Q2 2024 The Marcus Corporation Earnings Call
Good morning everyone and welcome to the Marcus Corporation second quarter earnings conference call. My name is Lydia and I'll be your operator today.
Lydia: My name is Lydia, and I will be your operator today. At this time, all participants are in listen-only mode and will conduct a question-and-answer session towards the end of the conference. If at any time during the call you require assistance, please press star zero, and an operator will be happy to assist you.
Speaker Change: At this time all participants are in listen-only mode and will conduct a question-and-answer session towards the end of the conference.
If at any time during the call you require assistance, please press star 0 and an operator will be happy to assist you. As a reminder, this conference is being recorded.
Lydia: As a reminder, this conference is being recorded.
Lydia: Joining us today are Greg Marcus, Chairman, President and Chief Executive Officer, and Chad Paris, Chief Financial Officer and Treasurer of the Marcus Corporation.
Chad Paris: 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 program over to Mr. Paris for his opening remarks. Please go ahead sir.
Chad Paris: At this time, I'd like to turn the program over to Mr. Paris for his opening remarks. Please go ahead, sir.
Operator: If at any time during the call you require assistance, please press star zero, and an operator will be happy to assist you. As a reminder, this conference is being recorded. At this time, I'd like to turn the program over to Mr. Paris for his opening remarks. Please go ahead, sir.
Chad Paris: Thank you. Good morning and welcome to our fiscal 2024 second quarter conference call.
Chad Paris: Thank you. Good morning, and welcome to our fiscal 2024 second 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. We will also post all Regulation G disclosures, when applicable, on our website at MarcusCorp.com.
Chad Paris: Thank you. Good morning and welcome to our fiscal 2024 second quarter conference call.
Chad Paris: 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. Our forward-looking statements may generally be identified by our use of words, such as we believe, anticipate, expect, or words of similar import. Our 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.
Chad Paris: In addition, we routinely post news releases and other information regarding developments at our company that impact our investors, customers, vendors, and other stakeholders. You should look to our website, MarcusCorp.com, as an important source of information regarding our company. Reconciliation of Adjusted EBITDA for the Nearest Gap Measure is provided in today's release. We generated consolidated revenues of $176 million, a decrease of $31 million, or 15%, compared to the prior year quarter. With revenue growth in our hotels and resorts division offset by revenue decreases in our theater division, we delivered $2.2 million of consolidated operating income and $22 million of adjusted EBITDA. Operating income was negatively impacted by a non-cash impairment charge of approximately $500,000 related to a leased theater location that we closed during the quarter and which is excluded from adjusted EBITDA.
Chad Paris: Below operating income, we recorded $13.9 million of debt conversion expense associated with the previously announced repurchase of $86.4 million of our convertible senior notes. I'll discuss our balance sheet and recent financing transactions further in a few minutes, but I'll briefly explain the non-recurring debt conversion expense now. The required accounting for the repurchase transaction results in this charge to earnings for the premium paid above the principal value of the repurchased convertible note.
Speaker Change: I need to begin by stating that we plan to make a number of forward-looking statements on our call today.
Speaker Change: All of which we intend to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act.
Our forward-looking statements may generally be identified by our use of words such as we believe, anticipate, expect, or words of similar import.
Speaker Change: Our 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.
Chad Paris: 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 2024 second quarter results and in the risk factors section of our fiscal 2023 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 MarcusCorp.com.
Speaker Change: 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 2024 second quarter results.
Speaker Change: and in the risk factors section of our fiscal 2023 annual report on Form 10-K, which you can access on the SEC's website.
Speaker Change: We will also post all Regulation G disclosures when applicable on our website at MarcusCorp.com.
Chad Paris: The forward looking statements made during this conference call are only made as of the date of this conference call, and we display many 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. You should look to our website, MarcusCorp.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 EBDA, a non-GAAP measure used in evaluating our performance and its limitations.
The forward-looking statements made during this conference call are only made as of the date of this 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. You should look to our website, MarcusCorp.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, a non-gap measure used in evaluating our performance and its limitations. A reconciliation of adjusted EBITDA to the nearest gap measure is provided in today's release.
Chad Paris: The reconciliation of adjusted EBDA to the nearest GAAP measure is provided in today's release.
Chad Paris: Okay, with that behind us, let's begin. This morning I'll start by spending a few minutes sharing the results from our second quarter and discuss our balance sheet, liquidity, and recent financing transactions. I'll then turn the call over to Greg, who will focus his prepared remarks on where our businesses are today and what we are seeing ahead in the second half of the year.
Speaker Change: Okay, with that behind us, let's begin.
Speaker Change: This morning, I'll start by spending a few minutes sharing the results from our second quarter and discuss our balance sheet, liquidity, and recent financing transactions. I'll then turn the call over to Greg, who will focus his prepared remarks on where our businesses are today and what we are seeing ahead in the second half of the year. We'll then open up the call for questions.
Chad Paris: We'll then open up the call for questions. This morning we reported a quarter that, as we expected, got off to a slow start but picked up momentum and significantly improved as we move further into the summer season. In theaters, the lingering effects of content supply challenges from the Hollywood strikes created a slower-than-normal start to the summer movie season in April and May. We then turned a quarter in June with better content supply, and we saw audiences return for the big screen theatrical experience in big numbers. In hotels, we once again continued our trend of gains in group business and delivered a quarter with solid growth in revenue, occupancy, RevPAR, and earnings.
Greg: This morning we reported a quarter that, as we expected, got off to a slow start but picked up momentum and significantly improved as we moved further into the summer season.
Greg: In theaters, the lingering effects of content supply challenges from the Hollywood strikes created a slower-than-normal start to the summer movie season in April and May. We then turned a corner in June with better content supply, and we saw audiences return for the big-screen theatrical experience in big numbers.
Chad Paris: I'll start with a few highlights from our consolidated results for the second quarter of fiscal 2024. We generated consolidated revenues of $176 million, a decrease of $31 million, or 15%, compared to the prior year quarter. With revenue growth in our hotels and resorts division offset by new decrease in our theater division, we delivered 2.2 million of consolidated operating income and 22 million of adjusted EBITDA. Operating income was negatively impacted by a non-cash impairment charge of approximately 500,000 related to a lease theater location that we closed during the quarter and which is excluded from adjusted EBITDA.
Speaker Change: We generated consolidated revenues of $176 million, a decrease of $31 million, or 15%, compared to the prior year quarter, with revenue growth in our hotels and resorts division offset by revenue decrease in our theater division.
Chad Paris: The low operating income; we incurred $13.9 million of debt conversion expense associated with the previously announced repurchase of $86.4 million of our convertible senior notes. I'll discuss our balance sheet in recent financing transactions further in a few minutes, but I'll briefly explain the non-recurring debt conversion expense now. The required accounting for the repurchase transaction results in this charge to earnings for the premium paid above the principal value of the repurchase convertible notes. Conversely, the benefit for the cash value we received from the related proportionate unwind of our cap call transactions, which economically offsets the vast majority of the premium we paid to repurchase the convertible notes, is accounted for as a $12.9 million increase in equity that does not run through earnings from an accounting perspective.
Chad Paris: Conversely, the benefit of the cash value we received from the related proportionate unwind of our capped call transactions, which economically offsets the vast majority of the premium we paid to repurchase the convertible notes, is accounted for as a $12.9 million increase in equity that does not run through earnings from an accounting perspective. In addition to that unfavorable accounting treatment, our income tax expense for the quarter was negatively impacted by $1.1 million for the related non-cash tax impacts of the capped call unwind.
Chad Paris: In other words, in terms of the economics of the transaction that was recognized in the second quarter, the net cash premium to repurchase the convertible notes was really $1 million. In addition to that unfavorable accounting treatment, our income tax expense for the quarter was negatively impacted by $1.1 million for the related non-cash tax impacts of the cap call unwind. In total, our net loss for the second quarter was negatively impacted by $15 million, or $0.47 per share, from the convertible debt repurchases and related transactions. As we have reported in the release, on the overall convertible debt repurchases and cap call unwind transactions, from a cash perspective, we were able to retire $86.4 million of convertible notes for only $87.9 million.
Chad Paris: In total, our net loss for the second quarter was negatively impacted by $15 million, or $0.47 per share, from the convertible debt repurchases and related transactions, as we have reported in the release on the overall convertible debt repurchases and cap call unwind transaction. From a cash perspective, we were able to retire 86.4 million of convertible notes for only 87.9 million.
Chad Paris: Excluding the impacts of the convertible debt repurchases, our net loss for the second quarter of fiscal 2024 was $5.2 million, or 17 cents per share. Turning to our segment results, I'll start this morning with our Hotels and Resorts division. Revenues were $74.5 million for the second quarter of fiscal 2024, an increase of 6.3% compared to the prior year. Total revenue before cost reimbursements increased by over $3.4 million, or 5.6%, over the second quarter of last year.
Chad Paris: Excluding the impacts of the convertible debt repurchases, our net loss for the second quarter of fiscal 2024 was $5.2 million, or $0.17 per share.
Chad Paris: Turning to our segment results, I'll start this morning with our Hotels and Resorts division. Revenues were $74.5 million for the second quarter of fiscal 2024, an increase of 6.3 percent compared to the prior year. Total revenue before cost reimbursements increased over $3.4 million, or 5.6 percent, over the second quarter of last year. Rev Par for our comparable owned hotels grew 6.5 percent during the second quarter compared to the prior year, growing at 5 of our 7 owned hotels.
Chad Paris: RevPAR for comparable owned hotels grew 6.5% during the second quarter compared to the prior year, growing at five of our seven owned hotels. The RevPAR increase resulted from an overall occupancy rate increase of 4.5 percentage points, with an average daily rate, or ADR, that was down just slightly, negative two-tenths of a percent over the prior year. Our average occupancy rate for our owned hotels was 72.7% during the second quarter of fiscal 2024.
Chad Paris: Both. The rev-par increase resulted from an overall occupancy rate increase of 4.5 percentage points, with an average daily rate or ADR that was down just slightly negative two tenths of a percent over the prior year. Our average occupancy rate for our own hotels was 72.7 percent during the second quarter of fiscal 2024. Our properties continue to perform well against both the competition in our markets and the industry as a whole. According to data received from Smith Travel Research, comparable competitive hotels in our markets experienced Rev-Par growth of 4.6 percent for the second quarter of 2024 compared to the second quarter of fiscal 23, indicating that our hotels outperformed their competitive set by 1.9 percentage points when comparing our Rev-Par results to comparable upper upscale hotels throughout the United States.
Greg: Our average occupancy rate for our owned hotels was 72.7% during the second quarter of fiscal 2024.
Chad Paris: Our properties continue to perform well against both the competition in our markets and the industry as a whole. According to data received from Smith Travel Research, comparable competitive hotels in our markets experienced rev par growth of 4.6% for the second quarter of 2024 compared to the second quarter of fiscal 23, indicating that our hotels outperformed their competitive set by 1.9 percentage points. When comparing our REVPAR results to comparable upper-upscale hotels throughout the United States, the upper upscale segment experienced an increase in REVPAR of 3% during our second quarter compared to the second quarter of fiscal 23, indicating that our hotels outperformed the industry by 3.5 percentage points.
Speaker Change: indicating that our hotels outperformed their competitive set by 1.9 percentage points.
Chad Paris: The upper upscale segment experienced an increase in rev-par of 3 percent during our second quarter compared to the second quarter of fiscal 23, indicating that our hotels outperformed the industry by 3.5 percentage points. The trend of strong group business continued in the second quarter, with group rooms increasing to 44.6 percent of our total room mix during the second quarter of 2024 compared to 40.1 percent in the prior year quarter. The slight decrease in ADR resulted from an increase in our group rooms as a percentage of our overall room revenue mix, with growth in midweek rooms, group rooms sold, which generally increases occupancy at lower rates.
Chad Paris: The trend of strong group business continued in the second quarter, with group rooms increasing to 44.6% of our total room mix during the second quarter of 2024, compared to 40.1% in the prior year quarter. The slight decrease in ADR resulted from an increase in our group rooms as a percentage of our overall room revenue mix, with growth in midweek group rooms sold, which generally increases occupancy at lower rates.
Chad Paris: We also continued to benefit from improvements to our revenue management strategy at certain properties to drive higher midweek occupancy at lower daily rate offerings to optimize overall room revenue and Rev-Par. Our success in growing group business and better revenue management drove our outperformance over our peers in the quarter. With the continued growth in group business and events, our banquet and catering operations grew, with food and beverage revenues up 3.8 percent in the second quarter of fiscal 2024 compared to the prior year.
