美高梅國際酒店集團 (MGM) 2012 Q1 法說會逐字稿

Good morning and welcome to the MGM Resorts International first-quarter 2012 earnings conference call.

Joining the call from the Company today are Jim Murren, 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; Grant Bowie, Chief Executive Officer of MGM China Holdings Ltd.

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.

Well, thank you, Ashley.

Good morning and welcome to our first-quarter earnings call.

This call is being broadcast live on the Internet at www.MGMResorts.com and a replay of the call will be made available on our website.

We have furnished our press release on Form 8-K this morning to the SEC did.

Before we get started, I would like to read a few Safe Harbors.

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.

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

You can find the 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 being recorded.

With that, I would like to turn it over to Mr.

Jim Murren.

Good morning, everyone.

Well, we had many accomplishments during the first quarter of this year.

We completed several financing transactions at CityCenter and at MGM.

MGM China paid a dividend of $400 million to its shareholders.

We announced a partnership with Ameristar and launched the non-gaming component of M Life, our rewards program.

Here in Las Vegas, January and February were very strong months with increases in many of our core business levels throughout the properties year-over-year.

Then we had March where we faced two challenges, a very difficult city-wide convention comparison and a poor table game hold.

Despite these anomalies, growth in our Las Vegas resorts is continuing.

We posted year-over-year growth across all major metrics.

Net revenues, adjusted EBITDA, margins all grew year-over-year.

We also exceeded our REVPAR guidance of I think we said 2% to 3%.

We're up 4% in our Las Vegas Strip properties.

We continue to believe that REVPAR growth for the year will be at least mid-single digits with potential upside coming from in the year/for the year convention bookings and retail segment strength.

We grew both rate and occupancy and our gaming volumes grew in table games and in slots.

On the regional side, MGM Grand Detroit continues to perform well and had its second best quarter ever.

Detroit's performance was driven by record slot handle and revenue at that property.

In addition, both Beau Rivage and Tunica experienced significant year-over-year growth.

CityCenter experienced a difficult first quarter from a hold with Aria Holdings significantly below the prior year.

I know Aria is getting the high-end play, and I know that they expect their customers to return the favor in future quarters.

Bobby will discuss this in greater detail in a little while.

There are many great projects underway there to expand that business.

MGM China reported another record quarter with EBITDA growth of 21% and improved margins.

Grant is going to go into further details about what is driving that and where we see continued growth opportunities.

Beyond that, we are reinvesting in our resorts, as you know.

We are actively pursuing growth opportunities in key gateway cities.

We have recently been back from Japan where we think the prospects are favorable and more recently in Toronto, which we find the opportunity there to be particularly exciting.

We're spending time in south Korea and through MGM China in Taiwan.

Of course, we remain highly focused on Western Massachusetts and we believe we are very well positioned on all of these fronts.

We continue to improve this Company financially and operationally, and we're excited about our future.

With that, I will turn it over to Dan to get into some of our operating results.

Thanks, Jim.

In the quarter hour wholly-owned domestic resort casino trends continued to improve.

Our casino revenues were up 9% driven by table game volumes up 5% and our slot handle up 7%.

We saw year-over-year volume improvement in both our national and international rated table games play and believe this is being driven by market share gains and the continued rollout of our M Life customer loyalty program.

As Jim mentioned, unfortunately, our casino results were negatively impacted by hold the quarter.

Had we held that the midpoint of our range, we would've generated an additional $25 million in EBITDA at our wholly-owned property and approximately $7 million for our share at Aria, assuming a midpoint of a hold range for Aria.

Given these adjustments, our adjusted property EBITDA would've been $509 million versus the $477 million we reported.

Our room trends continue to improve.

Our wholly-owned domestic hotel revenues increased 3% year-over-year.

That increase was despite having over 70,000 rooms out of service at the MGM Grand due to the current room remodel that is underway.

Overall, we were still able to increase our occupied room nights by approximately 60,000 in the quarter, reflecting a gain in market share as well as the continued strength in demand for our lost Vegas Strip resorts.

It is clear that the underlying trends remain positive but, as anticipated, due to the difficult city-wide convention comparison in March, our convention mix was down slightly year-over-year.

