Q3 2022 MGM Resorts International Earnings Call
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 Hawk yard 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 listen only mode. After the company's remarks, there will be a question and answer session to ask a question you May Press Star then one on a touchtone phone to withdraw your question. Please press Star then two.
In fairness to all participants please limit yourself to one question and one follow up.
Please note. This conference is being recorded now I would like to turn the call over to Andrew Chapman.
Good afternoon, and welcome to the MGM resorts International third quarter 2022 earnings call.
This call is being broadcast live on the Internet at investors that MGM resorts Dot Com. We've also furnished our press release on form 8-K to the SEC.
On this call we will make forward looking statements under the safe Harbor provisions of the federal Securities laws.
Actual results may differ materially from those contemplated in these statements.
Additional information concerning factors that could cause actual results to differ from these forward looking statements is contained in today's press release and in our periodic filings with the SEC.
Sept as required by law, we undertake no obligation to update these statements as a result of new information or otherwise.
During the call. We will also discuss non-GAAP financial measures in talking about our performance you can find the reconciliation to GAAP financial measures in our press release and Investor presentation, which are available on our website.
Finally, this presentation is being recorded I will now turn it over to Bill 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 in Las Vegas had one of its best quarters in its first full quarter of operation under MGM resorts leadership. It continues to outperform our initial expectations were.
Continue to see further opportunity with the cosmopolitan as we look to integrate a reward system and improve physical our physical connection to our sister properties.
Net 2022 is shaping up to be a record year for many of the resorts and we believe a fundamental change in people's perception of travel and the value that it brings to their lives in Las Vegas, and MGM resorts is benefiting this emerging theme.
I want to thank our employees again for their tremendous efforts they put forward to achieve these outstanding results.
We know that our guests are experiencing greater satisfaction and 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 it 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 remaining laser focused on that strategic plan.
We 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 Leo Vegas in September . This important acquisition represents the first step of an aggressive expansion in the international and online gaming for M. G. M. I'd like to again welcome Gustaf Hackmann and team and we're also recently announced the addition of Gary Fritts as our president.
Or active great will lead our broader digital strategy. Both here in the U S and internationally, which Leo Vegas is a significant part.
Staying with digital for a moment, we remain bullish on that M. G M, which continues to build on success every quarter in the third quarter bet MGM 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 will add, Massachusetts, Ohio, and Maryland towards online.
Sports betting portfolio.
I am Jim remains the clear leader in I gaming with a 29% market share and bet MGM commands, 22% share in active markets when combining U S sports betting and I gaming and so we hit the halfway point of the NFL season, we are encouraged by the preliminary metrics reinvestment has remained within our expectations and market appear to be at.
Acting more rationally that's been MTM shared in May at its Investor day, our strategy is to focus on profitability by allocating spend the geographies with the highest ROI and targeting bonuses. We believe this is being executed exceptionally well.
Our investment in bedroom G M and Leo Vegas will allow us to continue to drive our Omnichannel strategy a key competitive advantage. There over time allows us to generate incremental earnings between our 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 bet MGM Omnichannel customers, who visit Vegas are younger than 50 and over 50% are under the age of 35 overall.
Gross you play online at our properties 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 resort development opportunities. So we have a 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 are developing a compelling proposal and we look forward to submitting it in the coming months beyond the United States MGM in order.
Belmont partner Orix, along with the city of Osaka submitted our area development plan to the government of Japan in April we were optimistic that we receive certification in the near future I recently visited our development site and we and the oryx team couldn't be more excited by the opportunity to bring it fully integrated resort to Japan.
Turning to Macau, we officially submit our application for new concession in September and we remain committed to supporting the couch continued development as a world class tourism and leisure destination, we aimed to support the Macau government in achieving its diversification goals and will continue to invest in innovative projects and programs that help the region Fleur.
Krish the Macau government is in the process of reviewing each of the Concessionaires proposals and we expect a decision 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 strengthen our luxury resorts where pricing remains robust in fact October was our highest months ever in terms of hotel revenue as you look at the convention segment, which has the longest lead time it gives us visibility into the future. Our convention room mix is pacing at our goal of 19% with increased ADR year over.