Chad Paris: We also continued to benefit from improvements to our revenue management strategy at certain properties to drive higher mid-week occupancy at lower daily rate offerings to optimize overall room revenue and REVPAR. Our success in growing group business and better revenue management drove our outperformance over our peers in the quarter. With the continued growth in group business and events, our banquet and catering operations grew with food and beverage revenues up 3.8% in the second quarter of fiscal 2024 compared to the prior year. Finally, hotels' adjusted EBITDA grew to $11.4 million during the second quarter on the higher revenue.
Speaker Change: We also continued to benefit from improvements to our revenue management strategy at certain properties to drive higher midweek occupancy at lower daily rate offerings to optimize overall room revenue and rev par.
Speaker Change: Our success in growing group business and better revenue management drove our outperformance over our peers in the quarter.
Speaker Change: With the continued growth in group business and events, our banquet and catering operations grew with food and beverage revenues up 3.8% in the second quarter of fiscal 2024 compared to the prior year.
Chad Paris: Finally, hotels adjusted EBITDA grew to 11.4 million during the second quarter on the higher revenues.
Speaker Change: Finally, hotels adjusted EBITDA grew to $11.4 million during the second quarter on the higher revenues.
Chad Paris: Turning to theaters, our second quarter fiscal 2024 total revenue of 101.5 million decreased 25.9 percent compared to the prior year second quarter. Comparable theater admission revenue decreased 28.8 percent over the second quarter of 23. With comparable theater attendance, decreasing 26.3 percent. According to data received from ComScore and compiled by us to evaluate our fiscal 2024 second quarter results using our comparable fiscal weeks, United States box office receipts decreased 26.8 percent during our fiscal 2024 second quarter compared to US box office receipts during our fiscal 2023 second quarter. Indicating our performance was approximately two percentage points below the industry.
Chad Paris: Turning to theaters, our second quarter fiscal 2024 total revenue of $101.5 million decreased 25.9% compared to the prior year's second quarter. Comparable Theater Admission Revenues, Admission revenue decreased 28.8% over the second quarter of fiscal 23, with comparable theater attendance decreasing 26.3%. According to data received from ComScore and compiled by us to evaluate our fiscal 2024 second quarter results using our comparable fiscal week, United States box office receipts decreased 26.8% during our fiscal 2024 second quarter, compared to US box office receipts during our fiscal 2023 second quarter, indicating our performance was approximately two percentage points below the industry. Looking by month, we underperformed in April and May and then significantly outperformed the nation in June.
Speaker Change: Turning to theaters, our second quarter fiscal 2024 total revenue of 101.5 million decreased 25.9 percent compared to the prior year second quarter. Comparable theater admission revenues
Speaker Change: admission revenue decreased 28.8% over the second quarter of 2023.
Speaker Change: The United States box office receipts decreased 26.8% during our fiscal 2024 second quarter compared to U.S. box office receipts during our fiscal 2023 second quarter, indicating our performance was approximately two percentage points below the industry.
Chad Paris: Looking by month, we underperformed in April and May, and then significantly outperformed the nation in June. We believe that our lower box office performance during the second quarter was primarily attributable to an unfavorable film mix compared with the second quarter of fiscal 2023, which included 12 weeks of the Super Mario Brothers movie, a film where we significantly outperformed our average market share in the prior year. While the second quarter this year also included the opening of a great blockbuster family film, where we are also enjoying high market share inside out two. With only two weeks of the films run falling in our second quarter, much of this outperformance will benefit our third quarter of fiscal 2020, which will benefit our third quarter of fiscal 2020, which will benefit our third quarter of fiscal 2020, in addition to the improvement in film mix in June, we believe several changes that we made to promotions during the quarter positively impacted our improvement in performance in June, which Greg will discuss further.
Speaker Change: Looking by month, we underperformed in April and May, and then significantly outperformed the nation in June.
Chad Paris: We believe that our lower box office performance during the second quarter was primarily attributable to an unfavorable film mix compared with the second quarter of fiscal 2023, which included 12 weeks of the Super Mario Brothers movie, a film where we significantly outperformed our average market share in the prior year. While the second quarter this year also included the opening of a great blockbuster family film, where we are also enjoying high market share, Inside Out 2, with only two weeks of the film's run falling in our second quarter, much of this outperformance will benefit our third quarter.
Speaker Change: We believe that our lower box office performance during the second quarter was primarily attributable to an unfavorable film mix compared with the second quarter of fiscal 2023.
Speaker Change: While the second quarter this year also included the opening of a great blockbuster family film, where we are also enjoying high market share, Inside Out 2, with only two weeks of the film's run falling in our second quarter, much of this outperformance will benefit our third quarter.
Chad Paris: In addition to the improvement in the film mix in June, we believe several changes that we made to promotions during the quarter positively impacted our improvement in performance in June, which Greg will discuss further. Our average admission price decreased by 3.1% during the second quarter of fiscal 2024 compared to last year.
Speaker Change: In addition to the improvement in film mix in June, we believe several changes that we made to promotions during the quarter positively impacted our improvement in performance in June, which Greg will discuss further.
Chad Paris: Our average admission price in decreased by 3.1% during the second quarter of fiscal 2024 compared to last year. The decrease in our admission per caps was primarily due to the introduction of several promotions we introduced early in the summer to encourage movie going and drive attendance. These changes include our new $7 every day matinee promotion for seniors and children and changes to our value Tuesday promotion that reintroduced a free complimentary size popcorn for MMR loyalty members, resulting in higher attendance on Tuesdays at a lower ticket price as compared to other days of the week. In addition, average admission price was negatively impacted by a decrease in the percentage of 3D and PLF ticket sales during the second quarter of 2024 compared to the second quarter last year, which was favorably impacted by high 3D ticket sales from Super Mario Brothers and more films that played on PLF screens at higher attendance levels.
Greg: Our average admission price in decreased
Greg: by 3.1% during the second quarter of fiscal 2024 compared to last year.
Chad Paris: The decrease in our admission per cap was primarily due to the introduction of several promotions we introduced early in the summer to encourage moviegoing and drive attendance. These changes include our new $7 every matinee promotion for seniors and children and changes to our Value Tuesday promotion that reintroduced a free large popcorn for MMR loyalty members, resulting in higher attendance on Tuesdays at a lower ticket price as compared to other days of the week.
Greg: The decrease in our admission per caps was primarily due to the introduction of several promotions we introduced early in the summer to encourage movie-going and drive attendance.
Greg: These changes include our new $7 everyday matinee promotion for seniors and children.
Speaker Change: and changes to our Value Tuesday promotion that reintroduced a free complimentary-sized popcorn.
Chad Paris: In addition, the average admission price was negatively impacted by a decrease in the percentage of 3D and PLF ticket sales during the second quarter of 2024 compared to the second quarter of last year, which was favorably impacted by high 3D ticket sales from Super Mario Bros. and more films that played on PLF screens at higher attendance levels.
Speaker Change: In addition,
Chad Paris: Our average concession food and beverage revenues per person increased by 2.3% during the second quarter of fiscal 2024 compared to last year's second quarter. The increase was primarily due to pricing changes implemented during 2023 and by an increase in the number of concession items purchased per customer. Our top 10 films in the quarter represented approximately 73% of the box office in the second quarter last year. The less concentrated film slate resulted in an approximately 2% point decrease in overall film cost as a percentage of admission revenues.
Chad Paris: Our average concession food and beverage revenues per person increased by 2.3% during the second quarter of fiscal 2024 compared to last year's second quarter. The increase was primarily due to pricing changes implemented during 2023 and by an increase in the number of concession items purchased per customer. Our top 10 films in the quarter represented approximately 73% of the box office in the second quarter of fiscal 2024, compared to 80% for the top 10 films in the second quarter last year.
Speaker Change: Our average concession food and beverage revenues per person increased by 2.3% during the second quarter of fiscal 2024 compared to last year's second quarter.
Speaker Change: The increase was primarily due to pricing changes implemented during 2023 and by an increase in the number of concession items purchased per customer.
Speaker Change: The less concentrated film slate resulted in an approximately 2 percentage point decrease in overall film cost as a percentage of admission revenues.
Chad Paris: On the lower revenues, theater division adjusted EBITDA during the second quarter of fiscal 2024 was 15.1 million compared to 31.3 million in the prior year quarter.
Chad Paris: The less concentrated film slate resulted in an approximately 2 percentage point decrease in overall film cost as a percentage of admission revenue. On the lower revenues, theater division adjusted EBITDA during the second quarter of fiscal 2024 was $15.1 million compared to $31.3 million in the prior year quarter. Moving the cash flow on the balance sheet, our cash flow from operations was $36 million in the second quarter of fiscal 24, compared to $55 million in the prior year quarter, with a decrease in cash flow from operations primarily due to lower EBITDA. Total capital expenditures during the second quarter of Fiscal 24 were $19.8 million, compared to $7 million in the second quarter of Fiscal 23.
Speaker Change: On the lower revenues, Theatre Division adjusted EBITDA during the second quarter of fiscal 2024 was $15.1 million, compared to $31.3 million in the prior year quarter.
Chad Paris: Shifting the cash flow and the balance sheet, our cash flow from operations was 36 million in the second quarter of fiscal 24 compared to 55 million in the prior year quarter, with the decrease in cash flow from operations primarily due to the lower EBITDA. Total capital expenditures during the second quarter of fiscal 24 were 19.8 million compared to 7 million in the second quarter of fiscal 23. A large portion of our capital expenditures during the second quarter were invested in the hotel business, with guest room renovations at the Fister Hotel and meeting space and ballroom renovations at Gran Geneva Resorting Spa.
Speaker Change: Shifting the cash flow in the balance sheet, our cash flow from operations was 36 million in the second quarter of fiscal 24 compared to 55 million in the prior year quarter, with the decrease in cash flow from operations primarily due to the lower EBITDA.
Speaker Change: Total capital expenditures during the second quarter of Fiscal 24 were $19.8 million compared to $7 million in the second quarter of Fiscal 23.
Chad Paris: A large portion of our capital expenditures during the second quarter were invested in the hotel business, with guest room renovations at the Pfister Hotel and meeting space and ballroom renovations at Grand Geneva Resort and Spa. The remaining balance of capital expenditures during the quarter were for maintenance projects in both businesses. Our capital investments and renovation projects have progressed as planned, and we continue to expect capital expenditures for fiscal 2024 of $60 to $75 million, recognizing that the timing of several of our planned projects is subject to change as we are still finalizing the scope and timing of various projects, and the actual timing of these projects will impact our final capital expenditure number for the year.
Speaker Change: A large portion of our capital expenditures during the second quarter were invested in the hotel business, with guest room renovations at the Pfister Hotel and meeting space and ballroom renovations at Grand Geneva Resort and Spa. The remaining balance of capital expenditures during the quarter were for maintenance projects in both businesses.
Chad Paris: The remaining balance of capital expenditures during the quarter was for maintenance projects in both businesses. Our capital investments and renovations projects have progressed as planned, and we continue to expect capital expenditures for fiscal 2024 of 60 to 75 million, recognizing the timing of several of our planned projects are subject to change as we are still finalizing the scope and timing of various projects. And the actual timing of these projects will impact our final capital expenditure number for the year.
Speaker Change: Our capital investments and renovations projects have progressed as planned.
Speaker Change: And we continue to expect capital expenditures for fiscal 2024 of $60 to $75 million, recognizing that the timing of several of our planned projects are subject to change, as we are still finalizing the scope and timing of various projects.
Speaker Change: and the actual timing of these projects will impact our final capital expenditure number for the year.
Chad Paris: We will continue to update our capital expenditure estimates as the year progresses.
Chad Paris: We will continue to update our capital expenditure estimates as the year progresses. They are a much smaller piece of our overall capital structure, and we expect to settle them with cash at or prior to their maturity in September 2025. Second, in July, we completed a private placement offering of $100 million of senior notes in two tranches.
Speaker Change: We will continue to update our capital expenditure estimates as the year progresses.
Chad Paris: We recently announced the completion of several refinancing transactions. First, as I mentioned earlier in the call, we entered into agreements to repurchase an aggregate 86.4 million of our convertible senior notes for cash consideration of 87.9 million, which is net of the cash we received from the proportionate unwind of the cap call transactions. We affected the repurchase over two tranches: the first $40 million tranche closed in the second quarter, and the second $46.4 million tranche closed in July during our third quarter. We believe the repurchase transactions significantly simplify our capital structure and eliminated potential future delusion at an attractive repurchase price.
Speaker Change: We recently announced the completion of several refinancing transactions.
Speaker Change: First, as I mentioned earlier in the call,
Speaker Change: We entered into agreements to repurchase an aggregate $86.4 million of our convertible senior notes for cash consideration of $87.9 million, which is net of the cash we received from the proportionate unwind of the cap call transactions.
