch office network.

Joseph Greff:

You did a fairly thorough job talking about your current operations and the trend lines in Las Vegas and the regional Macau as well as BetMGM. So I have a couple of sort of big picture questions or one big picture question in them, sort of one thought on New York. But my first question is, if you could just give us an update on any digital or any M&A aspirations in digital, how much of a strategic priority is that for you, both in international markets and in North America? And then maybe for each, how big is too big? Is there a size constraint?

William Hornbuckle:

Thanks, Joe. Let me take those. As it relates to digital, we're focused on working alongside our partners with a collective goal to maximize the growth and profitability of MGM and LeoVegas. I think we're making good progress on both those fronts. And that's really all we're going to say. I think on the second one, it has been interesting. I'm hopeful in the next month or so that we're going to hear something from the commission and ultimately get the process rolling.

Operator:

And our next question will come from Shaun Kelley with Bank of America.

William Hornbuckle:

I'll kick it off and turn it over to my colleagues. Look, obviously, Formula One is a unique opportunity. And it sounds like one that's going to repeat itself for us often and the economics around that are substantial. That being said, we've relooked at our forecast for the second half of the year and particularly on top line, driven by rooms and driven by luxury, feel really good about it, both individually by property, and particularly as you go up the luxury spectrum and then ultimately overall.

Shaun Kelley:

That's super helpful color. As my follow-up, a small one, but Jonathan, thanks for the sort of extra detail on the Marriott agreement. Just sort of one specific one on that, but the $60 million to $75 million in annual profit you outlined, is that -- is a number like that net or gross, meaning is that after the incremental cost to Marriott for that? So would that just be pure savings to MGM? Or do we have to net out whatever the costs are the fees to Marriott as a part of that?

Operator:

Our next question will come from David Katz with Jefferies.

Corey Sanders:

Yes, David, it's Corey. I think the business is fairly stable as we look across all of our lines of business. The one area we're seeing a little bit of a decline in is our table games at a few of the properties that Jonathan mentioned earlier about the decline in our business. The non-gaming amenities are holding up extremely well and have been very strong this summer.

Jonathan Halkyard:

I was just going to add a couple of comments, which is that ours is a unique regional portfolio in that not only are virtually all of the properties have commanding market positions but now with the conclusion of the room renovation at the Water Club as well as the Beau Rivage, these are properties which are as a group point to be extremely strong free cash flow generators for the enterprise over the next several years with a lot of the major CapEx behind us. So they play a very important part for the portfolio because of that.

Jonathan Halkyard:

Sure. Most of our investments in the loyalty program have been around technology enablement for our MGM Rewards members so that they can make their reservations online, they can check-in through mobile check-in, et cetera, and also introducing benefits to the program whereby they can redeem their MGM Reward points for non-gaming as well as other amenities and earn the points on non-gaming amenities.

Corey Sanders:

And just a few other points, Jonathan. We just have changed our platforms, which will allow us to do gamification, which we think from a loyalty perspective will help increase wallet share. And then we just announced that The Cosmopolitan in Las Vegas in February will shift to our loyalty program. So we're looking forward to the opportunities there also.

Barry Jonas:

I appreciate the commentary on margins. You've previously talked about 400 to 600 basis points of margin improvement on 2019 for the domestic properties. I believe you've been exceeding that. Just curious if that's still the right range that 200 basis point range? Or if you think it's a little tighter now?

Barry Jonas:

Okay. Understood. And then just as a follow-up, you've given a lot of great color on the Marriott deal. Maybe just can you talk a little bit more about any integrations with that MGM and how you could see upside there?

Carlo Santarelli:

I was just hoping maybe if we could kind of look at the same-store results in Las Vegas and maybe you guys kind of help me better understand some of the ins and outs. But I thought if you look at the margins on the same-store portfolio, down 350 basis points, but still kind of within a range of what you guys talked about relative to 2019.

Jonathan Halkyard:

The -- in terms of the margin performance year-on-year, again, it was fairly consistent with what we experienced in the second quarter in terms of margin performance in Las Vegas. But as we look year-on-year, a lot of the difference is coming from labor. As we came out of this -- came into the second quarter in 2022, we weren't yet fully staffed. And so we were comping against a lighter labor load in the second quarter of 2022.

Carlo Santarelli:

Okay. And then just getting back to the accounting for BetMGM and obviously, the EBITDA loss in the quarter, given the different calendar accounting. Clearly, June was a positive month based on that. July and August tend to be seasonally softer months, I would say, within the sports calendar, et cetera.

Jonathan Halkyard:

I mean, I'd prefer not to parse the quarters. I think you're directionally correct in terms of the relative strength of the different quarters. We think the second quarter calendar result was terrific, and we stand by that second half profitability comment.

William Hornbuckle:

Yes. You've gotten football, obviously kicking up in the third quarter. So the answer is yes.

Stephen Grambling:

Maybe one more on BetMGM. I know you didn't disclose or BetMGM didn't disclose the EBITDA exactly. But from what we can tell, it looks like the margin there may be a little bit lower than one of your closest peers. But I know there's some puts and takes to try to compare these things. Anything that you can call out to help investors that they try to compare and benchmark?

Stephen Grambling:

That's super helpful. And one follow-up just on kind of BetMGM, but also the regional properties. It looks like the properties that were in the states with legalized iGaming had a little bit weaker gross gaming revenue than those without. Any color on how to assess cannibalization from iGaming or BetMGM specifically?

Corey Sanders:

46%.

Stephen Grambling:

Makes sense. And ultimately, free cash flow margin accretive.

Operator:

And our next question will come from Dan Politzer with Wells Fargo.

William Hornbuckle:

This is for you, Corey.

Corey Sanders:

And then thinking of the Sphere with U2, which at 20,000 people a night has to help the entire city. And I think boxing is definitely coming back. We just hosted fight last week and that was spectacular for us. So...

William Hornbuckle:

It's 2 things. You kind of touched on both of them. Drive to profitability, we see cohorts maturing in 24 to 36 months, particularly in sports. Hopefully, a little sooner in iGaming -- hopefully, they are maturing a little sooner in iGaming. We've seen our CPAs come down from 400s down below 300s. And so there's active maturity there in the context of how we're marketing into whom and we're more disciplined about all of that.

Brandt Montour:

I was wondering if in the regionals if you wanted to -- if you were able to give us a little more color on what happened in -- at the Borgata and in Detroit this quarter? And if it's fair to assume that if you adjusted for that, you would have ended up comfortably in that 32% to 33% margin range that you talked about, Jonathan?

Corey Sanders:

Borgata was the big dragger of the margin.

William Hornbuckle:

I'll kick it off and turn it over to Hubert, who obviously lives this every day. Look, we are uniquely positioned in the way we've historically shaped for decades our marketing organization around knowing our own customers and delivering them to our properties. And obviously, now with the demise of junkets, we've seen that network go to work. And frankly, we're expanding on that network. We've opened a couple more offices, and so that's been meaningful and helpful.

