美高梅國際酒店集團 (MGM) 2017 Q3 法說會逐字稿

Good morning, and welcome to the MGM Resorts International Third Quarter 2017 Earnings Conference Call.

Joining the call from the company are Jim Murren, Chairman and Chief Executive Officer; Dan D'Arrigo, Executive Vice President and Chief Financial Officer; Bill Hornbuckle, President; Corey Sanders, Chief Operating Officer; and Grant Bowie, CEO and Executive Director of MGM China Holdings Limited.

(Operator Instructions).

Please note, this event is being recorded.

Now I'll turn the call over to Mr. Dan D'Arrigo.

Well, thank you, Steve.

Good morning, and welcome to the MGM Resorts Third Quarter 2017 Earnings Call.

This call is being broadcast live on the Internet at www.mgmresorts.com, and we have furnished our press release on Form 8-K to the SEC this morning.

On this call, we will make forward-looking statements under the safe harbor provisions of the federal securities laws.

Actual results may differ materially from those contemplated in these statements.

Additional information concerning factors that could cause actual results to materially differ from these forward-looking statements is contained in today's press release and in our periodic filings with the SEC.

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

You can find the reconciliation to GAAP financial measures in our press release, which is also available on our website.

Please note that our supplemental earnings deck is posted to our website as well.

Finally, this presentation is being recorded.

And with that, I'll turn it over to Jim.

Well, thank you, Dan, and good morning, everyone.

Sorry if we're a couple of minutes late.

I know it's been a busy day for all our investors today with many calls.

Before I get into our very strong -- obviously very strong third quarter results, I want to take a moment to remember the 58 innocent people who lost their lives and the hundreds of more injured people because of an evil individual that made a decision to carry out a devastating act of violence.

First, our thoughts and prayers remain with the victims and their families as they recover from this senseless tragedy, as well as the victims of the most recent attacks in Sutherland Springs, Texas and in, of course, New York City.

I also, again, want to thank the first responders and the various law enforcement agencies who are working diligently to examine the events of October 1. We have always appreciated their support and -- during this trying time, and we continue to work with them through this investigation.

This heinous act of one person impacted our entire city and community.

But in the days and weeks following, the outpouring of support we've received from fellow Las Vegans as well as our guests, partners and corporate leaders from across the U.S. has been heartening.

We've also now learned of incredible acts of bravery by many of our own security officers and employees that helped alert police to the shooter's location, employees who drove victims to hospitals while under fire, delivered potentially life-saving first aid, worked with first responders to assist the wounded and led those in harm's way to safety.

The morning after, 500 MGM Resorts employees from all across our properties arrived at Mandalay Bay.

They immediately assisted staff in the front desk, servicing guestrooms, answering phones and, ultimately, ensuring the needs of our guests and our colleagues.

We've worked very hard, especially over the last few years, to foster a One Company Culture.

This was not easy.

Our operating companies have spent a great deal of time and effort to implement best practices across every aspect of our business, including guest service standards, systems training, marketing, communications, and this support system was put to test last month.

And I've never been more proud of the strength of our employees, who showed selfless dedication and spirited teamwork in the face of such unspeakable evil.

Our strong culture and operating model that we built over the many years allowed us to take rapid and coordinated action, and I'm gratified to have witnessed this genuine embodiment of our one company, one culture ethos.

Despite the tragedy, Las Vegas continues to move forward.

While we anticipate near-term impact, which we'll, of course, talk about in detail, we're confident in the resilience of this community and its ability to remain the leading entertainment and business destination for the roughly 43 million people a year that visit us.

So now let's talk about the third quarter results.

We continued to demonstrate the strength of our business model.

And obviously, we exceeded our guidance in the quarter.

We produced consolidated net income attributable to MGM Resorts of $149 million.

Our domestic resorts, on a same-store basis, produced the best EBITDA quarter in over 10 years.

Our margins and profitability exhibited strong growth as a result of the execution of the strategies that we've talked about many times on these calls and the strategies we've put to place over the last several years.

Las Vegas did particularly well in the third quarter in spite of the fact that the city itself faced over 140,000 fewer large-scale convention attendees year-over-year.