Speaker Change: We affected the repurchase over two tranches. The first $40 million tranche closed in the second quarter, and the second $46.4 million tranche closed in July during our third quarter.
Speaker Change: We believe the repurchase transactions significantly simplify our capital structure and eliminated potential future dilution at an attractive repurchase price.
Chad Paris: Following the repurchases, the remaining $13.5 million of convertible notes are a much smaller piece of our overall capital structure, and we expect to settle them with cash at or prior to their maturity in September 2025. Second, in July, we completed a private placement offering of 100 million of senior notes in two tranches: 60 million of 6.89 percent notes with final maturity in 2031, and 40 million of 7.02 percent notes with final maturity in 2034. The proceeds of this offering were used to fund the convertible notes repurchases and for general corporate purposes. This was our first return to the private placement debt market since the pandemic, and we were thrilled by the strong demand from new and existing debt investors for this over-subscribed debt offering.
Speaker Change: Following the repurchases, the remaining $13.5 million of convertible notes
Speaker Change: are a much smaller piece of our overall capital structure and we expect to settle them with cash at or prior to their maturity in September 2025.
Speaker Change: Second, in July we completed a private placement offering of $100 million of senior notes in two tranches.
Speaker Change: 60 million of 6.89% notes with final maturity in 2031 and 40 million of 7.02% notes with final maturity in 2034.
Speaker Change: The proceeds of this offering were used to fund the Convertible Notes repurchases and for general corporate purposes.
Speaker Change: This was our first return to the private placement debt market since the pandemic, and we were thrilled by the strong demand from new and existing debt investors for this oversubscribed debt offering.
Chad Paris: Through the completion of these financing transactions, we extended our weighted average debt maturity from 1.6 years to just over four years. We believe the successful execution of this financing once again underscores the importance of our core philosophies of maintaining a strong balance sheet with manageable leverage, ample liquidity, and owning our real estate. Our balance sheet remains strong, and we ended the second quarter with 33 million in cash, and over 208 million in total liquidity, with a debt to capitalization ratio of 28 percent and net leverage of 1.9 times net debt to adjusted EBITDAQ.
Chad Paris: Through the completion of these financing transactions, we extended our weighted average debt maturity from 1.6 years to just over four years. We believe the successful execution of this financing once again underscores the importance of our core philosophies of maintaining a strong balance sheet with manageable leverage, ample liquidity, and owning our real estate. Our balance sheet remains strong, and we ended the second quarter with $33 million in cash and over $208 million in total liquidity, with a debt-to-capitalization ratio of 28 percent and net leverage of 1.9 times net debt to adjust. Thanks, Chad. Good morning, everyone.
Speaker Change: Through the completion of these financing transactions, we extended our weighted average debt maturity from 1.6 years to just over 4 years.
Speaker Change: We believe the successful execution of this financing once again underscores the importance of our core philosophies of maintaining a strong balance sheet with manageable leverage, ample liquidity, and owning our real estate.
Speaker Change: Our balance sheet remains strong, and we ended the second quarter with $33 million in cash and over $208 million in total liquidity, with a debt-to-capitalization ratio of 28% and net leverage of 1.9 times net debt-to-adjusted EBITDA.
Gregory Marcus: With that, I will now turn the call over to Greg. Thanks, Shat. Good morning, everyone.
Speaker Change: With that, I will now turn the call over to Greg.
Gregory Marcus: Over the last few quarterly earnings calls, we've talked about our outlook for the year in terms of two storylines that we expected to play out over the short term. First, we expected two different trends in our divisions, with hotels continuing to grow with steady occupancy growth and events in our markets that we would benefit from. While we expected theaters to be impacted by product supply challenges following last year's Hollywood strikes. Second, in theaters, we expected the year to be a tale of two halves, with the most significant impact of the product supply shortages felt in the first half of the year, with stronger product turning into the second half of the year, building momentum heading into 2025.
Greg: Thanks, Chet. Good morning, everyone.
Greg: Over the last few quarterly earnings calls, we've talked about our outlook for the year in terms of two storylines that we expected to play out over the short term.
Gregory Marcus: We expected two different trends in our divisions, with hotels continuing to grow with steady occupancy growth and events in our markets that we would benefit from, while we expected theaters to be impacted by product supply challenges following last year's Hollywood strike. It has played out as expected. While the second quarter started out very slowly in our theater division in April and May, we really started to see an inflection point in June with films that drew large audiences. They were not a surprise.
Greg: First, we expected two different trends in our divisions with hotels continuing to grow with steady occupancy growth and events in our markets that we would benefit from.
Speaker Change: while we expected theaters to be impacted by product supply challenges following last year's Hollywood strikes.
Speaker Change: Second, in theaters we expected the year to be a tale of two halves, with the most significant impact of the product supply shortages felt in the first half of the year, with stronger product returning in the second half of the year, building momentum heading into 2025.
Gregory Marcus: This has played out as expected, though when you peel back the onion, there are surprises both positive and negative within the quarters. While the second quarter started out very slowly in our theater division in April and May, we really started to see an inflection point in June with films that drew large audiences. and even broke box office records. In hotels, it got off to a strong start that carried through to deliver a great quarter, which we expect to be followed by an even better third quarter given the events we have going on in our markets.
Speaker Change: This has played out as expected, but when you peel back the onion there are surprises both positive and negative within the quarters
Speaker Change: While the second quarter started out very slowly in our theater division, in April and May, we really started to see an inflection point in June with films that drew large audiences
Speaker Change: and even broke box office records.
Speaker Change: In hotels, we got off to a strong start that carried through to deliver a great quarter, which we expect to be followed by an even better third quarter given the events we have going on in our markets.
Gregory Marcus: While the quarterly comparisons to last year have been tough, they were not a surprise.
Speaker Change: While the quarterly comparisons to last year have been tough,
Gregory Marcus: We see improvement coming in the second half of the year, and our long-term outlook for both businesses remains positive.
Speaker Change: They were not a surprise.
Speaker Change: We see improvement coming in the second half of the year, and our long-term outlook for both businesses remains positive.
Gregory Marcus: I'll start today with our hotel and resorts division. You've seen the segment numbers, and Chad shared some additional detail on the performance metrics, including our outperformance to the comp sets and upper upscale hotels nationally. Overall, the quarter was solid with several highlights. First, continue to win group business that is filling in midweek occupancy, and it helped grow our overall occupancy to nearly 73%. This is our highest occupancy level in the second quarter since the pandemic, and well, it isn't quite all the way back to the typical second quarter pre-pandemic average of around 77%. We continue to get closer.
Gregory Marcus: I'll start today with our hotel and resorts. The net result has been successful in growing our occupancy and overall revenue. As we all saw a few weeks ago, Milwaukee recently hosted the Republican National Convention at our three downtown hotels. The Pfister, St. Kate, and Hilton Milwaukee Cities all played a big role in welcoming an estimated 50,000 visitors to the city.
Speaker Change: I'll start today with our Hotel and Resorts Division.
Speaker Change: You've seen the segment numbers and Chad shared some additional detail on the performance metrics.
Chad Paris: including our outperformance to the CompSats and upper upscale hotels nationally.
Speaker Change: Overall the quarter was solid with several highlights. First, continue to win group business that is filling in midweek occupancy.
Speaker Change: And it helped grow our overall occupancy to nearly 73%.
Gregory Marcus: Our average daily rates were effectively flat in the second quarter compared to the second quarter last year, and we held ADR despite the increase in group business, which is typically at lower rates. In addition, we continue to benefit from optimizing our revenue management strategies like properties. We've been aggressive on daily rates during low-demand periods to drive occupancy and maximize revenue with our available room-night capacity. The net result has been successful in growing our occupancy and overall repart. Finally, we did continue to see some modest rates softening among leisure customers in the quarter at some of our properties, which was offset by rate growth and other segments.
Speaker Change: Finally, we did continue to see some modest rate softening among leisure customers in the quarter at some of our properties, which was offset by rate growth in other segments.
Gregory Marcus: Our banquet and catering business continues to benefit the strength in our group business with food and beverage revenue is going 3.8% in the second quarter of 2024 compared to the second quarter last year. As we look ahead, group bookings remain strong with our group-room revenue bookings for the remainder of fiscal 2024 or group pace in the year for the year, running approximately 11% ahead of where we were at this time last year, excluding the impact of the Republican National Convention in Milwaukee. Looking further ahead, our group pace for fiscal 2025 is running over 36% ahead of where we were at this time last year.
Gregory Marcus: Bank with and catering pace for the remainder of fiscal 2024 and 2025 is similarly ahead of where we were at this time last year. Our newly renovated meeting spaces and ballrooms at Grange and Eva Resort and Spa and at The Fister have contributed to our success in winning groups and event bookings. The guest room renovation of the historic building at the Fister Hotel was completed on schedule, with all rooms back in service in time for the RNC. We've planned to complete the last space of the hotel renovation with a refresh of the lobby and public space later this year.
Gregory Marcus: The investments we have made in our properties put us in a great position to win in our markets. As we all saw a few weeks ago, Milwaukee recently hosted the Republican National Convention and our three downtown hotels, the Fister St. Kate and Hilton Milwaukee City Center. All played a big role in welcoming an estimated 50,000 visitors to the city. 13. During the five nights of the event, we hosted convention attendees and many VIPs in a complete cell out of our over 1,250 rooms at these three hotels, with 19 convention events in our ballrooms and meeting spaces.
Gregory Marcus: In terms of financial impact to our third quarter, the R&C generated over 3 million in the incremental revenue for the division over our volumes during the same week last year. This was a milestone event for the city with national media coverage that highlighted our great hospitality and all the things that make this city great. While the event certainly will be a net positive to our third quarter results, more importantly, we believe the event showcased the city's ability to successfully host large-scale conventions and events, with venues including Barred Center, the Expanded Convention Center that opened earlier this summer, and Pfizer Forum.
Gregory Marcus: In terms of financial impact on our third quarter, the RNC generated over $3 million in incremental revenue for the division over our volumes during the same week last year. This was a milestone event for the city, with national media coverage that highlighted our great hospitality and all the things that make this city great. The National Box Office had its biggest monthly decline of the year in April of approximately 38 percent and then sequentially improved each month as we had more and better filled theaters. Chad went through our results for the quarter, including our circuit underperformance, the change in the national change in the national box office by two percentage points in the second quarter compared to last year.
Speaker Change: This was a milestone event for the city with national media coverage that highlighted our great hospitality and all the things that make this city great.
Speaker Change: More importantly, we believe the event showcased the city's ability to successfully host large-scale conventions and events with venues including Baird Center, the expanded Convention Center that opened earlier this summer, and Pfizer Forum.
Gregory Marcus: We are optimistic that the success of the R&C will have a long-term positive impact on event bookings and hospitality demand in the market in future years.
Speaker Change: We are optimistic that the success of the RNC will have a long-term positive impact on event bookings and hospitality demand in the market in future years.
Gregory Marcus: Turning to theaters, as I mentioned in my opening comments, we saw a significant difference in the performance of the division in April and May compared to June, both in terms of the overall box office in each month and in terms of our performance relative to the nation. The national box office had its biggest monthly decline of the year in April of approximately 38 percent, and then sequentially improved each month as we had more and better selves to play. And Marcus Theater's box office compares and followed that national trend. Chad went through our results for the quarter, including our circuit under performance to change in the national, underperforming the change in the national box office by two percentage points in the second quarter compared to last year.
Speaker Change: Turning to theaters, as I mentioned in my opening comments, we saw a significant difference in the performance of the division in April and May compared to June, both in terms of the overall box office in each month and in terms of our performance relative to the nation.
Speaker Change: The National Box Office had its biggest monthly decline of the year in April of approximately 38 percent, and then sequentially improved each month as we had more and better films to play.
Speaker Change: And Marcus Theodore's box office comparisons followed that national trend.
Gregory Marcus: However, as Chad mentioned, while we started the quarter slowly, we finished strong. Looking by month, we underperformed in April and May and then significantly outperformed the nation in June by over nine points for the month. There are several changes that occurred that we believe drove this positive trend that has now continued into July. We didn't make any further changes to admission prices on Tuesday.
Gregory Marcus: However, if Chad mentioned, while we started the quarter slowly, we finished strong. Looking by month, we underperformed in April and May, and then significantly outperformed the nation in June by over nine points for the next one month. There are several changes that occurred that we believe drove this positive trend that has not continued into July.
Gregory Marcus: First, I'll start with the changes that we made. On our last call, I noted that with the softer film slate, we were refocusing on driving attendance, keeping customers coming to the movies, and making sure we had a compelling offering for everyone, particularly our value-oriented customers. In May, we rolled out our everyday matinee promotion, which offers a $7 ticket for kids and seniors for any shows starting before 4 p.m. on a standard screen seven days a week. In addition, we continued to evolve our Value Tuesday promotion. We didn't make any further changes to admission prices on Tuesday.
