美高梅國際酒店集團 (MGM) 2011 Q2 法說會逐字稿

Good morning and welcome to the MGM Resorts International second quarter of 2011 conference call.

Joining the call from the Company today are Jim Marin, Chairman and Chief Executive Officer; Bobby Baldwin, Chief Design and Construction Officer of MGM Resorts International and President and CEO of CityCenter; Dan D'Arrigo, Executive Vice President, Chief Financial Officer and Treasurer.

Participants are in a listen-only mode.

After the Company's remarks there will be a question-and-answer session.

Now I would like to turn the call over to Mr.

Dan D'Arrigo.

Good afternoon and welcome to MGM Resorts International's second-quarter earnings conference call.

This call is being broadcast live on the Internet with www.mgmresorts.com, and a replay of the call will be made available on the Company's website.

Just a short time ago, we furnished our press release on Form 8-K with the SEC, and before turning the call over to Jim I would like to just read our Safe Harbor statement.

On this call, we will make forward-looking statements under the Safe Harbor provisions of the federal securities law.

Actual results might differ materially from those projected in the forward-looking statements.

Additional information concerning factors that could cause actual results to materially differ from those in these forward-looking statements is contained in today's press release and in our periodic filings with the SEC, including our most recent Form 10-K and subsequent 10-Q filings.

During the call, we will also discuss non-GAAP financial measures in talking about the Company's performance.

You can find a reconciliation of these measures to GAAP financial measures in our press release, which is available on our website.

Finally, please note that this presentation is also being recorded.

I would now like to turn the call over to Mr.

Jim Murren.

Thank you, Dan.

And before we get going, I would like to take a moment to remember our colleague, Terry Lanni.

Terry was, of course, an iconic leader of our Company, our community and our industry.

He was a wonderful man.

We're going to miss him very much, a personal friend of mine, and we wish his family, of course, all of our best wishes.

So, for just not too long ago we reported a very solid second quarter.

Importantly, for the first time since the downturn, the Company experienced two consecutive, sequential quarters of operational improvement.

This, combined with very positive forward trends that we are currently seeing, leads us to believe that the signs of the recovery here in Las Vegas is consistent.

We are going to see continued improvement as we move into the back half of this year and into 2012.

Our adjusted EBITDA was $366 million.

That included a couple impacts I would like to lay out for you.

We were negatively impacted by hold, a mandatory closure of our Tunica casino, as well as our share of a write-down at CityCenter.

So, to put numbers around that, the $366 million you'd have to adjust for hold, which would've been an adjustment of $27 million.

Tunica cost us $12 million, closing that for the quarter.

Our share of the CityCenter residential was $26 million.

ARIA actually held well, so that would go the other way of $9 million.

So, netting those out, the adjusted EBITDA would have been $422 million -- a really fine quarter for us.

Results were broad-based.

We saw positive trends in both our luxury portfolio as well as the core brands.

And really, it came from all segments of our business which again, I think, bodes well for the future.

In the quarter, MGM and our joint venture partner executed on an important long-term goal to bring MGM China public on the Hong Kong Exchange.

We priced that deal at the high end of the range, and [Pansy] and I are very gratified with the investor response that we got on the transaction.

Grant and our operating team their continue to execute on their goals, and they brought us another record quarter at MGM Macau, driven by improvements in just about every metric.

Back here in Las Vegas, I recall that on our last call we talked about a guidance of strip RevPAR we thought would be up in the mid-single digits in the second quarter.

We actually surpassed that goal and reported RevPAR [of] 10% due to a nice increase in short-term bookings and really strong demand across our portfolio.

During the quarter we saw particular strength within the retail segment or, in other words, our FIT and leisure markets.

And that led to additional increases in occupancy and in ADR.

And in fact, June was surprisingly strong and was actually our biggest RevPAR growth month in the quarter, up in the low teens.

Again, we see this is another indicator of a recovery here in the retail segment, which, of course, is very important to us.

It represents the largest percentage of our rooms.

On the casino side, casino revenues were up despite the low hold that I talked about.

Our hold was below our normal range.

We didn't do as well as we have been doing for many quarters internationally.

We didn't do well in April.

But we had a really good quarter on our national rated play, second consecutive quarter of growth there; and slots were up very nicely in the quarter.

And in fact, over in Detroit, we had the best slot quarter in our history.

We see these are more indicators of an improving domestic customer, which was our problem in our industry in 2008, 2009 and 2010.

We're seeing strength in the national play, both on the table side and on the slot side.