And obviously, you see that we more than delivered.

And the reason why is we brought some of the best experiences to town, including 2 of the highest-grossing boxing events at T-Mobile, we had a great group calendar, we drove spend across the board with all our business segments.

And the end result was 4% growth in the third quarter in net revenues to $1.5 billion on the Strip.

We generated $514 million of Strip EBITDA, that's up 14% from the year ago quarter; and REVPAR growth of 4.2%, significantly above our guidance.

Our margins grew more than 270 basis points year-over-year to just over 33.5%.

And we achieved several records in the quarter at many of our properties.

I guess the star would be Bellagio, where its margins were almost 42%.

First time ever it reached 40% margin, and, obviously, the best quarter it's ever had in its history.

We had higher table games hold of 26.8%.

But more importantly, we had 12% increase in volume.

Even on a normalized basis, our Strip cash level would have been almost $490 million and the margins would have been over 32%.

CityCenter had another great quarter campus-wide.

Revenues and EBITDA were up 4.5% and 17%, respectively.

And it produced margins of 33.6%, up 360 basis points year-over-year.

Aria had a record-breaking quarter in revenues, EBITDA and margins.

In Macau, where Bill and I were last week for most of the week, the market clearly has recovered quickly from Typhoon Hato, which hit Macau on August 23.

Our teams have worked very hard there to volunteer to help recovery, both in terms of MGM China, MGM Resorts, and our great partner, Pansy Ho, committed significant amount of money to assist and support the Macau community and its future and that community's healing.

We're extremely confident about Macau's long-term prospects and its evolution into Asia's tourist and leisure capital.

We're opening, as you know, our second property in Macau.

It's a stunner, and it will open on January 29 of next year.

We've spent a long time developing, designing, creating, programming a property that would be unique to Macau and certainly unique to the hospitality market.

We worked hard to deliver on a promise that we've made to the government to create an entertainment destination that's unparalleled, and I think when you see what Bill and I saw last week, you'll feel that we've delivered on that promise of entertainment, of food and beverage, of retail that's uniquely Chinese, uniquely Macanese and embodies the idea of MGM as an entertainment company.

We're also excited to deliver The Mansion, which, of course, has been so successful to us here in Las Vegas.

That Mansion product will be delivered to Macau also next year, which we believe will have a significant competitive advantage in the VIP business.

And in the meantime, Grant, who's on the phone, and his team continue to do what they do best: best operators in Macau, most transparent, most accessible, best leaders of people.

And that is going to be very evident as we move forward into the balance of this year and into our really important opening in 2018.

Looking ahead, obviously, the event of October 1 has had an impact on the fourth quarter.

The entire town did the right thing.

We all took a pause in marketing out of respect for those affected initially.

At that time, we saw a spike in non-group cancellations, actually a little more than doubled than what we normally see.

Of course, our bookings declined immediately after October 1 because we were suspending our outbound marketing programs and focusing on what mattered: taking care of victims, their families, first responders, our employees and all the guests that are here.

I'm happy to say that these cancellations progressively subsided by mid-October, and our booking pace returned -- remarkably returned to normalized levels almost immediately thereafter as soon as we turned on our marketing efforts.

Mandalay Bay was the lone exception because we felt it was appropriate to start their marketing later at a slower pace.

So to give you some color around the fourth quarter, about half of our cancellations were isolated literally to the month of October.

And as I said earlier, we've seen bookings improve, our business improve here in November.

On the group side, the support has been remarkable.

All of us in this room literarily were here in Las Vegas meeting with heads of large groups that were actually in-house at Mandalay Bay, Aria, Bellagio, MGM, and they all concluded the same thing, that they would not let evil win, they're going to host their convention, they're going to honor the employees of our community and are going to do their work, and they did.

And some of the largest groups we've ever had, including at Mandalay, said that we're going to not only stay, but we're going to book again and again and honor the destination.

And so our booking pace going into next year is extremely strong.

We also have to acknowledge the fact that October, as you know, typically is the strongest month of our fourth quarter and actually usually one of the strongest months of the year.

And so that is going to impact the fourth quarter revenues and profitability.

