永利渡假村 (WYNN) 2013 Q2 法說會逐字稿

Good morning and welcome to the Wynn Resorts second-quarter 2013 earnings call.

Joining the call on behalf of the Company today are Steve Wynn, John Strzemp, Matt Maddox, Kim Sinatra, Gamal Aziz, Maurice Wooden, Scott Peterson, Ian Coughlan, President of Wynn Macau, and Robert Gansmo, CFO of Wynn Macau.

All lines have been placed on mute to prevent any background noise.

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

(Operator Instructions)

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

Please go ahead, sir.

Thank you and good morning, everyone.

Before we get started I just need to remind everybody that we will be making forward-looking statements under the safe harbor of federal securities law and those statements may or may not come true.

With that I'm going to turn it over to Steve, who is actually in Macau right now, to kick off the call.

It is 8.30 at night here and 12 hours earlier -- actually later than New York.

And reprogramming some of fountains with Kenny Ortega and the group was a lot of fun.

Today has been a really good day for us.

We signed our contract, the final contract with the guaranteed maximum price with [Latten] and that fixed two things -- our guaranteed maximum price and we held the cost of the project now is $4 billion.

Maybe a little less, but no more than $4 billion.

And we know that completion date is -- we have an early completion date of January of 2016 so we will make Chinese New Year in 2016 and if they miss the early date, which they don't think they will, it's April.

2016, not 2017.

So we are well under way our foundations are coming up on the last few months of all of the pilings and caissons and stuff that we had to go so deeply into the earth to support the new building.

But it was two-and-a-half years of design.

It's, by far, the most aggressive, ambitious, and lovely project that I have ever been involved in in my 47 years.

And I think that it's going to be a great addition to Macau.

I think it is going to further enhance the growing strength of the Cotai area, and so that has been very good news for all of us.

The earnings, I am happy with it for the year.

I tend to look at things on a broader brush stroke, perhaps, than some of you will in your questions, but between Las Vegas and Macau we are about $100 million ahead of where we were this time last year.

And that is pretty good when we were pushing $1.6 billion last year.

We are tracking towards healthy growth for the year.

In Macau, we did $292 million and last year was $302 million, but last year we had a $21 million unique one-time-only credit adjustment in which we credited ourselves $21 million.

If we compare apples-to-apples, we would be a little ahead this year.

Many of you ask questions about mass-marketing and VIP trending.

We are basically up in the non-casino revenue.

We are a little behind in slots.

Not in coin-in, but in hold percentage.

And the mass-market sequentially was behind the second quarter to first, but it has been a bouncing ball with us because we are 22% ahead in July with three days to go in mass-marketing.

So we are very happy.

Our run rate we were able to get more efficient.

Our run rate of operating this place is a little less than it was last year.

We have about 10% at current levels, between 10% and 11% of the revenue, in this 30-odd casino market, but we do have 1/6, or 16%, of the profits.

And that is the most important thing we are concerned about is the bottom line.

So without further ado Ian is here.

I am with my colleagues in Macau this week, and we are all on hand early in the morning in Las Vegas to take your questions.

(Operator Instructions) Joseph Greff, JPMorgan.

Good morning.

Good evening, everybody.

Steve, maybe I will start off with a broad-brush question here.

The Macau media of late has been reporting on the government potentially looking at concession, subconcession renewal discussions starting perhaps as early as 2015.

Can you talk about your expectations or views on what, if any, changes they may be looking to place around the renewals?

And I will leave it as broad as that.

Thank you.

I was in fact in such conversations today and I feel very comfortable being in Macau.

I think -- I certainly don't have anything to do with the specifics of the government's final decision, but I know that the matters to be addressed in 2015.

And speaking for myself, after 12 years in Macau I feel sanguine and comfortable about being here and plan on being here a lot longer.

I think that probably answers your question.

Okay.

Then, maybe this is for you, Matt.

The margins in Macau were about 210 bps points below what we were looking for.

Volumes were basically right in line.

Were there any adverse mix shifts in VIP between direct and junket, or maybe even in mass between premium versus non-premium assets that would (technical difficulty) some of that?

Yes, Joe, that is exactly right.

We held less than 2% in our direct program, and as you know, in the direct program the margins are higher.

So while our overall junket hold was 2.94%, we held high on the junket space and really low in our direct.

And that was the reason.

And was there anything weird on the mass side overall?

No, only in June.