Speaker Change: First, I'll start with the changes that we made on our last call. I noted that with a softer film slate, we were refocusing on driving attendance to keep customers coming to the movies, and making sure we had a compelling offering for everyone, particularly our value-oriented customers.
Gregory Marcus: In May, we reintroduced the free complimentary size popcorn for all MMR members, replacing the prior Tuesday promotion of a 20% discount on all food and non-alcoholic drink for MMR members. These changes are designed to drive attendance and appeal to value-oriented customers on making sure that movie going remains the most affordable out-of-home entertainment option. Based on the first two months of results, the changes appear to be contributing to our improved performance. Second, the mix of film shifted to genres that played well in our markets in May and June, including Inside Out 2, If, and Bad Boys Writer Die, all of which outperformed our normal market share.
Gregory Marcus: In May, we reintroduced a free popcorn for all MMR members, replacing the prior Tuesday promotion of a 20% discount on all food and non-alcoholic drinks for MMR members. Second, the mix of films shifted to genres that played well in our markets, including Inside Out 2, If, and Bad Boys Ride or Die, all of which outperformed our normal margins. However, similar to what we saw in the first quarter, the second quarter slate this year was weaker overall with lesser performances and fewer blockbusters.
Speaker Change: Second, the mix of films shifted to genres that played well in our markets in May and June.
Speaker Change: including inside out to if and bad boys ride or die all of which under outperformed our normal market share
Gregory Marcus: We expected that the increase in promotions would create a headwind to our admission per caps, which were down 3.1% in the set in quarter, and were also impacted by a challenging comparison with high 3D ticket sales for the Super Mario Brothers movie last. and Michael Hickey. In terms of the quantity of wide-release films in the second quarter, we had a similar number of titles with 28 wide releases in the second quarter of fiscal 2024 compared to 29 in the second quarter last year. However, similar to what we saw in the first quarter, the second quarter slate this year was weaker overall, with lesser performances and fewer blockbusters.
Speaker Change: We expected that the increase in promotions would create a headwind to our admission per caps, which were down 3.1% in the second quarter, and were also impacted by a challenging comparison with high 3D ticket sales for the Super Mario Bros. movie last year.
Gregory Marcus: With an average opening weekend US box office gross per wide-release film that was 28% lower than the same average in the second quarter last year. Only Inside Out two opened to over 100 million in the second quarter this year compared to three films with an opening over 100 million in a fourth film, The Little Mermaid coming very close with a 95 million opening during second quarter last year. In June, we saw that once again, when quality product supplies there, audiences still want to come out to see films on the big street. Inside Out 2 delivered the second highest grossing opening weekend animated film of all time and has gone on to become the highest grossing animated film of all time, overtaking other Pixar blockbusters, including Incredibles 2 and Frozen 2, with a domestic box office that now stands at over 600 million dollars during its six week run.
Gregory Marcus: In June, we saw that once again, when quality product supply is there, audiences still want to come out to see films on the big screen. Inside Out 2 delivered the second highest grossing opening weekend animated film of all time and has gone on to become the highest grossing animated film of all time.
Speaker Change: In June, we saw that once again, when quality product supply is there, audiences still want to come out to see films on the big screen.
Speaker Change: It's almost all time.
Gregory Marcus: The momentum continues into July with the releases of Despicable Me 4, Twisters, and Deadpool and Rover E, with last weekend's highest our rated opening of all time. Deadpool, Wolverine broke several records from Marcus Leaders as well, becoming our highest ever grossing weekend summer film opening between May and August and our highest ever PLF grossing opening weekend summer film.
Gregory Marcus: The momentum continued into July with the releases of Despicable Me 4, Twisters, and Deadpool and Wolverine. With last weekend's highest R-rated opening of all time, Deadpool and Wolverine broke several records for Marcus leaders as well, becoming our highest ever grossing weekend summer film, opening between May and August, and our highest ever PLF grossing opening weekend summer film. This fall, we are excited about Betelgeuse, Betelgeuse. Joker, Folly Adieu, and Venom, The Last Dance, among others.
Gregory Marcus: As we look ahead to the rest of the year, we see a stronger second half. This fall, we are excited about Beetlejuice, Beetlejuice, Joker, Folly Adu, and Venom: The Last Dance among others. For the holidays, we look forward to films such as Gladiator 2, Moana 2, Wicked, The Lord of the Rings, The War of the Hero, Craven the Hunter, Mufasa, and Sonic the Hedgehog 3. As we look further ahead to next year, the slate for 2025 is stacked with several very strong franchises, including Superman Legacy, Captain America, Mission Impossible, Jurassic World, Karate Kid, the Fantastic Four, Snow White, Wicked 2, and Avatar 3, just to name a few.
Speaker Change: This fall we are excited about Beetlejuice Beetlejuice.
Speaker Change: For the holidays, we look forward to films such as Gladiator 2, Moana 2, Wicked, The Lord of the Rings, The War of the Rohirrim, Kraven the Hunter, Mufasa, and Sonic the Hedgehog 3.
Speaker Change: As we look further ahead to next year, the slate for 2025 is stacked with several very strong franchises, including Superman Legacy, Captain America, Mission Impossible, Jurassic World, Karate Kid, The Fantastic Four, Snow White, Wicked 2, and Avatar 3, just to name a few.
Gregory Marcus: As we look at the product supply ramping back to, and potentially exceeding 2023 levels in 2025, and further growth beyond, we remain very positive and optimistic about the long-term future for the industry and our theater business.
Gregory Marcus: Finally, I'd like to briefly talk about growth in theaters. While over the last few years, we've closed several underperforming theater locations as we optimize our footprint, we continue to look at opportunities to grow this business in attractive locations and with a financial model that makes sense. We recently announced the addition of a new theater to our circuit at the Shops at West End in St. Louis Park, a separate of Minneapolis, Minnesota. This is our eighth location in Minnesota and our closest to Minneapolis. It's a great example of what we think is possible when we were close with landlords to reposition theater, in this case, in an attractive lifestyle center in a good market that we know.
Speaker Change: While over the last few years we've closed several underperforming theater locations as we optimize our footprint, we continue to look at opportunities to grow this business in attractive locations and with a financial model that makes sense.
Speaker Change: We recently announced the addition of a new theater to our circuit at the shops at West End in St. Louis Park.
Speaker Change: a suburb of Minneapolis, Minnesota. This is our 8th location in Minnesota and our closest to Minneapolis. It's a great example of what we think is possible when we work closely with landlords to reposition theater, in this case an attractive lifestyle center in a good market that we know.
Gregory Marcus: We reopen the theater as the Marcus West End Cinema in early July, bringing all of our great offerings and programs to customers on day one, including our magical Movie Rewards loyalty program. Marcus Passport, Value Tuesday, and Everyday Match. and me. We look forward to making further improvements in the theater with the landlord and the months to come.
Speaker Change: We reopened the theater as the Marcus West End Cinema in early July, bringing all of our great offerings and programs to customers on day one, including our magical movie rewards loyalty program, Marcus Passport, Value Tuesday, and Everyday Matinee.
Speaker Change: We look forward to making further improvements to the theater with The Landlord in the months to come.
Gregory Marcus: Finally, I would like to briefly comment on the financing transactions that Chad covered earlier. As you can tell, we've been busy the last several months developing and executing a financing plan to extend and simplify our capital structure. I would be remiss if I didn't congratulate Chad on leading a complex refinancing that we believe will be a huge positive for our shareholders in the long term. We often get questions on the capital allocation, our priorities, and how we think about the mix of paying a dividend in sharey purchases. One of the ways we viewed repurchasing a substantial portion of our convertible debt was that we were indirectly buying back our equity by eliminating potential future dilution.
Gregory Marcus: I would like to briefly comment on the financing transactions that Chad covered earlier. As you can tell, we've been busy the last several months developing and executing a financing plan to extend and simplify our capital stream. I would be remiss if I didn't congratulate Chad on leading a complex refinancing that we believe will be a huge positive for our shareholders in the long term. We often get questions on capital allocation, our priorities, and how we think about the mix of paying a dividend and sharing.
Speaker Change: Finally!
Chad Paris: I would like to briefly comment on the financing transactions that Chad covered earlier. As you can tell, we've been busy the last several months developing and executing a financing plan to extend and simplify our capital structure.
Speaker Change: And I would be remiss if I didn't congratulate Chad on leading a complex refinancing that we believe will be a huge positive for our shareholders in the long term.
Speaker Change: We often get questions on capital allocation, our priorities, and how we think about the mix of paying a dividend and share repurchases. One of the ways we viewed repurchasing a substantial portion of our convertible debt was that we were indirectly buying back our equity by eliminating potential future dilution.
Gregory Marcus: One of the ways we viewed repurchasing a substantial portion of our convertible debt was that we were indirectly buying back our equity by eliminating potential future delusions. We are continually evaluating where we can best deploy capital with each investment decision, whether for growth, maintaining our assets, or returning capital to shareholders through dividends or through our current share repurchase authorization of $2.4 million.
Gregory Marcus: We're continually evaluating where we can best deploy capital of each investment decision, whether for growth, maintaining our assets, or returning capital to shareholders through dividends, or through our current share purchase authorization, 2.4 million shares. In this regard, we are optimistic and opportunistic, and we'll deploy capital where we see the best returns.
Speaker Change: We are continually evaluating where we can best deploy capital with each investment decision.
Speaker Change: [inaudible]
Gregory Marcus: In this regard, we are optimistic and opportunistic, and we'll deploy capital where we see the best. I'd like once again to express my appreciation for our dedicated associates. Their outstanding work and commitment to serving our customers is responsible for our success, and we appreciate all they do every day. As we say so often, they are our most important assets. So, on behalf of our board of directors and our entire executive team, thank you to all.
Speaker Change: and opportunistic and will deploy capital where we see the best returns.
Gregory Marcus: I'd like to once again express my appreciation for our dedicated associates, the Marcus Corporation. They're outstanding work and commitment to serving our customers is responsible for our success, and we appreciate all they do every day. As we say so often, they are our most important assets.
Speaker Change: I'd like to once again express my appreciation for our dedicated associates at the Marcus Group.
Speaker Change: Corporation.
Speaker Change: Their outstanding work and commitment to serving our customers is responsible for our success, and we appreciate all they do every day.
Gregory Marcus: So, on behalf of our board of directors and our entire executive team, thank you to all of our associates.
Speaker Change: As we say so often, they are our most important assets. So on behalf of our board of directors and our entire executive team, thank you to all of our associates.
Chad Paris: And with that, at this time, Chad and I would be happy to open the call up for any questions you may have. Thank you.
Gregory Marcus: And with that, at this time, Chad and I would be happy to open the call up for any questions you may have. Thank you. Please press star followed by the number one if you'd like to ask a question and ensure your device is unmuted locally when it's your turn to speak. If you change your mind or your question has already been answered, you can withdraw your question by pressing star followed by the number 2.
Speaker Change: And with that at this time, Chad and I would be happy to open the call up for any questions you may have.
Lydia: Please press star followed by the number one if you'd like to ask your question, and ensure your devices are muted locally when it's your time to speak. If you change your mind or your question has already been answered, you can withdraw your question by pressing star followed by the number two.
Speaker Change: Thank you. Please press star followed by the number one if you'd like to ask a question and ensure your device is unmuted locally when it's your turn to speak. If you change your mind or your question has already been answered you can withdraw your question by pressing star followed by the number two.
Jim Goss: We'll go fast to Jim Goss with Barrington Research. Please go ahead to your line as I think.
Operator: We'll go first to Jim Goss with Barrington Research. Please go ahead; your line is open. All right. Thank you. One question or set of questions about the hotel sector. You talked about the benefits of the RNC. I'm wondering, was there any displacement impact from that event with demand pushing to other summer timeframes that you might benefit from later on? And did this event help heighten the profile of, thank you, the Arts Hotel and provide potential justification for additional expansion of that concept? [inaudible] Look, it's a yes and no, Jim, but it's complicated what happens with the IRS.
Speaker Change: We'll go first to Jim Goss with Barrington Research. Please go ahead, your line is open.
Gregory Marcus: All right, thank you. One question or set of questions about the hotel sector. You talked about the benefits from the RNC; wondering, was there any displacement impact from that event with demand push to other summertime frames that you might benefit from later on? And did this event help tighten the profile of St. Kate, the arts hotel, and provide potential justification for additional expansion of that concept? You know, look at it, it's a yes and no, Jim. Let me look at the complex, what happens with the RNC. Yes, it did move some business later in the summer.
Jim Goss: All right, thank you
Jim Goss: One question, there's a set of questions about the hotel sector.