And I think we're pretty clear on that in our earnings call that it has an impact in the fourth quarter.

But against -- again, in terms of the cadence of the quarter, it's very clear that our revenues and profitability are improving since October.

And we're going to talk about that in -- a little bit more in a moment.

It needs to be reinforced because we've talked about this before about why we invest the money we invest in Las Vegas: to broaden out our destination, to increase our non-gaming activity in business because it continues to yield extraordinarily high returns on investment.

The returns in our events, our arenas, our conference facilities are justified and enhanced and validated by the trends we're seeing in McCarran Airport, driving business and in overall visitation.

And we see that in our forward bookings as well, as we speak.

The analytics team, our revenue management team is the best in the industry and better than we've ever been before.

And so we have high confidence in saying the following: that we've already achieved 80% of our convention room nights that we've wanted to achieve for 2018, going into next year.

This is an extremely high level for us in any time in our careers.

We -- actually, we're going to be a bit better than that but for the fact, as you know, CON/AGG, which is a very large citywide convention, is not here in the first quarter next year, and so that will impact the city in the first quarter.

And also, to a lesser extent, there has been a movement in CES by a few days, which will have a slight negative impact on the citywide REVPAR.

However, our ambient business, our strong business, is improving, and we expect to see REVPAR growth in 2018.

We are the leader in sports world.

We've had a kind of rough road trip for the Golden Knights, but they're off to a great start and clearly been very popular here in Las Vegas, driving almost sold-out crowds every single home game.

We have brought in, and they will play next year a WNBA team.

We've been very active with the NCAA in general, with the NBA, with soccer, rugby, NASCAR, bull riders, rodeo.

Of course, we're bringing Dan's favorite, Oakland Raiders team, to Las Vegas.

All of these individual activities collectively make a difference in terms of increasing visitation and, more importantly for those who live here, create a community event.

We're spending a lot of money as a company improving our properties.

Monte Carlo is rapidly transforming itself to Park MGM and NoMad.

Many of the venues have already opened under great duress.

It's been difficult from a construction standpoint, which obviously had an impact on its cash flows.

But toward the end of next year, you will fully see what we have envisioned for that property.

And as I mentioned, Cotai's the HORIZON opens in January, and Springfield, Massachusetts will be the home of our newest property and our last major development project here in the United States when it opens next September.

And that really winds down our development cycle, which accelerates our free cash flow profile, which we have articulated on many calls before but want to reemphasize today.

Our goal has been and remains to maximize our revenues, improve our margins, which are industry leading, thereby improving our cash flow, being very clearly disciplined on our capital expenditures and throw off free cash, which we have and will return to our shareholders.

We feel confident in our future for basically 4 points.

One, we have a dominant position in all of our domestic markets, and we alike strength-on-strength: remodeling rooms, refreshing restaurants, finding new entertainment offerings, expanding our convention facilities.

These are high-ROI projects that yield great returns not only in the near term but provide enduring value to our owners.

We have and will remain a fortified balance sheet, remain a strong credit profile.

And that means that our leverage continues to decline even though we're investing in our future and returning capital to our shareholders.

And we have set a target internally and set it before to you, but our target leverage is in the 3 to 4x range, and we think we're going to get there by the end of next year.

We're well on our way, just a touch over 4x right now.

Last quarter, we again took out a higher-coupon debt.

And it seems like every quarter, but, again, last quarter, our rating agency improved our ratings.

Thirdly, we are very prudent and disciplined in our growth opportunities.

There are not many that we find attractive.

We like what we own and operate.

We like investing in those tenfold properties.

But we are not looking for growth for growth's sake.

And in fact, if there's any project or any opportunity in the world that the team here in Las Vegas are focused on, that would be lost -- that would be here and in Japan.

For growth, look to MGM Growth Properties.

With James and Andy at the helm, they are not only growing rapidly through their relationship with MGM Resorts but are hot on the trail to expand their portfolio of owned assets with multiple tenants.

And finally, and importantly, we intend to continue to return excess capital to our shareholders.

We've already done so this year.

We've returned over $500 million of cash to you in the form of dividends and share repurchases so far.