I think that has also something to do with the fact that our loyalty program, M life, has been rolling out with great momentum.

If you recall, we launched that on the Strip here in January of this year, and we've seen a nice increase in our active players and in trips in the quarter.

Promotional spend, by the way, is down as a percentage of revenue, largely due to a more targeted marketing, more clever marketing from our perspective.

We are excited about this because next month, in September, we roll out all the non-gaming elements of M life into our regional properties.

And then, in the following month, in October, we do the same thing here in Las Vegas.

That will be the culmination of the full M life launch.

And with this rollout, we believe we are going to see nice increases in the non-gaming revenues against even what we have been doing thus far this year.

With that, I think I will turn it over to Dan to get into a little more operational detail.

Thanks, Jim.

First, a few highlights from our operating results.

Our wholly owned domestic operations held approximately 1 percentage point lower, below the low end of our range, this quarter.

As Jim mentioned, had we held at the midpoint of our range, our EBITDA would have been higher by $27 million.

Even still, our EBITDA margins at our wholly owned Strip properties increased by 125 basis points to 22.4%.

The recovery is broad-based.

Our luxury properties, despite the lower hold percentage, showed strong EBITDA improvement of 9%.

And our core properties were up 16% in the current quarter.

We were impacted by the $12 million of the closure of Gold Strike Tunica.

Our casino revenues were up 1% and, excluding the impact of Tunica, would have been up 3% in the quarter.

Tunica is now back on track and performing well.

Moving on to Macau, we invested approximately $280 million when we opened MGM Macau in 2007 and have since received about $190 million in cash distributions to date.

The IPO put a fair value on the equity of approximately $7.5 billion, valuing our share at almost $3.8 billion, resulting in a significant gain in the quarter and having a profound impact on our balance sheet by being able to consolidate this entity.

As a result of the consolidation, just to help you with modeling going forward, and the accounting adjustments, depreciation and amortization expense will increase by approximately $85 million to $95 million per quarter as a result of the accounting adjustments to the consolidation of Macau.

Our balance sheet continues to improve, driven by the consolidation of Macau and the strengthening of our cash flows at our wholly owned operations.

Our leverage at June 30, pro forma for the consolidation of Macau, is roughly eight times.

MGM China reported another record quarter with net revenues up 118% year over year to $668 million US, and EBITDA was up 177% to $170 million, which was well above our forecast in our prospectus.

MGM Macau's improvements across all major drivers in the quarter including VIP volumes, up 110% to $22.4 billion, a 21% increase in our main floor table games drop to $544 million, and slot handle was up nicely, 76%, to $862 million in the quarter.

At the end of the second quarter, MGM China had cash of $417 million, debt of $591 million and a leverage of 1.4 times, and that's before adjusting for any excess cash.

This morning, we were notified that the New Jersey Casino Control Commission voted unanimously to approve the extension of our control of the sale of our share of Borgata to March 2013, and the Company will continue to work through its sales process.

And any future updates will be provided in due course.

Our second-quarter CapEx was $48 million, bringing our year-to-date total to $83 million.

We continue to expect to spend around $275 million in capital in 2011, which includes room remodel activity at both Bellagio and MGM Grand Las Vegas.

Our properties continue to be in great condition with several new restaurant, entertainment and retail upgrades in process.

Bellagio's room remodel program began on June 20th and will finish in time for the December holidays.

We have already turned two floors, and the new rooms are receiving great feedback from our customers.

We expect we will earn up to an approximate $30 per night rate premium, once these new rooms come online.

Also at Bellagio the build-out of Hyatt Lounge is underway, anticipated to be unveiled New Year's Eve.

And MGM Grand Las Vegas will begin its room remodel in September and will be opening its new room product to the public over the course of about a year.

With that I turn it over to Bobby Baldwin.

Thanks, Dan, and good afternoon.

We are extremely pleased with the results of all of the CityCenter, as we continue to solidify CityCenter as one of the premier luxury destinations in Las Vegas.

CityCenter resort operations reported net revenues of $275 million and adjusted EBITDA of $64 million in the second quarter.

ARIA was designed to be an elite high-end resort, and we are living up to that promise.

Second-quarter EBITDA for ARIA was $53 million on record revenues of $233 million.

ARIA EBITDA benefited by approximately $18 million due to high hold percentage in the second quarter.

Operating results were driven by a 90% hotel occupancy, the highest RevPAR since opening of $181 and a strong table games volumes in its best slot quarter ever.

One of the factors driving occupancy in ADR is the continued growth of the convention segment thanks to our world-class convention facilities.