Jim Goss: You talked about the benefits from the RNC. I'm wondering, was there any displacement impact from that event with demand pushed to other summer time frames?
Speaker Change: that you might benefit from later on? And did this event help heighten the profile of St. Kate, the Arts Hotel, and provide potential justification for additional expansion of that concept?
Speaker Change: You know
Speaker Change: Look, it's a yes and no, Jim. Let me put this. It's complex what happens with the RNC. You know, yes, it did move some business later in the summer. So, you know, like the Northwestern Mutual annual conference was moved to accommodate it.
James Goss: Yes, it did move some business later in the summer. So, you know, like the Northwestern Mutual annual conference was moved to accommodate, You know, so that was probably the biggest move. And so, yeah, I'm sure at this place in business, and I'm sure some people look at the TV and say, Wow, Milwaukee's cool. I should go there.
Gregory Marcus: So, you know, like the Northwestern Mutual Annual Conference was moved to accommodate it. You know, so that was probably the biggest move. And so, yeah, I'm sure at this place in business, and I'm sure some people look at the TV and say, wow, Milwaukee's cool. I should go there because it's true. But the other side of that is that there was, by the way, this is all in that positive, but there was a little displacement on the front end because the convention center was pretty much out of business for a few weeks before the RNC came out because just the setup was such an extensive setup.
Speaker Change: You know that so that was probably the biggest move and so yeah I'm sure at this place in business, and I'm sure some people look at the TV and say wow Milwaukee's cool. I should go there Because it's true But the other side of that is that there was by the way, this is all in that positive, but
Gregory Marcus: Because it's true. But the other side of that is that there was... And by the way, this is all in the positive, but... There was a little displacement on the front end because, you know, the Convention Center was pretty much out of business for a few weeks before the RNC came about because just the setup was such an extensive process. So, you know, there were positives and negatives to it, but overall. We're really pleased with how it all turned out. As for St. Kate, yeah, you can look at... You read my mind; I'd like to have more of them.
Speaker Change: There was a little displacement on the front end because, you know, the Convention Center was pretty much out of business for a few weeks before the the RMC came about because just the setup was such an extensive setup.
Gregory Marcus: So, you know, there were positives and negatives to it, but overall, you know, we're really pleased with that.
Speaker Change: So, you know, there were positives and negatives to it, but overall, you know, we're really pleased with how it all turned out. As for St. Kate, yeah, you can look at...
Gregory Marcus: Erdogan. As for St. Kate, you read my mind. I would like to have more of them, but we've got to get this one in a place where it's so hard to judge when you get on one timer like the RNC. But again, we think that that pause is it continues to build and that concept continues to grow every year, and we're pleased with how it's coming along. So we do think about exactly what you're talking about. OK, thanks.
Gregory Marcus: But we've got to get this one in a place. And it's so hard to judge when you get a one-timer like the R&C. But again, we think the net positive. It continues to build. And that concept continues to grow every year. And we're pleased with how it's coming along. We do, we do think about exactly what you're talking about. Okay, thanks.
Speaker Change: in a place where, and it's so hard to judge, you know, when you get a one-timer like the RNC. But I, again, we think the net positive, it continues to build and that concept continues to
Speaker Change: to grow every year, and we're pleased with how it's coming along. And so we do think about exactly what you're talking about.
Jim Goss: And on the cinema side, I'm wondering at this stage is film flow, importantly, in numbers game or is it dependent primarily on the quality and or demographic appeal of the film mix being released. I'm probably wondering about your read on consumer attitudes toward theatrical attendance at the stage. You're always pretty bullish on it, but I think. You know, I think, you know, my theory is that at the end of the day, it is the number of films released. However, I mean, that's, you know, I mean, it has to be what I would call a normal slate.
Gregory Marcus: CinemaSide. I'm wondering, at this stage, is film flow, importantly, a numbers game, or is it dependent primarily on the quality and or demographic appeal of the film mix being released? And I'm partly wondering about your read on consumer attitudes toward theatrical attendance at this stage. You're always pretty bullish on it, I think. You know, my theory is that, at the end of the day, it is the number of films... However, I mean, that's, you know, what I mean.
Speaker Change: Okay, thanks.
Speaker Change: cinema side.
Speaker Change: I'm wondering, at this stage, is film flow, importantly, a numbers game, or is it dependent primarily on the quality and or demographic appeal of the film mix being released? I'm partly wondering about your read on consumer attitudes toward theatrical attendance.
Speaker Change: at this stage.
Speaker Change: You're always pretty bullish on it, but I think...
Speaker Change: You know, I think you know my theory is that at the end of the day, it is the number of films released.
Gregory Marcus: It has to be what I would call a normal slate, you know; if you don't, if you release, you know, a hundred and ten films, and not one of them is a tenth-rate fool, that's not, that's not what I would call a normal slate. And so, I think, you know, as we're thinking about the earlier part of the year, when the number of films released, what they were releasing, I'm glad they were putting movies out there, but not tent poles. We talked about what a tent pole is.
Speaker Change: However, I mean that's, you know, I mean...
Gregory Marcus: You know, if you don't, if you release, you know, 110 films and not one of them as a tent pool, that's not what I would call a normal slate. And so, I think, you know, so thinking about the earlier part of the year, where the number of films released seemed to be at a higher, higher cadence, what they were releasing. I'm glad they were putting movies out there. And, but, but not, you know, tent poles. We thought, you know, we thought, but, but what is a tent pole? What a whole tent. So lots of things can be inside of it.
Speaker Change: It has to be what I would call a normal slate, you know, if you don't, if you release, you know, a hundred and ten films and not one of them is a tenth, well, that's not, that's not what I would call a normal slate. And so I think, you know, sort of thinking about the earlier part of the year where the number of films released.
Speaker Change: Seemed to be at a higher at a higher cadence
Speaker Change: that what they were releasing, I'm glad they were putting movies out there, but not tent poles. We talk about what is a tent pole? Well, it holds the tent so lots of things can be inside of it. If you just had tent poles, well, you're not stocking your tent full.
Gregory Marcus: Well, it holds a tent, so lots of things can be inside of it. If you just have tent poles, well, you're not stocking your tent full. Or if you don't have tent poles, well, the ceiling is going to be a little lower, so to speak.
Gregory Marcus: Not just if you just had tent poles, well, that's, you're not, you're not stocking your tent pole. And, or if you don't have tent poles, well, the ceiling is going to be a little lower, so to speak. And so, at the end of the day, assuming the proportionate number of tent poles, and then smaller films and sort of a very slate of different kind of films, then I feel that the box office is still relatively predictable. But it used to be, because look at people want to go to the movies. Look at what we are seeing right now.
Speaker Change: And, or if you don't have tent poles, well, the ceiling is going to be a little lower, so to speak. And so, at the end of the day, assuming the proportionate number of tent poles, and then smaller films, and sort of a varied slate of different kinds of films,
Gregory Marcus: So, at the end of the day, assuming the proportionate number of tent poles and then smaller films and sort of a varied slate of different kinds of films, then I feel that the box office is still relatively predictable, but it needs to be, because look at it. People want to go to the movies. Look at what we are seeing right now. You can just think back a few years; no one's going to a family movie anymore. All of a sudden, we have the highest-gross animated film, uh, you know, Oh, Marvel's done. Stick a fork in Marvel, and then we'll get Deadpool and Wolverine.
Speaker Change: then I feel that the box office is still relatively predictable.
Speaker Change: But it needs to be because look at people want to go to the movies. Look at what we are seeing right now I cry, you know, and I want to you know, you could just think back a few years No one's going to a family movie anymore. All of a sudden we have the highest animated film of all time
Gregory Marcus: You know, and I want to, you know, and you can just think back a few years. No one's going to a family movie anymore. All of a sudden, we have the highest enemy that's on the fall time. You know, Marvel's done, Sikafork and Marvel, and then we get that pool of movies. I saw last night; it was so great. But, you know, it's, you've got to get people back in the habit. You know, oh, you know, right now comedy's dead; nobody's going to comedy. Although everybody wants a Dead Pool, which I promise you is a comedy.
Speaker Change: Uh, you know, um, oh, Marble's done. Stick a fork in Marble, and then we get Deadpool.
Gregory Marcus: I saw it last night. [inaudible] It's just, you know, but you've got to take enough swings and you've got to get people back in the habit. You know, oh, right now, comedy's dead, nobody's going to see a comedy. Although everybody went to Deadpool, which I promise you is a comedy.
Speaker Change: But, wow.
Speaker Change: So, it's just, you know, but you've got to take enough swings and you've got to get people back in the habit. You know, oh, right now comedy's dead, nobody's going to comedy. Although everybody went to Deadpool, which I promise you is a comedy.
Gregory Marcus: People, I don't know, seem to have more fun laughing in a room full of people than laughing by yourself on the sofa. Ha, ha, you know, that's great. But, you know, you want a room full of people around you. So I think you've got to get back to that and build the audience. People have to get back into the habit of going. Okay, one last one.
Gregory Marcus: People, people, I don't know, seems to be more fun to laugh at, you know, a room full of people than to laugh by yourself on the sofa. Ha, ha, you know, that's great. But, you know, you want a room full of people around you. And so, I think they just, they got to get back to that and build the audience. People have to get back in the habit of going.
Speaker Change: People, I don't know, it seems to be more fun to laugh
Speaker Change: like, ha, ha, you know, that's great. But you know, you want a room full of people around you. And so I think they just, they gotta get back to that and build the audience. People have to get back in the habit of going.
Gregory Marcus: Alternative content gained a little more traction when there was less content available. And I'm wondering if, in the aftermath, as alternative content begins to subside from lack of need, what elements do you feel will have a more lasting impact, and will it be confined to certain days of the week or anything else of that nature? I've always said that alternative content will continue to be, and I think that it's going to become the biggest part of our business.
Jim Goss: Okay. One last one, alternative content gained a little more traction when there's less content available. And I'm wondering if, in the aftermath, is, is alternative content begins to subside from lack of the need.
Speaker Change: Okay, one last one alternative content gained a little more traction when there's less content available
Speaker Change: And I'm wondering if, in the aftermath, as alternative content begins to subside from lack of need, what elements do you feel will have a more lasting impact, and will it be confined to certain days of the week or anything else of that nature?
Gregory Marcus: What elements do you feel will have a more lasting impact and will be confined to certain days of the week or anything else for that nature? I think that alternative content will continue to be important to what we do and I don't always say that it's going to become the biggest part of our business but those last customers are very profitable, those are high margin customers and I think that will be we only be strategic and figure out that the key is for us to know the audiences, to know who that is and to effectively be able to market to them because that's ultimately the challenge of alternative content is to be able to market to an audience and you're not releasing something nationally and having you know and playing you know 500,000 runs of something which is what a national run is of something over a month you know you have to you can't throw as much marketing at it so you have to be very efficient and so our loyalty program which continues to grow and not just ours because it needs all the industries and there are I think all the industries loyalty programs can need to grow as we get better at marketing and finding those audiences you know for example I'll give you an example our Indian film Bollywood content you know we're getting better at it and it's growing our newest market has been very strong we're in burden we want them to have a very invested the time and built that built that audience and we're growing it now again it's it's not huge dollar amounts but over time it's gross and it can be meaningful and it can whether it's that or concert phones or whatever we might be doing it's something we have to pay attention to because as I said those last dollars are the most profitable okay thanks for your thoughts appreciate it and next question say come strong my kitty with the benchmark company please go ahead to your line as I've been and Greg Jack morning guys and great job congratulations on your financing transactions awesome to see that thank you yep me um I guess the first topic on the tell side really strong growth least versus expectations maybe for the first half here and I get the group data looks good um but sort of your confidence here um that you can continue to sort of grow the hotel piece second half of 24 and 25 and I guess the backdrop here some lot Greg is that I think prior quarter you expressed maybe a little softness and in leisure so sort of curious update there and then your confidence for growth yeah Michael I'll start um as we mentioned the prepared remarks we did see some continued softness in leisure I wouldn't say that it was meaningfully accelerating or different than what we mentioned in the first quarter but as you know that's been a really hot segment to the business coming out of the pandemic and so it's it's normalizing which I think generally we thought in the industry thought was was going to happen what what is happening though this offsetting it is we're seeing other segments of the business that have have more than offset it and that's primarily happening in occupancy this quarter it even it even managed to offset the softness and leisure rates to hold rate flat and so you know we like the fact that our mix of business gives us the ability and opportunities to win in other segments to to offset softness in certain certain sectors or parts of the business when it happens um and we were able to do that this quarter and and as we go into the second half of the year we talked about the bookings and what the forward book looks like for for group business which looks strong for the balance of the year good growth um both this year and next year that you know we think will continue to help us offset any softness that we see in leisure but um I would say it's more of a more of sort of what continuation of what we saw but we're managing it both that I don't think we look at specific, we don't talk about specific assets like that, it's a mixture of stuff, you know, when you do something like that, part of it is just you have to do it because you know, that's what you have to do to stay in the business and keep your assets up, but you know, it is so beautiful and the F&B market is so competitive and the bank what's market, so now people come and they see how great the asset is, you know, I think there's obviously going to be a benefit to it, and we'll talk to quantify, but that is the, you know, the cost of being in business over time.
