Marcus Corp (MCS) 2017 Q1 法說會逐字稿

Good morning, everyone, and welcome to The Marcus Corporation First Quarter Earnings Conference Call. My Name is Shannon, and I will be your operator today. (Operator Instructions) As a reminder, this conference is being recorded. Joining us today are Greg Marcus, President and Chief Executive Officer; and Doug Neis, Chief Financial Officer of The Marcus Corporation. At this time, I will turn the call over to Mr. Neis for his opening remarks. Please go ahead, sir.

Thank you, and welcome, everybody, to our fiscal 2017 first quarter conference call. As usual, I need to begin by stating that we plan on making a number of forward-looking statements on our call today. Our forward-looking statements could include, but not be limited to statements about our future revenues and earnings expectations, our future RevPAR, occupancy rates and room rate expectations for our Hotels and Resorts division; expectations about the quality, quantity and audience appeal of film product expected to be made available to us in the future; our expectations about the future trends in the business group and leisure travel industry and in our markets; our expectations and plans regarding growth in the number and type of our properties and facilities; our expectations regarding various nonoperating line items on our earnings statement; and our expectations regarding future capital expenditures. Of course, our actual results could differ materially from those projected or suggested by our forward-looking statements. Factors, risks and uncertainties, which could impact our ability to achieve our expectations, are included in the Risk Factors section of our 10-K and 10-Q filings, which can be obtained from the SEC or the company. We'll also post all Regulation G disclosures when applicable on our website at www.marcuscorp.com.