For 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 with further which further solidifies Las Vegas as the nations top sports destination, we will host the mens N C double a west regional for suite 16, and the elite eight rounds at T mobile in March and Formula One as you know has selected the weekend of November 16th next year. So it was the first ever Las Vegas race.
On the strip that we can 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 states and expect an exceptional demand based on our studies of other host cities. We believe the prime positioning of our properties will 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 and 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 through select key capital investments in our properties and to our MGM rewards program Amgen rewards continues to deliver on our promise to provide more compelling benefits to all of our members.
Fact, since we launched the new program, we've seen a greater portion of our direct bookings from Amgen rewards members and an increase tier progression, particularly for gold plus players with that I'll turn this over to Jonathan discuss more details of the quarter. John Thanks, very much Bill Let me start my remarks by also welcoming Gustaf M. The over 900 Leo Vegas employees.
To MGM resorts no doubt the future of Leo Vegas is bright and I'm confident this enterprise will serve as a meaningful contributor of talent and earnings to our company.
I'd also like to Echo Bill's comments and thank all of our employees for the second straight quarter of record results. Our people are the best in the business and they demonstrate that every day with the care. They show for our guests now, let's discuss our third quarter results in some detail.
Our consolidated third quarter net revenues were $3 $4 billion, an increase of 26% compared to 2021, despite the 70% revenue decline at MGM, China due to closures and other COVID-19 related limitations.
On the Las Vegas strip topline demand was strong with same store net revenues, increasing 18% and same store adjusted property EBITDAR up 8%.
Occupancy was a major driver of the improvement year over year, reaching 93% for the quarter. The highest it's been since the start of the pandemic and improvement and an improvement of over 1000 basis points year over year. The key driver of the occupancy gain is midweek demand, which is returning to more normal levels as conventions in <unk>.
Group's return the value proposition of our group business supports our pricing power in Las Vegas, ADR hit a record $227 in the third quarter, an increase of 26% year over year.
We continuously work to optimize the hotel mix in our business over the past two years, we've increased the effectiveness of our casino marketing and loyalty programs to drive the casino in direct high rate transient business mix up by several percentage points each.
This has helped offset the decrease in convention mix mix that we experienced in 2020 in 2021 now as our convention mix returns were generally displacing less profitable, but still important leisure business. This convention business comes at a higher average rate typically between 30 to $40 higher and brings with it.
Higher margin catering spend.
Our third quarter regional net revenues grew 5%, while adjusted property EBITDAR declined 8% during the quarter, our highest daily worst Casino segment remained our best performing with the greatest increase in both rate and days and theoretical win.
Our casino customers age 65, and above grew again this quarter as compared to last year and 2019, but it still hasn't reached the visitation frequency pre pandemic.
Our local and cross property efforts will continue to address these important segments to drive further growth.
Adjusted property EBITDAR margins were 33% a decrease of approximately 450 basis points compared to the third quarter last year. This margin result is consistent with our prior commentary and as the market stabilized we expect to maintain 400 to 600 basis points of margin improvement versus 2019.
We've increased our employee head count by a low double digits during 2021 we faced a difficult hiring environment and had a number of outlet closures, but.
But we're now fully staffed fully open and have returned to the service levels for which we are known.
In Macao adjusted property EBITDAR was a loss of $70 million in the third quarter of 2022 due to property closures and COVID-19 related policies, eliminating visitation to the market.
As we look to reach profitability during 2023.
Our third quarter corporate expense, including share based compensation was $117 million, which included $9 million of transaction costs related mostly to Leo Vegas.
We do expect corporate expense to remain elevated in the fourth quarter due mostly to transaction costs related to the Mirage sale.
Strategically investing our corporate resources and growth areas, including improvements to our infrastructure enhanced digital offerings and our IR development efforts in Japan, and New York.
And finally R capital allocation priorities are as follows first will maintain a strong balance sheet with adequate quizlet liquidity second will invest where we have clear advantages exercising prudent and measuring prospective returns for our shareholders and finally, we will return cash to our shareholders. These <unk>.
<unk> are manifest in our major allocation decisions this year.
We bolstered our liquidity through the closing of the Vg transaction and the announced sales of the Mirage and Goldstrike, we acquired the cosmopolitan of Las Vegas, with strengthen our portfolio or making strategic capital deployments into improving our existing product with room remodels across three of our major properties and and announced re.
