Q4 2023 The Marcus Corp Earnings Call
Thank you for your patience everyone's the Marcus Corporation fourth quarter earnings call will begin shortly.
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This is for you.
Good morning, everyone and welcome to the Marcus Corporation fourth quarter Earnings Conference call. My name is chat should not be your operator for today at this time all participants are in listen only mode. We will conduct a question answer session towards the end of this conference.
Any time during the call you require assistance. Please press star zero and an operator, we'll be happy to assist you. As a reminder, this conference is being recorded joining us today are Greg Marcus Chairman, President and Chief Executive Officer, and Chad, Paris, Chief Financial Officer, and Treasurer of the Marcus Corporation at this time I'd like to turn the per.
Graeme over to Mr. Paris with opening remarks. Please go ahead Sir.
Yeah.
Thank you and good morning, everyone welcome to our fiscal 2023 fourth quarter conference call I need to begin by stating that we plan to make a number of forward looking statements on our call today, all of which we intend to qualify for the safe harbors from liability established by the private Securities Litigation Reform Act.
Forward looking statements may generally be identified by our use of words, such as we believe anticipate expect or words of similar import are forward looking statements are subject to certain risks and uncertainties, which may cause our actual results to differ materially from those expected.
Listeners are cautioned not to place undue reliance on our forward looking statements.
The risks and uncertainties, which could impact our ability to achieve our expectations identified in our forward looking statements are included under the heading forward looking statements in the press release, we issued this morning announcing our fiscal 2023 fourth quarter results and in the risk factors section of our fiscal 2022 annual report on Form 10-K.
Which you can access on the Sec's website.
We will also post all regulation G disclosures when applicable on our website at <unk> Dot com.
The forward looking statements made during this conference call are only made as of the date of the conference call and we disclaim any obligation to publicly update such forward looking statements to reflect subsequent events or circumstances.
In addition, we routinely post news releases and other information regarding developments at our company that impact our investors customers vendors and other stakeholders.
Should look to our website markets Corp, Dot com as an important source of information regarding our company. We also refer you to the disclosures we provided in today's earnings press release regarding the use of adjusted EBITDA.
non-GAAP measure used in evaluating our performance and its limitations a reconciliation of adjusted EBITDA to the nearest GAAP measure is provided in today's release.
Alright with that behind us.
As well as the impact of the continuing shift in our business mix with more growth in midweek group business at lower rates.
Breaking out the fourth quarter numbers for the comparable owned hotels more specifically our overall revpar increase during the fiscal 2023 fourth quarter compared to the prior year quarter was due to a one 5% increase in our average daily rate or ADR and an overall occupancy rate increase of $2.
Four percentage points.
Our average fiscal 2023 fourth quarter occupancy rate for our owned hotels was 59, 2%.
Finally, with the increase in occupancy and growth in group business, our banquet and catering operations continued to perform well food and beverage revenue at our comparable owned hotels was up four 8% in the fourth quarter of fiscal 2023 compared to the prior year.
The division delivered $7 4 million of adjusted EBITDA for the fourth quarter and nearly 31% increase over the prior year fourth quarter.
For the full year fiscal 2023 hotels, adjusted EBITDA was $37 7 million the.
The sale of the Skirvin Hilton negatively impacted adjusted EBITDA by $3 million in fiscal 2023, compared with fiscal 2022 and.
Excluding the impact of the skirvin sale adjusted EBITDA increased five 1% in fiscal 'twenty three compared to the prior year.
Shifting the theaters are fourth quarter fiscal 2023 total revenue of $98 6 million increased one 1% compared to the prior year fourth quarter comp.
Comparable theater admission revenue increased four 1% over the fourth quarter of 2022 with comparable theater attendance decreasing three 5% is.
It is important to note our fiscal calendar negatively impacted our revenue and attendance comparisons over the prior year periods.
Our fiscal year ended on December 28, compared to December 2019 in fiscal 2022, resulting in one less day in our fiscal fourth quarter during the busy week between the holidays compared to the prior year, while adding one day in late September when business is significantly slower.
The loss of the day between the holidays had a one two percentage point negative impact on attendance growth.