So with that behind us, let's talk about our fiscal 2017 first quarter. Clearly it was another excellent quarter for us and a great way to start off our new fiscal year. And while this is only our second year of officially reporting on a calendar year cycle, we didn't hesitate using the word record several times in our press release, as it was very clear that many of our reported results today were results -- were records for the comparable period in prior years, and in fact were records for any quarter that we've ever reported, regardless of the dates on the calendar. Our Theater division had another great quarter, once again outperforming the industry. And while some one-time preopening costs may have masked it, we experienced improvement from our comparable hotels and resorts during the quarter as well, recognizing that our first quarter will always be our most challenging quarter due to the seasonal nature of our primarily Midwestern hotels. I'm going to take you through some of the detail behind the numbers, both on a consolidated basis and for each division, and then turn the call over to Greg for his comments. Now before I dig into each division, let's spend a few minutes on a couple of the line items below operating income. Starting with interest expense. The explanation for the increase in interest expense this quarter is pretty simple. The $500,000 increase is entirely due to the fact that we assumed several capital leases in conjunction with the Wehrenberg acquisition last December. This amount is the interest expense proportion of the rent payments that we made on those assumed leases. Otherwise, our interest expense was essentially even with last year despite the fact that we had increased borrowings compared to last year. The reason our interest expense total wasn't impacted by the increased borrowings was that our overall average interest rate decreased compared to last year, due primarily to a change in the mix of our debt portfolio. I'll also note that we reported a slightly higher loss on disposition of property and equipment this quarter. That was due to a write-off of some equipment that was disposed of at one property. Our first quarter effective income tax rate, adjusted for losses from noncontrolling interests, was 37.7%, slightly lower than last year, but generally right around our past historical 38% to 40% range. Shifting gears away from the earnings statement for just a moment, our total capital expenditures during the first quarter of fiscal 2017 totaled approximately $22.2 million compared to approximately $16.5 million last year. Now nearly $16 million of our total spend during the fiscal 2017 first quarter was incurred in our Theater division, the majority of which related to 2 new theaters that were under construction during the quarter as well as continuing DreamLounger seating projects, premium large-format conversions and new food and beverage outlets that we've been discussing for some time now. The $6 million of capital expenditures on our Hotels and Resorts division were primary related to the new SafeHouse Chicago and the new villas under renovation at the Grand Geneva. At this early stage of our fiscal year, I have no reason to make any major adjustments to our previous estimate for capital expenditures for fiscal 2017 of an amount in the $100 million to $120 million range, recognizing that as we pointed out in our recent 10-K filing, the timing of several of our planned expenditures are still just estimates at this time. We're still finalizing the scope and timing of many of the various requested projects for our 2 divisions, and we anticipate proceeding with many of these projects as the year unfolds. The actual timing of the various projects currently underway or proposed will certainly impact our final capital expenditure number, as will any currently unidentified projects or acquisitions that could develop during our fiscal year. Now I'd like to provide some financial comments on our operations for the first quarter beginning with Theaters. Our box office revenues increased 36.1%, and our concession revenues increased 36.9% during the first quarter. But obviously those numbers include the Wehrenberg Theatres and the new theater in Country Club Hills, Illinois, both of which were added in our fiscal 2016 fourth quarter. So if we exclude those new theaters as well as 4 screens that we added to existing locations during 2016, box office receipts increased 9.1% and concession revenues increased 11.5% for comparable theaters during the fiscal 2017 first quarter compared to last year. Those comparable theater results are the numbers that we can then compare to the rest of the industry. According to the data received from Rentrak, a national box office reporting service for the theater industry, and compiled by us to evaluate our fiscal 2017 first quarter results, United States box office receipts increased 7%, 7.0% during our fiscal 2017 first quarter, indicating that our box office receipts at comparable theaters during the first quarter of fiscal 2017, outperformed the industry by 2.1 percentage points. I want to quickly point out that we outperformed the industry despite