So that number that everyone was focused on, there was some hold issues in June in both slots and mass tables, but overall it was pretty normal.

And it has been corrected.

I mean it has corrected itself in July.

And that 22% number, Steve, that you mentioned that is a sequential number or is it a year-over-year number?

That is year over year, but it is up sequentially too in double digits.

The holding (multiple speakers) what does the sequential look like?

Sequential is up about 13%.

It's 13%, Joe.

I'm sorry; it's 22% up year over year and we are -- our run rate is probably about flat with Q1, which was our best mass gaming quarter, and up 13% over Q2.

Correct.

Great, and my last question.

Matt, of the $2.5 billion of cash and investments, how much of that is Macau-related?

Half.

It is right at half between the -- in the Asian subsidiary.

Thank you.

Incidentally, I forgot to add, we had another nice quarter in Las Vegas at $130 million.

Just thought I would mention it.

Felicia Hendrix, Barclays.

Good morning, good evening.

Steve, since you mentioned Vegas, I will ask.

The margins are actually much better than we were looking for.

I was wondering if you could discuss some of the initiatives you might be taking on the cost side there.

Well, you know what happens, because of our sort of a premium niche that we have here in Macau and that customer base makes its way to our place in Las Vegas.

And the same thing is true in Brazil, Chile, Colombia, and Mexico.

Last year we won about $600 million at the tables, another $177 million in slot machines.

52% of that is Asian, 24% is Latin, 24% is domestic.

And in slot machines, I would say $25 million or $30 million of the $170 million is international.

So our brand, because of the market segment we cater to, tends to benefit from the international market.

In these emerging markets a lot of people are enjoying success outside the United States and they make their way to Las Vegas.

And I think that we are one of the first choices for that kind of visitation and you know we cater to that business aggressively.

That would be my comment.

It does introduce volatility to our business, but we have got so much of it we can afford to deal high, because at any given moment we have a handful of people playing $100,000 or $200,000 a card in games.

So we are benefiting from that and I think that is probably the most relevant answer I could give as to our margins.

International; we are not dependent upon the United States primarily, but from upside.

And, Felicia, as you will notice, in the press release we talked about the $12.2 million credit in the quarter as we every June do a historical analysis of our collections in Las Vegas.

Yes, thank you.

And, Ian, in Macau you guys talked a bit about and it was very helpful -- I think Steve mentioned -- about what is going on in the mass side.

Obviously, everybody there is now trying to go after the premium mass customer, so I was just wondering if you talk about how competitive that environment is.

And obviously, people are sampling new product.

As you talk to some of your customers who might be sampling what are they saying, and are they eventually coming back to you guys?

The mass-market high limit side is hypercompetitive, remains hypercompetitive.

We have just been focusing on taking care of our customers, delivering high-quality service, and trying not to get into the heavy discounting promotional battle this is in the marketplace.

A number of our competitors have corrected mistakes they have made in the past.

They have also built new facilities and they are ramping up new business.

We are maintaining a very nice quality level of business.

We opened Encore and it was a success from the first day we opened; continues to be the mass-market high limit area in the marketplace.

And our customers are very satisfied.

People do shop around.

People will move for discounting, but players always gravitate back to quality.

And service consistency is where it is at in Macau and that is what we have been focusing on.

Thank you.

Just quickly, Ian, do you expect any construction disruption from the hotel renovation?

There is mild disruption.

We are not doing heavy renovation.

We are refurbishing our guestrooms.

We are doing all 600 keys in our Wynn Tower and we are just over seven years old.

They have been incredibly well-received.

We have taken the palette from Wynn Las Vegas Tower suites and rooms and so far the reaction has been excellent.

We have done five floors so far.

We will be finished by late November, so very little disruption.

We have 100 keys left to sell each evening, so there might be mild impact from that on the gaming side.

But overall it has been very well received and very few complaints.

But we are out of order with a portion of our inventory.

100 rooms approximately.

Yes, about 1/6 of our rooms.

So we are operating at a little bit of a deficit, especially since we have such a high utilization of our rooms by VIP customers.

It is very, very difficult for us to sell rooms for straight cash here because we have such a large component of high rollers and bigger players that justify complementary services.

We have only 1,000 rooms here and they are used all the time.

All of the time.

Great.

Thank you so much.

Carlo Santarelli, Deutsche Bank.

Good morning, everyone.