And a one four percentage point negative impact on admission revenue growth compared with the prior year fourth quarter.
According to data received from Comscore and compiled by us to evaluate our fiscal 2023 fourth quarter results.
U S box office receipts increased five 6% during our fiscal 2023 fourth quarter compared to U S box office receipts during the fourth quarter of fiscal 2022, indicating that our comparable theater admission revenue lagged by approximately one five percentage points.
However, the recovery in our admission revenues relative to pre pandemic periods in fiscal 2019, compared with the recovery of the U S box office continues to outperform the industry during.
During the fourth quarter of fiscal 2023, our comparable theatres admission revenues were 69, 4% of admission revenues in the fourth quarter of fiscal 2019, which compares to a 68, 2% U S box office recovery during the same period.
For the full year fiscal 2023, our comparable theatres admission revenues were 81, 3% of admission revenues in fiscal 2019, which compares to a 79, 4% U S box office recovery during the same period, indicating that our recovery admission revenues has outperformed the recovery of the industry during 2023.
Hi.
Our average admission price increased by eight 3% during the fourth quarter of fiscal 2023 compared to last year.
The increase in average admission price in the quarter was significantly impacted by Taylor Swift the Arris tour.
Each represented approximately 63% of the increase in our average admission price and more than offset the headwinds from the high percentage of <unk> and Pls ticket sales in the fourth quarter last year from Avatar the way of water.
The balance of the increase in average admission price was due to strategic pricing actions in our value Tuesday pricing changes implemented earlier in the year.
For the full year fiscal 2023 average admission price increased 10, 9% compared to the prior year.
Our average concession food and beverage revenues per person at our comparable theaters increased by three 1% during the fourth quarter of fiscal 2023 compared to last year, driven by inflationary price increases implemented during the year and higher check averages across our circuit.
For the full year fiscal 2023 per capita average food and beverage revenues increased by five 2% compared to the prior year.
Theater Division adjusted EBITDA of $14 7 million during the fourth quarter of fiscal 2023 increased approximately 5% compared to the prior year fourth quarter.
Shifting to cash flow and the balance sheet, our cash flow from operations was $34 million in the fourth quarter of fiscal 'twenty three.
For the full year cash flow from operations was $102 6 million compared to $93 2 million in the prior year, which included approximately $28 million of nonrecurring income tax refunds in government grants received during fiscal 2022.
Excluding these nonrecurring items from the prior year cash flow from operations grew 37 4 million and approximately 57% increase.
Total cash capital expenditures during the fourth quarter of fiscal 2023 were $12 9 million and for the full year fiscal 2023 total capital expenditures were $38 8 million compared to $36 8 million in fiscal 'twenty two.
During 2023, the majority of our capital expenditures have gone to renovation projects in the hotels business with the balance going to maintenance projects in both of our businesses.
As we have shared with you previously we expect a ramp up in our capital expenditures in fiscal 2024, as we continue several renovation projects in our hotel division and invest in maintaining and enhancing the customer experience in theaters.
For fiscal 2024, we expect total capital expenditures of $60 million to $75 million with 40% to $50 million in hotels, and 20% to $25 million in theaters of course, the timing of some of these planned expenditures could impact our actual total capital spending during fiscal 2024.
During 2023, we reduced long term debt by $10 5 million ending the year with a debt to capitalization ratio of 26% and net leverage of one two times net debt to adjusted EBITDA.
While we invested in our businesses and reduced debt. We also returned $7 5 million in capital to shareholders in fiscal 2023 through our quarterly dividend, which we increased to <unk>.
A quarter in the third quarter.
We remain committed to returning capital to shareholders, while maintaining the strength of our balance sheet and liquidity.
We ended the fourth quarter with over $55 million in cash and $276 million in total liquidity as we have discussed before we have always believed in maintaining a strong balance sheet with a manageable amount of debt, including owning the majority of our assets. We believe our strong balance sheet as a strategic advantage as Greg will discuss further.
Our recently announced investments in a joint venture to acquire Loews Minneapolis Hotel is a great example of our financial flexibility and ability to move quickly when opportunities to invest in future growth arise.
With that I will now turn the call over to Greg.
Thanks, Chad good morning, everyone.