the fact that we had nearly 5% of our comparable screens out of service during long portions of the fiscal 2017 first quarter, due to renovations underway at multiple theaters. We've now outperformed the industry average during 13 of the last 14 interim reporting periods. The first quarter comparable theater increase in our box office revenues of that 9.1% was attributable to an increase in attendance at our comparable theaters of 8.6%, an increase in our average admission price of 0.7%. Now a modest price increase taken in November and increased number of premium large-format screens with a corresponding price premium, contributed to the increased average price this quarter. But frankly -- probably the more important takeaway from that relatively small average price increase is the reminder that film mix can and does have an impact on our average price. Our top 2 films during the fiscal 2017 period were the PG-rated family movies, Beauty and the Beast and The LEGO Batman Movie, resulting in a higher percentage of lower priced children's ticket sold. Compared to our top 2 films during the first quarter of fiscal 2016, which included the R rated film, Deadpool and the PG-13 rated film Star Wars, The Force Awakens, resulting in a higher percentage of higher price adult tickets sold last year. We're pleased to report an increase in our average concessions of food and beverage revenues per person as well of 2.8% for the first quarter. Our investments in nontraditional food and beverage outlets continue to contribute the higher per capita spending, although once again, the fact that our top 2 films this quarter were kids and family fare, likely had a slightly negative impact on our sales of some of those nontraditional food and beverage items. Lastly, I'll point out that the roughly $3 million increase in consolidated other revenues this quarter was primarily from our Theater division. About half of that increase related to comparable theaters and was due primarily to an increase in preshow advertising income and Internet surcharge ticketing fees. The remaining increase in other revenues is attributable to the Wehrenberg Theatres, including preshow advertising income, Internet surcharge ticketing fees and rental income from the retail center that we acquired in the transaction. Switching to our Hotels and Resorts division. Our overall hotel revenues were up 3.6% for the first quarter thanks to a 4.4% increase in RevPAR at comparable owned hotels, and a 3.4% increase in food and beverage revenues. The increase in food and beverage revenues is due in large part to the opening of the new SafeHouse in Chicago as well as an increase in SafeHouse Milwaukee revenues because the Milwaukee location was closed during a portion of last year's first quarter for renovation. As we've noted in the past, our RevPAR performance did vary by market and type of property, but I'm pleased to note that 7 of our 8 owned hotels reported increases in RevPAR this quarter compared to last year. Breaking out the numbers more specifically, I'll tell you that our fiscal 2017 first quarter overall RevPAR increase was entirely due to an overall occupancy rate increase of 3.1 percentage points. Our ADR actually decreased slightly during the first quarter of fiscal 2017 compared to the first quarter of fiscal 2016, because it's generally more difficult to increase the ADR during our slower winter season, as overall occupancy is at its lowest. As a result, our focus was on increasing occupancy during our first quarter. Despite this annual challenge, 4 of our 8 company-owned hotels reported increased ADR during the fiscal 2017 first quarter, compared to the first quarter of fiscal 2016. Now according to the data received from Smith Travel Research and compiled by us in order to compare our fiscal quarter results, comparable upper-upscale hotels throughout the United States experienced increase in RevPAR of 3.2% during the fiscal 2017 first quarter. And I'll tell you that competitive hotels in our collective markets actually experienced a decrease in RevPAR of 2.9% during our fiscal 2017 first quarter. Thus you can see that we outperformed in this division as well this quarter. And finally, I'm pleased to tell you that as a result of these increased revenues, operating losses attributable specifically to our 8 owned hotels and resorts decreased. Again, operating losses during this quarter is because of the winter, but these losses decreased during the first quarter of fiscal 2017 compared to the first quarter of 2016. The only reason that we're reporting a fiscal 2017 first quarter Hotels and Resorts division operating loss slightly higher than division losses during the first quarter of fiscal 2016, is because of several one-time items that have nothing to do with hotel operations. Specifically, as typical when opening up a new operation, we incurred one-time preopening expenses during the first quarter were related to new SafeHouse in Chicago. In addition, comparisons to last year results were also negatively impacted by a one-time favorable adjustment last year, impacting our management company profits. With that, I'll now turn the call over to Greg.