We announced the $1 billion share repurchase program only a few months ago.

We are committed to our dividend.

Not only it's current but to increase it over time.

And we feel that, that is the right path to reward the people that have been with us on the journey that we've been on over the last 4, 5 years.

So I know we have a lot of questions.

We got plenty of time to handle them.

But I'd just like to emphasize that I'm incredibly proud of the men and women of our company, how we have navigated this company over many years to this strong foundation of growth and financial success.

And I'm also, more recently, immensely proud of the men and women and the community at large that have handled these horrific times that we have experienced over the last 1.5 months.

We will focus on what is important to our business and to our customers and to our employees, and we're confident, based on our analytics, that we are on the way to recovering already.

So with that, I'd like to turn it over to the operator.

(Operator Instructions) And your first question comes from Harry Curtis with Nomura.

I had 1 question in Vegas and 1 for Grant in Macau.

In Vegas, I wonder if you could give us a little bit more of your strategy with respect to reintroducing Monte Carlo and what sort of disruption has it caused.

But what kind of returns on investment are you likely to enjoy there?

And then secondly, in Macau, Grant, it seems to me that some of your competitors who aren't necessarily VIP oriented have recently kind of dialed up their marketing efforts.

And I'm wondering if the competitive environment just for VIP has shifted at all in the last quarter or 2.

Thank you, Harry.

I'll start and I'll maybe turn over to Corey, who's got a cold he's soldiering through, and then we'll turn over to Grant.

We -- I underestimated the impact of the disruption to Monte Carlo.

It has been incredibly disruptive to the employees, to the guests.

The building has been under the most comprehensive renovation of any property that we've ever undergone.

And it has had a meaningful impact on its cash flows for the last couple quarters, and that will continue into this quarter and probably into the first quarter and start rapidly improving in the second quarter.

When we have opened venues, and we've only opened a few new ones, they've been profoundly successful: a couple of new restaurants; the room product, as it's been unveiled to the customers, has been extraordinarily highly received.

The returns on capital on Monte Carlo, I would say, would be some of the highest we've ever committed over the last 5 years, well in excess of any newbuild.

Just imagine the fact that it's a 3,000-room hotel that we've added a $90 million theater to, and now $550 million under way, taking a property that is well positioned geographically but poorly positioned in the market to a property that is right at the center of the Strip and with extremely high brand recognition, and that's driving a lot of revenues.

So I would expect very high returns, and I would think that Monte Carlo's cash flows, once they become fully integrated as Park MGM, will double.

So that's the kind of project that I think you should look toward the future for us.

It is straddled over 3 years, so it fits within our capital expenditure guidelines that we've set for ourselves and articulated.

But it is a very attractive way to deploy capital, and that's where we're focusing our capital, is where we dominate, which is here, obviously, in Las Vegas.

And if we are right on our expectations of Monte Carlo and its returns to Park MGM, that bodes well for our other existing properties in Las Vegas.

So I'll stop there.

Do you want to add anything else?

Sure.

Harry, from a pricing perspective, our goal is probably within a few years to ramp up to our total strategy because of the transition period as Park MGM is introduced and NoMad is getting completed.

But the goal on this project is we believe there's an opportunity to price this product right around or above a Mirage-ish MGM-type property.

There's not a lot of product in the town with that.

We think there's an opportunity from the Park MGM perspective to hit that sweet spot.

The NoMad will be more on the higher end and should be priced with some of the luxury properties.

But overall -- that's the overall strategy with the property.

Thank you, Corey.

Grant?

And the next question comes from Joseph Greff with JPMorgan.

Sorry, Harry, do you want me to finish that?

Yes, we lost you there, Grant.

Go ahead.

Yes.

So I'll finish.

So Harry, I think was saying, as you've noticed, the strengthening in the VIP market across the board.

And I think what everybody's doing pragmatically is taking in that opportunity as it seems to be settled.

And we have assigned -- we're obviously positioning ourselves for Cotai and building out VIP for Cotai.

But even in the Macau property, we will be opening a new VIP room, bringing in a new operator in December.