I'd like to start today by reflecting on fiscal 2023.
We started the year with an expectation that both businesses. We continue on their trend of growth with theaters continuing to recover with an increase in film supply in hotels continuing to grow occupancy.
We had a plan for the year that focused on improving the guest experience.
Mitigating labor inflation through improving labor productivity and efficiency.
And controlling our costs across the company.
As I look at our performance during fiscal 2023, the year came together pretty close to our expectations and I am pleased with our results and how we manage our businesses that everything played out exactly as we expected some things didn't work as well as we expected and something surprised to the positive.
Through it all our team adjusted to changing conditions flex and we needed to and remain focused on delivering great experiences to our guests.
We ended the year with very good results.
And they are in a position of strength of the balance sheet that supports our focus on investing in our future growth.
The fourth quarter and fiscal year that we're reporting today completes a year of significant progress and we're pleased to be sharing these results with you.
I'll start with our hotel Division Chad covered the highlights of another solid quarter. So I will focus my comments on the year overall looking ahead.
After a record year for the division in 2022.
We entered the year, knowing that the pace of growth was going to moderate as we transitioned from the pandemic recovery to a normalized level of business.
We also do that following the divestiture of the Skirvin Hilton Our reported division results will be negatively impacted as we reflect on the year. Our comparable hotel results were solid and were in line with our expectations.
And our own hotels in fiscal 2023 compared to fiscal 2022 occupancy grew by three percentage points average daily rates grew by three 3% and Revpar grew by eight 4% our revpar growth was comparable to year over year Revpar growth for upper upscale hotels hotels nationally our revpar growth was 70 basis points.
Below our comp sets competitive sets, which like theaters, we attribute to the early recovery at our properties compared to later recovery at some of our competitors in our local markets.
When evaluating our results against pre pandemic fiscal 2019, our fiscal 2023 revpar growth of four 5% outperformance both national upper upscale revpar growth by six five percentage points and outperformed the competitive sets by three eight percentage points.
Throughout the year, our leisure business normalized a bit back to pre pandemic patterns with some extended weekend leisure travelers pulling back because work patterns returned to more in office work, but even with this change in customer travel behavior, we still had a very solid leisure travel year.
Our sales and marketing teams executed exceptionally well capitalize on returning group demand during 2023.
And as a result of this focus our group business continued to grow and increase midweek occupancy.
For the year, our group business increased from 35, 6% of our total rooms mix in fiscal 2022 to 37, 2% in fiscal 2023, continuing a trend that began in 2022 and moving back towards our pre pandemic group mix of approximately 40%.
Operationally our team executed on our plan to get our staffing levels back to where they need to be to deliver the hospitality and guest experience that our customers expect.
We improved guest satisfaction scores the vast majority of our portfolio, while changing our staffing models and improving labor productivity to keep our operational head count below pre pandemic levels to help offset the labor inflation impacting our industry.
Overall, we're very pleased with hotels results for 2023, and all that we accomplished.
Looking forward to 2024, there was a lot to be excited about in our hotel division, while we share the general industry outlook for low to mid single digit Revpar growth. In 2024. There are a few factors that we believe will drive outperformance in our results that are specific to our portfolio of hotels and resorts.
First with Milwaukee set to host the Republican National Convention in July we expect our third quarter results will benefit from a weak sellouts at over 200 rooms at our three downtown Milwaukee hotels.
While we are typically very busy at these properties during summer weekends. We expect the convention will result in high and mid week daily rates drive significant banquet and catering business for group events related to the convention and strong business in a restaurant outlets at the hotels.
The RNC will be the first major event to be hosted in Milwaukee's newly expanded Convention center, which now will have approximately 300000 square feet of exhibition Hall space as well as expanded ballroom and meeting space doubling the overall size of the center.
We're not only excited about the <unk> impact in Milwaukee's convention business. In 2024, we are optimistic that the event will serve as a showcase for larger scale events that Milwaukee can now host.
Setting up future bookings for a greater number of events.
As well as larger convention events in the long term.
Second our overall group bookings look strong.
Our group room bookings for the remainder of fiscal 2024 or group pace in the year for the year is running over 25% ahead of where we were at this time last year and 10% ahead of where we were at this time last year, excluding the impact of the RNC.