Thanks, Doug. I'll begin my remarks today with our Theater division. We're obviously thrilled to be reporting another record quarter for this division, once again outperforming the industry. As many of you know, coming into this quarter, most prognosticators were suggesting that the first quarter might be the most challenging quarter in 2017, particularly compared to the strong first quarter last year. So once again, our industry is proven to be very difficult to predict. That's why you've heard me say many times before, we need to be prepared to take advantage of times like this, because as we all know, history tells us that there will be quarters where the film product does not live up to expectations. Our team was clearly up to the challenge this quarter, and parlayed a particularly strong March at the box office into record operating results. The improvement in March box office receipts was particularly noteworthy, because last year's first quarter benefited from the fact that Easter was early. As movie going generally increases when students are out of school. In fiscal 2017, Easter occurred earlier in our second quarter. Clearly, the investments we are making in our theaters are continuing to make a difference. And when you combine those investments with our innovative marketing and pricing initiatives along with our loyalty program, that is now up to 2 million members with the integration of the Wehrenberg loyalty program, the result is record-breaking performance for our theaters. Last year's film slate during the first quarter was particularly weighted towards strong blockbuster movies as evidenced by the fact that our top 5 films during our fiscal 2016 first quarter, accounted for 49% of our total box office results compared to 37% for the top 5 films during the first quarter fiscal 2017, both expressed as a percentage of total box office receipts in the period. This reduced reliance on blockbuster films during the fiscal 2017 period had the effect of slightly decreasing our film rental costs during the period, as generally the better a particular film performs, the greater the film rental cost tends to be as a percentage of box office receipts. Increases in other revenues that Doug referred to earlier, also favorably impacted our results this quarter. Thus, despite higher fixed costs, such as depreciation and amortization, rent and property taxes, due in part to the Wehrenberg acquisition, our theater division operating margin also increased slightly during the first quarter of fiscal 2017 compared to the first quarter of fiscal 2016. This was a great achievement by our entire theater team from our executive management, led by Rolando Rodriguez, all the way down to our associates at each of our theaters. Certainly, a great deal of our focus during the first quarter was on integrating the 14 new Wehrenberg Theatres into our circuit. We made a conscious effort to not change too much too fast when we first took over the operations of these theaters. We were literally in the middle of some of the busiest weeks of the year at that time. I'm pleased to tell you that our integration efforts are going well. As we shared with you last time we talked, the one thing that we did do immediately was rollout our $5 Tuesday program, the very first Tuesday after we closed on the transaction, and we're pleased with how that program has grown in the short time since we've introduced it. In the months since the closing, we have been methodically making other select changes to the business, including increasing operating hours and implementing many of our successful marketing and promotional programs. That includes recently converting the 200,000 members of Wehrenberg's previous loyalty program to our successful Magical Movie Rewards program and rapidly increasing the sign up pace of new members. We're already beginning to see some of these efforts pay off. The Wehrenberg Theatres were generally tracking below the industry average at the box office prior to our acquisition, and without making a single capital improvement yet, we've begun to see a reversal of that trend. Our next focus will be on capital improvements at these theaters. Renovations are already underway at one key Wehrenberg Theater, which will include adding DreamLounger recliner seating, a SuperScreen DLX conversion, a lobby remodel, and expanded food and beverage offerings. And we're getting ready to get started on additional theater renovations shortly. As you may remember, we owned the real estate for 6 of the Wehrenberg Theatres and we leased the other 8. One of the reasons we like owning our real estate is because we can be much quicker about making capital improvements when we own. When you have a lease you have to work with the landlord first in order to negotiate terms, such as who just pays for what and what the impact on rent will be post-renovation. At the same time, while we certainly are paying a lot of attention to the new Wehrenberg Theatres, we also continue to look for opportunities to expand our successful amenities to more original Marcus theaters. In fact, in addition to the Wehrenberg theatres -- theater under renovation, we currently in the process of converting 7 more Marcus theaters to all DreamLounger recliner seating, with expected completion dates by the end of our fiscal 2017 second quarter. Doug mentioned that we had a number of screens out of service during the first quarter because of this effort. We also expect to open 1 new Zaffiro's Express and convert 3 existing screens to SuperScreen DLX auditoriums during the second quarter of fiscal 2017. And there is more to come. We anticipate beginning construction on additional DreamLounger conversions, SuperScreen DLX conversions, and new food and beverage outlets in the near future. And finally, our press release highlighted the fact that we opened our newest theater with all the latest amenities in Shakopee, Minnesota, early in our fiscal 2017 second quarter. The theater looks great, and we're pleased with the initial customer response to it. And we are only a couple of months away from the opening of our newest concept, our all in-theater dining BistroPlex in Greendale, Wisconsin. We're looking