Fresh of the Mandalay Bay Convention center to shore up our longterm group market share.
We returned cash to our shareholders through share repurchases during the third quarter, we repurchased 10 million shares for $307 million from the beginning of 2021 through yesterday, we've repurchased 115 million shares for $4.4 billion or 32% of our market cap does.
This activity brings our share countdown to 384 million shares.
Last quarter I made the case for the attractive valuation of our shares and I feel even more strongly now with market, leading domestic operations driving record results.
Leases limited to two or three per cent escalation for the next 10 years embedded cash flow growth in bed, MGM and MGM, China and about $11 per share in cash I think our stock trades it pretty attractive levels. We plan to continue to buy back stock through our authorized program and moving forward.
We will also continue to invest our capital and growth projects, such as New York, and Japan, as well as strategic M&A with that fell back to Ya function.
We believe we have accomplished a great deal year to date I'm optimistic about our path forward.
What we're doing is working our existing operations continue to grow as evidenced by another record court 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 Leo Vegas, MGM, China in Macau Margaret are shown.
Some productive signals and we believe we're well positioned to respect to licensing renewals also New York in Japan represent future development growth opportunities for a 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.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone, if you're using a speaker phone. Please pick up your handset before pressing the keys.
Anytime you question, that's been addressed and you would like to withdraw your question. Please press Star then too.
As a reminder, in all fairness, please limit yourself to one question and one follow up.
And our first question will come from Joe graph with J P. Morgan.
Go ahead.
Good afternoon everybody.
At.
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.
Sure, let me kick it off and I'll, probably turn it over to both my colleagues here.
So we're targeting as I mentioned in my comments, 19% market mix a couple of things we've been as high as 2021.
We've got about 100000 room nights offline, we're doing a Mandalay Bay complete remodel, which is undertaken in underway and it's been highly well received we were able to preview. It recently through IMAX. We've taken 100000 room nights off of weekends, given the strength with weekends were very positive on our ability to drive higher rated business.
Particularly through leisure and casino ultimately.
Adr's in the mid single digits.
An inquiry if you want to talk to you think a little bit.
Mm per cent yeah, yeah, 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. Some 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 mixed come down a little because of that also.
Great. Thank you and then with respect and Yorkies remind us.
The scope of the all in investment the timing of the spend an anticipated.
Timeline.
To complete once you start once you get approval.
New York correct.
Yeah Yeah.
So hopefully we hear something obviously, we get this RFA request they have a 90 day window to issue it which means by January one.
There is some debate over if they can issue all three licences at once or if they will issue all three at once or they will 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 $2 billion to $2.2 billion investment.
Which given let's just say it takes to the end of twenty-three would probably have to spend on that is gonna between 24 and 25.
Alright, thank you.
Our next question will come from Carlo Santa Rally with Deutsche Bank. Please go ahead.
Hey, everyone. Good afternoon Mmm, Jonathan you provided a lot of color on on kind of a mix and you guys just to hit on that the group pace for next year, but.
What was <unk>, how do you think about kind of a target.
You know what his casino running at this year as a percentage of room nights and and what is kind of the target next year within the 19% group and obviously trying to pull out of F. I T. Some of the the the opioid channels things like that.
Okay.
I'll make a couple of comments and certainly in by Cory to comment as well casino room mix B in the high twenties 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 in some of the leisure business has been overtaken.
Overtaken profitably by group business. The other thing I mentioned, which is important as our our direct bookings through are are proprietary channels are up about 11% this quarter versus a year ago and that's at nearly three times the rate of the growth of.
Overall web bookings. So this is one of the areas in which are 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 through our proprietary channels.
John I agree I mean, we've got a we've got a casino room nights about what do we want them, making sure that we have the most profitable customers on the weekend there.
<unk>. This group business comes back to shift it really add the package business, our lowest rated business.
Great. Thank you both of them that if I could just one follow up at Duncan mentioned.
The target for regional was kind of to remain four to 600 basis points North of 2019 for that segment with respect to Vegas and acknowledged well a lot of moving parts with with cosmopolitan coming in the city centre be consolidated a circus circus going out if we're going back to 2019 and then obviously.