Our luxury resorts were able to fill their convention room nights with in-house bookings and reported REVPAR up 7% in the quarter while our non-luxury resorts reported a REVPAR increase of roughly 3% in the quarter.

Those resorts obviously felt that impact of the city-wide much more than our luxury resorts.

As mentioned earlier, we have had a busy start to the year and have made several accomplishments in improving our balance sheet.

In January, we completed a successful and well-subscribed bond offering which was upsized from $500 million to $850 million.

In March, we upsized another deal to $1 billion at 7.75% due 2022.

This issuance was the lowest bond yield issuance we have had since 2007.

We're also active in working with our lenders on the bank front.

We amended and extended our senior credit facility to February 2015, and in March we subsequently paid off the non-extending portion of our bank term loans.

As a result of these transactions, our interest rate on our extended $1.8 billion credit facility was lowered in mid-April by 200 basis points to 5%.

As a reminder, our average domestic borrowing cost is approximately 8%, so for every 1% improvement in rate, that equals approximately $125 million in annual interest rate savings.

As we go forward, we believe there will be additional opportunities to further reduce our borrowing costs and improve our overall free cash flow levels.

At the end of March, we had excess cash of roughly $800 million, which includes our share of the Macau dividend which we received in the quarter of $204 million.

On a net debt basis, we finished the quarter just below $12 billion in debt, excluding MGM China.

At CityCenter, we are also busy on that front with Bobby and the team there.

We issued $240 million of first lien and attractive yield of 5.82%.

We also repaid and replaced the remaining $75 million of term loans with a revolving facility, giving CityCenter greater financial flexibility going forward.

At the end of the quarter, that facility was undrawn.

We will continue to look to be opportunistic in terms of extending our debt maturity profile and financing opportunities.

Our focus now really shifts to MGM China, where we will look to put a new financing package in place as we continue to finalize our Cotai development plans.

During the quarter, we spent approximately $114 million, including about $9 million at MGM China in CapEx.

Our MGM Grand room remodel program continues to progress nicely with roughly 2300 rooms completed.

That project is on budget and on time to be completed by September of this year.

Going forward, to help with your modeling a little bit, we expect our stock compensation expense in the second quarter to be about $9 million or $10 million.

Depreciation expense in the second quarter is estimated to be about $230 million to $235 million.

Our interest expense in the first quarter gross was about $284 million, which included approximately $6 million for MGM China and $23 million in non-cash amortization.

We estimate that our gross interest expense for the second quarter will be down off first-quarter numbers about $275 million to $285 million, which includes about $6 million for MGM China and, again, $23 million in amortization costs.

We anticipate that our effective tax rate during the second quarter will be approximately 3%.

With that, I will turn it over to Bobby to talk about CityCenter.

Thank you, Dan, and good morning everyone.

For the first quarter of 2012, CityCenter resort operations generated adjusted property EBITDA of $32 million with Aria reporting adjusted property EBITDA of $19 million.

As mentioned, we were severely impacted by a low hold percentage.

For the quarter, however, Vdara, Mandarin and Crystals all achieved record level adjusted property EBITDA.

When comparing year-over-year quarterly results for Aria, hold affected adjusted property EBITDA affected us by $26 million.

As you know, we're in the gambling business and hold percentages can go both ways.

This quarter, it went against us.

In addition to the hold percentage impact, we also experienced a decline in table games volume and lower hold percentage in slots as well.

There was also a property tax credit that benefited us in the quarter in 2011.

Despite these factors, we continue to see a strengthening in the fundamentals of our business as demonstrated by year-over-year growth in slot handle REVPAR, occupied rooms, food and beverage revenue, and retail sales.

We continue to be pleased with the manner by which business volumes are increasing at Aria.

March occupancy at Aria was the highest since the opening, coming in above 92%.

Looking out for the next two quarters, room bookings are significantly outpacing last year.

In fact, we expect occupancy in the second quarter to be the highest ever for Aria driven by continued growth in convention business as our world-class convention space continues to gain traction in the marketplace.

Convention business is also robust for 2013.

It was announced this quarter that Viva Elvis will be ending its run in August and we will be welcoming a new show, a Cirque du Soleil production, Zarkana, to Aria in the fourth quarter of this year.