Robin Farley:

I just wanted to follow up on the Marriott agreement. It seems like a great distribution agreement. Can you describe it as a franchise agreement, which would suggest that you're paying a share of rooms revenue from -- you mentioned you expect them to fill maybe 5% to 7% of the lowest rooms. Are you paying a share of room revenues from the other 90-plus percent of rooms in the agreement?

Jonathan Halkyard:

Yes. We're not going to go into the details of the agreement. We actually feel like we've been pretty transparent in terms of what we think they'll deliver, what they think they'll deliver in terms of rooms and the incremental value associated with those rooms on a net basis, but that's as far as we're going to go in terms of describing the transaction.

John DeCree:

In your prepared remarks, you've mentioned about the A's in the backyard for you guys. So maybe a little bit further looking, but are there potential reinvestment opportunities on the south ends of the strip for your properties that might make ROI sense now that maybe didn't previously? Is there things that you're starting to consider and that you might be able to do with that potential anchor down there in your backyard?

William Hornbuckle:

John, I'll take it off and turn it to Corey because he knows this more intimately. But I would say this park is enjoying its best year ever by far. And so it sits in the epicenter with T-Mobile of activity. And we see bleed over from Luxor when conventions are there. Obviously, we'll see bleed over in Luxor and Excalibur when sports kick -- when sports -- when football kicks back up. New York, New York is enjoying a decent year. So it's a little bit of a mixed bag, but generally, Corey?

Chad Beynon:

First, I wanted to ask about your share repurchases, 15 million in the quarter, that was the highest in 4 quarters. Just wondering how you're thinking about the pace of repurchases as we get through the back half of the year and then beyond?

Operator:

Ladies gentlemen, this concludes our question-and-answer session. I'd like to turn the conference back over to Bill Hornbuckle for any closing remarks.

Operator:

The conference has now concluded. Thank you very much for attending today's presentation. You may now disconnect your lines.

Operator:

Good afternoon, and welcome to the MGM Resorts International First Quarter 2023 Earnings Conference Call. Joining the call from the company today are Bill Hornbuckle, Chief Executive Officer and President; Corey Sanders, Chief Operating Officer; Jonathan Halkyard, Chief Financial Officer and Treasurer; Hubert Wang, President and Chief Operating Officer of MGM China; and Andrew Chapman, Director of Investor Relations. [Operator Instructions] Please note, this conference is being recorded.

Andrew Chapman:

Good afternoon, and welcome to the MGM Resorts International First 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.

William Hornbuckle:

Thank you, Andrew, and good afternoon, and thank all of you for joining us today. I'd like to start by highlighting the recent news with the Japanese central government officially certified our area development plan in Osaka, which is a recognition of our perseverance and the great partnership that we have forged after more than a dozen years. This is one of the final steps that paves the way for us to begin our development process in Osaka to create what will likely be the first integrated resort in Japan. I'd like to thank the government of Japan, the City of Osaka, our local partner, Orix, and Ed Bowers and the development team and the many MGM employees who helped make this reality. It's truly an higher, and we look forward to getting started on this major development to increase our global reach and fulfill our strategy to increase our geographic diversification.

I'll point to a few KPIs to reflect our impressive start to the year in Macau. In the first quarter, our MGM China properties generated adjusted property EBITDAR of $169 million or 88% of our first quarter 2019 adjusted property EBITDAR. Our market share was 15% during the quarter, and we are confident in our ability to sustain share as we put in place key structural advantages, including:

one, we gained an additional 200 tables as part of the concession renewal process. This represents a 33% increase in the tables for MGM in a market with fixed table allocations. Currently, our half of our incremental tables are fully in use and the remaining will be added as demand returns and we complete further refurbishments on the casino floors.

Jonathan Halkyard:

Thanks, Bill. And I too want to at our employees for delivering another record quarter of financial results. I'd also like to recognize and thank our teams in both Japan and Macau for their outstanding wins this quarter.

Operator:

[Operator Instructions] And the first question will be from Joe Greff from JPMorgan.

Jonathan Halkyard:

Sure. I'll make a couple of comments, Joe, and then I'll certainly invite Corey to add his perspective as well. The strength in Las Vegas really has been driven mostly, not entirely, but mostly by weekend rates. That's where the real pricing power has been. It's been certainly supported by the event schedule Bill referenced in his remarks. But we're still seeing -- during the quarter, we saw growth in the midweek room rates as well. But just the real strength has been from the weekends.

Corey Sanders:

I would agree.

William Hornbuckle:

Joe, we've got Hubert on the phone. I'm going to turn it over to him. Before I do though, I just want to recognize that team, thank Hubert, Kenny and Panzy of note. Their leadership has gotten us to a great place. April has been amazing. Maybe Hubert, you can speak a moment on Golden Week, how it's kicked off. But over to you, Hubert.

Joseph Greff:

Do you think you maintained the market share gains from the 1Q thus far in April? And one final one on that...

William Hornbuckle:

Joe, reflecting on my comments earlier, look, it's not lost on us. This is probably 10,000 rooms, give or take, left to open in Macau. And so arguably, that will have an impact. But I think the team's ability to drive high-end mass and into some VIP has been demonstrated. We're well over 90%, both in GGR and EBITDA in April. And the first couple of days of Golden Week, you've seen just under 0.25 million people hit the market. And we're getting more than our fair share of that. But we do recognize there's 10,000 rooms to go.

William Hornbuckle:

Hubert?

Joseph Greff:

It's $169 million with VIP hold, if we adjust that for normal VIP table hold property then?

William Hornbuckle:

It's $14 million, Joe, is the answer.

Shaun Kelley:

Congrats on the results and specifically the news out of Japan. So if I may, I just wanted to start with the Japan project. Bill, like, obviously, you've been working on this milestone for a long time. Can you help us think about key remaining milestones? And very specifically, when should investors start to prepare for capital commitments needing to go into the ground and maybe a little discussion about broad level plans around project financing for it?

Shaun Kelley:

Great. And then my follow-up, just to switch gears, would be in online. You gave some great color about some of the KPIs and how the GGR/NGR side is going. Could you just talk a little bit about the operating loss cadence as we move throughout the year? And can you reiterate the sort of joint contribution of around $150 million commitment for the full year? Is that still in play? Or does that need to be tweaked a little bit as we sit here today?

Jonathan Halkyard:

And I would just add under our plan, you mean under the investment that we anticipated, putting into the venture. And in terms of the pace, we do expect as we go through the year that we're going to be turning towards EBITDA profitability, and that we'll reach that during the second half of the year.