ARIA is seeing increased bookings in 2011 and beyond.

ARIA's Sky Suites was recently recognized by AAA as one of America's most luxury us accommodations by receiving the coveted Five Diamond award as its own hotel experience within ARIA.

We are now proud to be the recipients of two five-star hotel awards at ARIA.

Vdara has established itself as an intimate non-smoking, non-gaming boutique hotel and has been extremely well-received by our guests.

Vdara has increased trade in occupancy in the quarter to and now has approximately 1,300 hotel rooms online.

Vdara posted its best quarter since opening at $5 million in the second quarter.

Vdara recently received the AAA Four Diamond rating, recognizing our commitment to enhanced quality, high level of service, and attention to detail at Vdara.

Crystals' second-quarter EBITDA was $6 million versus $2 million in the second quarter of 2010.

Same-store sales were up 24% year over year, maintaining its position as the second-highest sales per square foot in the Las Vegas market.

87% of Crystals is currently under lease.

Jimmy Choo just opened this month, and the Dolce & Gabbana's men's and women's stores are scheduled to open early in January 2012.

Residential sales pace continues to be slow.

However, we are having a great deal of success in the leasing program to people at -- with the residential component of CityCenter.

To date, we have leased 346 units, and we will produce total annual lease income of around $8 million.

With that, I will send it back to you, Mr.

Murren.

Thank you, Bobby.

We made a lot of strides in the second quarter.

We are pleased with that, but we recognize we've got some more work to do.

I want to give you a little bit of insight as to what we see happening here in Las Vegas for the summer and into the fall.

And it's a good story.

Our booking pace is, so far, up quite nicely for the summer and really throughout the fall period as well.

We expect RevPAR in the third quarter here in the Las Vegas Strip to be up around 10%.

We are particularly encouraged in terms of the second half of the year on our convention calendar, most notably the months of September and October; they are exceptionally strong.

And in fact, the third quarter convention mix is expected to be up about 300 basis points over last year's mix.

The event calendar is also strong.

The back half of this year is better than the first half led by, in this quarter, an important fight, the Mayweather fight in September, and then there's a Pacquiao fight in November, along with some really good concerts we think will continue to drive that domestic casino business I talked about.

We have been up in profitability throughout the first half of the year; and, based on the booking trends that we see in our forecast, we expect that this trend will continue throughout the year.

We believe we have positioned ourselves to take full advantage of the Las Vegas recovery.

We are seeing results both in strong RevPAR and in customer spend now and in casino volumes.

We have been very diligent in keeping our costs in line.

We will continue to do that, and we expect, therefore, to be able to drive this revenue growth to the bottom line.

Over in Asia, we work with Grant and the team.

The Macau team is doing a tremendous job not only in the existing property but on our planned in Cotai, We are very excited with our progress there.

We have been working with the government to have our land concession issued; and, while there is no specific date at this point for that land grant issuance, we are hopeful that we can secure that approval in the near future.

In the meantime, we have been working overtime on our internal development work and permitting with the agencies there.

We have also looked at other expansion opportunities within the existing MGM property in Macau throughout the SAR.

We are expanding further in Asia with their hospitality division, and they are bringing the first hotel online literally this year in Sanya on Hainan Island.

The MGM Grand will open.

The owner there is [Copgo], and it will be the first of many hotels we expect to have throughout China in cities such as Beijing, Chengdu, Tianjin, Nanjing, among many others in the region.

We expect to have multiple properties there over the coming years as we continue to expand our portfolio not only here domestically but overseas.

We want to make sure we have plenty of time for your questions, which we have done so.

And so I think at this point I will turn it over to the operator for Q&A.

(Operator Instructions).

Steven Kent with Goldman Sachs.

A couple things -- just on the whole percentage, maybe if you could give us a little bit more color on that, away from just the usual that we play on lucky or played lucky.

Was there any shifting of customers from your properties to other properties?

That's my first question.

The second question is you mentioned, I think, Jim, in your commentary that casino and restaurants spends are increasing.

Maybe you could give us some color on that to show the vibrancy of the North American consumer and sort of give us a sense for what's going on there.

And then finally, given what is going on in the market and given some what appears to be expectations of a slowing economic environment, could you revisit your ability to cut expenses were to do things if, in fact, your forecast, our forecast doesn't turn out to be the way it's looking?

Okay.

That's a mouthful there.

But try to hit them all; but if we miss something, let us know.

Okay?

So I'll take the casino side, your first question.

We had a poor April.