Steve, now that you mentioned obviously having the guaranteed maximum price in place for Cotai and having a better sense of the timeline of that project, as well as maybe a clearer sense of what is going on in some of the domestic projects you guys are currently in the process of, how are you thinking about capital allocation here throughout the rest of the year 2014 as you are cognizant of the spend required for the other initiatives?

That is a perfect Matt Maddox question.

Might as well get the main guy to answer it.

Carlos, as you know, on capital allocation we put in a $1 a share dividend per quarter to provide investors with stability as we go through this growth phase.

As new projects come on board we plan on always keeping that $1.

If there is excess cash flow available at the end of the year, then the Board will decide what they want to do with it.

Just so you know, on Cotai, we just are about to sign an additional $200 million accordion on our bank facility at LIBOR plus 175.

So Cotai is pretty much fully financed and future projects are really just speculative right now.

And, again, we have $2.5 billion.

And under $2.5 billion, $2.5 billion or less.

That is correct.

Matt did a wonderful job.

Just an update for Philadelphia and Boston?

It is nice to be investment grade.

Philadelphia and Boston, well, we are hard at it as you know.

Five or six applicants in Philadelphia for that remaining license.

There will be shenanigans, I am sure.

Someone told me that the SugarHouse people wanted to say that the state of Pennsylvania doesn't have the right to issue a license that they took back previously.

Sort of a ludicrous, preposterous thing.

But those guys, if they think that we are going to win, they don't want to see us there until the last possible minute and I don't blame them.

When you see some of these facilities, they are boxes of slot machines.

They don't really have any tremendous magnetism.

They just sort of cater to the locals.

In Massachusetts, we got through our home host agreement nicely.

Made a guaranteed payment to the people of Everett that helps them enormously, plus a lot of other improvements we are doing to make the area pretty and a give a good invitation to people to visit.

And then we had our host community required vote and we got almost 87% of the people were enthusiastically in support of us.

We are waiting for the state of Massachusetts to finish its suitability investigations of the various applicants in Springfield and Boston.

Then, of course, the folks at Suffolk Downs, for example, one of the applicants in Boston, they have to finish their host agreement and then have a vote in their communities, whatever those communities are.

And so we have to wait on them to find out what is going to happen, which will probably be after the first of the year.

Maybe sooner in Pennsylvania, but that is not a schedule we control.

But we have designed facilities that we think will be profitable and give us a tremendous return on equity.

We sit with a lot of cash, and in today's world we can't make very much money on our cash, but when we deploy it on our own business then it is another story.

I think I may have said this in the previous call but we see [900] in Pennsylvania with a $300 million or $400 million equity investment that we can make $150 million or $175 million on.

We see Boston at [500] or [550].

We think we can make $300 million on that in equity and we think we can borrow a conservative amount of money and favorable rates to make up the balance of those projects in the form of mortgage financing.

So it is a way to pick up $400 million or $500 million with our new concept of Urban Wynn.

Now this idea of Urban Wynn, which is being suggested to the authorities in Pennsylvania and Boston, it is worth repeating, if I didn't say it before, the era of the grand hotel is gone.

The day of the Waldorf-Astoria, the Plaza Hotel, the place that people go to stay and visit that isn't happening anymore because the cost of rooms, construction, and the Internet hotels.com kind of pressure on pricing.

So what you get is stores on the ground floor and then some office floors, then some hotel floors, and then some condo floors.

Mixed-use buildings that are places to stay, but they are not places to visit.

When the government of Pennsylvania or Massachusetts decides, however, that they are going to put their casinos in the city, now we have a horse of an entirely different color.

Where we have stood off from racinos and riverboats, not our thing, we build hotels that people like to come and stay at.

We specialize in high-class service and big rooms and fancy bathrooms and great restaurants and good food and all of that jazz.

You notice all that is non-casino talk.

Slot machine, a blackjack table has zero power.

They are commodities.

They are the same everywhere in the world in a dumpy little box of slots or in a fancy place like Highline Casino.

It is the non-casino things that drive the business.

So now with these new laws in these states that allow metropolitan casinos, like Boston, for example, or Philadelphia, you can build a beautiful hotel with an atrium lobby, with restaurants that have indoor/outdoor experiences, shops, a wonderful spa, meeting rooms that have gardens outside.

And then down the hall, completely -- in a room that is 800 or more square feet with a [175 or 180] square foot bathroom, separate shower, separate tub, water closet with a bidet and john, two sinks, makeup area for the lady, integrated closets.