David Katz:

I wanted to just drill a little deeper on BetMGM, which obviously is going better than as planned, going very well. When we look at the partnership and think about the MGM database and its benefits to the BetMGM JV, in conjunction with those customers that are coming in through BetMGM right, both of which have added to the productivity here. I suppose the question we ponder with a lot of investors is, the bigger that gets, how does that arrangement work and sort itself out, et cetera? And I'm not asking when are you going to go back and make another offer. I'm really just trying to get a layer down.

William Hornbuckle:

Yes. Hubert, why don't you handle the first part of that, and I'll try to do cleanup.

William Hornbuckle:

Now David, look, obviously, we're leaning into mass. I think the way to look at the totality of the business, obviously, the junket operators were not cheap to do business with. I mean, they took a lot of the margin out of the business. The fact that now we're on our own doing this, there's a formula that suggests somewhere under 100% of former GGR levels, we could drive over 100% EBITDA. It's arguable when that's going to land 85% or 90% of total top line, but we do believe that. We think the business will settle in, in the mid-20s in terms of the margin business overall.

David Katz:

Okay. Fair enough. Nice quarter.

Stephen Grambling:

Sticking with the digital side, you referenced some of the aspirations to continue to expand worldwide. What are the criteria priorities that you're focused on or what deal breakers are there any potential partnership or transaction as we think global? And do you generally expect them to be more bolt-on deals? Or could you even contemplate something more transformational?

Stephen Grambling:

Makes sense. And maybe as a follow-up on the digital side in the U.S. In thinking through the march to positive EBITDA and beyond, we saw [ Sandro ], I think had profitability about a year ago and then ramped it a bit lumpy thereafter given the seasonality and mix of sports. Given your skew towards iGaming, how might the magnitude of that flip deposit EBITDA and then consistency, compare and contrast to maybe some of the peers?

Operator:

The next question will be from Brandt Montour from Barclays.

Jonathan Halkyard:

The growth for us has really been in the higher-end properties. I mean we think all our properties are higher end. But certainly, the luxury properties have seen more of the growth. Price elasticity, it's a tough concept to apply here since the properties like the Bellagio, Cosmopolitan, Aria have different customer segments in some ways from the ones say at Mandalay Bay or Luxor, Excalibur. And so we're attempting to drive price wherever we can at each of these properties. But I would say, in the general matter, the weekends are where we have greater pricing power and in the luxury properties.

Jonathan Halkyard:

I wouldn't say there's any difference in seasonality. If anything, just the strength of the event calendar and just the increased sophistication with which we're marketing to all of our segments, if anything, might reduce the seasonality that we face. We've already, on previous calls, called out the differences in 2023 against last year, with the first quarter and the fourth quarter, for different reasons, probably being a bit stronger year-over-year. But that's really not seasonality as much as just some idiosyncratic issues during this year and last.

Operator:

The next question is from Dan Politzer from Wells Fargo.

William Hornbuckle:

Hubert, why don't you take it?

Jonathan Halkyard:

Yes. I think there is some flexibility. Not to speak for VICI, of course, but they are fantastic partners of ours. And as we plan for that project and think about the ways in which we will finance it and the best way to allocate our capital, doing a sale leaseback with VICI at some point certainly could make a lot of sense for us, and that's part of our planning.

Chad Beynon:

On Slide 7 and 8 in the deck, you pointed out really strong slot handle and table drop, it looks like, in the regional market and in Vegas. Is there anything to talk about just in terms of additional detail within the segment's strength at the high end? Has that kind of continued as we've expected for the past couple of quarters? Any weakening at the low end or anything else to call out to kind of help frame out where the consumer is within your database?

William Hornbuckle:

And then, Chad, maybe one final point, I'll be interested to see how this manifests itself over the next 3 to 6 months. With China reopening up, the one segment we still miss is the high-end Asian/Chinese gamer. And so time will tell. We've gotten about 80% of our visitation back from international play. But those players made up like 50% of the play, and particularly when you think about something like baccarat. And so I see it as an opportunity. I don't know how it manifests itself yet given policy, given capital restraints. but we do see it as something we're going to focus on trying to drive.

Chad Beynon:

Okay. And then given the conclusion of the U.K. white paper, a market that you'll be in soon, it seems like a win for both the operators and responsible gaming, in general. Does anything change positively or negatively in terms of timing or just your expectations, your excitement, about that market and other global markets as you look to grow this digitally?

Operator:

And the next question is from Robin Farley from UBS.

William Hornbuckle:

Yes, Robin. Look, I think at this point, we're fairly committed. The idea of going in reverse would be something hard to contemplate. We have to sign the land lease. And I think given the nature of that lease and given the other documents we have to sign with the government of the City of Osaka, they're definitive in nature, and therefore, we're paying out cash. And so within the next 3 months, it's just hard as it's ever going to get. And so we're going to go forward with some excitement from that.

Jonathan Halkyard:

The way to think about that is that the gross gaming revenue, we have net against that for rated players, these customer complementaries that we provide to them. And those are generally priced at retail. The largest portion of that are rooms, but there's certainly food and beverage as well. And the price of those as increased dramatically. Our ADR year-over-year grew 31%. So the cost, which has been assessed to that, and therefore reflected in the casino revenues, goes up. And so the demand for gaming in our business has never been higher across segments, but the cost of the rooms that we provide to these guests to earn those complementaries has gone up.

Operator:

And the next question is from John DeCree from CBRE.

Corey Sanders:

Yes, John, this is Corey. I think last year in the first quarter, especially in our bigger boxes in the regionals, we were constrained on hotel rooms. And this quarter, we had full accessibility, both in Borgata and, as Bill mentioned, the brand-new Beau Rivage room. So we're seeing huge demand in the Beau Rivage rooms from current customers and new customers, but it's also driving a significant amount of hotel revenue and food and beverage revenue that would not have been there last year.

Corey Sanders:

Yes, John. So if we looked at Q1 of '19, that customer would have made up about 45% of our rated win at that time. They are currently about 25% -- 20% of that. So if that comes back, from that perspective, it's pretty meaningful. From a Cosmopolitan, they are pretty big in the international business and, in particular, the Far East and Korea are very strong markets for them. Their size is about 1/10 of what we do.

Operator:

And the next question will be from Barry Jonas from Truist Securities.

Corey Sanders:

Yes. This is Corey. The Cosmopolitan operation is going extremely well. We're very happy with the results we're seeing there. The business is continuing to be strong. We are in the process now of finding when we will be converting them over to MGM Rewards. We will make sure, from a customer perspective and employee perspective, it will be a smooth transition. So more to come on that in upcoming quarters.

Jonathan Halkyard:

And as I kind of rewind the tape and look at the capital that we applied to the Cosmopolitan versus that which we freed up from the sale of the Mirage and the incremental EBITDAR, and more importantly, EBITDA, after rent associated with that, this has just been a fantastic set of transactions for MGM and the shareholders.