Zarkana is a proven and established show that has been seen by more than 1.2 million guests in New York City, Madrid and Russia.

We anticipate that Zarkana will provide a significant increase in show revenues while also generating incremental traffic throughout the resort.

We're very excited for this new residency here at Aria.

Construction is also underway on Javier's, a Mexican restaurant that is extremely popular in Southern California.

This well-known brand will be located off of the casino floor and will add energy and a unique experience to Aria when it opens this August.

At Vdara, as mentioned earlier, Vdara reported record adjusted property EBITDA of $5 million, up 69% from last year.

Revenue increased 40% year-over-year due in large part to an increase in occupied rooms.

Additionally, we're pleased to have grown the ADR despite a significant increase in room inventory as compared to last year.

Vdara continues to succeed in fulfilling a niche in the market as the premier non-gaming non-smoking boutique hotel.

Crystals' first-quarter 2012 adjusted property EBITDA was $7.1 million, up 21 -- pardon me, 27% from 2011.

The increase is the result of higher rents, new store openings and expensive stabilizing at lower levels.

Three new tenants have opened in 2012 and currently 86% of Crystals is under lease.

Finally, two significant interior modification projects at Crystals were completed in April that promote more direct pedestrian access to Aria from the Cosmopolitan Bridge and the Gucci entrance off Crystals.

Both properties appear to be successful or both projects appear to be successful at increasing the pedestrian flow to the Aria Casino and Resort.

That concludes my report.

I'll turn it over to Grant Bowie.

Grant?

Thanks, Bobby.

MGM China continues to perform well.

For the first quarter, net revenues were $702 million.

This is up 18% year-over-year while adjusted property EBITDA reached $165 million.

This includes $12 million of branding fees.

If we exclude the branding fees, adjusted property EBITDA was $177 million.

This is a 21% increase year-over-year.

EBITDA margin before branding fee improved to 24.5% from 24.6% last year due mainly to higher VIP hold percentage, continued improvement in main floor contribution and the impact of the efficiencies from the implementation of our key performance indicators.

During the first quarter, we were able to derive growth from each of our revenue segments with our market share remaining consistent at approximately 10%.

This is despite the addition of significant new capacity into the market.

In our VIP business volume grew by 6% year-on-year.

We were able to add one new junket operator during the quarter.

This contributed to our volumes.

We also benefited from a VIP hold of 3.2% for the quarter.

On the main floor table, Wynn was up 16% and our slots were up 20% year-on-year.

The success of our main floor was the result of our continued effort to better yield floor.

Our slot growth has outperformed the market and our March slot revenue was an all-time high for us.

The slot performance in particular was driven by strong customer acceptance and increased use of the slots in our Supreme and Platinum gaming areas.

We continue to seek out growth opportunities by driving improved operating performance through continued volume and yield improvements, by innovation in our slot product and programs designed to increase visitation to our property, as well as expansion of our existing site.

In terms of the volume growth, we are working to improve overall player and visitor numbers.

One tool we use to drive that is to increase and improve our Grand (inaudible) events.

We had great success with our winter scaling arena, and we have just opened a butterfly exhibit in April which will be in the Grand (inaudible) for the next eight months.

Our expansion project on a Level II is underway and upon contemplation will have 40 gaming tables which are available from our existing table inventory of 427 units.

We continue to put a lot of effort into our Cotai project to refine and enhance our design.

We believe the government approval for our land grant application is imminent.

We are well prepared to commence construction as soon as we're given the green light by the government.

Our plans call for a truly unique MGM experience, which will have approximately 500 tables, 2500 slots, 1600 rooms, and a budget of approximately $2.5 billion to be spent over a time frame of 36 months.

At the end of the first quarter, MGM China had approximate cash of $575 million, debt of $552 million, and an adjusted leverage ratio of approximately 1, or 0.086 to be precise, based on a trailing 12-month EBITDA.

In closing and in response to the often asked question re dividends, the Board continues to monitor our financial position and will determine the future timing and the amounts based on the Company's capacity to meet all of its obligation opportunities.

With that, I would like to turn back to Jim Murren for his closing remarks.

Thank you, Grant, and thank you for being up late at night.

You know, as we reflect on the first quarter, our take-away is that the fundamentals of the business are getting stronger and the foundation for growth here in Las Vegas is broadening.