Mirage going out later this year.
An apples to apples basis relative to 19, you guys have a similar kind of target range in mind.
Actually think we can do better than that in Las Vegas.
In part for a number of the the reasons you mentioned, which is of course some of the changes we've made to the portfolio here or will have prospectively with the sale of the Mirage, but but also just an increasing effectiveness and and driving demand and yielding.
I I'd feel comfortable that the margins will stabilise at at increments higher than that that I described for the regional properties.
Okay is it takes a whole kind of 400 600 operational plus.
Influence of those kind of for assets coming to in N out.
At a minimum I would say, yes, okay adamant about helpful. Great. Thank you very much.
Okay.
Our next question will come from Sean Kelly with Bank of America. Please go ahead.
Hi, good afternoon, everyone.
Just wanted to ask a little bit about Nixon margins significantly maybe sticking with Las Vegas for a moment.
Yeah. It looks like continued pretty strong sequential growth on the casino side and Jonathan I know this has been an area, where you've probably been expecting things to be at.
At some point, maybe settled back into more normal behaviors, but it just seems like it's really robust. So could you just give us a little bit more color about the dynamics are what you saw on the corner and how you see that trending both sort of market wise and and things you might be doing for market share cause they're getting that does look strong relative to the market.
Yeah 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 and.
In our in our other properties here in Las Vegas, So I would say the main contributor to it has been the.
Has been to strengthen the hotel yielding.
We have grown our labor and 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 longterm market share for profitable market share for our businesses.
Here in Las Vegas and.
And we think that that that that those customer service scores in the retention associated with those customers are gonna help us get there.
Sean would that I would add on the casino site every weekend here is just a major weekend with events between Allegiant the three major showrooms here the arena is.
That demand, we don't really see slowing down and probably.
The piece that still missing, but we're starting to see some of this come back is it far east play we've seen some groups from Hong Kong, we've had intentions from groups from Singapore that wanted to come back so.
Think we're pretty optimistic come what we've seen in the casino front Las Vegas <unk>.
Find out just some color it was kind of interesting to me last night Uhm, Elton John was here on a Tuesday night, He put 50000, plus an allegiance stadium.
The South ended the strip is absolutely benefiting we thought Alicia could do like 40 events I think it's gonna do that anymore 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 into the strip, which lovely courted that.
Neighborhood and so we're pretty excited by we think it it 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.
Particularly months in October Excalibur, Luxor, but at great much.
Thank you very much.
Our next question will come from David Cats with Jeffries. Please go ahead.
Afternoon folks thanks for taking my questions.
In the past I can recall, Jonathan you're giving out some statistics around.
The cross activity between <unk>.
And <unk>.
And Gemma rewards.
<unk>.
Are you able to talk about any of those this time.
It's actually build David I'll take part of that Yeah, we I look at it.
<unk> the idea of Omnichannel is still very strong.
First and foremost Amgen rewards it shifts surpassed $40 million <unk>.
Folks in our database.
We get about 40, the key driver to that has been bad M. G M and so it is supplying close to 40 per cent of our new our customer base.
The inverse of that is we're supplying but MGM with about 15% of its customers.
And then we've seen and I know you've heard some other industry numbers on folks that have come in omnichannel spend.
We've seen that number doubled in the last year between what happened in the third quarter of 21 versus the third quarter of 22 in terms of activity. So there's.
There's nothing to indicate where not extremely positive by that that opportunity and the channel that brings us in the.
Overall nature of it and and Interestingly, we're excited to continue to projected into Leo Vegas, and some of the things we wanted to internationally over time.
So overall, it's working exceptionally well.
Understood and my follow up question, what is going to be about me or Vegas, and if you could just be a bit more specific about what capabilities. It brings you.
That may be transferable or helpful within the United States.
And.
Well to be clear within north within the United States in North America of note, Canada, and Ontario Province to be specific that is the domain of bad M. G M and so that that all of that activity case would remain would that Jamie and that partnership Leo.
Leo Vegas was an opportunity to open up the rest of the world and so while relatively small it's scaled to some it's probably going to about 50 million in cash flow.