When we look out a bit further to fiscal 2025 group pace is up over 40% ahead of where we were at this time last year. As we are seeing event planners are starting to book events further out.
We are also seeing similar increases in banquet and catering booking pace for 2024 and 2025.
Third we will be completing major renovation projects in 2024 at the Pfister Hotel and Grand Geneva Resort and Spa that we expect will continue to drive group business to support our premium rate positioning in our markets.
At the faster, we will complete extensive guestroom and lobby renovations in our historic tower to enhance the guest experience, which follows the ballroom and meeting space renovation that we completed in the fall last year.
Grand Geneva, we will complete the ballroom and meeting space renovation in the first half of the year. This project follows our guestroom and lobby renovations over the last three years and substantially completes our interior renovation of the main lodge resort.
We believe the renovations at these properties are helping to support the strong group bookings that we are seeing for future events.
We believe that these three factors should set up the hotel division for a strong fiscal 2024 and our team is focused on the successful execution of these major projects and preparing for what we expect will be a very busy summer.
The reinvestment in our existing properties to maintain and enhance their value as part of our overall portfolio management strategy.
And we believe these investments provide substantial returns to our shareholders over the long term at these core assets.
We've talked in the past about our ongoing portfolio management process, which includes evaluating each assets competitive market strategic positioning financial performance over time current valuation.
And expected future returns as each asset approaches its next capital investment cycle.
Our investment decisions are focused on value maximization as the determining factor for whether we hold reinvest or divest the hotel.
These investments will be significant over the next two years is up to $50 million of capital expenditures expenditures expected for the hotel division in 2024.
Finally, we've continued to work on our growth strategy and are actively seeking opportunities to invest in new hotels or increase the number of rooms under management.
Our growth may come in several different forms, including acquiring new management contracts or hotel management businesses seeking opportunities, where we May act as an investment fund sponsor or as a joint venture partner and acquire in order to redevelop and conditional hotel properties. This.
This year has been a challenging market for hotel transactions, but we've been persistent and have looked at many deals during the year. We made an investment in business development talent talent with the addition of Tiffany Donato, who joined US in September as our Chief investment officer of Marcus hotels and resorts. She brings a significant track record of successful hotel transaction experience to the division.
Two weeks ago, we announced our investment in a joint venture that has reached an agreement to acquire the Loews Minneapolis Hotel 250 room full service luxury hotel in downtown Minneapolis.
We expect the deal to close in the first quarter and while we aren't disclosing the terms of the deal today, our expected investment in the hotel is approximately $2 million to $5 million, depending on the final level of investment from limited partners.
We believe this is an exciting opportunity to create value by investing in an attractive asset with a focused management strategy, while adding another premier destination to our portfolio of branded and independent lifestyle hotels.
We have experience operating in the Minneapolis market and we have assembled a great team to execute our repossession repositioning strategy at the hotel.
This is a long term investment play what we believe is a good real estate assets acquired at an attractive valuation and what we expect to be a recovery market over the long term. We're excited about the opportunities for future growth in the hotel business and I'd like to congratulate Michael Evans in our hotels and resorts team for delivering a great year.
Turning to our theater division traveling over the numbers for the quarter with you, including our strong increases in per person revenues.
I'd like to start with a few highlights for the year.
And then look forward to fiscal 2024 and beyond.
First I think the biggest story of 2023 was the growth in the number of wide releases in huge audiences that came out to see them.
We had 110 wide releases in 2023.
<unk> increase from the 85, we had in fiscal 2022, which was disrupted by supply chain and production issues.
Second there were a number of surprises if you asked me a year ago to predict the biggest movies of 2023, I don't know that I would have comp with Barbie Oppenheimer and Taylor Swift areas tour at my top 10 and.
In fact, if you had asked me in August with the biggest movies of the fourth quarter would be Taylor Swift areas tour wasn't anywhere on our radar yet it was our number one attraction for the fourth quarter and our number 10 film for the year.
Third and related to my last point audiences came out to theaters to see a very diverse range of films in the big screen, we saw everything from action superhero to family and animated comedy Romance drama Whore concert films and even musicals.