Speaker Change: I think that alternative content will continue to be important to what we do.
Speaker Change: and I've always said I don't think that it's going to become the biggest part of our business.
Gregory Marcus: But those last customers are very profitable. Those are high-margin customers. And, you know, I think that that will be, we'll need to be strategic and figure out the key is for us to know the audience. To know who that is and to effectively be able to market, because that's ultimately the challenge of it, to be able to market to an audience when you're not releasing something nationally and having it play, you know, 500,000 times.
Speaker Change: But those last customers are very profitable. Those are high-margin customers.
Speaker Change: And, you know, I think that that will be, we'll need to be strategic and figure out, the key is for us to know the audiences, to know who that is and to effectively be able to market to them, because that's ultimately the challenge of alternative content.
Speaker Change: is to be able to market to an audience. You know, when you're not releasing something nationally and having...
Speaker Change: and playing 500,000 runs of something, which is what a national run is of something, over a month.
Gregory Marcus: You know, you have to, you can't throw as much marketing at it, so you have to be very efficient. And so our loyalty program, which continues to grow, and not just ours, needs all the industries, and there are, I think, all the industries. As we get better at marketing and finding those audiences, for example, I'll give you an example. Our Indian film industry, Bollywood.
Speaker Change: You know, you have to, you can't throw as much marketing at it, so you have to be very efficient. And so our loyalty program, which continues to grow, and not just ours, because it needs all the industries, and I think all the industries' loyalty programs continue to grow.
Gregory Marcus: As we get better at marketing and finding those audiences, you know, for example, I'll give you an example, our Indian film, Bollywood content.
Gregory Marcus: We're getting better at it, and it's growing. Our St. Louis market has been very strong. Warenburg, when we bought them, had a very good...
Speaker Change: We're getting better at it, and it's growing. Our St. Louis market has been very strong. Warenburg, when we bought them, had a very... They invested the time and built that audience, and we're growing that.
Gregory Marcus: They invested the time, built that, and built that audience. And we're growing it. Now, again, it's not huge dollar amounts, but over time, it grows, and it can be meaningful, whether it's that or concert films or whatever we might be doing. It's something we have to pay attention to because, as I said, those last dollars are the most profitable. Okay, thanks for your thoughts. I appreciate it. Our next question today comes from Mike Hickey with The Benchmark Company. Please go ahead; your line is open.
Speaker Change: It's not huge dollar amounts, but over time it grows and it can be meaningful, whether it's that, or concert films, or whatever we might be doing. It's something we have to pay attention to, because as I said, those last dollars are the most profitable.
Speaker Change: Okay, thanks for your thoughts. Appreciate it.
Speaker Change: [inaudible]
Speaker Change: Our next question today comes from Mike Hickey with The Benchmark Company. Please go ahead, your line is open.
Operator: Good morning, Craig. Good morning, Jack. Good morning, guys. Great job. Congratulations on your financing transactions. It's awesome to see that you took care of Chad. Thank you.
Mike Hickey: Hey Greg, Jack, good morning guys and great job. Congratulations on your financing transactions. Awesome to see that.
Michael Hickey: The, um, I guess the first topic, on the hotel side, really strong growth. Least versus expectations, maybe, for the first half here. And I get the group data, looks good. But your confidence here that you can continue to sort of grow, the hotel piece, second half of 24 and 25. And I guess the backdrop here somewhat, Greg, is that I think in the previous quarter you expressed maybe a little thought, and Lieser. So, sort of a curious update there. Yeah, Mike, I'll start.
Mike: Thank you, Mike.
Mike: The I guess the first topic
Speaker Change: on the hotel side, really strong growth, at least versus expectations, maybe, for the first half here. And I get the group data.
Speaker Change: looks good but sort of your confidence here that you can continue to sort of grow
Michael Hickey: the hotel piece second half of 24 and 25 and I guess the backdrop here somewhat Greg is that I think prior quarter you expressed maybe a little softness and leisure so sort of curious update there and then your confidence for growth
Gregory Marcus: As we've mentioned in the prepared remarks, we did see some continued softness in leisure, although I wouldn't say that it was meaningful. It's accelerating or different than what we mentioned in the first quarter, but as you know, that's been a really hot segment of the business coming out of the pandemic. And so it's, it's normalizing, which I think, generally, we thought in the industry thought was going to happen. What is happening, though, is we're seeing other segments of the business that have more than offset it, and that's primarily happening in occupancy. This quarter, it even managed to offset the softness and leisure rates to hold rates flat.
Greg: Yeah, Mike, I'll start. As we mentioned the prepared remarks, we did see some continued softness in leisure. I wouldn't say that it was meaningfully
Mike: accelerating or different than what we mentioned in the first quarter.
Speaker Change: But as you know, that's been a really hot segment of the business coming out of the pandemic, and so it's normalizing.
Speaker Change: which I think generally we thought and the industry thought was going to happen.
Speaker Change: What is happening, though it's offsetting it, is we're seeing other segments of the business that have
Gregory Marcus: have more than offset it. And that's primarily happening in occupancy. This quarter, it even managed to offset the softness and leisure rates to hold rate flat. And so, we like the fact that our mix of business gives us.
Gregory Marcus: And so, you know, we like the fact that our mix of business gives us The ability and opportunities to win in other segments to to offset softness in certain certain sectors or parts of the business when it happens. And we were able to do that this quarter and and as we go into the second half of the year, we talked about the bookings and what the forward book looks like for for group business, which looks strong for the balance of the year. Good growth.
Speaker Change: The ability and opportunities to win in other segments to offset softness in certain sectors or parts of the business when it happens.
Speaker Change: and we were able to do that this quarter and and as we go into the second half of the year we talked about
Speaker Change: the bookings and what the forward book looks like for group business.
Speaker Change: which looks strong for the balance of the year, good growth.
Gregory Marcus: Both this year and next year, which we think will continue to help us offset any softness that we see in leisure, but I would say it's more of a sort of a continuation of what we saw, but we're managing it. Well said. All right, and then.
Speaker Change: both this year and next year that we think will continue to help us offset any softness that we see in leisure. But I would say it's more of a continuation of what we saw, but we're managing it.
Speaker Change: Well said.
Gregory Marcus: You called out the Fister, you put some $20 million in capital on that. Just sort of curious, maybe the renovations that you did there, how you think that'll impact Rev Par or Utilization, ADR, water, how that asset should grow. I don't think we look at specific assets like that, other than, you know...
Speaker Change: All right, and then you called out the Fister, you put some 20 million in capital on that. Just sort of curious, maybe the renovations that you did there and how you think that'll impact REBPAR or utilization, ADR, I guess, specifically if you want, or how that asset should grow after the money you put in.
Speaker Change: I don't think we look at specific we don't talk about specific assets like that other than you know, it's
Gregory Marcus: It's a mixture of stuff, you know, when you do something like that, part of it is just you have to do it because, you know, that's what you have to do to stay in the business and keep your assets up, but, you know, but it is so beautiful and it's, you know, and the F&B market is so competitive, and the banquets market, so now when people come and they see how great the asset Yeah, I mean, where we see it, Mike, is really in the bookings and the group side of the business, and particularly in the renovated ballrooms.
Speaker Change: So it's a mixture of stuff, you know, when you when you do something like that part of it is just you have to do it
Gregory Marcus: because that's what you have to do to stay in the business and keep your assets up.
Speaker Change: But it is so beautiful, and the F&B market is so competitive, and the banquets market, so now when people come and they see how great the asset is, I think there's obviously going to be a benefit to it. It's a little tough to quantify.
Gregory Marcus: Yeah, I mean, where we see it, Mike is really in the bookings and the groups side of the business, and, you know, particularly renovated ballrooms, we're seeing that now, not just at the Vista but at Gran Geneva as well. You know, event planners like Fresh Space, and you know, that's where you have to make an investment like this; you'll start to win some of that over other alternative venues. And, you know, I do think that's related to what we're seeing in some of the group bookings. The other piece, this great set is, is, you know, maintenance capital in nature, but also preserving, in the case of the Fister, premium positioning in the market and a premium rate and maintaining the asset.
Speaker Change: That is the cost of being in business over time.
Gregory Marcus: Yeah, I mean, where we see it, Mike, is really in the bookings on the group side of the business and particularly renovated ballrooms. We're seeing that now, not just at the Pfister, but at Grand Geneva as well.
Gregory Marcus: We're seeing that now, not just at the Pfister but at Grand Geneva as well. Event planners like fresh space. And, you know, that's where you have to make an investment like this. You'll start to win some of that over other alternative venues, and I do think that's related to what we're seeing in some of the group bookings. The other piece, as Greg said, is maintenance capital in nature, but also preserving, in the case of the FISTER, premium positioning in the market and a premium rate and maintaining the assets.
Mike: You know, event planners like fresh space, and that's where, after you make an investment like this, you'll start to win some of that over other alternative venues.
Speaker Change: And I do think that's related to what we're seeing in some of the group bookings. The other piece, as Greg said, is...
Greg: is maintenance capital in nature, but also preserving, in the case of the Pfister, premium positioning in the market at a premium rate and maintaining the asset. So a little bit of defense there on maintaining a leadership position in the market.
Gregory Marcus: So a little bit of defense there on maintaining a leadership position in the market. Nice. Thank you.
Gregory Marcus: So a little bit of defense there on maintaining a leadership position in the market. Thank you. I guess topic two would be theaters. Nice to see you guys be opportunistic with the Showplace transaction. You know, I wish I could tell you, they were lining up, and there was...
Michael Hickey: I guess topic two with the, the year is nice to see you guys be opportunistic with the show place transaction. Curious what sort of opportunity you guys see in the market for similar deals as you look to expand your network now. You know, I wish I could say there were, there were lining up and there was, there was, there was a bunch of deals that we were able to do. But, you know, we keep, we keep looking. I do think that once, I sort of, my theory is that when things sort of, when stable, a lot of stabilize out more stuff will, will break free.
Speaker Change: Nice, thank you. I guess topic two would be theaters. Nice to see you guys be opportunistic with the Showplace transaction. Curious what sort of opportunity you guys see in the market for similar deals as you look to expand your network now.
Gregory Marcus: You know, I wish I could tell you they were lining up
Gregory Marcus: There were a bunch of deals that we were able to do. But you know, we keep looking. I do think that one, sort of my theory is that when things sort of stabilize out, more stuff will break free. Now this is the example, this is how the company was built originally, were about to be 90, 80 years ago. My grandfather built the company by finding landlords that needed help and said, you know, we can work together to do something. My grandfather brought the skill of running the operation to the landlord that had the real estate, and they became partners.
Gregory Marcus: that there was a bunch of deals that we were able to do but you know we keep we keep looking I do think that once I sort of my theory is that when things sort of stabilize out more stuff will
Gregory Marcus: Now, this is the example that we, this was how the company was built originally, you know, and we're about to be 90, 80 years ago. My grandfather built the company by finding landlords that needed, that needed help that said, you know, we can work together to do something that my grandfather brought the skill of running the operation to the landlord that had the real estate, and they became partners. And that's the kind of deals we would like to do. And we are out, we're out, we're out talking to people, as you can see because this deal got done.
Gregory Marcus: will break free.
Speaker Change: And this is the example, this is how the company was built originally, you know.
Speaker Change: We're about to be 90, 80 years ago, my grandfather built the company by finding landlords that needed help.
Gregory Marcus: that said, you know, we can work together to do something. My grandfather brought the skill of running the operation to the landlord that had the real estate.
Gregory Marcus: And that's the kind of deals we would like to do. And we're out talking to people, as you can see, because this deal got done. So we are out talking to people about trying to do these things. And I know our team is out looking for and talking to people. But I can't tell you there's a long list of them right now, but we'll just keep working it out.
Speaker Change: and they became partners. And that's the kind of deals we would like to do. And we are out talking to people, as you can see, because this deal got done. So we are out talking to people about trying to do these things. And I know our team is out looking and talking to people.
Gregory Marcus: So we, so we are out talking to people about trying to do these things. And I know our team is out looking and talking to people, but I can't tell you there's a long list of them right to second, but we'll just keep working on it.
Gregory Marcus: But I can't tell you there's a long list of them right this second, but we'll just keep working at it.
Michael Hickey: Would you guys start to think now that, you know, you sort of completed that.