We can do all of that in big rooms that have sitting areas and large-screen televisions.

That does not exist in New York, London, or Boston, or Philadelphia at the moment, but we can build what I call a grand hotel.

Then if you are a person that wants to gamble, go down the hall.

Families can enjoy everything I just mentioned without ever seeing a slot machine or a blackjack table.

If you go down the hall as if you were going to a ballroom in a convention area, you go through double doors, adults only, and there is a casino with Starbucks and a deli and a food court and noodle kitchen and bars and a sports bar.

And all that other razzmatazz that makes a casino exciting.

It will have separate access from parking that is covered and heated, so that people can drive their car right to their favorite slot machine.

That is an urban casino and I think that we're going to see more cities open their doors and invite the kind of projects that Massachusetts and Philadelphia are encouraging.

And I want to have one or two right away so that I can demonstrate the model for this kind of project just the way Mirage and Bellagio sort of set the stage for destination resorts of a modern era in Las Vegas.

So I am interested in this.

And Matt and Gamal and all the rest of us and Kim we have been at it working on this.

Now we don't know whether we will win or not, but we sure as heck have put our best foot forward.

Great.

Thank you, Steve.

Thomas Allen, Morgan Stanley.

Morning.

Just two on Macau.

What is the latest on the high-end slot initiative you have been talking about the past few quarters?

Then it seems like some of your Macau competitors may have been a more aggressive at pushing table minimums then you have been.

Do you think that is fair to say and is that a potential opportunity for you?

Thank you.

If they have been more aggressive at pushing table minimums than we have, then you just told me something I didn't know.

Linda, do you want to respond to that?

You mean table minimums or table maximums?

Table maximums or minimums, what did you mean, sir?

Table minimums.

What did you mean exactly?

You think that other casinos in Macau have upped their minimums more than we have?

Yes, if that is not fair to say, then we are wrong or I misread it.

We wouldn't know that.

But, hell, with the kind of customer base we have got, we have got as many high limit, high minimum table as anybody.

Most of these joints at Cotai are dealing to mass-market.

In the VIP area, we are right there.

I think what you also see is that basically we have an average bet that significantly exceeds the minimums anyway, so I'm not sure that raising the minimums actually has much impact.

We never would have focused on that if you hadn't asked us the question.

Linda just said -- I don't if you could hear her; we are on this phone -- that we change these minimums by the hours each day.

But it is not an item that is relevant to us and I don't think that particular thing should be relevant to you.

How we manage minimums is an asterix in this game.

It is how many people are betting the maximum.

I'm trying to be helpful, I am sorry.

No, no, no, it is helpful, it is helpful.

And then just on the slot initiative?

We opened a newly renovated, high-limit slots area.

We also extended the facility.

It has been very, very well received.

Clearly our competitors, we all learn from each other.

We got ahead of other people; they got slightly ahead of us; we are back ahead of them again.

We are very happy with how it has turned out.

Our customers have been very happy with it, so next time you are in town we would be happy to show you.

But we don't just throw money at it.

This chasing the top line is a fruitless exercise unless it results in the bottom line.

And so I want to repeat we may have 10% or 11% of the top-line volume, because of all the new hotels that have opened, but we have 1/6, 16% of all the profits in these 32 casinos here or 33.

And that is the number that I am really focused on the bottom line.

We watch everybody.

We will see all the earnings at the end of the second quarter.

We heard Sands.

They did a wonderful job.

I don't know how Caesar's and Melco did yet.

We will find out soon enough.

But we are perking along at $100 million a month, maybe a little better.

Just on Vegas, there is the view that there may be a recovery in Vegas.

How do you feel about that?

And then your non-gaming appeared to do very well.

Should we take that to imply that you are not feeling any impact from all the F&B in the market?

Thanks.

Look, as I have said before, we think the drivers the non-casino end of the business, not the casino.

We think the casino is a result, not a cost, and so we are really assiduous in applying ourselves to that.

Our night clubs weren't just about who the best disc jockey was for the moment, because that is a very changing seen.

Our nightclubs and that food and beverage revenue that we are so proud of and that you are noting is the result of years of planning.

We were two-and-a-half years before we broke ground on Cotai.

Working every week.

Las Vegas the same thing.

Those nightclubs they are more than just great big boxes of places to put tables and prop up a DJ.

They are environments and those environments have an emotional effect on the people that come to us and we design to emotion.