So much of it worked with audiences. It was a great reminder, to content creators and studios that audiences want diversity and some of the assumptions of the past about what works were dispelled by the surprise successes of some of these films and.
In general we believe the success of a more diverse movie slate that is less dependent on a limited number of large films is better for the industry and better promoting moviegoing.
Finally alternative content had a good year. It was led by Taylor Swift the areas to which was a very special and unique artist.
Fanbase strip. These came in droves to seat to see arrows on the big screen with immersive zone dancing in the aisles with incredibly powerful events cinema experience that was best watched in the company of other fellow Swift DS.
And one that could never be replicated in your home.
The alternate alternative content was more than just areas at.
It included sound of Freedom, which is deadly was a close number 11 for us this year, the chosen and Renaissance of film by Bianchi.
Overall, we were very encouraged by the progress the industry made in 2023 reconnecting with audiences and the commitment. The studios have continued to show the theatrical exhibition as they realize how important it is to invest.
Investments in movies.
As for our execution, our team made a lot of progress as well we.
We had a strong year per capita revenue growth with average ticket price growing 10, 9% during the year as.
As we've shared previously we made a number of changes to ticket prices from our price optimization and revenue management initiatives, most notably our value Tuesday changes.
While our pricing initiatives are the primary driver of our increase in average ticket price I do have to thank Taylor Swift for one two points of our per cap increase for the year.
Our Marcus passport program that we've launched the beginning of fiscal 2023 has been successful at bringing customers out for more consistent moviegoing.
The program allows customers to purchase passport ticket with access to every movie that is playing as part of market leaders film series.
Our film series showcased multiple movies celebrate specific genres holidays franchises filmmakers and warm.
The program launched last year at this time with the best picture passport between the 10 Academy Awards Best Picture nominees, followed by additional series throughout the year, including Winter and Summer Kids Dream passports for each feature each featuring 12 family films flashback cinema passport hunger games passport the chosen passport Disney Pixar packs.
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And holiday season screening passport, we expect to continue to expand our markers passport offerings in fiscal 2024, we grew our magical movie rewards loyalty membership by 14% to over $5 8 million members. We continue to develop more ways to leverage MMR magical movie rewards to deliver marketing and promotions tailored.
To our customers preferences.
We have additional investments in technology plan for our loyalty program in 2024 that we expect will drive greater insight into our customers and enhance our marketing programs and finally like in our hotel Division. The theater team has made significant improvements in labor management with a focus on guest per labor hour into operating hours management we.
<unk> operations payroll and benefits as a percentage of admissions and concessions revenue by approximately two percentage points in fiscal 2023 compared to the prior year.
Overall, it's been a year of great improvement and strong execution by our theatres team and we're proud of these results.
Looking ahead in the near term, we expect the shutdown of movie production during the Hollywood strikes last year, we will have a negative impact of a number of wide releases during fiscal 2024.
As I've said previously the disruption from the strikes was not helpful to the industry just as we were getting our momentum back in 2023 Thankfully. This is behind US and movie productions ramp backup, but it does create a short term content supply challenge as of right. Now we are projecting 95 to 100 wide release films in fiscal 2024 with a box offices backup.
Loaded to the second half of the year.
As <unk> seen in the daily domestic box office reporting the first quarter was off to a slow start given the lower number of wide releases in January and February with that said, we are thrilled with the early reviews and strong advanced ticket sales for due in part to and see a stronger margin a gradually improving release calendar as we head into the spring and summer.
In the long term our view remains optimistic on the business and industry and we expect the product supply will get back to and potentially exceed 2023 levels in 2025.
Finally, while we closed six underperforming theaters during fiscal 2023, we continue to evaluate opportunities to grow the circuit again by adding attractive locations.
These opportunities may include management contracts, taking over existing theater leases are partnering with landlords and acquisitions.
We believe our strong balance sheet positions us well to execute on the strategy as attractive growth opportunities arise.
As Chad discussed in his remarks in 2020, we returned $7 $5 million to shareholders through our quarterly dividend.