We loved the team we love the operating environment and has the system. It has it's got a full slate of gaming opportunities, Sweden is the benchmark about 35 per cent of its business comes from there, but we've kind of sports spreading products. So it's got all of the tools, we look to add onto it with live dealer.
<unk>, we're looking at a studio increment that could be added onto this thing and so we see it as a cornerstone to grow rest of world. We think about places like Brazil, which is add activity and talking more and more about sports betting and hopefully and potentially casino gaming.
We just see that as a leading indicators leading opportunity for us and the vehicle to do that.
Okay. Thank you very much.
Our next question will come from Dan Polzer with Wells Fargo. Please go ahead.
Hey, good afternoon, everyone. John you gave some detail on how you think about valuation for your for your stock and then you can call. It out the $11 per share cash on the balance sheet. How do you think about the question here, giving you have the 4.4 billion cash that billing and 116 am liquidity. What do you think is the norm.
<unk> cash balance that you'd feel comfortable with giving the macro in some of your ranking capex obligations.
Yeah.
Is about 400 million or so that's required.
So-called working capital in our cages et cetera, and we have established as a financial policy that we will have $1.5 billion available to us. In addition to our revolving credit which is approximately $1.5 billion. So that's that's the way we think about it 1.5 would be.
Considered our minimum cash.
Got it and then just as my follow up on Vegas. Some of your competitors are called out Uhm. One also mcwhorter such as utilities was there anything there that you'd call out or that you saw on your side.
No not in the third quarter you know we are.
<unk> are largely bought through the energy cause largely bought through the end of 2023. So we didn't suffer any meaningful increase there in fact, the opposite is that we continue our energy efficiency programs I've had a slight decline in usage, but no. There's really nothing unusual in Vegas in.
And the region's there were a couple of unusual items. There was some some minor hold impacts in the in the third quarter about 60 basis points and we also had some hurricane.
Proceeds in the prior year quarter about 80 basis points most of the rest of it was labour increases when we look quarter over quarter, but we did probably have one and a half points of unusual margin items in the regions in the third quarter.
Got it thank you so much.
Our next question will come from Chad <unk> with Macquarie. Please go ahead.
Hi, good afternoon, Thanks for taking my question.
Bill Jonathan I know you mentioned that.
Firstly, but I'm James coming in better than <unk> better than the 1.3 billion dollar revenue projection and you're still on track on the losses for the year. You did mention that you still expect to achieve profitability and twenty-three at some point, but given that everything's coming in better than expected, California, there's not gonna be a big launch an.
And twenty-three just give them the maturation of the markets, where you're currently offer your product or the reasons why you might not be able to hit that that goal potentially earlier, if if hold as as you know as expected. Thanks.
Like I I chat I wouldn't go so far as to change our projections in our prediction that by this time next year, we should be in a profitable scenario. So I you know I want to stay on point on that you know the new markets. We've indicated we're opening up we think we have real opportunity there we're doing some very interesting.
One and only kinds of things in the gaming market place, where you have integrated jackpots that are omnichannel, they will stretch across our casinos as well as the digital channels and so we've got two or three products coming out that are going to be exclusive and we're excited by I think Illinois gaming is the lion's share of the N G R and this and this.
And this whole universe actually.
And so but no I I don't want to get ahead of ourselves we.
We continue to invest in the business you want I can see it grow we like the positioning we have both for my gaming in particular and ultimately in sports betting and so it'll take some investments point on California's well taken but we're not gonna get up our husbands shelves right now.
Okay. Thanks.
And then with respect to the zero Covid policy and in China, and kind of where things stand right. Now has anything changed in terms of you know your expectation of of when the spigot could or should it turned back on and then if not how should we think about you know the current burn rate and in that market.
Thanks.
I'll, let you chime in here in a moment I would say this because obviously, we all got the message of zero tolerance and it was demonstrated this week in Shanghai and ultimately at our own Cotype property and you can speak to that.
Also the other side of the coin is they've opened up every province, all 31 provinces. Now are are accessible to do <unk>, which is convenient and timely.
So we're encouraged by the signal and really what it means from a cow you know Macau is obviously an essay are but it is obviously considered part of broader China in every way shape or form and so the support I think it's trying to give it.
By doing that I think is meaningful to us and hopefully over time.