Then when the competition decides to challenge us by paying a disc jockey more money, for example, which is a popular idea these days, and take a disc jockey from $200,000 to $400,000 a night it doesn't have the effect that you would imagine.

Our customers stick to us with loyalty.

Not because of any other reason except that we offer a better environment for them.

At the end of the day when you are recreating, when you are out playing at night, when you are going to a nightclub it is the environment you are in that matters.

So I think our food and beverage numbers are reflecting the fact that we can withstand a competitive challenge in Las Vegas.

We have -- as you know, you can compare us to anybody on the Strip.

Even my own places, my own older places, practice hotels like Bellagio and Mirage, we hold our own.

Against bigger hotels even, more rooms, like MGM, we hold our own.

And they throw plenty of money at the customers but we bank on other things that are more enduring.

Any view on if there is a recovery in Vegas underway?

I have always been sort of neutral about using the word recovery.

I think that Las Vegas is doing better than it did last year, but the extra capacity that came on during the recession was poorly timed.

Some of it was Encore and Wynn, CityCenter.

We all could have picked a better time to build those buildings, so I am including myself in that group, but it is what it is.

The amount of money that is lost in Las Vegas in the last four years in terms of abandoned projects and marked down values from Frontier and the Stardust property to Fountainebleau and Cosmopolitan, CityCenter and places like that, has been astronomical.

I don't even like to think what that number is, but Las Vegas is perking along because there is tremendous choices that are available to people of every income level.

The infrastructure in Las Vegas is almost impossible to duplicate and that is the reason why it survives California Indian gaming and all these other jurisdictions.

It doesn't get any easier, but Las Vegas is managing to hold its head up.

If we had a real recovery in the United States and I don't think we are having a real recovery in the United States.

I think we are having a limp-wristed sort of crawl out of a hole, but a recovery is a more robust word.

I don't see it in the country as clearly as the politicians do who are trying to sell it to the people.

I think most of it is baloney.

I think real inflation is way north of 10%.

Everybody's dollar is going down.

Buying power and living standards are going backwards from the working people of America and that is taking a toll on what you would call recovery.

So I don't see it myself.

Thank you.

Cameron McKnight, Wells Fargo.

Great.

Thanks.

Good morning and good evening.

A question first for Steve and/or Linda.

Could you offer some thoughts on the macro outlook in China?

We have seen a lot of ambiguous macro data recently.

And specifically some data that we see and collect indicates that sentiment amongst high-end Chinese consumers remain very strong.

Just wondering if you can talk to that and some of what you are seeing in your business specifically.

Obviously everyone is aware of the liquidity issue in China.

We are very conscious of how we handle our credit and collections, but we really haven't felt any effect on our business or economy here yet.

Our customers are not pessimistic, but Linda is careful about the credit.

We always are, as you know, even after (inaudible) for years out.

So in 47 years I've been in business we have never had an adjustment to our reserve, only 47 years.

Great, thanks.

Then just as a follow-up, we have seen some of the visitation growth pick up over the last couple of months and specifically in the data we are seeing northern Chinese visitation pickup.

Are you seeing some of that reflected in your customer mix?

In general -- yes and no.

We actually see a pickup across the (inaudible) north and also through the Guangdong province area, so both sites are picking up.

You don't always see a natural reflection on the breakout of visitor arrivals into the cities in people that are playing directly in the casinos.

So day-tripping activity has reduced and moved away from Guangdong and there are more overnights there.

As with all the extra rooms at Cotai, there are people coming and staying one or two nights and they are coming from further afield.

The high-speed train network is certainly helping and the increase in the individual visitor scheme is also benefiting, so we are getting more people coming and staying longer.

The plan that the government of Macau implemented in 2002 to change this place and make a destination city rather than a day-trip city that plan, that goal, which led to the expansion of the concessions, is by and large taken foot and is thriving.

The construction of the fabulous hotels in Cotai is causing people to come and stay overnight.

Macau is becoming a destination resort, not just the neighborhood baccarat game.

It is happening as they planned.

It was a very articulated program that led to the two new concessions that Galaxy and my company received and which supported the expansion of the three subconcessions of MGM and Melco and the Sands.

And it is all happening thanks to Sheldon Adelson, thanks to Jamie Packer and Lawrence Ho.

Thanks to the [Louis] family.

Francis has done at great job at Galaxy.