<unk> Corporation has a long history of returning capital to shareholders and we remain committed to paying a dividend as we move past the more significant capital investments in our hotels planned for this year, we will continue to reevaluate the level of dividend and potential share repurchases to return incremental capital to shareholders to the extent, we don't have actionable investment opportunities.
We have said many times, we view the world through a long term lens our rate of improvement will vary from quarter to quarter and year to year is it likely will in 2024, but I'm confident that we will continue to make consistent long term progress.
We manage the business day to day, but at the same time look at the overall performance of our investments with the goal of long term sustained growth and industry outperformance.
Finally, I would like to once again express my appreciation for our dedicated associates, the Marcus Corporation their outstanding work and commitment to serving our customers.
He is responsible for our success and we appreciate all that they do every day they are our most important asset.
So on behalf of our board of directors and our entire executive team. Thank you to all of our associates.
And with that at this time, Chad and I'll be happy to open the call up for any questions you may have.
Okay. Thank you.
Just to ask a question. Please press star one on your telephone keypad now if you change your mind. Please press star followed <unk>. Please.
Ladies and show your phone is on mute likely before asking your question.
Okay.
Our first question today comes from Eric close from B Riley <unk> Securities. Please go ahead.
Thank you good morning.
So a couple of questions I guess one.
You know what you're talking about the Milwaukee Convention center expansion and kind of the group pace, you're seeing this year kind of with and without the RNC then into next year can you maybe dive into the those kind of figures a little bit more in terms of kind of what rates.
You may be seeing versus last year and.
And kind of how it gets more broadly how you expect.
The expansion you mentioned kind of boost.
Occupancy and Revpar, maybe in the region overall in the coming years.
Well.
I think looking out for some specific data to try and help give you some color on that Eric.
But overall it should be it should be beneficial to the overall market thats the whole point of the convergent centers. The convention center actually was designed.
Just to give a little color on what they did is.
We have a very tight we have a limited season here in Milwaukee, It isn't beautiful 12 months a year its getting better though.
This winter but.
So one of the challenges that we had with the convention center was its size and it basically could handle one convention at a time now.
What would happen is is there is there is that set up and take down period that happens when you bring in a new convention.
The.
And during that time the Convention Center, you can't use the convention center, which look at the reason we build the convention center is to.
Provide an economic benefit to the entire community, whether it's through selling hotel rooms in the room tax and all of that that generates and the economic activity that generates or car rental or ridesharing usage or retail or restaurants, all the things that a convention center brings its the generator, it's not the entity itself, but the problem was it doesn't.
Generate when it's when it's inside of our takedown so when they build the center and when they made the decision to expand the center. The idea look at obviously, we can handle bigger conventions and the RNC is an example of that but what it should benefit what we're aiming to have happened with it is that you can back to back conventions and so.
And that and we certainly have room.
In our hotel supply.
Especially on the west side of our town to handle more customers.
And that.
And that should be the benefit of having the convention center being able to handle back to back conventions too just to help the existing supply of hotels get better that should drive overtime higher rates and better occupancy slipped and so I guess, let me ask pardon sorry.
Sorry, Eric Let me just take the part on the on your question on the impact of the <unk>. When you look at the third quarter.
I'm not going to get into the specific impact of what the sell out for the week.
It means in terms of the rate that that's going to be asked but in terms of the uplift to the quarter for the for the portfolio overall.
You should think about this is like an 8% to 10% Revpar uplift for the division in the quarter.
And.
There's a lot of other things that happened in that quarter. It's our peak season is our biggest quarter of the year. So there could be other puts and takes but when we just look at what they are in secret mean, that's that's sort of how we think about it.
That's helpful.
Rephrasing my broader question little bit differently, obviously.
They can handle now two times the number of the convention, so I'm not going to make the assumption that the number of convention in town double let's say taken.
<unk> taken a number let's say the number of conventions that Milwaukee hosts goes up by 50% annually because of this if you were to get what you normally get as your share of bookings and room rates and food and beverage from the convention business and that goes up by 50% as you maintain your share of that increase convention business and.
Hughley going forward, what could that mean to kind of annual revenue and EBITDA because of that.
I don't know that we have that number I don't think its that robust, though even if even if that were to happen because because remember it is our busiest season.