We just didn't hold well at all in April, plus in the very rarified area of high end, customers do move around.

And we pick up more than our share, and we lose share.

So in that month we didn't do as well as we would like.

June -- I'm sorry -- May, June, July we have been up, and in fact we're having a very solid time of the high end internationally.

So I do not believe -- internationally, as you know, was strong for us throughout even the recession.

And I do not believe we've lost any permanent share.

We did not have a good April, but that happens.

And I think some of those customers that we -- that beat us are back and we are getting even.

From a standpoint of cutting expenses, I will go to your last question and then I'll look and try to find some examples.

We always are doing that.

Our payroll is pretty flat.

Expenses were up a little bit, but in terms of salaries, bonus accruals, the culinary contract.

But in terms of any major cost savings beyond what we accomplished early and effectively, I don't anticipate seeing anything significant.

Every year, we look to take cost out of our business.

We do that in February -- January-February period as we get into a year.

We will do that again.

But at this point, we are showing margin growth.

We are seeing good occupancy, great occupancy across our portfolios.

Our food covers are up.

Our retail sales in most every venue is up.

Spot revenue is up, and so I don't see a need or even an opportunity to cut costs when our revenues are building.

On your middle question --.

Steve, I think it was related to kind of how do we see kind of the domestic spend.

And I think one of the key points we track is, as we look at our net RevPAR and excluding our casino and hotel business and so, picking up all the other lines, we are up almost 3% in the quarter, which speaks to our food and beverage, our entertainment offerings and nightlight offerings.

And that has been a nice data point -- (multiple speakers).

Yes, that's what I was looking for, thank you.

Yes, so I'm looking at the food and beverage numbers.

Food and beverage numbers up, entertainment is up.

Retail sales were up at Via Bellagio were tremendous.

And also -- Bobby, did you mention on Crystals -- I think you did -- the same-store sales, the retail?

Up 24%.

Up 24%.

And we are seeing those trends continue in the summer.

Shaun Kelley with Bank of America.

I just wanted to start with Las Vegas.

If you could give us a little bit more color on the slot business, it looks like you actually did quite well and it looks like you probably actually gained a little bit of market share relative to the Strip.

So, could you give us a sense of maybe what you're doing?

Is that kind of M life rolling into the results?

And how sustainable do you think that is?

That would be my first question.

Well, maybe I'll start and then turn it over to anyone that can jump in.

M life just really began, and I think that is having an impact.

I think the bigger impact, far bigger impact, will be next year.

I think the slot increases are a function of a few things -- one, overall, general improvement in the customer that is coming to Las Vegas.

We are seeing across the board improvements in RevPOR, total revenue per occupied room.

That translates well on the slot side.

The mix has improved in terms of the room mix, so as we're driving more productive customers through the buildings we are seeing higher slot revenue.

The marketing that we are doing, packaging rooms with entertainment, has been very effective.

M life has definitely has had an impact on that.

And one of the programs we did with M life, as an example, is we made all of our employees -- and we have 62,000 of them -- we made them M life Insiders.

And what they can do now with their employee IDs is help book rooms for their friends and themselves, customers, family members.

We are seeing an impact in terms of hotel reservations and gaming and non-gaming revenue as a result of that.

So I think it's a function of a variety of things.

I think we're just really scratching the surface on the M life side, though.

That's helpful.

And then my second question was really primarily related to Macau.

I know there are some operational improvements that are expected to come on line there, particularly on some of the direct VIP side.

So could you give us an update, or maybe Grant could if he's on, about what the timing around some of that is?

And then, for Dan, on the same note, just the balance sheet in MGM Macau obviously looks like it has some room there.

I know some competitors have done some refinancing activity there.

So what you might be able to do on that front?

That would be helpful.

Great.

I'll turn it over to Grant.

I think it's about five in the morning there.

Grant, are you with us?

Let me just wake up.

Yes, thank you.

Okay.

So some of the improvements on the Macau property?

I guess the first point -- we opened the Platinum Lounge, which is part of the main floor operation.

That comes on in the first phase, in August.

In fact, the end of next week.

And that will be completed before the National Day holiday.

The upgrade for the in-house VIP customers is now looking -- unfortunately, we are going to miss National Day holiday.

But we do have gaming capacity to cover that in November -- late October, early November.

So we're looking for a really strong stream of additional capacity coming online, and the market is still looking good for us.

And on your Macau balance sheet question, we believe there is an opportunity there to take a look at the markets.

The good news is is, as I mentioned earlier, they are less than 1.4 times leveraged.