These are smart guys and they are doing really nice places, beautiful.

And big rooms, lots of choices.

This place is getting very powerful and it is supporting on an ever-increasing basis still a good growth rate.

I can't wait till this 28 or 29 months goes by so that we can get opened in Cotai, because we are going to toot our horn when that time comes.

We have taken into account these guys and what they have done, these competitors of ours.

It has put us on our game.

You don't take anything lightly in the competitively in Macau.

These are smart people; they have got money and they know how to deploy that capital.

So there is a lot of choices, fun things to do here.

It is the first time that any city has ever, ever begun to offer the choice that Las Vegas, Nevada, USA has offered.

Thank, God, they are 6,300 nautical miles away so there is room for both of us.

And I'm happy to be a both markets but -- it is just great.

But Cotai is causing this town to change.

This is not Atlantic City in the sense that it is a local market.

This has now become a place where people travel to.

Stays are getting longer.

Perfect.

Thanks very much.

Sure.

(Operator Instructions) Harry Curtis, Nomura.

Two quick questions.

First, what will be your annual cash contributions to the project in Cotai?

Then, secondly, Steve, if you could talk to the special features that Cotai will have that should lift its ROIC comparable to what you are doing on the peninsula.

Thanks.

Matt, you want to answer the capital contribution one?

Sure.

Harry, just for some CapEx history, so we have spent about $300 million to date.

I would expect us to spend another $300 million for the rest of this year, likely $1 billion in 2014, and then the vast majority of the rest of the spend in 2015 leaking over into the beginning of 2016.

We will probably utilize between 30% and 40% of our free cash flow when you look at our model and we currently have $2.5 billion of debt with over $1 billion of cash on hand and a $1.5 billion revolver undrawn right now.

So that is basically how it will shake out.

Than one last thing I want to point out.

A lot of people quote various numbers for construction costs for projects in Cotai.

Our $4 billion is all-in.

If you look at hard cost, plus owner supplies, plus FF&E, what a lot of people like to quote, the thing that hits the cash flow, that is $3.5 billion.

The remaining $500 million preopening expenses, our land lease payments through 2016, and capitalized interest.

A lot of that money gets paid after we open, too.

That is right.

So, Harry, does that take care of that part of your question?

And I will get to the features.

All right, Harry, did Matt deal with that satisfactorily?

So now about the features.

We are famous or well-known; we earned our bones anyway, by having public entertainment.

We started with the volcano at the Mirage (technical difficulty).

Anyway, then we had the pirate show, the pirate ships that sink, then we had the dancing waters, etc., etc., and then we got the tree of prosperity and fountains here.

Cotai is going to be, in one respect, if you are on the outside, reminiscent of the Bellagio.

We have got an eight-acre lake that is strategically placed in front of the hotel and we placed all of the high-end gaming on the water and the restaurants on the water.

We filled the lake with new versions, new technology of water that dances and colors and lights.

It is a very complex, expensive, very advanced water and light show, including fire.

Then, from the street in front of our property and surrounding the lake and going into the hotel is a Doppelmayr gondola that holds eight people at a time with a several thousand hour capacity.

And that gondola is equipped with music and air-conditioning.

People get off the monorail, the light rail that stops -- the light rail that the country is building starts at the ferry terminal and we are the first stop.

It goes two sides of our 52-acre site, the north side and then finally the west side.

In the middle of the west side, approximately in the middle of the lake, on the street in front of the center line of the lake and the hotel the light rail comes to an end -- makes a stop.

Its first stop as it journeys through Cotai at the -- and the name of the hotel is the Wynn Palace.

Wynn Palace is the name of the hotel.

The light rail stops at the midpoint of our lake and bridges go to the west to City of Dreams, the Hyatt, and MGM.

And they go to the east to our sidewalk, because we are opposite both MGM and the City of Dreams.

Each of their sites is approximately half of ours.

People load the gondola as they come down the escalator from the light rail.

So they go around the lake, then they stop, they get off the light rail, the monorail, and they go into the gondola.

They rise above and go around and through the lake and through the fountains, and then get inserted into the building into the retail promenade.

At the north and south entrances of the hotel there are three major ways into the hotel besides the gondola.

That is our attempt to capture the light rail traffic by making an irresistible kind of ride for them to experience.

But there is a north to south and a bus entrance, three different entrances -- north and south atrium and then a bus entrance at the east side.

In each of those three arrival moments we have placed attractions and features.