We know this because we grew even in the face of the operations we discuss and we're growing now.

That is good news for Las Vegas and good news for MGM.

Looking forward, we are confident we can accomplish many milestones in the quarters ahead.

We see great opportunities in international gaming in our US regional expansion and online gaming and social media to come.

The second quarter has some great events for the city.

Floyd Mayweather is fighting this weekend at the MGM and also next month Pacquiao is fighting in June again Bradley.

And so these are major events, more than we had a year ago, and they drive casino play for the town and largely for MGM.

Over in Macau, Grant is enjoying Golden week right now.

I have to say it is off to a great start.

Our forward-looking pace remains quite strong as our convention base is solid and the retail segment booking trends continuing to improve.

Again, this supports our thesis of a broadening recovery in Las Vegas.

We expect convention mix to increase year-over-year during the second quarter and most notably our convention pace is up significantly in 2013 and 2014.

Based on our current booking trends, we expect mid-single digit REVPAR growth in the second quarter and as I, said we have a strong forecast for the year.

We are driving future growth initiatives in fields where we believe we can yield high returns on investment.

In the Hospitality division, we have opened our first hotel in China, MGM Grand Sanya, and we are well-positioned in key gateway cities around the world.

We expect this Hospitality business to grow, bear fruit for all of our shareholders.

I'm very proud of our efforts with M Life.

We are seeing tangible benefits of capturing increased customer spend at our properties.

We think this will continue and expand with the recent addition of our non-gaming amenities to our rewards program.

We are very actively now cross-marketing our regional properties to drive market share and increase visits to Las Vegas.

We expect this trend will only improve with the marketing relationship we have created with Ameristar.

New growth markets in gaming will likely emerge, and we have positioned ourselves internationally to effectively compete there.

We are very excited to say that, this quarter, along with our partners in the second quarter, we are launching a social gaming site which re-creates the Las Vegas Strip experience and exclusively features our brands.

We believe this product will be superior to what you currently see in the market and will be a strong customer acquisition and brand expansion tool for us.

And of course, we continue to remain aggressively focused on pursuing federal legislation for online poker.

We are keenly aware of what is going on on a state-by-state basis for those opportunities, which we think will likely emerge.

So, with that, operator, I would like to turn it over to you so that we can get to the Q&A section of our call.

(Operator Instructions).

Bill Lerner, Union Gaming.

A question and then a very quick follow-up.

You -- Jim or Grant, I guess, you've been more measured over time in your Cotai approval commentary until now or until this morning.

What makes you say approval is imminent?

Then a quick follow-up.

Want me to take that Grant, and then you can follow-up?

We believe that the announcement of the land transferred to Wynn is an important step.

We believe that we will be following shortly thereafter.

We believe our process through this since 2007 has been delivered, measured, and tracking to that type of outcome.

I would say that the opening of capacity in the marketplace and a very measured approach the government has taken to grow and the very recent announcement with Wynn bodes very well for MGM.

But Grant, do you want to add to that?

I think I just want to add that clearly the Wynn has now cleared the air.

From our perspective and most importantly, we've put a lot of time and effort into the process, both in our dialogue with the government and understanding exactly their position, but most importantly making sure that we get the product that we know will add considerably to the diversification of the industry here in Macau.

Okay, thanks guys.

Then to follow quickly maybe for Dan or even Bill, in Vegas, when looking at all the data points out there, March seems to be an anomaly.

Can you talk about why obviously ConExpo rolled off 100,000-plus delegates, but can you quantify it perhaps?

Do April and May look as strong as January and February?

Bill, this is Dan.

Maybe I will ask Corey to jump in as well.

But clearly when you look at that one week year-over-year comparison, it had a dramatic impact on the operating leverage in the business predominantly in a lot of ways to what we call our core properties that are mid tier in our value orientated properties.

Not just from an ADR standpoint, when there is 100,000-plus higher spending individuals up and down the Strip, that obviously -- that tide rises all the ships on the Strip from a leverage standpoint.

When we look at our January, February and even three out of four weeks results in March, they were strong across the board sans hold for a second in March which the volumes all both well.

Corey do you just want to quantify?