Gregory Marcus: Would you guys start to think now that, you know, you've sort of completed the finance, a lot of time. But now that that's sort of cleaned up for you, start to consider more traditional M&A in the theater space, and the more important, Capital Allocation?
Michael Hickey: and the financing piece, obviously, that took a lot of time, but now that that sort of cleaned up for you, would you start to consider more traditional M&A in the theater space is sort of more important on the list of capital allocation opportunities?
Speaker Change: Would you guys start to think now that you know you've sort of completed
Gregory Marcus: the financing piece obviously
Speaker Change: That took a lot of time. But now that that's sort of cleaned up for you, would you start to consider more traditional M&A in the theater space as sort of more important on the list of capital allocation opportunities?
Gregory Marcus: Michael Hickey, I think it's changed. The M&A model in the theater business is fundamentally different than it was pre-pandemic in that you're buying a circuit of theaters; you'll generally can be difficult because in the portfolio of locations, many of them are not cashful positive. And so you really need to think about paying cash for a circuit, and what you're getting, and you have to look location by location. What we're seeing in terms of opportunities are more individual deals. And so it's a lot of hard work to do individual locations, but that's where the financial returns are going to make sense.
Gregory Marcus: Mikey, I think it's fundamentally different than it was pre-pandemic in that you're buying a circuit of theaters. It can be difficult, because in the portfolio of locations, many of them are not cashflow positive. And so you really need to think about paying cash for a circuit and what you're getting. You have to look location by location.
Mike: Mike, I think it's...
Gregory Marcus: It's changed. The M&A model in the theater business is fundamentally different than it was pre-pandemic in that you're buying a circuit of theaters you know generally can be can be difficult because
Gregory Marcus: in the portfolio of locations, you know, many of them are not cash flow positive and and so you really need to think about paying cash for a circuit and what what you're getting and you you
Gregory Marcus: What we're seeing, in terms of opportunities, are more individual deals. And so it is. It's a lot of hard work to do individual locations, but that's where the financial returns are going to make sense, singles and doubles, not not, you know, purchases of 20 circuits, 20 locations in a circuit at a time.
Gregory Marcus: You have to look location by late location what we're what we're seeing in terms of opportunities are more Individual deals and and so it you know, it's it's a lot of hard work to do individual locations but that's where the financial returns are going to make sense and and it's you know,
Gregory Marcus: And singles and doubles, not purchases of 20 locations in a circuit at a time.
Gregory Marcus: And that's, I think, where we are until stabilization somewhere quite a bit north of where we are today kind of resets and helps everybody to understand what the rent levels need to look like. The, um, I guess last question, gentlemen, on staying on the theater side within the promotional piece, it looks like, Greg, you're having success there. Do you think that is sort of?
Greg: singles and doubles, not purchases of 20 circuits, 20 locations in a circuit at a time.
Gregory Marcus: And I think where we're at until stabilization, somewhere quite a bit north of where we are today, kind of resets and helps everybody understand what the rent levels need to look like in a least circuit.
Speaker Change: I think where we're at until stabilization, somewhere quite a bit north of where we are today, kind of resets and helps everybody understand what the rent levels need to look like in a leased circuit.
Michael Hickey: Good. I guess last question, gentlemen. On the staying on the theater side, within the promotional piece, it looks like Greg, you're having success there. Do you think that is sort of any indication of a consumer that's, hate to say, trading down but sort of seeking value here, Greg, or do you think that is maybe a factor of just not the best slate and they just need some extra motivation to get into the theater? And then I guess the follow on would be now that the slate is looking great for the foreseeable future and can sort of like the build out of that promotional piece sort of be, you know, contract productive I guess versus getting people in prime times with full ticket prices.
Gregory Marcus: The last question gentlemen on the staying on the theater side within the promotional piece it looks like Greg you're you're having success there it do you think that is sort of
Gregory Marcus: any indication of a consumer, That's, I hate to say trading down, but sort of seeking value here, Greg, or do you think that may be a factor, extra motivation to get into the theater? And then, I guess, the..., follow on would be now that the slate is looking great for the foreseeable future, can the build out of that promotion be sort of, counterproductive, I guess? No, I think it's, look, there's a few things that are going on.
Gregory Marcus: any indication of consumer
Gregory Marcus: that's, I hate to say trading down, but sort of seeking value here, Greg, or do you think that?
Speaker Change: is maybe a factor of just not the best slate and they just need some extra motivation to get into the theater. And then I guess the follow on would be now that the slate is looking great,
Speaker Change: for the foreseeable future can sort of like the build out of that promotional be sort of be you know contra productive I guess you know versus getting people in prime times with full ticket prices. Thanks guys.
Gregory Marcus: Thanks, guys. No, no, I think there's a few things that are going on.
Greg: No, I think it's, look, there's a few things that are going on. I think the dynamics are such that...
Gregory Marcus: I think the dynamics are such that, and let's break it like in a couple different parts. Like so, one of the idea of the return to free popcorn. I mean, do I think that's indicative of a weaker consumer? No, I think that free is a powerful word. I mean, it wasn't because we did it. It was very interesting. We did a substitution. We had made the change. By the way, we tested this. We didn't just do this radically, but without trying to test it. Obviously, our test didn't sort of match what ultimately happened. But the, you know, the idea of moving to, when you give free popcorn, well, if you don't want popcorn, then what value are we giving to someone on a value Tuesday, you know, we are giving, because we, and so we suppose we'll give you, you know, 20% across the concession stand, that's going to be a value potentially to more people.
Gregory Marcus: I think the dynamics are such that, But then when we rolled it out, it didn't match our expectations. And so we went back to free popcorn, and we changed what the offer was. And it really seemed to be, it's hard to exactly quantify which piece of all that is.
Speaker Change: And let's break it like in a couple different parts like so one of the idea of the return to free popcorn
Gregory Marcus: I mean, you know, do I think that's indicative of a weaker consumer? No, you know, I think that free is a powerful word. I mean, you know, we didn't, it wasn't because we did, it was very interesting, we did a substitution. We had made the change, and by the way, we tested this, we didn't just do this radically, but you know, without trying to test it.
Gregory Marcus: Obviously, our tests didn't sort of match what ultimately happened.
Gregory Marcus: but the you know the the idea of moving to when you give free popcorn well if you don't want popcorn then what value are we giving to someone on a value Tuesday
Speaker Change: You know we are giving because we and so we suppose what we give you, you know, 20% across the concession stand That's going to be a value potentially to more people. That was the theory and as we tested it seemed to play out. Okay
Gregory Marcus: That was the theory, and as we tested it, it seemed to play out okay. Lee. But then when we rolled it out, you know, it didn't match our expectations. And so we went back to free popcorn, and we changed what the author was. And it really, it really seemed to be, you know, it's hard to quantify which piece of, you know, of all that is. But it's something that we thought, okay, well, you know, you make a mistake and you go back and you change, and that seems to be a more powerful, uh, uh, driver for Tuesdays.
Gregory Marcus: But then when we rolled it out, and you know it didn't it didn't match our expectations And so we went back to free popcorn and change and we changed what the offer was
Gregory Marcus: It really seemed to be, you know, it's hard to quantify which piece of, you know, of all that is.
Gregory Marcus: But it's something that we thought, okay, well, you make a mistake, and you go back, and you change. And that seems to be a more powerful driver for Tuesdays. Now, when I say Tuesdays, let me bring up your next point, which is, you know, are we worried about things being counterproductive? And, you know, the answer to that is, no. Because, you know, one of the things we think about, and this is probably the overlap of hotels overlapping with theatricals.
Gregory Marcus: But it's something that we thought, OK, well, you know, you make a mistake and you go back and you change, and that seems to be a more powerful.
Gregory Marcus: Now, when I say Tuesdays, let me bring up to your next point, which is, you know, we worried about things being counterproductive.
Gregory Marcus: driver for Tuesdays. Now, when I say Tuesdays, let me bring up to your next point, which is, you know, are we worried about things being counterproductive?
Gregory Marcus: And, you know, the answer to that is no because, you know, one of the things that we think about, and this is maybe the overlap of hotels overlapping with theatrical. And that is the right price for the right customer at the right time. Not like we just cut a discount across the board, you know, all day and all night. You know, our, our seven, let's call it our seven and seven, seven dollar man and a seven days a week for seniors and kids. That ends at four o'clock. And so, you know, the might, you know, might you just place a little bit of business, yeah, but in the aggregate, the idea of keeping it affordable for families, which again is, we know the consumer is weakening a little bit.
Gregory Marcus: And, you know, the answer to that is no, because, you know, one of the things we think about, and this is maybe the overlap of hotels overlapping with theatrical.
Gregory Marcus: And that is the right price for the right customer at the right time, not like we just cut a discount across the board, you know, all all day and all night, you know, our our seven side, let's call it our seven and seven seven dollar matinee seven days a week for for seniors and kids that ends at four o'clock. And so, you know, the might, you know, might you just place a little bit of business? Yeah.
Gregory Marcus: And that is the right price for the right customer at the right time. It's not like we just cut a discount to cross the board, you know, all day and all night. You know, our 7, let's call it our 7 and 7, $7 matinee 7 days a week for seniors and kids.
Gregory Marcus: But in the aggregate, the idea of keeping it affordable for families, which, again, is we know the consumer is weakening a little bit. You know, again, is so how do we appeal to that family that maybe we can keep this affordable entertainment when, let's face it, you know. Very passive.
Speaker Change: That ends at four o'clock.
Speaker Change: And so, you know, might you displace a little bit of business? Yeah, but in the aggregate, the idea of keeping it affordable for families, which again, we know the consumer is weakening a little bit. Again, so how do we appeal to that family? How do we keep this affordable entertainment? Well, let's face it.
Gregory Marcus: Now, again, is, is, so how do we appeal to that family that maybe, how do we keep this affordable entertainment? When let's face it, you know, the studios have have, have gone in and they, and they've, they've put out a lot of product into that fire hose with the consumer perceives is virtually free in their streaming programs. And so, you know, how does that not impact us? That, that, that has to impact upstream, and they have to know that. And so, we have to be able to be competitive so the family can make the decision to get off the sofa and invest their time and go to a theater, which we know and the studios and we all know is a much better, much better financial result for everyone and not just financial across the life of their content.
Gregory Marcus: You know...
Speaker Change: The studios have gone and they've put out a lot of product into that fire hose at what the consumer perceives as virtually free in their streaming programs.
Gregory Marcus: And so, you know, how does that not impact us? That has to impact Upstream, and they have to know that. And so, we have to be able to be competitive so the family can make the decision to get off the sofa and invest their time and go to a theater, which we know, and the studios and we all know, is a much better
Gregory Marcus: Much better financial result for everyone, and not just financial, across the life of their content.
Gregory Marcus: So, you know, because they, that we all want people to be invested in the content. We want people to go. The reason to go to theatrical is I've talked about before. You sit on your sofa. It's very passive. You flip your remote, and you can stop it and start it and not watch it if you didn't like it in the first few minutes. You have no investment. But when you go to a movie theater, you've made investment of your time and you, you, you, you, you, you, you will, you will like something more. You will tell more people about it.
Gregory Marcus: So, you know, because
Gregory Marcus: We all want people to be invested in the content. We want people to go, the reason to go to theatricals, as I've talked about before, you sit on your sofa.
Gregory Marcus: You flip your remote, and you can stop it. When you go to a movie theater, you've made an investment of your time, and you... You will like something more. You will tell more people about it. You'll want to watch it again when it comes out in the ancillary markets. That's the window, selling to the same person over and over again. But you've got to have a price where you can make all those sales, and that's where we are.
Gregory Marcus: very passive. You flip your remote and you can stop it and
Gregory Marcus: you know, and start it and not watch it if you didn't like it in the first few minutes, you have no investment. But when you go to a movie theater, you've made an investment of your time. And you've…
Gregory Marcus: You'll want to watch it again when it comes out in the ancillary markets. You know, that's Windows selling to the same person over and over again. But you got to have a price where you can make all those sales, and that's where we are. You know, I've talked about this before. I've told people this. I've probably talked about these calls. You know, 20 years from now, the number of kids who will say, you know, to someone, you know, I remember my parents took me to my first movie. You know, they took me in the living room and we turned on the TV and I watched Inside Out 2.
Gregory Marcus: You will like something more, you will tell more people about it, you'll want to watch it again when it comes out in the ancillary markets, that's windows, selling to the same person over and over again. But you've got to have a price where you can make all those sales, and that's where we are. I've talked about this before, I've told people this, I've probably talked about it on these calls.
Gregory Marcus: I've talked about this before. I've told people this. I'm probably talking about it on these calls. 20 years from now, the number of kids who will say to someone, "I remember my parents took me to my first movie. They took me into the living room, and we turned on the TV, and I watched Inside Out 2." will be zero.