So we are going to look at a new financing opportunity there, which will most likely involve bringing down the cost of that debt and maybe adding some capacity and preparing for our Cotai development plan.

Joe Greff with JPMorgan.

When you look backwards at the second quarter and you look at the different segments in the Las Vegas Strip, what is the ADR Delta between the group and FIT, the leisure segment?

And then, when you look at the third quarter/fourth quarter, or recently booked 2012-plus group bookings, is there any slowdown in the pace of the ADR improvements?

Thanks.

We are digging into look at that.

The Delta has remained the same between the convention and the leisure, I know that.

And in all cases it has been moving up.

But --.

It has really been a pace story in the second quarter.

Our convention business was relatively flat year over year in terms of the room mix, and we've really seen a nice pick up, as Jim mentioned earlier, in the retail and leisure channels.

And that has given us the ability to price up as well.

And I think your second part of the question was on pace?

Is that right, Joe?

Yes.

If you look at pace now versus pace a quarter ago and you look at the rate on individual rooms basis.

Well, you know, pace is up.

We're going to be up all year.

It looks like we're up all year in pace.

We gave you the RevPAR guidance for the third quarter.

That's the highest number we've given as a forecast in -- since 2007, I think.

We had a good pop in the first quarter, but that was a recovery quarter.

But we are getting good, strong growth in all the segments.

I think, on the convention side, we are going to be up in rate again in 2012.

I don't think we've given a number, but it will be up a healthy rate in 2012.

And the leisure, meaning the FIT and the leisure segment, the retail segment has been what drove the second quarter and what is driving our confidence in the third quarter.

The rate is up about pretty consistent with the extension of leisure (inaudible--microphone inaccessible).

Corey was just saying that we are seeing the same kind of growth in rate in the convention block as we are in the leisure block.

David Katz with Jefferies & Company.

I think, in the commentary in the release in Macau, specifically, it says that the whole percentage was slightly higher than the normal range.

Did you quantify for us what that benefit was?

Or was that included?

I thought the $27 million was a number that was really just related to domestic wholly owned.

The $27 million was purely domestic wholly owned.

And the important VIP segment was about 3.1% in the quarter, slightly above the normal range for Macau.

Got it.

And then, just on a different question, it does feel to some degree as though there's an elephant in the room, and there has been for us with other earnings calls.

And this is not the type of question I would normally ask, but we have had an unusual 10 days.

And have you observed or perceived anything over the past 10 days that's an observable change in mood, customer behavior or anything like that?

And how did the weekend go?

Well, I'm not surprised that we're getting the question, given what's going on in the markets.

First off, the weekend was packed here.

My wife is out of town, so I was on the Strip right a bit this weekend going to -- had dinner with Bobby Baldwin and went to a concert, a Don Henley concert we have for our best customers.

There has been one discernible change, and that is -- I saw it this morning when I was working out in the gym here with -- Corey was there.

The gym was packed; that's the good news.

The change is that everyone is watching CNBC and Bloomberg.

Usually, there are a few other channels on, on all the TV monitors.

But they were almost exclusively financial.

And even the non-financial ones, they had a Dow in the corner of the Weather Channel and just about everywhere else.

So honestly, we have been looking at this very carefully.

We've seen zero impact to our call center.

We've had no change in our cancellation activity at all.

We had a very strong -- we're having a very strong August in terms of occupancy, great weekend trends.

And I know it's important to you, but we are just, in the real world, living, watching people coming to Las Vegas here, there's been no change at all.

Thanks and well done.

Janet Brashear with Sanford Bernstein.

I have a question for grant, since we've already woke him up here.

If you look at July, your share has a little bit of a setback in Macau from 11%, roughly, to about 8%, roughly.

I'm wondering maybe what you think the drivers of that were.

Was it a delayed impact from the Galaxy opening?

And what level of share you think might be sustainable going forward?

And then part two to the question -- your margins came up quite a bit and are getting stronger in Macau.

But they are still fairly low for the market.

In the past, you said you can ramp those higher.

What's the potential for margins at Macau?

For the first question, July was really a pure hold issue.

Our volumes actually were quite strong and we were pricing the market growth.

And by foot traffic and hotel occupancy we're trending upwards.

And in terms of the margin issue, I think, if you look on a unitized basis by revenue stream, our margins are actually already getting into design, and there are some unique characteristics between the different operators that create different trends.

So yes, we are obviously very focused on moving those margins up.

At this point in time, I'm not going to commit myself absolutely to where they will sit.