So I think -- because to your point, yes, there is a focus on VIP, but I think it's probably because after a very quiet few quarters and almost over 2 years, we're now seeing some growth, and I think everybody's just repositioning and rebalancing their portfolio within that sector.

Thank you.

Thank you.

Thanks, Grant.

Operator, I think we had a question from Joe.

Yes, yes.

Yes, Joseph Greff from JPMorgan, please.

A couple of questions here.

Looking at -- to 2018 in Las Vegas, can group room nights exceed 2017 levels?

Or is the CON/AGG rotating out of 1Q just too much to overcome?

CON/AGG is, I think, too much to overcome.

Yes, look, our goal is always to maximize that base around the 19%, 20%.

CON/AGG will be a little bit of a challenge.

There is a chance we can get there, but it's going to be a tough challenge.

Actually, asked another way, would you expect 2Q through 4Q group to be up in '18 versus 2Q through 4Q '17?

Yes.

Yes.

Yes, after we get through the first quarter and, obviously, the citywide rotation, we except group business and overall REVPAR to be up in the balance of the year.

Great.

And Grant, hopefully you're still there, but how much VIP products will be open on day 1 of the Cotai opening?

And when does The Mansion product open?

So at the opening, we'll have our own in-house VIP.

And I think as we've indicated earlier, we wouldn't have junket initially, but we do have a program to bring that online as quickly as we can.

So that is a focus for us at the moment, based on the construction program.

And we're looking to get The Mansion again online before the middle of the year, and we're just going to work as quickly as we can.

Clearly, bringing the junket and The Mansion and ramping up the VIP all needs to come together because we've got to be able to service that customer at the level we know we want to.

And like the impression that Jim indicated, we're going to create with The Mansion.

Great.

And then one final one, back to Corey in Las Vegas.

Monte Carlo disruption in the 3Q and what you disclosed, you expect in the 4Q as a little bit under $20 million.

When does that disruption cease?

Is it really middle of 2018 before we see no disruption impact?

I think yes, It's -- at the end of the first quarter, we'll have the property rebranded.

But we'll also be doing about 600 rooms in NoMad.

So there'll be a little bit of an offset there.

But in general, most of the disruption or at least EBITDA decrease should end by the first quarter.

Yes, it's -- I don't know if you've been out lately, but they've -- literally, the exterior of the building is -- the signs are down.

It's being refaced from the exterior.

It's incredibly challenging to navigate in the interior.

And there are pockets of really brilliance in terms of Primrose, the steakhouse, but -- and the lobby area.

But it is literally a full-on construction project right now.

And it really won't feel like an integrated resort until the second half of the year.

And the next question comes from Shaun Kelley with Bank of America.

And Jim, thanks for all the heartfelt comments around the tragedy.

So I just wanted to follow up on Vegas.

And maybe we could drill down a little bit more on specifically 1Q '18.

As we think about the different things you're lapping, CES and -- or the CES shift and then also the lack of CON/AGG, can you just help us drill down a little bit more in terms of magnitude on how much you think that could impact the year?

And specifically, if you'd be willing to give us a range on what you think REVPAR will be down in the first quarter.

Yes, I'll start and then Dan or Corey or anyone can jump in.

We -- when we went into strategic planning back in July, we expected the first quarter to be flat to down anyway.

But we expected the first quarter to accelerate after we got through that, and we had expected to be up for the balance of the year.

So before October 1, we had expected that to be the challenge.

We knew that would be the challenge but that we thought and we still believe today, based on really almost nonexistent cancellations and actually new bookings for '18, that will be up at every other quarter in 2018.

But I think the -- do you want to quantify the magnitude maybe, Dan or...

Yes.

I think, Shaun, it's probably a little bit too early for us to kind of get into what that magnitude will be.

On the next quarter we'll -- quarterly call, we'll definitely give you kind of how we're thinking about the full year.

But as Jim said, REVPAR will be up in 2018, challenging first quarter and then strength thereafter.

And we just gave guidance, I think, in the fourth quarter, didn't we, Cathy?

Yes.

All right, which was...

5% to 7% down.

Yes.

Down 5% to 7%.