William Hornbuckle:

Yes, I'll take that one. Barry. As it relates to Dubai, we are still doing pylons. That property continues to evolve. We were the managers, but the owners yet again, want to upgrade the property, I think, with gaming in mind. But it's up to Abu Dhabi and the national government to ultimately decide. We have had people on the ground there basically nonstop since the first of the year, trying to understand the opportunity in Abu Dhabi and then ultimately, if it will open up. Well, if passed and when passed, it will open up to the other Emirates. Whether the rulers of each Emirate then take it upon themselves to approve it is, a, up to them. Obviously, we're focused on Dubai, given the niche of our projects. We think it would be ideal. There happens to be 150,000 to 200,000 square feet of space that could be converted into such a thing.

Operator:

And our final question today will come from Steve Wieczynski from Stifel.

William Hornbuckle:

We have. And obviously, given the location and the conversation of a pedestrian bridge from it to the park, which is obviously where T-Mobile sits, we think it could bring about 400,000 tourists a year to the Valley that wouldn't otherwise come. We think that's a reasonable number. That's a number that's been created by a bunch of folks looking at it. And so we think that part is accretive.

Operator:

And ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Bill Hornbuckle for any closing remarks.

Operator:

And thank you, sir. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator:

Good afternoon, and welcome to the MGM Resorts International Fourth Quarter and Full Year 2022 Earnings Conference Call. Joining the call from the company today are Bill Hornbuckle, Chief Executive Officer and President; Corey Sanders, Chief Operating Officer; Jonathan Halkyard, Chief Financial Officer and Treasurer; Hubert Wang, President and Chief Operating Officer of MGM China; and Andrew Chapman, Director of Investor Relations. [Operator Instructions] Please note, this conference is being recorded. Now I would like to turn the call over to Andrew Chapman. Please go ahead.

Bill Hornbuckle :

Thank you, Andrew, and thank you all for joining us today. I'm proud to announce that MGM Resorts International drove record fourth quarter adjusted property EBITDAR for Las Vegas and regional resorts. What's more, our full year Las Vegas Strip adjusted property EBITDAR increased by more than 80% year-over-year. These outstanding results are evidence of our focus on optimizing growth in our business and operations as well as our strategic vision of becoming the world's premier gaming entertainment company. These outcomes are also a testament to our employees who will go above and beyond every day to take care of our guests and create an amazing, great experiences, which drive loyalty among our customers. Our employees are true heroes of this story, and we need to be celebrated. I couldn't be proud of them for delivering these financial results alongside the steady improving guest and record employee satisfaction scores we are enjoying. As we look forward, we expect many of the drivers for our 2022 performance to continue into 2023. Importantly, we are well positioned on weathering a variety of environments, given the inherent long-term benefits of MGM's diverse portfolio. In fact, we have the most diverse offerings in the gaming space. And as such, we are a well-balanced organization that benefits from both scale and a host of premier brand offerings. This distinction -- the distinct pieces of our business that creates this diversification are number one, our number of nine Las Vegas Strip and eight regional domestic properties in the U.S. that cater to all market segments and produced consistently strong profitability; two, our two integrated resorts in Macau, the pre-pandemic generated EBITDAR of over $700 million and are just now beginning to see a very real return to profitability; three, our digital strategy with 50% ownership of BetMGM, one of the leading U.S. digital sports betting and gaming operators. BetMGM is the leader in what is financially the most important segment in the nation, iGaming, and is making overall progress towards its profitability. And our ownership of LeoVegas, which we're using to grow our digital business internationally and extend both MGM's brand and content reach. And ultimately, our balance sheet, allowing significant flexibility to invest in areas with the highest return on capital including New York, Japan, further expanding our digital footprint via LeoVegas and other substantive international opportunities we're pursuing in that space as well as funding and continued share repurchases. In fact, as you know, we have just announced that our Board approved another $2 billion repurchase program. Looking ahead, we see multiple opportunities for growth and momentum in our business, coupling these opportunities with a relentless focus on free cash flow per share, our operating model, our margin control and disciplined expense management, which we believe gives us a great confidence that our best days are ahead of us. Let me walk through the business case for '23, starting with our U.S. properties. First, we are encouraged by the early success of The Cosmopolitan of Las Vegas as we migrate the business into MGM Resorts infrastructure. On an annualized basis, we have double-digit growth in revenue and EBITDAR compared to the reported 12-month period prior to the acquisition. We are already beginning to produce cross-property play with hundreds of high-end players from The Cosmopolitan database attending MGM Resorts customer events and driving millions and win at our other sister properties. This is a trend that we saw continued for the Lunar New Year celebration at our properties in Las Vegas, and we expect to expand to the mass market as we integrate MGM Rewards into The Cosmopolitan system. Next, we have a strong event calendar in Las Vegas. CES has a 115,000 attendees last month, up from 45,000 in 2022. CONEXPO and CON/AGG next month is setting up to be the best ever. And March Madness, Sweet Sixteen and the Elite 8 games are coming to Las Vegas. Together, the calendar in March is positioned to have us have the best hotel revenue month, we believe, in our history. Additionally, Formula 1 is expected to bring $1 billion in economic value to the city, which we believe we are the best positioned to take advantage of. Las Vegas also has Allegiant Stadium, which has brought 40 events and over 1.5 million visitors to Las Vegas in 2022 and is expected to bring even more visitors, even higher quality events in 2023, driving significant spend, particularly at our South end properties. Another tailwind is the ongoing growth in visitation. The LVCVA expects domestic flight growth capacity to reach 120% of 2019 in the first quarter of 2023, and international recover further with 80% of 2019 available seats. Harry Reid Airport hosted a record 52.6 million passengers in 2022. Outside of our domestic business, we also see tremendous opportunities for growth. Starting with China, fully stated Macau is back. As you well know, COVID restrictions impacted our Macau operations in 2022, causing an operational loss that negatively impacted our overall results. But we are experiencing a rebound in 2023 as our guests are returning in force just that they did in Las Vegas when restrictions were lifted here. In fact, quarter-to-date, we are excited to report that MGM China's combined properties are the highest earning businesses within our company. As part of the concession renewal process, we committed to bring nongaming entertainment events to Macau. Those events were strong drivers to visitation to our property during the Lunar New Year and at the end of January. We see these early results as validation and our confidence in Macau markets recovery and the long-term viability upon which we are retendering commitments were built. And unique to MGM China, we have secured 200 additional tables as part of our new gaming concession, which combined with our premier mass positioning, should allow us to drive market share into low to mid-teens. In fact, during the month of January, our market share was 16%, which compares to high single-digit market shares pre-pandemic. This outstanding performance was driven by the MGM Chinese team, strategic focus delivering full gaming floor renovation, a complete hotel product mix for our targeted customers various marketing efforts in producing strong nongaming events, shows and promotions plus our team's improvement in service levels and operational efficiencies. These collective efforts position us for a long-term growth story in Macau. We've also reason to be optimistic about the growth prospects of our business well into the remainder of this decade, especially in light of the two new gaming licenses that we hope to receive in the near future. We expect to submit our RFA in New York in the first half of this year, and we hope for response in the near future. One advantage we have over the competition in this market is our ability to add tables to our existing casino floor and thus incremental tax revenue for the state almost instantly once approved for license. We expect to spend about two bed in New York inclusive of the license fee. We will fine-tune our program and planning. But right now, we're expecting extensive property improvements such as a significant entertainment offering, new food and beverage opportunities, covered parking and an overall increase in the casino floor space. As you may recall, we also submitted our RFP in Japan for an integrated resort license to operate in Osaka approximately 10 months ago. Unfortunately, I'm still waiting for the response from the government, but we are being patient and believe we will hear so soon. MGM Resorts has presented a compelling offer with our partner, ORIX, to develop an integrated resort, which will develop international tourism and growth to that region. We're extremely excited for the ROI opportunity in a market in which we may be the sole operator for some time in the future. Each of the projects I just mentioned are expected to generate returns well above our current free cash flow yield. These are all future capital investment decisions, we weighed upon that same standard. In closing, 2022 was a phenomenal year for MGM Resorts, and we're confident we will see progress into 2023 and beyond. With that, I'll turn this over to Jon for more color on the fourth quarter and the year.