Get us to a different place I'm not gonna project when that time is there's just been as we all know so many curves and this road, but I know you, but if you wanted to talk any more sentiment that particularly maybe talk about where you are or the lockdown.
Yeah, Thanks, Bill and I can cancel a question.
The policy that recently moving at the E Visa application I'm also the group.
Group, a visa application for entire nation to Mccall I think that's a definitely a long term policy.
Short term would probably will appeal, it's a graduate ramp up a process and maybe with fluctuations between due to the panic zero Covid policy in place.
So I think that just give you. An example in <unk> recently there have been some cases, so we have seen the measures to border crossing has been hyphen.
And they're all.
<unk> <unk> <unk> <unk> <unk> <unk>, and we had to shut down the operation for three days and we just re opened end up calling him yesterday and will be open today. So I'll need a couple of things you know could happen.
From time to time, if the policy in place, but all all I think over the long run with the policy in terms of your question.
Question on the bottom right. So I think that we're looking at all all all packs off for about.
Wanted to have.
Dollars a day in that range.
Alright, and I can very much. Thank you.
Our next question will come from Robin Farley with you B S. Please go ahead.
Great. Thanks, and I know you talked a little bit about some of the factors with the regional emergency down with labor costs. Some things I'm just curious if you're seeing anything in terms of marketing or promotions and the regional markets. Just given that you mentioned that gaining revenue with pretty much flat in the glass is coming from Nongaming.
If that is starting to you know lead to anything promotional thanks.
Hi, Robyn Inscore I think in general and most of our regions were saying some reasonable Ah Reinvestments Atlantic City, we saw a little bit of a ramp the market said a tough market right now, but in general are reinvestments have stayed pretty consistent.
As we add some of these amenities, which are players have been asking for that that component those comps will go against that gaming revenue, which would.
Given a reason why I'd be flat, but you would see profitability in other departments and the regional there I guess.
Okay. Thank you and.
<unk> I'm curious if you've ever seen.
Anything different in terms of demand and your Vegas resorts in terms of you would have been more premium properties versus the you know the properties that are second more proud market are you are you seeing any.
Different and in demand trends there. Thanks.
Like I I think we've set in our general comments Robyn Uhm.
Although again October for some of our legacy properties was a bit surprising in the context of affirmative.
It was probably do the programming I mentioned earlier, but generally speaking our ability to yield up is tied to luxury it's tied to average rates at places like Arya Cosmopolitan and <unk>, it's tied to find dining it's tied to the entertainment experiences that may be a bruno Mars or something of that ilk and so we just have not seen a slowdown.
In that matter of fact to the contrary and so it doesn't mean you know we're not eyes wide open on what may happen here, but to date and through October the phenom of what's happened in Las Vegas, particularly for higher end properties continues.
And we're pretty excited by all of that.
Okay, great. Thank you very much.
Our next question will come from John Decree with C. B R. E. Please go ahead.
Hi, everyone and thank you for taking my questions.
Maybe one more in Las Vegas about your convention group bookings, maybe a bigger picture question did you look for 220 23, and we've got the the big ones and one Q maybe Cory are you are you seeing.
<unk> bookings part of the big events get get back closer to 2019 levels and when you start to see pacing is it more driven by by more events. I guess you know we have a lot of conversations are those big events going to see similar attendance at 2019 or might they be smaller and then you guys can kind of go over all 10 minutes too.
No very sales to the other department. So curious if you have any visibility on that yet.
Yeah, I I think the answers, yes to all of them actually <unk> the bigger events that are still coming in depending on the type of industry, you'll see attendance reached the levels that they weren't before especially if they're more domestic and international component, maybe not but we're also seen a lot of smaller.
Groups and medium sized groups come in and book also said that the business is definitely dynamic right now from that perspective.
We're seeing a lot of demand for that business, where we're seeing a lot of demand for that business in the year for the year also.
Got it thanks, Corie, Jonathan maybe housekeeping one in the press release, there was a little over 1 billion dollar amortization charge I think related to the sub confession in Macau, maybe talked about this last quarter, but within a couple of questions could you remind us on the accounting of that and.
And what's that for.
Yeah, when when M. G. M went to a majority position in M. G M. China and in 2011, we recorded through the purchase of counting an intangible related to the concession we've been amortizing that intangible.