So we don't expect the first quarter to be down as much as the fourth quarter, if that helps you.

Yes, that's helpful.

So negative but maybe not quite as negative as what we saw in the fourth quarter is probably at least an assumption?

Yes.

And what I would expect is what was down in the first quarter is probably the result of CON/AGG and the shift of CES.

Right.

Right.

So if there is a decline, it'll be for those citywide reasons and will not be as much as the fourth quarter.

And then -- and maybe just as a follow-up, can you just talk about sort of what you're able to do on the operating expense base?

I mean, clearly, between the comp that you face in Q1 and then just the overall business environment, which at times has been robust as it was in 3Q and other times it's not quite as robust, I mean, what's the natural rate of expense growth?

And is there any incremental expense growth that might occur a little bit?

So Joe (sic) [Shaun], this is Corey.

I'll answer it.

Even in the fourth quarter, we were down 3% in FTEs.

And I think we have our engine pretty well dialed in to match our labor with our forecast.

And in particular in Q4, even before the incident, we usually go into slow period plans, which we accelerated.

So we will hopefully be able to offset any cost increase there.

As we operate in the future in a lot of our PGP initiatives, they're all driven to constantly increase our margins over time.

And so we believe, based on what we have in place, that we'll be constantly be able to do that and, therefore, manage the labor in particular, our biggest cost, through our new technology that we're using.

And as we've said before but it bears repeating, our goal is to increase our EBITDA margin 50 to 100 basis points a year, and that remains the target that we feel is achievable.

We've obviously come off a tremendously strong third quarter.

And therefore, we'll have a good year with our 9-month results already booked overall.

But we expect to continue to not only drive revenue growth in 2018 but margin growth as well.

And the next question comes from Carlo Santarelli with Deutsche Bank.

Corey, Jim, Dan, whoever kind of wants to take a stab at it, but the large-scale conventions relative to smaller groups, which you guys have done a great job this year backfilling, especially in the third quarter versus kind of events, could you talk about the dynamics of maybe not down to profitability, but the dynamics of how those events are different for you guys from an earnings perspective as we look at next year?

And maybe you have some holes to fill in the first quarter with CON/AGG moving out and some of the other puts and takes throughout the back half of the year.

Well, I'll start and then I'll move it to either my left or right.

We have -- and I'm sure Mike Dominguez and his team are on the call listening in, as many of our thousands of employees are listening, and many of them are shareholders of MGM.

We have the best convention sales team in the world, not just in the gaming industry or in the United States.

And what we have been able to accomplish in terms of booking conventions, moving conventions from other cities, improving the portfolio of product, standardizing our delivery of product, filling in calendars where we no longer have any real slow periods in our calendar for conventions has been remarkable.

We had prebooked the expansion to the Mandalay Bay Convention Center before we even started construction, and it's been remarkably successful.

And we're expanding the MGM Grand Conference Center as we speak and are already prebooking into that expansion.

And we're looking for other growth opportunities as well, including in the building we are right now at Bellagio.

But the large group business, of which there's still significant groups we do not get in Las Vegas or we don't have at MGM Resorts, is significantly more profitable.

So do you want to share anything on that?

Yes, what I would add, Carlo, is actually, when you look at our business, and in particular the large groups, and especially you saw it in October right after the event, them being here sure helped quite a bit without having a major impact on our results.

But in general, 60% of our business or close to that is corporate.

And of that, the large groups are a small percent of it.

And actually, a majority of our room nights come from the smaller groups.

The large groups, what it allows us to do is yield our rooms a lot higher at those properties when that core business is in there.

It looks stronger.

It continues to look strong.

Many of those groups book multiyears.

And so we have a lot of that tied up.

We constantly are looking for actually larger groups to actually help us on our shoulder periods also.

But in general, when we look at our Strip revenue and what those large groups have done, they've actually helped us grow the total convention contribution, probably about 5% to 10% a year over the last few years.

And we expect that to continue.

Great, that's very helpful.

And then if I could just ask a follow-up.

Obviously, it's always volatile, as experienced in the 2Q relative to the 3Q, with hold swinging almost 600 basis points.