We still have it will it will displace some business it will drive some occupancy, but it will also display some business at higher rates, but that's not a straight 50% add on so.
I don't know off top my head, what we're projecting at the Convention center for what it will mean, we can find that data.
And I just see.
Eric in terms of how they're how they're booking events into the center.
The building is going to open in May.
Some of the event planners are going to want to see it done and so the impact is probably more of a late 'twenty five 'twenty six type of <unk> that can be hitting.
Hitting hitting the new run rate and so.
What I think of a better sense of what the feedback is from event planners as they get through the first summer here with the Central Bank and then we can start to quantify what that impact could mean to us and even on top of that like for example, there is a right after the RMC.
As a.
Our conference of event planners coming here.
To see the New Convention center and they have their annual Congress and they go checkups or whatever then I guess, the Chinese newest thing is and Theyre coming here and so that's when they're going to be able to evaluate our our convention center, our hotel product the whole market and but remember these things are planned out years in advance. So this is you guys have done a really long term perspective on it.
It's great for the long term, but it's a long term thought deferred to buildup.
Okay, and then two more quick questions I guess, one quick on the theater side.
I know you close number to you last year is there anything I know the things that we can with valuation but is there anything you can think of.
This year, that's likely to be closer exited.
Yes, I don't I don't know, we did quite a bit of pruning last year as we look at underperforming theaters and as we look at it.
Lease maturities this year.
Nothing significant Eric if it's if it's one or two maybe but right now nothing concrete plan.
Okay and then.
Lastly.
The Loews Minneapolis agreement.
I guess one how.
Our robust pipeline right now for additional deals maybe relative to how it was a year of Hugo and then would you.
Put that $2 million to $5 million investment kind of towards the lower end or the higher end of what you would consider for future deals.
Hello.
The pipeline is better than it was a year ago, it's not it's not like we're not.
One crazy because the market is still.
It's still been somewhat with the financing markets, it's still somewhat tough to get transactions done and get buyers and sellers to come together.
I read today that the housing market that now that the homeowners are starting to understand what the value is so the transactions are happening there. So maybe that will happen in the hotel market, but there are transactions happening and so we have got more.
Brian Tiffany and we're seeing.
Better flow as for the dollar amount.
It's probably I was thinking about it's probably in the range remember we have two partners on this deal. So we're only really picking up a third of the equity overall.
We will take some limited partners, even on our end as well and so it's probably somewhere in probably somewhere in that range even going forward.
I'd say, it's pretty average you could you could see us do deals in this structure in that $5 million to $10 million range, depending upon how big the asset is and how many other folks we have in the deal but this is we'd like to do more of these with this structure.
Yeah.
Got it. Thank you both appreciate it.
Thanks, Eric.
Okay.
As a reminder to ask a question. Please press star followed by one on your tenant. Thank you Pat now.
The next question on the line is from Jim Goss from Barrington Research. Please go ahead.
Alright, thank you.
I'd like to pursue a little more on what.
Eric just raising the.
Okay.
I know you always are rethinking group business mix.
<unk>.
In recent years, you've taken this asset light approach to hotels.
But it does reduce the relative impact of the.
Hotel space on your business mix now this might be a little bit more than some of the other.
Equity Stakes you've taken in some of the hotels, but I Wonder if you just can you just talk more broadly about what you think the mix should be given.
How hotels have entered recently for you relative to some of the issues you've had in the theatrical side.
Yeah.
Yeah.
I don't think that we have a set mix at this point, it's going to be sort of what where that where do we see the best opportunities for our capital.
And.
Right now.
No.
We're seeing opportunities on the hotel side.
To the extent that theater opportunities pop up we're looking at them as well.
It will just sort of just.
I can't sit here and see what we got X percent figure for each one right now the best opportunity looks to be on the hotel side.
But we'll see what happens with theaters.
And.
I don't know, what's going to happen with that mix neither of our for US we want to grow our business as always but neither of them really has.
It has big scale benefits will not see we don't see huge scale.
Impacts because of their theatres that scaled really comes from marketing.
National movies, which the studios are doing and some hotels, it's the big generally the national marketing elements of the the Big Hotel companies.
So.