Yes, we did quantify it, Bill, because taking 120,000 attendees out for a week and replacing it with a lot less attendees absolutely had an impact on our business.

When we looked at it, it actually probably had close to a 3% increase in REVPAR for the entire quarter on the Company, not just the month.

We would have had a very positive REVPAR growth in March if you just took that week out.

From an EBITDA perspective, excluding any gaming win or loss, it probably was about a $15 million to $16 million impact on our bottom line just from that one week.

I was just going to say, Bill, I'm just -- so our REVPAR was up 4%.

You're saying that if that was not there it would have been what?

It would've been a little bit over 7%.

Over 7%.

Okay.

That's what I was after.

Thanks, guys.

Robin Farley, UBS.

Just to get some clarification, when you talked to about imminent approval in Cotai, is that -- just looking at the Wynn process, in September, there was the announcement that they had agreed to terms with the government and then the official gazetting took this additional sort of six months or so.

So is the part that you think is imminent, is that agreeing to terms or has that already happened but it's not necessarily something you felt was needed to be in an 8-K?

Or in other words, I'm just wondering which stage is the imminent one?

Do you want me to take that, Grant, or do you want to do it?

My comment is that the imminent announcement that we are waiting for will be the release of the draft land concession.

The processes that we're looking to do is obviously ensure that that moves as quickly as we possibly can.

Much of that has to do with the status of our project in terms of its ability to be executed.

Thank you.

So, the process, as you understand, is you get the draft land concession.

That process, in terms of agreeing to those terms, can actually be very quickly and then we went to parallel that with moving forward with getting all of the appropriate approvals to commence construction.

They're parallel but need to be all completed and we -- the land concession gazetting can be handled judiciously.

Okay, great.

That's helpful, thanks.

Then just switching over to Las Vegas, I understand the impact in Q1 and you mentioned that '13 and '14 pace is up significantly.

It sounded like, in your opening comments, you're kind of looking for, in the year, for the year business to pick up or that you are seeing that pickup.

Can you tell us what, for the remaining three quarters, group nights on the books versus the prior year, how that is pacing?

Corey is looking for that, Robin.

I can tell you we're seeing it segment-wise because I was looking at this yesterday.

We're seeing good strength in year for the year in the technology companies, healthcare, automotive as well has been quite strong.

Our lead numbers have been up ,really I know we had a great number in December.

Do you have any of that, Corey, at your tips?

I don't.

Convention mix, we said that we expect convention mix to be flat to slightly up year-on-year this year.

Yes, the rooms are really closely but pacing is pretty close to prior year's pace.

We're up.

At CityCenter, we're up 250,000 room nights versus 188,000.

So it's about a 70,000 room nights increase at CityCenter compared to last year.

Okay, great.

Thank you.

We'll get you more, Robin.

We just don't have it at our fingertips.

I know it's hard to have every number.

I didn't mean to pull a number out of there.

Thanks.

Carlo Santarelli, Deutsche Bank.

Good morning.

Hey everyone.

I was just hoping you guys can provide a little bit more granularity.

When we look at the segments in Las Vegas and try get our hands around all the moving parts, obviously hold with an influence, with the convention calendar having an influence as well, but if you would look at kind of your core gaming segments as well as your core room segments, thinking about it from a margin perspective and flow through to margins, with obviously gaming and other revenue seemingly leading hotel room revenue, I can understand why the margin is depressed but could you talk a little bit more about maybe some of the limited flow through that we did see in the quarter?

Yes, I will turn that over to Corey for that.

Yes, great.

We've been watching this also.

The first two months of the year, when we had the right mix in there and the mix was supported by the convention base, our flow through is in excess of 50%.

The March impact was mainly the shift in ConExpo leaving and you have a lot more occupied core rooms at a lower rate.

So we were actually up 60,000 rooms.

We had 77,000 rooms out at MGM and we replaced those with the core rooms.

So you are seeing an impact on your room rate because of that core -- shifting to the core for the rooms.

We think that is an anomaly that we will have that happen just in that one event.

Great, that's helpful.

Thank you.

Cameron McKnight, Wells Fargo.

Good morning.

A question for Jim or perhaps Grant.

How are you thinking about financing on Cotai?

I'm going to turn it over to Dan.

This is Dan.