forward to that. As we look ahead, we're excited to continue to invest in both new and existing theaters during fiscal 2017, as we further expand the successful concepts and amenities that have contributed to our industry outperformance. Our press release highlighted some of the films scheduled for release during the second quarter. On a paper they look good, but coming back to how I started my remarks, it is difficult to predict the box office. We hope 2017 turns out to be another record year at the box office like some are suggesting. And if it does, we will be prepared to capitalize like we did in the first quarter. But if 1 or more quarters disappoint, we'll be prepared for that as well. We're looking at this business like we always do with a long-term perspective. And with that same long-term perspective in mind, I would be remiss if I didn't note that we continue to be very interested in expanding our circuit with selective acquisitions if appropriate opportunities arise. With that, let's move on to our other division, Hotels and Resorts. You see the segment numbers and Doug gave you some additional detail. Given that most of our company-owned hotels are located in the Midwest, we typically lose money in this division during the winter months, and the first quarter of fiscal 2017 was no exception. But as Doug shared with you, thanks to a great effort led by our executive management -- great effort by our executive management, led by Joe Khairallah, as well as our sales team and the hard-working teams at each of our owned and managed hotels, we outperformed the industry, and increased occupancy and reduced our operating losses at our company-owned and operated hotels. We continue to do a nice job of managing costs and increasing profitability, while continuing to maintain our high-levels of customer service. Additional group and transient business drove our increased occupancy during the fiscal 2017 first quarter compared to last year. I'll also note that the timing of Easter has the opposite effect at hotels and resorts versus the impact on theaters that I mentioned earlier in that business travel tends to decline around Easter. Thus, the fact that Easter was in the first quarter last year and is in the second quarter this year helped our fiscal 2017 first quarter comparisons and will hurt our second quarter comparisons a little bit. Looking to future periods, although our group revenue -- group room revenue bookings for future periods in fiscal 2017, something commonly referred to in the hotels and resorts industry as grew pace is running slightly behind our group room revenue bookings for future periods last year at this time. Our owned hotels had a slightly above-average group booking period during the fiscal -- first quarter of fiscal 2017. And as a result, we're reasonably hopeful that we'll be able to make up the shortfall in group room revenue bookings for future periods in the coming months. By now, you've read and heard that a big event during fiscal 2017 first quarter was the opening of our newest SafeHouse restaurant and bar in Chicago. As Doug shared with you, preopening costs from this property negatively impacted our reported results this quarter, but that is part of opening a new operation. We had a soft opening on March 1, and a grand opening celebration on March 30. So it's way too early to draw many conclusions about the place yet. I will tell you this, the restaurant looks great and the early response from customers on social media has been everything we'd hoped for and a little more. The SafeHouse Milwaukee has been around for 50 years, so we'll obviously have to be patient as we build awareness about a concept who's street presence consists of a nondescript door, a couple of wall lamps and a sign for international exports. But we're excited to have this new location open and look forward to months ahead. Our Hotels and Resorts division operating results should benefit in the future periods from 2 current growth initiatives. We continued construction on 29 new all-season villas at the Grand Geneva Resort & Spa, and we expect to begin opening completed units during our fiscal 2017 second quarter. We're also preparing for the summer 2017 expected opening of the new Omaha Marriott Downtown at the Capitol District in Omaha, Nebraska, a new hotel that we will manage and in which we will hold minority interest. Also from a growth perspective, we continue to actively review opportunities to add to our portfolio of managed hotels in the coming year, and we hope to have one or more of these come to fruition in the coming months. Conversely, I'll also share with you that early in the second quarter of fiscal 2017, we ceased management of the Sheraton Madison Hotel in Madison, Wisconsin and sold our 15% minority ownership interest in the property for a small gain. We don't expect this transition -- transaction to significantly impact our fiscal 2017 operating results. We also continue to actively review opportunities to sell one or more owned hotels depending upon a number of factors that we've previously described. It is no secret that the hotel transaction market has not been particularly robust in the last year. So we'll continue to show patience as we review such opportunities. Before we open the call for questions, I want to conclude my remarks by highlighting the final balance sheet section of today's press release. During the first quarter, we showed once again the willingness and ability to return capital to shareholders, while still pursuing an active growth strategy. For the third time in 2 years, we increased our quarterly dividend this time by 11.1%. And despite a continued active CapEx plan and a significant acquisition in 2016, our debt-to-capitalization ratio remains at 42%, giving us a great deal of flexibility to pursue future opportunities wherever they may arise. Lastly, I want to say thank you to all of the hard-working associates of The Marcus Corporation. The results we're sharing with you today are the direct result of a lot of hard work in both of our divisions. And for that, I'm grateful. With that, at this time, Doug and I will be happy to open the call up for any questions you may have.