But it does feel like the natural kind of bias relative to your normal hold if you look back over the last, call it, 7 quarters has been higher.

As you think about your theoretical range and maybe some of the tweaks that have been made around some of the games, does that range maybe feel a little bit like it's conservative and your experience of late is going to be more indicative of maybe the natural table game hold on the Strip going forward?

Carlo, this is Dan.

I don't think the range is conservative.

I think the approach we're taking with respect to our casino business over the last few years has really evolved into more focused on profitability overall as well as the customers.

So as we talked about before, certain steps that we've taken with respect to certain of our customers are much different today than historically and some of which we don't deal to any longer.

So we've taken a different approach.

I think that's probably helped our ability to skew more towards the higher end of that range and how we look at customers today, how we market, how we promote those customers.

And the deals that are cut with the customers, I think, have helped our theoretical and ultimately our actual hold percentages.

Yes, and it's -- yes, I agree with Dan.

I think we're still happy with the range because we dominate in the high end.

I think we're bigger than our next 2 competitors combined.

Note how much money Bellagio made again, if you can, but compare that to our Strip competitors.

So there is volatility in the high end, and that's why I think at this point, we should keep the range where it is.

But there's no doubt that the analytics around our hold table games department and the men and women that are working there has improved the profitability and also the hold percentages if you look back over the last several quarters.

And the next question comes from Felicia Hendrix from Barclays.

So Jim, in your prepared remarks, you mentioned that you were -- that the company returned to marketing Mandalay Bay later than the other properties for obvious reasons.

So just wondering if you could give us some more details regarding that property perhaps maybe when did marketing start, what kind of demand are you seeing there once you did start that.

And is there a percentage of the room base that's out of service?

Yes, I'll start then I'll maybe give Corey since probably the most folks of all of us.

But we all -- so literally, on the 1st of October, we shut down all our marketing channels, all external, internal channels, Strip-wide.

And that -- if there's any affirmation that the people we have in direct marketing and -- are worth the money that we pay them, it was -- it's certainly true that it has an immediate, instantaneous impact on bookings.

We felt that when we did start slowly bringing back marketing, started pivoting our external, our website, our digital plans, we didn't start doing that until in the middle of the -- of October.

I think it was late in the second week, wasn't it, Corey?

It's around the 10th or 11th.

The 10th, 11th.

But not at Mandalay.

Mandalay, we took another week or 2, didn't we?

Yes.

What we ended up doing at Mandalay is we probably took another week and then we started drizzling it out just to make sure that the reaction was not adversarial.

And so over time -- it's at full force now.

I would say that Mandalay, compared to the rest of our properties, probably has the most impact.

We know that 20% of the cancellations came from there.

But they're slowly -- they're really close to where their booking pace was prior to the incident.

Yes, and as you know, we're so proud of our national ad campaign.

We took that off air immediately, and that has not gone back up on air and probably won't -- will.

I know it won't go up -- back up on air until sometime next year.

So we're not fully back from a marketing perspective.

We don't think it's appropriate to do so at this point in time.

But in our direct marketing, here in November, all the channels are back fully functioning.

And Felicia, I'd like to make another point to just add on.

It wasn't just MGM Resorts.

This was the entire community for about 10 days that stopped marketing the destination.

So LVCVA, ourselves, our colleagues up and down the Strip, as well as our partners on online channels, et cetera, really kind of shut down any outward- and forward-facing marketing efforts for that 10-day period.

Yes, so it wasn't just us.

That's a good point, Dan.

And, I mean, that -- you'll have to be here to experience it.

But I also -- it is a good point to say how appreciative we are at MGM of our competitors.

We had pastries delivered from The Venetian, we had folks coming over from Tropicana, we had Cosmopolitan chipping in, we had folks at Wynn.

Caesars properties all -- we all rallied around the same tragedy.

And the city collectively and universally shut down its outward-facing marketing.

For the better part of 1.5 weeks, people had their own views on how to restart their programs independent of themselves, but it was certainly a collective decision by the community to pause, focus on the victims and the families and the employees and the community, and we're all turning on those channels now.

And can you say how many -- what percentage of the room base is back in service at Mandalay?