Bill Hornbuckle :

Thanks, Jonathan. I hope the comments that -- you've conveyed the excitement that we all have towards our business this year and ultimately beyond. In all my time with the company, I've never been more excited about our present and future as I am right now. I think we're stronger, more agile, more focused and more determined than ever to win. And with that, we're happy to take your questions.

Shaun Kelley :

Thank you for all the detail and color. So a lot of different places we could start, but I want to start with a high-level, strategic one. Jonathan, you ended on walking through a really robust liquidity position, still a lot of cash on the balance sheet that's either collecting interest at a better yield than before, but not a huge yield. So the question we get all the time remains kind of that ownership interest in upping the stake in maybe one of those areas that you discussed, BetMGM being the big one. And obviously, we know there's a partner there, but if you could give us your latest thoughts around the strategic value there and how you fold that in with your comments around maybe a more organic or stand-alone international online expansion?

Jonathan Halkyard :

And Shaun, just a couple of comments, the broad strokes around capital allocation as we look forward. We do have a maturity in March, $1.25 billion at 6%. So present plan is to, of course, redeem those bonds and that will capture about $75 million of free cash flow for the business. We were active share repurchases just in the past three quarters. We spent almost $2 billion at a price of about $33 to $34. So we'll continue to be repurchasers of our shares, but we'll moderate that depending upon market conditions. And then, of course, funding what Bill described, which is our interactive ambitions, which will be predominantly through M&A but we're reserving a significant amount of capital for those activities as well.

Bill Hornbuckle:

It's a combination thereof. When you talk studio business or even live dealer, the technology aspect of that is on our scale, relatively de minimis. When you talk about stepping up to other marketplaces, whether it's South America over time or rest of Europe, we'll have to take a different view on that as these opportunities unfold. But for now, it's more bolt-on and relatively small.

Joseph Greff :

Can you hear me okay now?

Joseph Greff :

All right. Nice speaking with you. In Las Vegas, can you talk about how you're thinking about FTE count and payroll expenses and how they'll trend this year? Maybe you could break it up between both sort of on a same FTE basis as well as just wages. And what kind of revenue growth do you need to offset wage expense growth in Las Vegas? I’ve got another one.

Corey Sanders :

I think from the standpoint of levels of FTEs, from a fixed cost perspective, there will be no increases. It will all be on variable. So if there's additional catering and banquet business, it would match that revenue component of it. But I think we're pretty comfortable that we could service our properties, service our guests at the levels we're at today. And then I don't know, Jonathan, if you want to take the revenue.

Bill Hornbuckle:

I mean, overall, I think we think our margins are going to sustain is really the guide, I think the answer to that.

Bill Hornbuckle:

Yes, I can put a little color around it, and then we have Hubert on the line, these guys have worked hard at this for three years. So I'll let him talk a little bit about the business. But look, the rebound was, interestingly come January 8, fairly instant. I think we peaked during Chinese New Year, making a little over 5 million a day. I mentioned in my prepared comments, 16% share. And for us, for all the reasons I mentioned, our mass piece, volumes were 100% over our '19 levels. Now we're talking about a whopping 30 days here. But for the company, particularly from where we have come from, we activated 150 to 200 new tables we have. We're very excited about what's happened in the first 30 days. And so Hubert, maybe any other color would be helpful.

Operator:

The next question will be from David Katz from Jefferies.

Hubert Wang :

Yes. I think that in terms of margins, I think that we expect in this year and beyond, probably we'll at the high end of -- in the 20s, but in the higher side of the 20s. And in terms of junket to direct, certainly, there are some conversion in that space, but it's really too early to give you any concrete numbers. But from the strength we have observed in January and Chinese New Year in our direct business, I think that we're still very confident in the growth of the direct business and particularly given the wide network of MGM Resorts in terms of global reach of high-end customers.

Corey Sanders :

Yes, this is Corey. Yes, I think it's sustainable. As we look at the event calendars on weekends and our forward-looking pacing and what we're booking rates at now, we have pretty good visibility further out. On the midweek, we see our -- not only our convention business getting better, but the whole city's convention business getting better. So the pricing that we're seeing today, we should be able to sustain, given where the economy is today.

Carlo Santarelli :

Just looking at some of the disclosure in Las Vegas and trying to decipher what is kind of the delta between gaming revenue and your net casino revenue has widened in the last few quarters. I'm assuming that is kind of all mix related with Cosmo coming online? And is that kind of a range, that delta, that pretty much will hold firm moving forward?

Carlo Santarelli :

Great. And then, Corey, just on that, on the topic of convention mix, you made a comment earlier, I believe that the bookings that were done, were done at double digits. If you look at kind of the entirety of the group business on the books or the targeted group business on the books from a pricing perspective, how does that look year-over-year or relative to 2019, however, you guys kind of want to think about it?

Carlo Santarelli :

Okay. And do you believe, like when you think about it overall, just that taking the pricing aside, thinking about the visibility that it provides you do you believe as you look through 2023, all things equal economically and from a macro perspective that there should be pricing power year-over-year on a same-store basis?

Bill Hornbuckle:

And remember, Carlo, one thing we have strategically decided to do is push more business out of weekends and back into midweek. And so that has an overall play in ADR. Obviously, it brings down the convention ADR, but it raises the overall company's ADR because it gives us more opportunity we where we see, frankly, and continue to see real upside, particularly in the luxury segment, across Cosmo, MGM, Mandalay, Aria, Bellagio.