(Operator Instructions) And we'll go first with James Goss of Barrington Research.

This is Pat Sholl in for Jim Goss. I just had a couple questions on the integration of Wehrenberg. With the new initiatives that you guys have been putting in place, has a lot of the improvement that you've seen in terms of the performance relative to the industry, has that mostly been coming from attendance gains, I think that was kind of what you had been saying when you rolled these out at the Marcus theaters. Is that correct?

Yes, Pat, that would be correct. We have not made any major pricing changes at all at Wehrenberg and since we've yet to have any new DreamLounger locations open up yet there, we're just under construction with our first one, there have certainly been no price adjustments regard -- related to that either. So it's really been attendance.

What would be sort of pacing that you would expect to see...

Pat, I'm going to even jump in there and follow-up and say, if anything, because we have rolled out the $5 Tuesday program, I don't have the numbers in front of me, but if anything probably it's -- even maybe had a slightly negative effect on our average ticket price because just like when we first rolled out the $5 Tuesday's to all of our original Marcus Theaters, as we grow that business, the mix changes slightly. So it definitely has been attendance that's been driving it.

And I would even add to that a little bit, which is we look at that is one of the focuses of the business. We realize the importance of attendance. And that is whether we originally talked about scheduling showtimes and $5 Tuesday, appropriately pricing may be the better way look at it to drive attendance and that has lots of ancillary benefits, as you know.

Okay. And then putting in those initiatives, is that -- that's been kind of what's been driving the acceleration in the membership for the Wehrenbergs? I think, you posted that at around 200,000 at Q4. Is that still roughly where it is?

I don't have an updated number at my fingertips right now, but yes, certainly there's been a strong push, Pat, to get new sign-ups. And just like -- kind of playing out exactly as it played out with our original Marcus Theatres, Tuesday is a major initiative in that regard, because as you know you get the free popcorn if you're -- only if you're a member. And so that -- and so, I think, while we are signing people up everyday of the week, Tuesday is a key day for us in sign-ups.

And our next question comes from the line of Mike Hickey of Benchmark.

Guess, I just want to check your recliners in relation to guidance for Q2 -- actually Q1. Do you have, Doug, where you were in terms of total installations for your network?

At the end of Q1, it was the same as at the end of Q4 last year. So we had no new ones open up in the first quarter. So we were still at that 48% penetration rate of the original Marcus circuit and only 1 of the 14 Wehrenberg Theatres with the recliners. But that's going to be changing. We've already -- now we've opened up a new theater, as you know, in Minnesota that has all recliners. And then as we mentioned, we have actually 8 theaters right now under construction or under renovation with recliners, 7 Marcus and 1 Wehrenberg, that are all scheduled to open, there about, by the end of the quarter. They'll kind of come on during the quarter, but I -- certainly probably won't have a lot of impact in the quarter itself, maybe a little bit mid-quarter. So...

All right. So you got 8.

8 more. I don't have a screen count at the top of my mind here for you, but we're on pace as we've talked about -- we've talked about in K and everything else. If all of these projects hit and we can get them going, I still see us that by the end of 2017 or early in 2018, we're targeting, including Wehrenberg, to be in the 60-plus percent range in terms of penetration. So...

Okay. So that was 18 potential new installations for recliners this fiscal year, right? Is that the number you had before you, so..

Nothing has changed from we indicated in the K at this point in time. Again, timing is the wildcard, Mike, as you know, and Greg alluded to it in his prepared remarks in terms of the challenge, for example on the Wehrenberg side, is that 8 of them are -- 8 of the locations are leased, and so we've just got let that process play out and so we don't have complete control over that timing. But we're working hard to try to get a bunch of these projects going as soon as we can. So nothing has changed in terms of what's possible that we listed in the 10-K.

All right. All right. That's fair. The second question with respect to Q1, concession gross margin was down a bit compared to prior year. Theater operations, however, was up. That sort of performance of the quarter, should that be a trend as we think about the integration of Wehrenberg through the remainder of the year or how should we think about margin performance profile?

So if you look at -- you're talking about that concessions cost as a percentage of the concession revenues, that number?

Yes. I look at it from a gross margin perspective, which was down a bit, a couple hundred basis points maybe.

I will just tell you that, that can and does bounce around. I'm looking at that same percentage for fiscal 2016, and we had 2 quarters that I look at it from a cost perspective. You have the inverse. But on the cost perspective, in the second and third quarters, we were at 28.4% and 28.5%. And this quarter, we were at 27.2%. So we were lower than the second and third quarters. You're right, it was high -- that cost was higher in the fourth quarter, so mix makes a difference and certainly we're going to have a slightly new world as related to some of the food and beverage that's going on at Wehrenberg and we'll be kind of changing that out over the year. But they have some existing food and beverage. So you're right, the mix could be changing a little bit, but I wouldn't -- I don't think there was a -- we don't view it as if there was any major shift occurring there, so...

Okay. And on the theater operations, I guess, the same question. The cost was lower. Your margin is actually better compared to prior years. I'm just trying to think through, Doug, the integration here and ...