Two between 2031 and 2038 when the law was released back in June we together with our our outside auditing firm Deloitte, we came to the conclusion that that it's a new concession that will be beginning post December so the.
Listing concession on which the intangible was based we needed to amortize that towards the end of its life or by the end of its life, which is this year. So we took a relatively small amortization charge in the second quarter, and then work taking the remainder and the third and the fourth quarter and so.
That's that's what that is.
Got it understood. Thanks for that clarity thanks, everyone.
Okay.
Our next question will come from Barry Jonas with Truest Securities. Please go ahead.
Great. Thank you just just to follow up on the strip margin and a quarter. There there was a call out and the 10-Q for higher advertising costs are we now in a more normal level. There are cause that line added fluctuate a little bit going forward.
Yeah, well, it's higher than 21 cause 21, we cut back a little bit it's lower than we were spending in 2019.
Got it Okay and then just.
Yeah, it's probably a new normal up where we feel pretty comfortable plus or minus on going forward in the future also.
Okay that that's that's great I, just as a follow up I wanted to ask you about some of the partnerships sponsorships that that M. G. M has made you know wondering if you think some of the lower Roy ideals could roll off over the next few years and maybe help drive profitability for M. G M.
If possible maybe walk us through the set up there.
So bear is is bill the answers, yes, [laughter] you know we go into different markets, we try different things some of them are access deals.
You need a partner in a sponsor to help you get state et cetera.
And get ultimately license and in some cases, even get legislation through in terms of motivating the cause from the from the gecko some of them have been very.
Profitable some other than not as the team knows exactly the C. P. A cost per market and it's allocated certain percentages to what those sponsorships may feel like but there's clearly an opportunity going forward those deals range anywhere from a single year up to five it just depends on market and depends on who and what they are but yeah I think as we.
Get all smarter about this we all build a customer base that begins to plateau at a reasonable level, you'll see everyone get including US most of there'll be more efficient at that.
Great. Thank you so much.
Our next question will come from Stephen Grambling with Morgan Stanley . Please go ahead.
Hey, Thanks in the deck you you did mentioned investing in advance marketing and physical slash digital experience, which is I think associated with the loyalty program as you ramped up to around I think you said 44 million members and continue to invest in engagement. How are you thinking about monetization opportunities or partnerships to fund reinvestment or even make the loyalty program a profit.
Center.
Look what we have.
We have several different opportunities, whether it's uhm around our existing partnership with height and expanding it. We just actually did something with that M. G M with carnival that we'd like to bring into the MGM rewards over time as well and so there. There are we obviously have a deal at <unk> at the.
Cosmopolitan Las Vegas, and so we'll continue to push on that and obviously, we have something now to trade at 44 million members that are active there's there's a real opportunity to go back and forth on that as we've opened up a member of the whole essence behind MGM rewards versus M. Life was we've opened up for rewarding all spend not just gaming spent.
And so it's introduced a different set of customers to us. It's introduced a higher end retail customer I think that gets expanded by things like F. One and some other things that are coming to town.
And so we've got a whole team structured and focused on doing exactly that.
And will begin we're gonna hit our first full year here coming up will begin to give you some metrics you're going forward about where we've been and where we're at but some of the initial indicators are pretty affront my very affirmative actually so.
General thinking.
Sounds good that's helpful. Thanks, one one other unrelated follow up the market in Canada on the online side of it it will take at this point I guess, what are you seeing in that market for about MGM in terms of how it's ramping versus the U S and how it might've all from here.
Surprisingly well and why I say that is you know obviously that's been a market. It's been a cool gray market in Ontario, a note for a decade or so it might be more and our ability. They don't actually publish per share. So we cannot have exact things, but I know what we're doing we've done exceptionally well I think part of it is R.
Ontario, Slash Detroit database, and we've had exposure to those customers for 20 years and so we have taken real sure and if we're not leading word damn close in the context of <unk> gaming of note and we have a real position in place with sports betting you know, we're fortunate enough to get Wayne Gretzky onboard early and he's you know he's just iconic.
And so we feel really good about what's happened there and surprisingly, so which gives us a great deal of confidence in a highly competitive market before we entered.
The great one thank you.
Okay.