But as you are aware, we have continued to look for productivity and performance improvements.

In terms of sustainable share, with the opening of the Galaxy, and our fair share, as the whole market has, has come down to about 8 point percent.

But we still see in ourselves the opportunity to rise above that, and we are still looking at the double-digit opportunity there.

Felicia Hendrix with Barclays.

Wondering if you could just share with us what your cash ADR was in the quarter and what that change was year over year?

All right, we're looking for it.

Give us another question while we find it, okay.

Next one is, Bobby, at ARIA, if you back up the benefit of holed, the property is just under -- it was just lower than what we were looking for in the run rate that we have been expecting.

So I was just wondering, can you just give us some color specifically about what happened in the quarter and how we should think of the rest of the year in that property?

Well, the weakest component, of course, is the entertainment policy with the show.

And that's something that we are -- the entire Company is addressing with Cirque du Soleil and our partners with TKX, the people that have own the rights to Elvis.

Other than the weakness in the show, we actually had pretty reasonable performance in the quarter.

The whole percentage moves around, and we were the beneficiary of an $18 million hole.

We think that ARIA should have done a little bit better in the quarter, but we are still happy with its progress year to date and comparing to, of course, 2010.

I can't cite any particular weakness other than the entertainment slots and hotel were both up nicely, and so were the food and beverage.

Okay, so for the shows I guess there's just lots of aspects to that but it's just the actual ticket sales, just the traffic that it brings in -- that's sort of --.

I mean, is that what you are alluding to?

Because I would assume -- .

Yes.

Okay.

The show was only about half occupied, and we can do a lot better than that.

We're going to have to make some modifications to the show, and those are in the works.

But the show -- a good strong show like an O show or a Love show should contribute as much as $40 million to $50 million in EBITDA, and we have virtually no contribution at ARIA since that show opened.

We lose a little money directly with the show, but we lose even more money because we only get about half as much traffic as we should get with the Elvis show.

So that's $10 million a quarter, and Jim Murren and I and others and Mr.

Macbeth -- we are working with Cirque du Soleil to improve that.

And can you just tell us where at that property, because you said slots were okay, where you are in terms of when per slot per day at ARIA maybe versus the Bellagio?

In just a moment.

We do have your answer, Jim.

We're going to have to get a separate analyst for you, Felicia.

That would be helpful.

We're trying to figure out the cash ADR.

We don't have it right in front of us right now.

Do you have the win per unit per day at ARIA?

That's up quite a bit.

They're going to get it right now, but it was up pretty dramatically.

Okay, I can get Grant for a second, if I may.

In the cap -- I'm just wondering if you could just talk a little bit about what you're seeing competitively in the VIP side.

As we all know, a major competitor is obviously trying to bolster their presence on the VIP part of the market.

And I'm just wondering if you have heard anything from your major junkets that might indicate that there's more attractive deals to be had on Cotai?

No; I think the general strength of the market has continued.

There's still, obviously, a lot of talk from most of the operators of additional openings.

We also have additional capacity coming on board with one of our principal operators.

The key issue is liquidity still seems to be strong.

There seems to, certainly, be enough business for all of us to achieve the sorts of outcomes we have been looking at.

And if you look at the market growth in July, that would tend to bear out.

There's always cost pressures, so good operators are always looking for opportunities.

But I think generally the market is pretty stable in terms of that.

We have your other numbers.

Do you want those?

I would love them.

Win per unit in slots at ARIA is up 9%, 9.4%.

It's $206 versus $188 a year ago.

And the comp rate was flat year-over-year, so all the ADR increase we got was on cash.

Bill Lerner with Union Gaming.

A couple questions.

One, you talked about a third-quarter 300 basis point increase in the mix towards convention.

What has the premium been in convention versus the rest of your segments?

I know you talked about 10% in aggregate for sort of guidance, if you will, in RevPAR.

But I'm just curious what that premium is.

And then, I have a follow-up.

Well, as you know, the third quarter is the smallest quarter of the year from a convention mix perspective.

I think last year we were like 9% or something like that convention mix.

This year we're 12.5%, 13%.

And the Delta is -- what you're doing is you are replacing the leisure customer with the convention customer.

So that's the best Delta in rate relative to the whole mix.

And it has been running on average -- I think it was like $40 -- it was $60 in the first quarter, $40 to $60, depending on the month.

That's $40 to $60 in rate premiums for that so it's comparatively for that segment, right?

That's right, because it's coming all out of leisure segment.

The FIT segment is up.

Casino is pretty flat.