I get it. Although, again, if you look at the first quarter last year, cost was 85.9% and the first quarter of this year was 85.7%. So it actually was quite comparable as it relates to the quarter. So I do caution that there is some seasonality to this. And we get that. In the fourth quarter, we get those huge weeks that certainly have -- the fixed cost are the fixed cost. And then we have that huge December, and those couple of huge weeks, that certainly can have an impact on that percentage. So when I looked at that number, I actually saw that it was pretty comparable to what first quarter's number was last year.

Okay. That's fair enough. I guess we'll see how it works out. The last question from me. I think, Wehrenberg had 3 IMAX screens and of course we had Furious 8 and some content that theoretically play well. I'm just curious to your takeaways from seeing how IMAX has performed versus your UltraScreens, and if that has sort of maybe changed the mix as you think forward about maybe integrating IMAX into your greater circuit?

You know -- I'll work backwards. We're always open to the idea of working with IMAX. It's -- we haven't made any decisions yet. It's an interesting thing that we have inherited now, And we're working with it. And we're seeing how things are going with it. It's really too early to tell how it all plays, because really the argument for IMAX, is it's sort of its halo effect on an entire complex. And it has its positives and negatives. Its negatives are you're stuck with whatever they are playing, and you can't -- we have a really -- when we use our screens, our UltraScreens and SuperScreens, we have a fair amount of flexibility over what can play. And that's very helpful, especially in this digital world. The IMAX doesn't have that flexibility. But the IMAX has a very solid brand. And so, with really all of 12 weeks under our belt, or really more like 16 to 18 weeks. Too hard to tell right now, Mike, where we're going to with it.

By the way, I did check in and we're up to 2.1 million in MMR members for people that are keeping score.

And our next question comes from the line of Eric Wold of B. Riley.

Few questions. One, follow-up on one of the original ones around pricing at Wehrenberg. I understand that you implemented the $5 Tuesday so it'll have an initially adverse effect on average pricing. But if you think about base-level pricing, where were they relative to markets they're in and maybe relative to where you think they should have been? Is that an opportunity to kind of increase the base level pricing possibly in the summer months or is that something you want to wait for the upgrade of amenities you get in those units before you take that price.?

I think, the pricing was fair pricing, and I don't think we're going to make aggressive price changes off the bat. But we're going to improve the theaters. And, again, I think we will go back to our theory of the right price for the right customer at the right time. And so when we add an UltraScreen or SuperScreen, we have the ability to get a premium for that premium experience. But Tuesday's, we're going to have a great deal for customers, they're looking for a price that will be appropriate for a Tuesday. And then on the weekends, we will continue to remain competitive. And again, as we add DreamLoungers -- again every time when we add the amenities, we look for the ability to take the prices.

Okay. And then when you put in play, I know it's again early days here, but when you put in place the $5 Tuesdays promo at those theaters, what was the response relative to what you saw when you first implemented them at Marcus? Similar level of response and demand improvement on those Tuesday's relative to the weekends? And we kind of look at it to get a sense of one -- only one change you've made, but kind of when you think back to where Marcus was back, then you started making changes and now you've meaningfully grown the results at Legacy Marcus Theatres? How should we think about comparing that to what you think as opportunities -- the opportunities with Wehrenberg from where they are?

I think, the opportunity is relatively similar. They did have a $5 -- they had a discount Tuesday's program going. It was $6 actually. They had -- so it wasn't totally brand-new, but it wasn't -- we take a different approach to it obviously, and we're very aggressive about marketing it and sharing it with the customers what we do. The one thing interesting about what we've been doing is we're now 3.5 years into this. So it's a program that's evolved. It started off and it was strong and it got a lot of attention, and this is doing the same thing there. We're seeing good results there, but it takes time.

And the last one on the theaters. Remind us of what your situation is with the reserve seating, your reserve seating fees. I know it's kind of becoming an increased topic out there? What percentage of your admission in the quarter were reserved and kind of how should we think about the fee flow from that?