Our last question will come from been shaken with credit Suisse. Please go ahead.
Hey, How's it going I'm, sorry, if I missed it just taking another swing at Vegas margins revenue and EBITDA improved kind of regardless of how you got it with this in mind, if we think about the sequential margin compression in Vegas to peer to three Q. How much of this is a mixed dynamic so adding a lower margin revenues as you call it out and how much of this is.
Sequential margin compression on the existing business from head Count for example, which will also called out that didn't make sense I can tried separately.
No. That's all right. It's this is Jonathan it is mostly having to do with mix and do a minor extend some addition of labor.
Uhm, it's almost impossible to to overstate how.
Much I know your question was around sequential but you're over ear and sequential just the volume of.
Of activity is increased here and that's required some additional labor resources. We've also opened some final outlets that had been closed over the past the past year or two so it's really both of those dynamics, which of which have caused that.
Gotcha, and then just squeeze one more and there seems to be I think you've highlighted a few times, but there seems to be a disconnect in your evaluation and you've got the least liability on the balance sheet and then you've got kinda EBITDAR multiple discount with this in mind I guess, just kind of like high level is the opco structure. You think it's still the most desirable strategy or would you ever consider a pivot for NASA.
Structure, if that's an appropriate way to phrase it.
I think it is absolutely the right strategy I I.
Valuation considerations aside for a moment I love this capital structure, it's a perpetual capital structure with Escalations of 2% to 3% over the next 10 years. It is one that we do not have to refinance and when I look at what we've been able to accomplish on our M&A agenda.
It's probably not too difficult to.
[noise] tease out that the cosmopolitan and and and oriented nearly $300 million of EBITDAR during the third quarter.
And these are businesses that when you look at what we paid to acquire them or sub six times EBITDA multiples and at the same time, we've sold the Mirage and the goldstrike. It at 17, and 11 times multiples respectively. So there is clear valuation disconnect going on here, but when I look at the cat.
<unk> structure, the combination of it and it's cost with what I think is our operating leverage in these other businesses with the demand dynamics. We've described in the fact that really are regional cross cop property efforts are just getting started to the cosmopolitan integration still very early in this whole event backdrop I just.
Think it's a fantastic opportunity for for value creation.
So I wouldn't change it.
That's really helpful. Thank you.
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.
Thank you operating and thank you all for your attendance and obviously your interests just some.
[noise] highlight comments again, we feel obviously very strong and excited by our our business here in Las Vegas, you continue to see the strength and the growth again, we think there's been a couple of fundamental changes both in the context of the customer mix the opportunity and the desire to want to come to a place like Las Vegas, and our position with the asset changes of Mirage true Cosmopolitan.
And some of the other things we do we just we just really like where we are in Las Vegas Macau. Despite all of its trials and tribulations in the month of October did 450 million a G. G. R. So annualize that and think about that market place and its potential longterm, we have a great deal of safe in Macau Longterm and I think we're really.
Well positioned to get re license and are confident that will do so by your and you heard obviously that the success in bed M. G M.
It's absolutely tracking in the right direction and we're equally if not more excited ultimately for MGM resorts for Leo Vegas, and our push interest of world would that vehicle, leading the way I think most relevant is Johnson's point about our balance sheet. The liquidity is amazing it gives us two things if if we should go into a.
More significant downturn, obviously, you've got the resources to sustain and ultimately enough resources to also be opportunistic and so the opportunity that balance sheet presents for US. We think is very compelling and very exciting as we think about the next couple of years. We are keenly focused on margins I can assure you we.
We are at a place we said they would come back to where they are we wanted to do more work and we will continue to do they will not go backwards from this point you have a commitment on that and I think there's some room from enhancement in a couple of places Ah Las Vegas, and potentially a couple of regional properties. Despite the one off opportunities and things that hit us the red.
Is compelling [laughter] the two three per cent versus open <unk>.
Cost of what's going on right now in the marketplace and ultimately our growth pipeline with New York in Japan around the Ryzen, we love that are both of those opportunities for obvious reasons and so I think we're well positioned in both of those places to take advantage of that as well and then ultimately the colleagues at the table and all of our our team.
I couldn't be happier with the crew and how it's performing so thank you all and appreciate your joining us today have a great night.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.