Stephen Grambling :

Maybe turning to Japan, that was another one that you referenced is still out there. You're waiting on some approval but still looking for a return that's above it sounds like your free cash flow yield. Wondering if you could just elaborate on any of your updated expectations for that market and anything that's either evolved from the terms of the transaction, even the timing of when construction could start and when the proper to be coming out of the ground..

Stephen Grambling :

That's helpful. And maybe a follow-up on BetMGM, just to make sure I understand you correctly. I guess, are you anticipating far out, but any additional capital being put into that JV beyond this year, given the targets for kind of profitability or standalone at this point?

Operator:

Next question is from Chad Beynon from Macquarie.

Bill Hornbuckle:

I think Corey you're best...

Chad Beynon :

And then can you just talk a little bit more about the omnichannel opportunities with driving your players from BetMGM back to Las Vegas, given it's probably one of the more important years of your players wanting to come out and see some of the events, kind of where that stands now and how that should progress in '23?

Operator:

The next question is from Robin Farley from UBS.

Jonathan Halkyard :

No. We've seen same-store handle and drop and win growing modestly in Las Vegas. Although there's no question, the majority of the growth that we've seen in this quarter on a same-store basis, it's been on the hotel side. So the gaming customer is healthy here in Las Vegas, the -- it is driven mostly by our higher-value gaming customers, but it's very healthy on a same-store basis.

Jonathan Halkyard :

No, we're -- what I'm talking about our slot handle and table game drop and and slot win and table game win increasing.

Jonathan Halkyard :

Yes, some of that will be on a net basis after accounting for the cost of hotel rooms that are comped against those players. And so that is having an impact on what we're describing is that gaming revenue. But in terms of the way I consider the health of the gaming customer is to look at the volume metrics and the gross gaming revenue, which are growing on a same-store basis. Does that make sense, Robin? That's kind of when I think about what the behavior of these customers actually is, it's on the gross basis.

Jonathan Halkyard :

Yes, it's not. It was really an administrative issue. It was burdensome. It was complex. And that measured against the size of the of the dividend itself, which was de minimis and just how much capital we've returned, and we expect to continue to return through the form of share repurchases. We just felt that it was a practice that we did not need to continue. That doesn't mean that we wouldn't reconsider it or our Board wouldn't reconsider it at some point, and in so doing, would make it a more substantial dividend than a de minimis dividend, but it was mostly an administrative solve.

John DeCree :

Maybe just, Jonathan, a quick follow-up on Robin's question regarding casino revenues. So just to clarify, with the higher ADR now essentially the dollar amount that you need to net against casino revenue is what's causing that kind of accounting decline?

John DeCree :

Okay. Understood. Thank you for that additional clarity. Maybe just for a follow-up question. Bigger picture, I think it was pretty clear as to where you target growth investments, digital international, but the last 24 months or so, you've moved a lot of chairs and upgraded the asset base in Las Vegas and opportunistically, I think, divested Gold Strike. Curious if you could give us some comments on how you feel about the domestic portfolio today, both regionally and in Las Vegas? And if there's potential opportunities you'd consider, more on the M&A side? And we kind of know plans in New York and if other big markets were to open. But on the M&A front, either buy or sell, anything that you'd think about doing or might make sense.

John DeCree :

Fair enough. Fair enough. Just engaging the strategy. Appreciate it, Bill.

Barry Jonas :

Guys, given the strong strip outlook for '23, is the high end of that 400 basis point to 600 basis point margin expansion, the right place to think about how the year could shake out? Or could you still go higher? And then just with that, can you remind me what the starting point is here? Is it the reported pre-COVID 2019 number or based on sort of a pro forma portfolio?

Barry Jonas :

Great. Great. And then just a follow-up. I think iGaming, we're hearing that the industry is taking more of a push. I'm curious how you think about the impact that iGaming is having on land-based gaming. Not sure if you're able to quantify what you've seen more recently and say, Michigan, but you could -- can you help us understand some of the puts and takes with what would seem to be some cannibalization threat?

Operator:

The next question is Steve Wieczynski from Stifel.

Bill Hornbuckle:

So let me take the top end of that and Corey, you can speak to the margins. We have several different kinds of regional properties. And so Maryland this year had an all-time record and then some. It was fantastic. We always dream at that property making over $300 million, and it did. And I know I'm getting dirty looks some of my folks, but -- and it did. Atlantic City, given all of the competitive set and the reawakening of Hard Rock and what happened with Oceans, it's a highly competitive market, and we're holding our own and that property continues to do the same kind of EBITDA. It's done traditionally no matter where the marketplace has been. It's kind of interesting. Detroit, as I just mentioned, continues to do well. We saw a little softening with Empire as it came out of COVID. Springfield has enhanced and been improving. Look, obviously, it will be the place that I think any major recession activity shows. But I will say, to date, particularly up until and through January, we haven't seen it. So Corey...

Steven Wieczynski :

Got you. Good to hear. And then second question real quick, and it's more of a follow-up here. But going back to Macau, it sounds like, Bill, I think you said -- or Hubert said this, you were doing about 5 million a day during Chinese New Year. And again, I'm not sure if this was you, Bill or Hubert, but did I hear you say that even after Chinese New Year, which, look, I know it's only, let's call it, 7 days or so, but you're still somewhere in that ballpark?

Steven Wieczynski :

Okay. Yes, I was just making sure I was not going to...

Steven Wieczynski :

It's already done. Thanks, guys.

Daniel Politzer :

So first question, just on Macau. It's a two-part question. The 16% share you guys called out, to what extent do you think that's sustainable? And if you can maybe parse that out, how much of that step-up has been driven from growth in mass or premium mass or direct VIP versus pre-COVID. And then that quarter-to-date comment about the MGM China properties, the highest earning business in the company. I mean should I -- if I kind of go back and piece together some math, should I interpret that that they're pacing well over $100 million of EBITDA for the first quarter?

Hubert Wang :

Yes, Dan, in terms of the market share question you asked, it's too early, but to give you a definitive answer or whether it's sustainable or not, but they are the things that ahead of us because as you know, we have additional tables, almost 200 additional tables. And we haven't fully deployed all these tables yet. We're in the process of doing that, along with some casino floor reconfiguration. So we plan to deploy all these tables by the end of first quarter. And I think that, that's number one. Number 2 is that in the retendering commitment in terms of investment, we also have a lot of, I think, earning accretive projects. And I think that these offerings that will drive additional traffic. I mean just to give you some color on the nongaming side for Chinese New Year, I mean, our own occupancy approached 100% and our restaurant covers actually exceeded 2019 Chinese New Year level. And a lot of that was because of all the nongaming events and concerts that do a lot of incremental visitors to us. And we're also seeing a longer stay by our hotel customers. I think that as we invest more in these nongaming amenities, well, that will help with our market share growth down the road or sustain at that level.