So when we can drive a lot of casino mix in the third quarter, which we typically do not do, it's coming out of leisure segment in the third quarter.

Okay, great.

And then the follow-up -- just back to M life for a second, and it's probably too early, but maybe you just can help us generally.

7% growth in slot revenue in Vegas.

I'm not sure what your hold was there, but assuming it was -- that part of your gaming business was normal.

What can you attribute or how much of that 7% can you attribute to M life?

We don't know, obviously, the June numbers for the Strip yet.

But I suspect that that's better than the Strip.

Well, a few things on M life in the quarter.

Our database, active players, people that have been activated in our database went up 12% versus before we launch M life.

So year-over-year, we are up 12%.

The average number of trips per year has increased 4% on those customers that I'm talking about.

We've seen quite a bit of tier migration.

As you know, we have a tier program finally, and that's working.

And we are up double-digits in growth of people moving up the tiers, and that has had a particular impact on slot, handle and win.

In the second quarter alone we added 500,000 new customers to M life.

And so, that's --.

We're up, I think, total enrollment this year about 1.5 million.

And in terms of the average trips being up, we are seeing more consistency in the non-gaming spend as well.

So M life is certainly working.

It's just early days still, and I think once we get, we can turn on the non-gaming components of that, which we will in the regionals next month and here in October, that's going to have a bigger impact.

One other thing I wanted to mention, and we are talking about conventions in the mix, is the Mirage, which has been around for a while -- in terms of looking at booking trends, it had its biggest booking month in three years, in the month of July.

So in terms of booking new business, getting back to an earlier question, we are seeing booking trends, if anything, have not fallen, certainly not in July, not here in August.

But we are seeing it accelerate in some of our properties.

Mark Strawn with Morgan Stanley.

Could you guys talk a little bit about maybe how the volatility in the market has altered your capital raising plans at all?

I know you guys have talked previously about having enough liquidity through 2012.

And also maybe how the cash that you have in Macau and the free cash flow that you're going to generate going forward maybe kind of fits into the equation?

Well, yes.

I think we would have to be pleased with the progress we made when we made it.

We haven't anticipated being in the capital markets this year.

Certainly, it seems highly unlikely now, given the destruction of value that we've seen in the last few weeks.

But we never envisioned to being in the markets, anyway.

I think Dan is going to be working on the bank side, which he alluded to.

But in terms of the debt or equity markets, I don't think you will see anything -- pretty confidently, nothing from us.

We don't have to be.

We mentioned that last quarter.

And we certainly don't expect to be.

From a standpoint of cash, Grant and the team have done such a wonderful job in Macau.

Dan mentioned we've already brought back $190 million of cash from a very underleveraged joint venture which we now own 51% of, that certainly has a future opportunity for us from a capital raise standpoint, should we choose to.

So I think, from a standpoint of looking forward, our job here is to continue to grow our property cash flows, which, as I said, we believe will be up all year.

We have a defined capital expenditure program.

We know what our interest is.

So we will be generating free cash.

Combine that with what we are doing out of Macau, and the fact that we have quite a bit of cash in New Jersey which we will get when we ultimately sell our interest in Borgata, we have many tools at our disposal to continue to deleverage, which is a goal.

As Dan said, now that we consolidate Macau, our leverage at the end of the quarter was eight times.

That's far lower than it was only a couple years ago, and our goal is to get that down under six times over the next couple of years, under five times over the next three or four years as we continue to deleverage the Company.

Harry Curtis with Nomura Securities.

Most of my questions have been answered.

But Jim, just to drill down a little bit further in the booking pace, you mentioned that it was pretty strong still for July and so far in August.

Did that also apply to the booking pace as you look out into 2012?

Corey?

I mean, it does, but obviously it's a lot less information when we go out that far.

If we go out to 2012 we are focused on the convention calendar more.

We go out about four to five months on the whole retail convention/casino, so we have a much better idea of total pace for those segments four to five months out.

So for 2012, just drilling into the convention piece of it, how far, how fully booked are you relative to your expectations on the convention piece for 2012?

Well, we are ahead of this year, that's for sure, where we were.

And at Mandalay Bay, Dan, we were -- I think that's our big convention.

(multiple speakers).

The first four months is virtually sold out, and [check] doesn't have any space, more or less, to really book any large piece of business at Mandalay.

So our goal, as it is every year, is by the time we get to kind of the October, by the time we get to the fall, October-November time period, is to have about 80% of our room, convention room nights on the books going into the following year.