So we've put in reserved seating when we go to the DreamLounger's. And we have a -- and then -- and we referred to the fact that our other revenues certainly continue to increase and Internet ticketing surcharges are a big part of that and certainly a key part of that number. And so I think, that's what you see happen, Eric, is that when you go to reserved seating, I think, there becomes a shift towards more people using -- buying their tickets ahead of time and buying their tickets online. And that's where that corresponding benefit then in turn occurs. So as I mentioned, if you look, we had $3 million of increase to other revenues this -- for the entire company was pretty much all in theaters, and then $1.5 million of that was our existing core circuit, preshow advertising and the internet surcharge. And the other $1.5 million was Wehrenberg, with preshow advertising, the Internet surcharge and then the rental revenues as well. So it's -- that's important money, that's important dollars that flow-through to the bottom line.

Do you know what percentage of your admission is for the Legacy Marcus circuit were for reserved seats?

It starts to get up. I don't have it off the top of my head. But maybe someone who's listening is going to send that in to me while I'm sitting here. It used to hover in the single-digits. I think it gets up in the 40% to 50% range, where you're getting -- Look everything is reserved, it's a 100% reserved, but how many are buying ahead of time, I think is what you're trying to find out.

And then the last question of hotel side. I think you mentioned that you're coming out of the winter months. It's kind of tough to take price on ADRs, to move those up. As you move out of that, what are your thoughts on now that you've kind of completed construction, getting into hopefully a stronger year, is that something that you'd want to lead on in terms of price or is the market competitive enough that you kind of want to sit back and see how that flows?

Well, is the question are we going to be pushing ADRs? Is that the general question?

Pretty much, yes. Are you going to wait and see how the market responds first and not be the leader, be more of the follower on that?

I mean, look that we will -- we would like to push rate -- we try to push rate. These are decisions that are literally made daily and hourly. We're constantly looking at it and seeing what happens and watching pace and seeing if we had a -- if we have the opportunity to push rate, we're going to. But I don't know how -- I've been surprised that the world has not been able to push rate more than it has. But I think probably the transparency brought on by the Internet has made that a little bit challenging. And then, in Milwaukee, we've gotten a lot of product. So occupancies are holding up, but you're not going be able to push -- to absolutely just push rate like crazy, as much as I wish we could.

(Operator Instructions) Our next question comes from the line of Ryan Hamilton at Morgan Dempsey Capital Management.

You guys were just kind of touching a little bit on one of the questions that I had. I was just curious if there is any other dynamics that you're kind of seeing with your rewards program and your online ticket sales that are forcing you to -- or not forcing you, but making you adjust kind of your business or the way you kind of do things?

I'm not sure I completely follow. Say it again, Ryan.

Like, for instance, perhaps, you're seeing more online sales where people are picking up at a kiosk or something like that. Is that making it so you have a less people, maybe working a counter or register or something like that?

Well, I think you're asking an interesting question. Yes, we do -- we obviously see that especially on Tuesday's, it really is quite aggressive in terms of the people buying online and trying to get their tickets early. But I think that -- ultimately, I do think that this -- there's going to be, just like in a lot of businesses, there's going to be a move to technology that's going to ultimately reduce the reliance on labor. I sort of suspect -- we're starting to see touches of it. When you walk up to a box office, it might look more like you're walking up to a ticket counter with an airline.

I was kind of thinking maybe you are adjusting more people to concessions versus at the door or something like that. My other question was, what are you -- what are the plans right now with that recently acquired retail space?

In St. Louis or?

In St. Louis, yes.

We're managing it. If you remember, we always call real estate one of our - the hidden business. And so we're managing it and we haven't had any determinations as to what we are going to do with it yet.

And at this time it appears there are no other questions. I would like to thought call back over to Mr. Neis for any additional or closing remarks.

Thank you, everybody, for joining us today. We appreciate it. Maybe we'll see some of you next week at our upcoming annual meeting. It's on Thursday, May 4, at our Majestica Brookfield Cinema. For those who can't attend, we certainly will be webcasting the meeting as always. We also look forward to talking to you once again in July, when we release our fiscal 2017 second quarter results. Until then, thank you, and have a great day.

That concludes today's call. You may now disconnect your lines at any time.