For example, and I haven't announced this before, but I think it is time to share with everybody, I mean we are far enough down the road.

The theme of this hotel is flowers, floral things.

The use of flowers, of water and natural light and flowers has been taken to a new level for our company.

We have in these atriums floors that open and from the horticulture department below big, huge displays of flowers send -- and they change every month.

One of the things that was charming about Bellagio was that it was seasonal.

We had fall and winter and spring and summer.

If you remember, we had autumn -- oranges and browns in the autumn.

We had Christmas -- poinsettias and Christmas trees at Christmas and spring -- cherry blossoms in the spring.

In this hotel, huge -- if you can imagine the floats of the Rose Bowl parade, but imagine instead that they are intricate five-, six-, seven-meter tall sculptures that are 10 or 12 meters wide on variable height lifts that are like wedding cakes.

These things vary from a full carousel of horses like a merry-go-round and go round and round and up and down to calliope music to hot air balloons of multi-colors like in Around the World in 80 days, to peacocks and tigers and other fanciful objects that change every month -- all made a real flowers.

These are multistory atrium that go up and these kinds of fantasies take place to music 24/7.

Am I beginning to shape the picture for you, Harry?

Or did you leave?

I don't know.

I think Harry dropped off.

We have one last question.

Robin Farley, UBS.

Great, thanks.

I have two questions.

One is --

Robin, did you hear what I just said?

Robin, could you hear me?

Yes, yes, all of that.

I'm not sure what happened to the last question, but we could all here you so we heard all of the great description.

So thanks for sharing.

He was asking what the features are so I was starting to discuss some of them.

That was great to get that level of detail.

I wanted to ask if you have expectations for timing of anything in Japan.

No.

I mean you can read the newspapers and you know all about what happened in the election and you know that they have got an initiative to consider it during 2014.

Where that takes the government and what they will do to follow through is unknown at the present time.

There is certainly speculation.

We all are playing very close attention, but to say anything with any degree of certainty would be totally speculative at this point.

Does that affect your level of interest or the degree to which you are pursuing things there?

I would sure as heck be interested in Tokyo or Osaka if we were given the opportunity.

Naturally, Robin, we would have to measure the business opportunity, tax rate, rules, all that sort of thing.

But I am assuming that if Tokyo did a thing like, the government in Tokyo did a thing like that they would probably follow the successful models of Macau and Singapore or something like that.

So I would imagine that if they do legalize it in Tokyo we will all be hot after it.

Great.

Then my other question, which is getting a little bit more into the market share shift on the peninsula among the premium mass.

I know there were some comments earlier about how hypercompetitive that is.

I wonder if you could just -- there are moving pieces here with you added new capacity that I guess was there for two-thirds of the quarter, the high-end of slot area.

I think you mentioned something about hold issues in the month of June.

It sounded like you were making that comment about slot business, but maybe I misheard you.

So I just wanted to clarify basically these different moving pieces.

And now going forward that once you have your high-end slot room in place I guess how you expect market share to sort of play out versus how it did in Q2.

Robin, the level of inquiry that you are question represents it gets into crystal ball stuff.

When Ian made the remark earlier that the guys got smart, they did a better job with their high-end slot areas and got a little ahead of us and then we caught up.

We have redone a bunch of areas to make them sexier.

It looks good to us now and a lot of bigger players came so they won some big jackpots so the hold fluctuated a little bit.

On the amount of coin in it matters, but you know it really doesn't.

It really doesn't matter at all.

This mass gaming area and our ability to hold customers and to grow or to hold our position in the face of Cotai and the other competitors is something you just have to watch play out.

Remember I said that we were up over July, but we were down in June?

It bounces around in our place because we get some many big players.

It is hard to give you -- to quantify this.

I know we try all the time, but to tell you the truth, Robin, it is sort of a waste of time for all of us.

I think you have to look at the macro trends.

So whatever Robert Gansmo said about the hold percentage of June doesn't matter much because it is offset by the hold percentage of July, and I really don't want to go there.

It is the kind of super detail that seems to matter on these kinds of calls, but really amounts to nothing in the long run.

Great, thank you.

We have no further questions at this time.

I would like to now returning the floor to management for any closing remarks.

It was nice talking to you.

We will see you in 90 days and we will see what happens then.

And maybe report other jurisdictions and such things.

Thank you.

Thank you.

This concludes our conference.

You may now disconnect.