And we feel pretty good right now that we are going to achieve, maybe even exceed that goal, I think, or as even pacing ahead of that in terms of 2012, this early in the game.

And our convention folks are pretty excited about the way 2013 and 2014 are actually shaping up.

So there's many more conversations today with the meeting planners on multiyear contracts, and that's pretty encouraging as you look out the next couple of years.

Bobby, what do you see over at --

We actually have 68% of the rooms booked for 2012, which, as Dan pointed out, is ahead of the pace that we would normally expect and much better than last year.

The quality is improving dramatically in terms of the types of shows.

When you look at 18 months ago, the books were wide-open and we were just basically penciling anyone and everyone in.

The quality of events are improving, and the spend around those events are getting better.

Robin Farley with UBS.

A few questions on Macau -- first, you talked about Cotai and you are doing design work and permitting.

I guess, what's your timeframe in terms of being ready to break ground, if you did get approval tomorrow?

I just want to get a sense of the timing and what are really negating issues here.

Well, the gating issue is a government on that standpoint.

We are prepared, as soon as we get approval, which we expect, to start moving dirt immediately and clearing the site.

And so then, in theory, what would your opening date be if you got that approval tomorrow, in theory?

Well, Grant, didn't we say on that -- it hasn't changed since our IPO roadshow.

We said it would take about three years to build it, right?

Correct.

So it will be three years from whenever that approval comes, okay.

And then also, I don't know if you really said much more, certainly not on this call, about what kind of dividend payout may be likely from there, now that it's consolidated, and just kind of what your thoughts are on dividend payout from MGM China back to you.

Well, we haven't said.

We have been opportunistic in the past on that.

The Board would have to opine on that.

We have a Board meeting -- the next Board meeting, what, is August 18?

August 19.

So I'm sure that will be a topic of discussion.

But we haven't made that determination at this point.

Is there anything sort of philosophically that you could share?

Well, philosophically is that we have an underleveraged asset today that's generating a great return.

But we want to grow that Company nicely in Macau.

And so -- and Taiwan, too, should that be a possibility.

So I would say that there will be an opportunity for both dividends to shareholders and growing in Macau.

And I think that the future holds for both of them.

But in terms of whether we are going to do periodic distributions or quarterly distributions, we are not prepared to discuss it at this time.

We need to discuss that with our Board.

[Larry Katzen] with Katzen Advisors.

Great, I made it on.

A couple of things -- Jim, (technical difficulty) asked if it's non interest fees, I see that you made a little bit of money this quarter.

2012, with the hotel is starting to open up -- what can we see, 2012 and 2013, as far as the acceleration of that income stream?

Well, in the management side the ramp up occurs -- begins, really, when we open up in Sonya.

Then we will have that all for next year, and then moving into another hotel, we will have at least one, maybe two other hotels next year.

So it doesn't become substantial until we get into 2013 and 2014.

Then, if you're referring to the fees we are taking from MGM China, that's a different calculation.

That's part of the China prospectus.

But in general we expect that whole enterprise to be generating north of $50 million a year over the next -- within the next few years, getting into the $100 million a year range five or plus years out.

Okay, excellent.

And the least residential -- can you kind of, Bobby, divide that up around which buildings you've leased out and what you have left that are not being used right now?

I have a number right here.

And tell me if this is right, Bobby.

I think Mandalay and Oriental -- there are 225 units there.

We sold 62 of them, and we've leased 98 of them.

So we have 65 left in the inventory over at [Veer], we have, what, 669 units?

That's the number we have.

We sold 225 of those, leased 241 of those, which means we have 202 remaining.

(inaudible--microphone inaccessible)

So -- and of course, as you know, we are fully operating Vdara as a hotel, and we had a good quarter out of Vdara right there.

All right, all right, that's good, that's excellent.

Thank you, I appreciate that.

And then the last thing -- Atlantic City -- you just got that extension.

Do you have people in there looking at this point, or you are -- it's kind of nothing going on, given the economy and now you've got [six on]?

Well, we actually have been talking pretty consistently to a couple of groups.

This obviously changes the dynamic of the conversation a little bit, gives us more time, puts us in a stronger position than we were, let's say, a couple months ago.

And we will see how we will do.

I think we will do pretty well there.

At this time, sir, there are no more questions.

Do you have any closing remarks?

Well, I appreciate you taking the time today, given what is going on in the broader markets.

We are pleased with how we did, but we know we've got more work to do here.

We look forward to answering any questions you may have.

Thank you for participating.

This does conclude today's conference call.

You may now disconnect.