Jonathan Halkyard :

I don't want to give a quarterly pace. I do think you can look at our pace over the preceding four quarters. I think we actually did a bit more in the fourth quarter than we did in the third quarter. And so all I would say is that we have a healthy authorization from our Board. I hope I was able to communicate during the prepared remarks, the value we see in the shares. And despite all of the opportunities we have before us, the liquidity position the company has is going to allow us to continue to be an active share repurchaser. Beyond that, Dan, I just don't want to give any more specific outlook.

Jordan Bender :

Can you just talk about the contribution from Far East play during the quarter in Las Vegas? And then what do bookings look like from Far East play for this point -- or for this year at this point?

Jordan Bender :

Fourth quarter and then, I guess, quarter-to-date as well.

Jonathan Halkyard :

And the Far East play during the fourth quarter, it was up about at least 1/3 over the fourth quarter of 2021 and constituted pretty much all of the growth in our international play during the fourth quarter. So very encouraging.

Bill Hornbuckle :

Thank you, operator. I just want to thank everyone for joining us today. I know it gets late back on the East Coast. Just a couple of thoughts. Obviously, we continue to show organic growth here in Las Vegas, particularly in our premium product, our luxury brands. If you think about Aria and Bellagio last year that made over $1.2 billion in cash flow, and we see hopefully that sustaining. You think about now Macau and the returning and I think our 200 extra tables will make a difference throughout the course of this year. You think about our development pipeline. You think about both brick-and-mortar digital. I would say, without any disparaging comments to our competitors, that we think about the balance of regional location, domestic location, Las Vegas, international, digital, we are the most well balanced and prepared for growth. We have no net debt. We have -- we're sitting at about $5.3 billion of cash liquidity. And since Jonathan and I have joined the senior roles, the company has bought back over 25% of its shares, and all of it on the back of an amazing team that we've put together here that's got extensive experience over many decades in many different jurisdictions. And so to say I'm excited by our future would be an understatement. I thank you all for your attention and most importantly, your support. So thank you.

Operator:

Good afternoon and welcome to the MGM Resorts International Third Quarter 2022 Earnings Conference Call. Joining the call from the company today are Bill Hornbuckle, Chief Executive Officer and President; Corey Sanders, Chief Operating Officer; Jonathan Halkyard, Chief Financial Officer and Treasurer; Hubert Wang, President and Chief Operating Officer of MGM China; and Andrew Chapman, Director of Investor Relations. Participants are in a listen-only mode. After the company's remarks, there will be a question-and-answer session. [Operator Instructions] Please note, this conference is being recorded. Now, I would like to turn the call over to Andrew Chapman.

William Hornbuckle:

Thank you, Andrew, and thank you all for joining us this afternoon. I'm pleased to report another phenomenal quarter of financial results driven by our domestic business, with the Las Vegas Strip setting a new record for revenues and adjusted property EBITDAR. These results come on the heels of a record-setting quarter in Las Vegas -- our second quarter in Las Vegas and our regions. Also, the Cosmopolitan Las Vegas had one of its best quarters in its first fourth quarter of operation under MGM Resorts leadership and continues to outperform our initial expectations. We continue to see further opportunity with the Cosmopolitan as we look to integrate our reward system and improve physical connection to our sister properties. Net-net, 2022 is shaping up to be a record year for many resorts, and we believe that fundamental change in people's perception of travel and the value that brings to their lives in Las Vegas and MGM Resorts is benefiting this emerging theme. I want to thank our employees again for the tremendous efforts they put forward to achieve these outstanding results. We know that our guests are experiencing greater satisfaction in their stays, as measured by our internal Net Promoter Scores, which continue to exceed our projections, as well as our TripAdvisor rankings, which have improved significantly across our portfolio in the last year. Put all together and MGM continues to make great progress towards our long-term vision, which is to be the world's premier gaming and entertainment company. We've achieved this vision by remain laser-focused on that strategic plan. Let me hit some of the highlights of the quarter and then Jonathan will dig into the results in more detail. First off, I'm pleased to share that we've completed our acquisition of LeoVegas in September. This important acquisition represents the first step of an aggressive expansion in international and online gaming for MGM. I'd like to again welcome Gustaf Hagman, and the team. And we also recently announced the addition of Gary Fritz as our President of Interactive. Gary will lead our broader digital strategy, both here and the U.S. internationally, of which LeoVegas is a significant part. Staying with digital for a moment, we remain bullish on BetMGM, which continues to build on success every quarter. In the third quarter, BetMGM launched in Kansas, representing its 24th market to date, and the eighth new market we have added since November of last year. Looking forward, we'll add Massachusetts, Ohio and Maryland to our online sports betting portfolio. But MGM remains the clear leader in iGaming with a 29% market share. And BetMGM commands 22% share in active markets from combining U.S. sports, betting and iGaming. As we hit the halfway point of the NFL season, we're encouraged by the preliminary metrics, reinvestment has remained within our expectations and markets appear to be acting more rationally. As BetMGM shared in May at its Investor Day, our strategy is to focus on profitability by allocating spend to geographies with the highest ROI and targeting bonusing. We believe this is being executed exceptionally well. Our investment in BetMGM and LeoVegas will allow us to continue to drive our omnichannel strategy, a key competitive advantage that over time allows us to generate incremental earnings between a brick-and-mortar and our online channels. Early results of this strategy have been positive with a strong acquisition story as well as the creation of brand stickiness. Of the players that play in both channels, we've seen a younger customer in fact almost 90% of the BetMGM omnichannel customers who visit Vegas are younger than 50 and over 50% are under the age of 35. Overall, customers who play online at our properties have increased engagement and our lower cost per acquisition, which reflects the operating leverage we can and will drive into the future. Now I'd like to talk about the integrated resorts development opportunities we have. At New York State pointed the majority of the Gaming Facility Location Board members in October, and we anticipate the State to issue the casinos RFA by early January. We're developing a compelling proposal and we look forward to submitting it in the coming months. Beyond the United States, MGM and our development partner, Orix, along with the City of Osaka, submitted our area development plan to the Government of Japan in April. We are optimistic that we receive certification in the near future. I recently visited our development site, and we and the Orix team couldn't be more excited by the opportunity to bring a fully integrated resort to Japan. Turning to Macau. We officially submitted our application for new concession in September, and we remain committed to supporting Macau's continued development as a world-class tourism and leisure destination. We aim to support the Macau government in achieving its diversification goals, and will continue to invest in the innovative projects and programs that help the region flourish. Macau government is in the process of reviewing each of the concessioners proposals, and we expect good decisions to be made by year-end. Let me close by making some high level comments on the current state of business and our future outlook. Business is exceptionally strong right now in Las Vegas at MGM Resorts and we see the market remaining exceptionally hot. In particular, we are seeing outsized strength in our luxury resorts where pricing remains robust. In fact, October was our highest month ever in terms of hotel revenue. As we look at the convention segment, which has the longest lead time and gives us visibility into the future, our convention room mix is pacing at our goal of 19% with increased ADRs year-over-year. Our outlook continues to be positive and we're flexing our operations to take full advantage of the demand we're experiencing in the marketplace. Programming also remains an exceptional story, which further solidifies Las Vegas as the nation's top sports destination. We will host the men's NCAA West Regional for Suite 16 and Elite 8 rounds at T-Mobile in March. And Formula One, as you know, has selected the weekend of November 16 next year. So it's the first ever Las Vegas race on the strip. That weekend happens to be one of the slowest historic weekends of the year for us ahead of Thanksgiving. We'll open our hotel calendar tomorrow for those dates, and expect an exceptional demand based on our studies of other host cities. We believe the prime positioning of our properties allow us to fully capture the benefits of this exciting race. So right now, we have reasons to be optimistic as we look ahead. That said, we're not blind to the overall macroeconomic conditions. We remain keenly aware of the impact of inflation and the concerns of a potential recession. We continue to stay alert and are actively monitoring our business and indications of a slowdown. Our operations teams have become incredibly nimble over the last few years, excuse me, and are prepared to quickly adjust our business to the changing demand trends if they occur. In the meantime, we'll continue to look for opportunities to drive organic growth in our core business to select key capital investments in our properties and through our MGM rewards program. MGM Rewards continues to deliver on our promise to provide more compelling benefits to all of our members. In fact, since we launched a new program, we've seen a greater portion of our direct bookings from MGM Rewards members and an increased tear progression, particularly for our Gold Plus players. With that, I'll turn this over to Jonathan to discuss more details of the quarter, Jonathan?