I'll jump in real quick.

I think when you look at it, obviously the facility we did a couple of years ago is -- was state-of-the-art at the time and is now probably, we are probably paying too much and it is way under-utilized.

We will look to probably do a $2 billion to $2.5 billion financing package at the MGM China level.

That free cash flow will be more than sufficient to do everything we want to do at MGM China from a development standpoint, as well as continue to look at future dividend opportunities.

I think we would add that we are at a position now in terms of our design development, we have chosen all of our architects.

We have board approval at MGM China in terms of the programming and design of what we are doing.

(inaudible) costing us building out more precisely.

That, combined with our favorable outlook from a land perspective, means that we are gearing up that financing process right now and look to do that certainly by the end of the year, right, Dan?

Right.

Okay, great.

And Jim or Corey, how is the convention and event calendar looking for the balance of the year on a year-over-year basis?

Well, we have no more aberrations.

We have no more of these things that we have to talk about, and the calendar looks solid.

The convention calendar looks solid.

As Jim mentioned, we obviously have a good fight calendar this quarter and the back half of the concert calendar and events calendar is picking up nicely in 2012 versus last year.

Yes.

The convention mix is going to be up in this quarter.

It will be up at least 1%.

At least 1%.

I think the event calendar is really backloaded, especially at the Grand, with some great events.

Madonna is in October.

When you look at our first-quarter numbers, the fact that the Garden was not as busy as it was the year before and we had those increases in gaming numbers, I think it shows the market is recovering even on the casino side here.

Great, thanks very much.

Joe Greff, JPMorgan

Jim, on your commentary about mid-single-digit REVPAR growth in Las Vegas in the second quarter and the back part of the year, how much of that is driven by price?

How much of that is driven by your stated occupancy increases?

I am presuming it is a mixture of both.

And so if it is driven by some occupancies, are you -- and given the volume increases on the tables and slot handle, are you having to add much to FTEs in Las Vegas?

So, it's a combination of both, Joe.

We think those trends are going to be growing in the year, but it is a combination of both slightly more occupancy.

You can see that we are already at fairly high occupancies, but improved mix in pricing at the different price points.

We are not anticipating adding any FTEs to any material nature at all for the entire year.

For having 66,000 more occupied rooms, we were actually at 0.4% FTEs, so for the most part it is flat.

Got you.

Then looking back at the quarter and the adverse hold, was that primarily at the Grand and Mirage, just eyeballing the year-over-year EBITDA results?

It was predominantly at Bellagio, Mirage and Mandalay.

But the Grand held I would say within a normal range but it is predominantly at those three out of four properties, excluding (inaudible) of course, but you have those numbers.

So then looking at the wholly-owned Las Vegas EBITDA results, adjusting for hold, what would have been the EBITDA margin on an adjusted basis?

I have got to take a look at that.

I think it would have been up about 40 or 50 basis points I think on a comparable basis.

Got you.

Great, thanks guys.

Shaun Kelley, Bank of America.

I just wanted to ask about CityCenter.

Bobby, I think, in your comments, you had given a little bit of indication, something about a property tax benefit in the first quarter last year.

But I was just trying to understand, because even when we hold adjusted numbers, I felt like the margins were a little bit lower than what we were expecting.

So I kind of wanted to get your sense for how we should -- kind of what do you think is the right stabilized margin there, kind of with normal hold?

Because I think, in the second quarter, you have a tough hold comp too.

Well, the property tax benefit was about $4 million.

That's the first part of it.

The remaining question had to do with the margin going forward?

Yes, just kind of -- now that the property has been up and running for a while, just kind of what are you thinking about kind of the run rate margins there?

I mean, directionally, should this be in line with what you've been able to do at Bellagio, or is that too high or kind of with the mix of high end, how should we think about normalized margins there?

Well, it should be, going forward, 25 -- around the 25 percentile.

Of course, I think you can expect the margin to be about 25%.

Of course, we want to grow the volumes.

The last thing, I think mentioned that you did have lower tables volume in the quarter too.

Did I catch that right?

Yes, it was about 7.5%.

Okay.

Was that primarily on just on the high end side or was there something else going on on the mass?

80% of that was bought for us.

So some of it was timing.

Yes.