Gregory Marcus: 20 years from now the number of kids who will say, you know To someone, you know, I remember my parents took me to my first movie You know, they took me in the living room and we turned on the TV and I watched inside out to that number will be zero I promise you
Gregory Marcus: That number will be zero. I promise you. But there will be so many kids who say, "I remember my parents took me to my first movie." We went to the movie theater. My dad held my hand. He bought me popcorn, and I thought the characters were real. Inside Out 2. is my first movie, and they'll talk about it for the rest of their lives, and they'll be excited to go to Disney theme parks and experience the characters there and all of the flow-through benefits that you don't get just sitting on the couch. It doesn't mean to be on the couch is bad.
Gregory Marcus: I promise you that. But there will be so many kids who say, I remember when my parents took me to my first movie. We went to the movie theater. My dad held my hand.
Gregory Marcus: But there will be so many kids who say I remember my parents took me to my first movie We went to the movie theater my dad held my hand He bought me popcorn, and I thought the characters were real inside out too was my first movie
Gregory Marcus: He bought me popcorn, and I thought the characters were real. Inside Out 2 was real. And they'll talk about it for the rest of their lives. And they'll be excited to go to the Disney theme park, experience the characters there, and all of the flow-through benefits that you don't get just sitting on the couch. That doesn't mean sitting on the couch is bad; it just means it's not the same.
Gregory Marcus: movie, and they'll talk about it for the rest of their lives, and they'll be excited to go to Disney theme parks and experience the characters there, and all the flow-through benefits that you don't get just sitting on the couch. That doesn't mean sitting on the couch is bad, it just means it's not the same.
Gregory Marcus: It just means it doesn't. It's not the same. Maybe more than you wanted. But yeah. Appreciate it, Greg.
Gregory Marcus: Maybe more than you wanted in the answer, but yeah, I appreciate it. Thank you. And our next question comes from Eric Wold with B Reilly Security. Your line is open. Thanks. Thanks, guys.
Gregory Marcus: Maybe more than you wanted in an answer, but yeah.
Eric Wold: Thank you. And on that question comes from Eric Wold. Thanks. Thanks, guys.
Eric Wold: Thank you. And our next question comes from Eric Wald with B Reilly Securities. Your line is open.
Eric Wold: Give me a couple of questions. A couple of follow-ups with someone who's been out there on the pricing question. So I guess I'm like, you know, the midweek, many pricing and discounts to get your rationale. Greg, they just went through why you guys made those changes. Should we make the assumption that those changes are viewed as more permanent changes to the pricing? That's a key model and kind of commercial model or something that's more of a short-term move with the slate and kind of where wallets are right now. Well, you know, we've announced that it's for the summer.
Operator: Get me in a couple of questions, a couple of follow-ups on some of the ones that have been out there on the pricing question. So I guess on the midweek matinee pricing and discount Tuesday. I get your rationale. Greg, they just went through why you guys made those changes. Should we?
Speaker Change: Thanks. Thanks guys.
Operator: get me in a couple of questions, a couple of follow-up ones with some of the ones that have been out there. On the pricing question, so I guess on the midweek matinee pricing and discount Tuesday, I get your rationale, Greg, that you just went through of why you guys made those changes. Should we?
Speaker Change: Make the assumption that those changes are viewed as more permanent changes to the pricing model and kind of promotional model or something that's more of a short-term move with the slate and kind of where wallets are right now.
Eric Wold: Uh... I think the most interesting thing, though, is actually how it looks like the pricing, the actual, you know, what we charge is less, the $6 or $7, depending on if you're in our rewards program or not, versus $5 seem to be less impactful than free popcorn, which is really very interesting. Especially in an inflationary environment. I think that was very understandable.
Speaker Change: Uh, well, you know, we've announced that, uh, that it's for the summer.
Gregory Marcus: But obviously, we would seriously, we would be considering it, you know, to bring it back on a more prominent basis. I think the most interesting thing, though, is actually how it looks like the pricing, the actual, you know, what we charge is less, you know, the $6 or $7 depending on if you're in our rewards program or not, you know, versus $5, seem to be less impactful than free popcorn, which is really very interesting. And what's, but again, at $5 for 10 years, I define anyone to tell me they don't want to raise for 10 years, especially in an inflation environment.
Speaker Change: But obviously, seriously, we'd be considering it, you know, for...
Speaker Change: to bring it back on a more prominent purpose.
Eric Wold: basis. I think the most interesting thing, though, is actually how it looks like the pricing, the actual, you know, what we charge is less, you know, the six dollars or seven dollars, depending on if you're in our rewards program or not, you know, versus five dollars, seem to be less impactful than free popcorn, which is really very interesting.
Speaker Change: And but again at five dollars for ten years. I define anyone to tell me they don't want to raise for ten years
Gregory Marcus: I think that was very understandable. It's still, $6 is an incredible value for that.
Eric Wold: years, especially in an inflationary environment. I think that was very understandable. It's still $6 is an incredible value.
Eric Wold: Got it. And then on the acquisition question around the theater space, you know, how far outside of the Midwest kind of home base, you know, would you be willing to look for the right opportunity that comes along. And having you view the benefits of clustering in our region, and you talk about that, you know, obviously the, you try to mention the acquisition kind of environment, a lot of different that was, you know, you're kind of looking at one of these and two these and these that come up.
Speaker Change: for that.
Speaker Change: Got it and then and then on the on the acquisition question around the theater space
Speaker Change: Yeah, how far outside of
Speaker Change: the Midwest kind of home base, you know, would you be willing to look for the right opportunity that comes along and and how do you view the benefits of of clustering in a reason I talked about that, you know, obviously the
Speaker Change: which I mentioned, the acquisition kind of environment is a lot different than what, you know, you're kind of looking at 1Ds and 2Ds and these come up. So, I mean, if there's a single theater...
Gregory Marcus: So I mean, if there's a single theater in a far away place, does that make sense, or you really need to think with the customer base and loyalty? You really want to maybe kind of just management have more of a clustering. Or can you make it, make it work with one? You could absolutely make it work with one. I mean, it's not, not as good as having a bunch of them because you can get your, you know, it's not like the old days. The old days when you had to have an ad in the newspaper, I mean, you know, we're talking, you know, real old days here.
Speaker Change: in a faraway place. Does that make sense or do you really need to think with the customer base and loyalty you really want to and maybe kind of just management have more of a clustering or can you make it make it work with one?
Eric Wold: You could absolutely make it work with one. I mean it's it's it's not not as good as having a bunch of them because you can get your you know it's not like the old days. The old days when you had to have an ad in the newspaper I mean you know we're talking
Gregory Marcus: It's still six bucks, which is an incredible value. You know, it's not like the old days, when you had to have an ad in the newspaper. I mean, we're talking about the real old days of being able to have multiple theaters in a market, more for the ad hoc campaign. Oh, you know, $7.
Gregory Marcus: You know, you, you, you, you wanted to have a bunch of them in the market because you're just because your ad looks so much larger, you know, when you ran all this all month one, and now, you get people to your website and it's different in that regard. But still, I do think that there's some marketing benefits to being able to have multiple theaters in a market, whether you for more for, you know, the ad hoc campaign. Oh, you know, $7. I mean, I, you know, $7, Matt and A seven for, you know, senior seven days a week for seniors and kids, being able to market that is so much more efficiently is certainly helpful.
Gregory Marcus: you know, real old days here, you know, you, you wanted to have a bunch of them in the market because you're just because your ad looks so much larger, you know, when you ran all this, all of them on one and now, you know,
Gregory Marcus: You get people to your website, and it's different in that regard. But still, I do think that there's some marketing benefits.
Gregory Marcus: to being able to have multiple theaters in a market, whether you, more for, you know, the ad hoc campaign. Oh, you know, $7, I mean, you know, $7 matinee, seven for, you know, seniors, seven days a week for seniors and kids. Being able to market that so much more efficiently.
Gregory Marcus: $7 matinees for seniors, seven days a week for seniors and kids. Being able to market that is so much more efficient. The other thing I'd add to that, Eric, is certainly the bulk of our locations and the things that really move the needle in terms of, And, I mean, apparently, people have seen my TikToks all over the place. And this last question on the hotel side, you spoke about the strong group pace that you're seeing in 2025.
Gregory Marcus: Again, not the same as the days of old. And, you know, the more time people know your name and hear about you and get your programs are out there, that's better off you are. But overall, we can really manage it anywhere.
Speaker Change: is certainly helpful, again, not the same as the days of old. And, you know, the more times people know your name and hear about you and get your programs out there, the better off you are.
Eric Wold: But overall, we can really manage it.
Gregory Marcus: The only thing I'd add to that, Eric, is we, you know, certainly the bulk of our locations and the things that really move the needle in terms of customer preferences, you know, those locations are in the Midwest, but we do have single locations in certain markets, you know, as far west as Aurora, Colorado, as far east as Philadelphia, where we have a few of them in that market. But a couple of them in that market. But, you know, we have done it before. We certainly can do single locations in a given market, particularly if it's a great theater.
Gregory Marcus: The only thing I'd add to that, Eric, is we, you know, certainly the bulk of our locations and the things that really move the needle in terms of
Speaker Change: new customer preferences.
Speaker Change: those locations are in the Midwest. But we do have
Eric Wold: single locations in certain markets.
Speaker Change: as far west as Aurora, Colorado.
Gregory Marcus: Yeah, and I mean, apparently people have seen my tax all over the country.
Gregory Marcus: Check out imagine that that's not limiting your imbalance from from a landlord, maybe somewhere in a distant state because of where you are, you're still getting those calls. Yes, absolutely. Okay.
Eric Wold: And then it's the last question on the hotel side. You spoke about the strong group pace that you're seeing in 2025.
Gregory Marcus: Is there any way to kind of note, I guess, or kind of think about how much of that may be driven by the convention center expansion versus just normal group business improvements that you may just be experiencing in your hotel? I guess I'm just trying to get a sense of, is that just an improvement of the baseline, I don't think just an improvement, but is that an improvement of the baseline for your hotel business prior to the tailwinds of the convention center expansion really ticking in?
Gregory Marcus: Is there any way to get a note, I guess, or kind of think about how much of that may be driven by the conventions that are expansion versus just normal group business improvements that you may just be experienced your hotel. Well, can I try to get a sense of is that just an improvement of the baseline. I don't think just, but is that improvement of the baseline. Your hotel business prior to the tailwind of the convention center expansion really ticking in. Well, it's a little bit of a bowl. I mean, it's the business coming back.
Gregory Marcus: Well, it's a little bit of both. I mean, look, business is coming back, and the Convention Visitors Bureau, they've been out marketing hard, and the business flow is better. Yeah, I guess the only thing I'd add is Eric is 25, a little bit of both. They are starting to book in some events further out on the calendar for 2027 that I think they would.
Gregory Marcus: It's the convention center gate stronger because you know, because they've been. There's certainly probably a bunch of people who say, well, I'm not booking your convention center. So I see it done. But a bunch of people were, you know, excited about it. And I give credit to pay you volumes and put them with our local, you know, Convention Visitors Bureau. They've been out marketing art, and the business flow is better. Yeah, I guess there they are. Eric is 25, a little bit of both. They are starting to book in, you know, some events further out on the calendar, 20, 27.
Gregory Marcus: That I think they would, they would quickly say Milwaukee would not have gotten the word or not for the expanded Convention Center. But, but next year, you know, Niren is Greg said because they want, you know, some of this is they want to event planners want to see it. You know, next year, it's just a little bit of both.
Speaker Change: Planners want to see it.
Gregory Marcus: Next year, it's just a little bit of both.
Eric Wold: Perfect.
Eric Wold: Perfect. Thank you Bob.
Eric Wold: Thank you both.
Chad Paris: Thank you.
Eric Wold: Thank you.
Chad Paris: We have no further questions at this time.
Eric Wold: We have no further questions at this time.
Chad Paris: So I'd like to turn the call back to Mr. Paris for any additional or closing comments. Great. Thank you. What we'd like to thank everybody for joining us today. We look forward to talking to you once again in early November when we release the third quarter results. Until then, thank you, and have a great day.
Gregory Marcus: I'd like to turn the call back to Mr. Thomas for any additional or closing comments.
Speaker Change: Great. Thank you well, we'd like to thank everybody for joining US today, we look forward to talking to you. Once again in early November when we released the third quarter results until then thank you and have a great day.
Chad Paris: This concludes today's call. Thank you for joining.
Speaker Change: This concludes today's call. Thank you for Germany, you May now disconnect your line.
Operator: This concludes today's call. Thank you for joining us. You may now disconnect your line.
Chad Paris: You may now disconnect your line.
Operator: [music].