Yes, all the rooms except for 1 wing of 1 floor.

Okay.

And then -- thank you for all that color.

And Corey, just when you think through the REVPAR stats that you reported this quarter, the strategy to focus on more profitable customers is really apparent when you look at the occupancy rates across the board.

So what often stands out is the ADR increase that you generated in most of the properties, especially at the segment that you call the retail properties.

So I was just wondering, is that pure room rate lift?

Or is there anything else driving that?

And then I was just also wondering how much runway there was left to raise ADRs at those properties.

I would think, given the segment that it's in, it might be hard after a point to keep pushing prices.

Yes, so keep in mind we thought it was going to be even a more challenging quarter going in because of the 140,000 less citywide room nights.

So we were able to achieve that even without that.

And I think what drove a lot of the retail, especially in those properties, the 2 major events definitely helped quite a bit.

But if we can layer on the events with the convention base, I -- there's always opportunities to raise rates there.

And the rates there are still below peak at some of those properties.

Okay, that's actually a good point, Corey.

We didn't -- I don't think we've talked about it on the quarters.

We have talked about a strong convention calendar for 2018, but we have an equally strong entertainment calendar at all of our arenas as well.

And those big-arena events drive ADR increases.

And it's not as episodic as it used to be.

We literally have every weekend now, it seems, a major event at either Mandalay events center, MGM Grand Garden or T-Mobile Park Theater and our other venues.

And that has an instantaneous uptick in ADR when we have them.

Even when you look at the hockey games, and many of us are season ticket holders there, half the arena is the other team.

And there's a -- probably a good portion of the other team that is coming in from out of town, staying in New York-New York, Monte Carlo, Aria, Bellagio, Excalibur even because it's close to the arena.

Yes, they're not staying at Monte Carlo too much right now.

Under construction.

But they're staying at New York-New York and Excalibur, Luxor, Aria, MGM.

And the next question comes from Thomas Allen with Morgan Stanley.

Question for Grant if, Grant, you're still awake.

Can you talk about -- and do you -- how do you feel Typhoon Hato impacted your property, if you can quantify?

And do you feel like it had outsized impact given your location on the Peninsula?

I think it's true that the Peninsula properties had more dislocation.

But frankly, I don't think it had any permanent effect.

If anything, I think it was just a timing issue.

When you look at the GGR going into October, we've seen some good growth.

So it's one of those events -- it's a tragic event that had a lot of damage caused and, obviously a lot of dislocation in the community.

But in terms of business, I think we are becoming really pretty robust and pretty resilient, so I don't see it having any permanent impact at all.

And maybe one last question, please?

Okay, thank you.

And that comes from John DeCree with Union Gaming.

Snuck in under the wire.

Wanted to kind of get a little bit more forward-looking.

And when thinking about convention mix, Corey, you kind of talked about 19% to 20% range and you've got 2 new items coming online early next year, the Aria's convention space and then the year after at MGM Grand, has that given you the tools that you need to kind of get that convention mix up a little bit more?

Or is the strategy just to kind of target perhaps higher-priced groups in that space?

So keep in mind Aria is not included in our mix.

But the goal of the additional space is, one, to look at getting better groups in there at higher rates; two, to the extent it makes sense to place more convention business into a facility compared to the other business we could place into it, we will.

And I think there's opportunities to improve that mix.

But it's not the ultimate goal of purely sitting there and saying we want to be at a certain percent.

We're going to maximize our profitability by using all the spaces we have and making sure we have the right groups in our rooms.

And to remind you, part of the impetus for us making the decision to extend our convention space was the existing groups that we have today were growing in size and we wanted to make sure that we grew with them.

Right.

All right.

Well, I want to thank everyone for joining us today.

We are working hard for you, our investors, our owners.

I'm proud of our company.

We are enthused about the future of MGM Resorts not only here in the United States with Cotai opening around the corner.

And we're very active in the pursuit of what I believe to be a tremendous opportunity in Japan, and we aim to be a winner in that market as it unfolds.

And we'll be in touch with you.

Please call us at any point in time, and thank you for the time today.

Thank you.

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