It's not it's not it's not that that doesn't mean, we have to say, okay. We got to get to a certain scale size, which want to keep growing them, creating opportunities for our associates, creating opportunities for investment.
Okay, and I don't know if I recall, you, saying it was a.
Basically a third each with three partners. So this does seem like a little step up in the equity.
We've taken relative to some other recent.
Transactions so that's of interest.
Also IMAX finished Carl was talking about.
Greater number of domestic opportunities.
Our IMAX locations.
I know your focus is on your own Pls brands, but I wonder if you have any appetite in any of your areas.
Our additional IMAX in development.
And also.
Is there a likelihood you would try to continue to pursue the multiple pls brand.
And that you have in a number of your locations.
Outlook.
It all comes down to what the deal looks like.
As of now the deal Hasnt you can imagine IMAX has our phone number.
To find us and we've talked of course, a thought that through the years, but when we sit down and do the math.
It makes more sense to continue with our ultra screens and super screens.
Performed beautifully.
And I would tell you we actually got sucked form historically, probably the first.
Pls in the history of the business came from us many many years ago.
And with the first ultra screen, which that theaters, even exist anymore I think of how long ago that is.
Hi.
And.
And.
It is a numbers question, Jim and we just right now we like ours.
The only thing I'd add to that.
And we've talked about it a little bit during the year as the operational flexibility that we get from.
Our ultra screens in terms of scheduling and.
And content and flexibility to what we're showing and allows us to be really nimble, particularly in locations where we have.
Multiple pls and where we are.
Looking at for 2024, a few opportunities to add some pls to the existing circuit and conversion so not huge numbers, but we did we did some of that in 2023 and we're looking at a few more.
I bet.
But I would also tell you our pls percentage I think is amongst the highest in the industry in terms of Ah.
Attendance Peel up relative attendance pls is very high and ours.
Alright.
One final one.
If you and others have talked about.
Some additional alternative content popping up here and there and I know you've been very creative and creating there.
A discount they are one of the early ones that doing that sort of thing may be the first do.
Do you have any similar thoughts to create.
Some habits toward alternative content, maybe target I'm not even sure what I have in mind exactly whether whether it be a certain genre movie or something like that on a another weekday day or something like that.
Maybe take advantage of the opportunity and the data you're able to exploit with your loyalty program to create an event that might make more out of the days.
And then it would've been otherwise as you did with the discount and movies.
Okay.
Jim That's I would tell you that I like your thinking.
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I don't have anything to tell you right. This minute, specifically, but trust, but you hit on all the exact points right and we talk about how we're going to how we will continue to build with alternative content.
And it is youre at Youre, absolutely right. Our loyalty program is hugely important so that we can because as I just talked about in a minute ago at a national level.
The scale is really important from the studio side right, because they really need to be able to.
No matter, how good alternative content get that's still going to be the huge piece of our business but.
Our last customers are most profitable to the extent that we can build up our alternative content business.
The.
The.
The ability to reach and talk and know who our customers are is is.
Paramount importance.
We are stressing that inside of the business and then.
The idea of could you create a day.
I'm not sure but to date, but the underlying importance is this idea of our business is one of momentum in the moment of what it is the more new come the more you want to see and so figuring out how to develop more frequency in an alternative content environment is extremely important as well. So you are onto the important stuff, but still R&D. We are working on things like that perfect <unk>.
<unk> passport.
Passport program is.
How do we sort of event ties and create something special around a bundle of alternative content.
Harry Potter was unbelievably successful not really in a way it was alternative content because its respiratory content at this point.
And we've got our Oscar passport.
Now I'll turn of content right. This minute some of it could almost be but it's.
It's how do we do things like that and know our customers better and that's where it does become important today outflows to leverage our loyalty program. So you are right on.
Alright, well, thank you very much I appreciate it.
Thank you at this time it appears there are no other questions I'd like to turn the call back to Mr. Harris for any additional or closing remarks.
Thank you operator wed like to thank everyone for joining us today for our business update we look forward to talking with you again in early may when we release, our first quarter results until then thank you and have a great day.
That concludes today's call you may now disconnect your lines at any time.
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Yes.
Okay.
Okay.