William Hornbuckle:

Thanks, Jonathan. We believe we've accomplished a great deal year-to-date. I'm optimistic about our path forward. What we are doing is working. Our existing operations continue to grow as evidenced by another record quarter in Las Vegas, with a positive outlook thinking about October and beyond. Our balance sheet is in a position of strength as we have more than 6 billion in domestic liquidity with almost no net debt. But MGM is firing on all cylinders demonstrating tremendous growth and remains on track to achieve profitability during 2023. We also expect further global digital growth with LeoVegas, MGM, China and Macau markets are showing some productive signals. And we believe we're well positioned in respect to licensing renewals. Also, New York and Japan represent future development growth opportunities for our company. I would again like to thank our employees for the continued hard work and commitment to our company. And with that, we'll open this up for questions operator.

Joe Greff:

Good afternoon, everybody. Bill, Jonathan, whoever wants to take this question. I was hoping you could just talk a little bit more about where you do have visibility into next year, the group and convention business in Las Vegas. What percentage of your anticipated room nights are on the books right now? And at what price is that relative to this year or if you want to look at it in relation to 2019?

Corey Sanders:

Yes, yes. We usually are about 80% on the books right now. I think we feel pretty good on where we are. In addition to that, we also are looking at where we place convention. So in the past, we had a lot of convention room nights on weekends. So we strategically think we could do better cash flow by not placing some of that business on weeknights. So you'll probably see our mix come down a little because of that also.

William Hornbuckle:

Joe, you said New York, correct?

William Hornbuckle:

Yes, yes. So hopefully, we hear something -- obviously, we get this RFA request. They have a 90-day window to issue it, which means by January 1. There's some debate over if they can issue all three licenses at once or if they will issue all three at once or they'll go independent of that. But we're hoping for '23 in terms of being awarded a license. If you factor in the licensing fee and the initial expansion, we're looking at about a $2 billion to $2.2 billion investment, which given -- let's just say, it takes till the end of ’23, so probably the spend on that is going to be between ’24 and ‘25.

Operator:

Our next question will come from Carlo Santarelli with Deutsche Bank. Please go ahead.

Jonathan Halkyard:

I'll just - I'll make a couple of comments and then certainly invite Corey to comment as well. Casino room mix be in the high 20s to low 30%. It's pretty stable. A lot of our work recently has been around yielding the casino even more effectively, particularly during midweek. The casino business was very strong for us in terms of room nights. A year ago, as I noted in my comments, but that has since that and some of the leisure business has been overtaken profitably by group business. The other thing I mentioned, which is important is our direct bookings through our proprietary channels are up about 11% this quarter versus a year ago. And that's it nearly 3 times the rate of the growth of our overall web bookings. So this is one of the areas in which our MGM Rewards program and the improvements we've made to that as well as other marketing efforts have really helped drive the leisure business even through our proprietary channels.

Carlo Santarelli:

Great. Thank you both. And then if I could just one follow up, Jonathan, I know you've mentioned, the target for regionals was kind of to remain 400 basis points to 600 basis points north of 2019 for that segment. With respect to Vegas and acknowledging a lot of moving parts with Cosmopolitan coming in, City Center being consolidated, Circus Circus going out, if we're going back to 2019, and then obviously, Mirage going out later this year. On an apples-to-apples basis relative to 2019, you guys have a similar kind of target range in mind.

Carlo Santarelli:

Okay, is it safe to say it's kind of 400 to 600 operational plus the big influence of those kinds of four assets coming in and out?

Carlo Santarelli:

Okay. That’s helpful. Great. Thank you very much.

Operator:

Our next question will come from Shaun Kelley with Bank of America. Please go ahead.

Jonathan Halkyard:

Yes. I -- the margin performance is, of course, a number of dynamics going into it, but one of the most important has been our ability to yield on the room demand here. And we've seen it not only in our luxury properties, but also more recently in our other properties here in Las Vegas. So I would say the main contributor to it has been the strength in the hotel yielding. We have grown our labor in both the regional markets and in Las Vegas in the past quarter and we've done that intentionally. It's been reflected in our NPS scores and what our customers are telling us about their experience here. But it's also had some impact on margin, one that we intended and hopefully, we've signaled pretty clearly in the past. And that's really important because it is all about growing long-term market share for profitable market share for our businesses here in Las Vegas. And we think that that those customer service scores and the retention associated with those customers are going to help us get there.

William Hornbuckle:

And Shaun, maybe final, just some color. It was kind of interesting to me last night. Elton John was here on a Tuesday night, he put 50,000 plus in Allegiant Stadium the south end of the strip is absolutely benefiting. We thought Allegiant could do like 40 events. I think it's going to do that in more. And if you think about the nature of people saying, that's like 100 days a year that people have visitation to Las Vegas driving a huge activity case, particularly at the south end of the strip which is obviously core to that neighborhood. And so we're pretty excited by it. We think it underlines a foundation that just puts us at a different place than we've ever been historically. So that's one of the reasons I think we've seen this ADR growth has been amazingly substantiated throughout the company. This particular month in October, Excalibur Luxer had great months.

Operator:

Our next question will come from David Katz with Jefferies. Please go ahead.