Also, this year, we had the big Chinese New Year's party at Bellagio.

Last year, we had it at Aria.

So it's just a shift year-over-year of where we hosted our major event.

It had a lot to do with it.

Okay, that is really helpful color guys.

Thank you very much.

Mark Strawn, Morgan Stanley.

Hi guys.

One quick question on just the REVPAR trajectory as you go from 1Q to 2Q.

If we're looking at kind of a plus 7% adjusted number for the first quarter adjusted for that big show rotating out, I think you said at least mid-single digits.

Does that mean you are confident that you could come in ahead of that if in-quarter bookings are stronger than expected, given that there don't seem to be any major calendar anomalies going forward?

I think, Mark, that is the intent.

Obviously, a lot is reliant on the in the year/for the year on the convention going forward as well as continuing to gain traction on our retail pricing.

That is our goal, obviously, to continue to maximize that proposition.

Okay.

Are you seeing any, maybe of some of your higher end properties, seeing any pushback on rate as you try to push rate there maybe like we saw in some of the other releases so far this quarter?

We have not really.

Okay, thank you.

Felicia Hendrix, Barclays.

Dan, just to go back to something in your prepared remarks and also in the press release where you talked about table volumes being up, I was just wondering if you could parse out for us how the mass did versus how Baccarat did?

Yes, roughly how that works out, roughly about -- here on the Strip, about 7% increase in table game drop and about a 3% increase in Bacc drop for our wholly-owned Strip properties.

Yes.

Thank you.

Grant, can you help adjust your results for the hold for us?

Also, you know, there's been a lot of debate lately about what theoretical hold should be in Macau and definitely don't want to have that conversation now but when you do that adjustment, are you using the 3% or the 2.85%?

I think what we're seeing that the market is starting to stabilize closer towards 3%.

I think it has to do now that the volumes have grown to sort of a fairly strong mass and recognizing that most of the operational commission programs are now on revenue share, that I think what we're now seeing that normalized advantage is probably slightly drifting up.

But I'm not going to be unequivocal because I will repeat the comment that Bobby made, that we are in the gaming business and the whole percentages do move around.

But that is what we're starting to see as an emerging pattern for us anyway.

Okay.

So I mean when would you prefer when we adjust it to use -- for us to use the 3%?

Until we have a really bad month and I will come back and tell you another one.

(laughter).

But we are fairly conservative and we are cautious.

We tended to err to the lower side of that, to the ranges.

But we're now starting to see a pattern where it is certainly stabilizing closer to that 3%, but I don't want to make that an authoritative absolute.

But that is where we're seeing our trend.

as always, I appreciate the intellectual honesty.

Then you added a junket, a new junket.

Do you have any plans to add further junkets?

Yes, we've actually -- we would like to keep a continual pipeline of opportunities.

That is where that is happening.

Some of the work that we're doing around the property is reconfiguring existing spaces, repositioning tables to get them into better configurations.

We would like to think that we might be able to accommodate one or maybe two going forward, additional coming forward in the next two quarters.

Okay, fantastic.

Thank you.

Harry Curtis, Nomura.

Just a quick question related to Vegas, if you go back to 2006/2007 and the volume or number of your room nights, how close are you now to that peak?

Where I'm going with this question -- because I'm wanting to get a sense of at what level you feel more confident in lifting your ADR as you get closer to that volume of room nights?

Yes, we're looking at this right now Harry.

You want to look at -- we have all the convention room nights that far back.

Are you talking about total room nights or convention room nights?

The convention room nights because that seems to be what is driving the train here.

So just to give you a basis for 2007, we're about 1.8 million convention room nights --

At our company.

-- at our company.

And in 2011, we went to 1.6 million.

So would that imply that you really are that close to the line in the sand where you can get more aggressive or is there something else going on that keeps you a little bit more cautious about driving rate higher?

Obviously, Harry, there is a lot more room inventory on the Strip in comparing those periods.

The other part of it is the CityCenter phenomenon.

We've done a good job at driving market share increases and driving our convention mix back up, but as you saw in March, we've got to get that lift in the city-wides again that we once had back then in order to continue to drive the pace of the room size.

So that is going to be -- when you look at the improvements there, we are doing a good job on the city-wide, but it dropped at about 4.3 million convention attendees.

Last year, it was at 4.8 million.

It peaked at 6.3 million attendees on the convention side on city-wide.

So we've got more work to do in terms of our city-wide.

That is going to help us to continue to drive rate going forward.

Harry, do you want the 2012 estimate, since we have it?

Sure and through '16 would be wonderful.

The 2012 forecast for the entire Company, including Aria, we expect to exceed 2007 convention room nights.

Okay, very good.

Thank you.

Steven Kent, Goldman Sachs.

I was just a little confused.

In the beginning of your commentary, you talked about that maybe some of your luxury hotels were doing a little bit weaker than some of the -- or a little bit stronger.

I frankly forgot which way they were going, but you made a distinction between luxury and the rest of the market.

And then there has obviously been an issue with conference convention.

Maybe I've missed something but aren't those linked?

Don't a lot of convention goers stay at MGM, Mandalay Bay, and Bellagio?

Aren't those sort of the luxury or maybe I missed -- heard it wrong?

Yes, I think you're flipped up a little there.

Yes, when you look at the first quarter and the impact that we saw, obviously the Bellagios, MGMs, Mandalays and Mirage can back-fill a large city-wide event and they did that in the first quarter.

They were actually up much stronger in terms of REVPAR, about 7% versus, the mid tier and value properties who were at about a 3% increase.

So that was the distinction we made in looking at those two parts of the market.

The luxury convention mix for the first quarter was almost 29%, which is --

Almost at peak levels.

-- (multiple speakers) peak levels.

And then on this hold issue, obviously a bunch of people are asking it, was there any change in the way the customers were playing?

Were they moving around more frequently?

Were they moving to competitive properties?

Is that one of the reasons why the hold didn't normalize?

No.

At Aria, we had the same length of play that we would expect normally and that we enjoyed last year.

So it is mostly the swing of Lady Luck.

And it was across a few different table game types, so it's not like it was all Baccarat.

I think during the quarter, we even -- craps and 21 nipped us as well.

So --

Thank you.

Dennis Forst, KeyBanc.

I wanted to get a clarification on the convention room night projections, but then I had a question for Grant, if that's okay.

The convention room nights in '07, I think Corey said 1.8 million.

Was that for all properties?

Did that include Treasure Island back then?

(inaudible)

Treasure Island, was Treasure Island in '07?

It would have been deminimus.

Then the 2011 1.6 million room nights, did that include Aria?

Did that include all your owned and joint venture properties?

The 2011 number?

Yes.

That did not include Aria.

It did not.

So the record (technical difficulty) in 2012 is not apples-to-apples with the 1.6 million in 2011, correct?

Yes, that's correct.

If you included Aria, what would that number have been in '11?

It's going to be close to '12.

Okay, so between '11 and '12, it looks like it's going to be a similar number of convention room nights for the whole Company?

Correct.

Okay, great.

Then for Grant, if you're still awake, I wanted to ask about traffic at your property, maybe the Peninsula area in general, since the opening of Sands Cotai Central.

Have you noticed any change in the amount of both major players, room guests, and just walk-in traffic?

Not really, and this is now, what, our third opening since -- third property opening in Cotai since we have been on.

Really, the impact seems to be getting smaller each time.

If there is any impact within the short run that we looked at, it is around the 3% to 5% in traffic but it is not necessarily showing up in play.

That's also being affected by the fact that we have just come out of that pre-Golden Week cycle.

So it's a little bit difficult to really put a handle on it.

We have obviously study the traffic and the spend and I think we just need a little more time.

I think we need sort of that 30 to 45 days is what we're now starting to see as the indicators, but by and large, things for us are very stable.

I think it is worthy of pointing out that, for the quarter, the Peninsula is still generating 60% of all the revenues in the city.

And so the Peninsula is still really strong.

Most importantly, it yields strong as well and that's probably one of the key points.

Okay, great.

Thanks for color.

2007 does not include Treasure Island.

Okay, great.

Thanks, Corey.

It does not include Treasure Island.

I think apples to apples to get to that point, Dennis, is yes it will be flattish but our convention mix will be up this year versus last because we have fewer rooms in service because of the room remodel at the Grand.

Good point.

Thank you, Jim.

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