Okay, so moving right along, we're happy to have the team from MGM here. We have CEO Bill Hornbuckle on my left, and then on his left we have Jonathan Halkyard, CFO. Thank you guys for being here.
A pleasure.
I wanted to start off a little bit more high level and just kind of talk about what you're thinking in terms of your strategic priorities for this year and going forward.
Sure. Obviously, you've all seen the investment and the push we've made into digital. I think if there's any single thing this year that will stand out, make a difference, and I think where the company is highly focused is in our digital presence and the inflection in that business. I mean, I think you'll see our BetMGM business hit $2.5 billion, give or take. I think you'll see our Internet Interactive Group go to about $500,000 with Brazil on the horizon. The inflection of that business is kind of priority one. Obviously, continue to stay focused on Las Vegas, all that it offers. I think where the market has gone bodes to our strength in terms of youth of customer, average spend, millennial.
When you think about our assets between Bellagio, Cosmopolitan, and ultimately Aria, I think that leans into our strength and we'll continue to do that. We feel our regionals are solid as a rock, irrespective of what's happening in Washington, D.C., that business continues to perform. We like our regional position, and Macau continues to perform well. We've continued to hold share in the mid-teens, and that hasn't stopped. We'll continue to do the kinds of things that we do there. I think singularly this year, it's inflection in the interactive business and with BetMGM. Obviously our development cycle. New York is just around the corner this year. I'm heading to Japan next week to begin to put some ultimate pins in that program and pushing that forward.
We're excited by all of it, but I think that's the biggest inflection point.
If we think about kind of the demand you're seeing in Las Vegas in the first quarter, on your fourth quarter earnings call, you talked about strong trends domestically in the first quarter. What do you think is kind of underlying that demand and driving that strong demand in the first quarter?
Yeah, we talked about it a bit on our earnings call in early February. We started out the year with an exceptionally strong January, really coming from all quarters. And the gaming business was strong. Rates were strong, not only from the FIT and transient business, but also groups. February and March are playing out just as we expected they would. We've talked at length about the impact the Super Bowl had on our results back in 2024. Super Bowl, that event was very successful here in Las Vegas, but it's never the same as having it in Las Vegas, at least from a room perspective. The first quarter is playing out exactly as we anticipated: strength from all sectors. The groups are performing well, in particular toward the end of February into March, which are very strong group months across the system.
All in all, I think a pretty good start to the year. As we look out to the balance of the year, our results as a company and here in Las Vegas, I think will get a little bit less choppy than they've been in the past couple of quarters because we won't have some of these comps year- on- year. As Bill mentioned in his opening remarks, we expect to see this inflection in the results of our digital businesses, which we've improved our disclosures, a little bit more transparency to really show how those businesses are playing out.
You've identified $200 million of operational efficiencies. I think you've called out $150 million you would expect to realize this year. Can you remind us kind of where that's coming from, where you're most excited about?
Sure. When we use the word efficiency and excitement in one sentence, I don't know if that's exactly the right combination, but we are on track to do that. We've seen it already. About 35% of that is what we're charging folks to do various things. I'll go through a couple of those. The other 65% is mostly efficiencies tied to labor and some other things that we've done throughout the organization. It wouldn't surprise you to know that our resort fees have gone up. It wouldn't surprise you to know that some of our parking fees have gone up. If you've bellyed up to an ATM machine lately, it wouldn't surprise you to know that those fees have gone up. Some of it's fee-based, based on general volumes, and we were under market in a couple of instances.
I think we've positioned ourselves well, and we're already seeing a return on that. A lot of it is just general best practice between the deployment of technology. This device, particularly on the front end, we went through something last year at New York- New York, where we pushed what we call the front desk of the future. If any of you have been over to the property, we used to have this massive desk with about 24 wickets. We're down to five around the corner. That desk has become a bar with slot machines in it, literally. We have kiosks. We have people checking in on this device now. We now have it on the internet for desktop. We continue to begin to push those functions.
A couple of mornings ago, I ran into a robot roaming around the floor at Bellagio cleaning carpets. We continue to do those kinds of things with automation. Nothing's ever a layup, but I think the $150 million is well within our sight.
Got it. You have the MGM Grand renovation this year. What's the overarching strategy behind positioning the property, repositioning the property, and what's next on the horizon?
We hadn't touched those rooms in about 12 years, right? Twelve plus. By the way, the vast majority of that furniture is ending its way over at the Excalibur. While we're redoing the MGM, those rooms are getting repurposed at the Excalibur as we speak. It is an ongoing evolution, if you will. We've continued to do that kind of thing, particularly for Luxor and Excalibur. We took Bellagio, and if you walk into a Luxor room, you'll see Bellagio furniture from a day gone by. As it relates to MGM, it is a significant step up. We've put $300 million into those rooms. We were getting noise from our conference business, and rightfully so. You'll see a good step up. We've taken out the tubs in literally every room. We had literally from the original MGM tubs in all the restrooms.
A lot of its infrastructure isn't pleasant. It's noisier than most of our deals, only because we're impacting plumbing, but we're attacking the infrastructure, the look. If you see it, it's highly sophisticated, orientated towards group and leisure customers. We're down, how many? We've got about 600 rooms done already or something to that effect?
Yeah, more than that now.
I would clearly invite you all to go see it because it is a marked difference from where MGM has been. Far more sophisticated, far more elegant, and we think a great product.
This is a step. I mean, it's a big step because of the magnitude of the property, but a step in a process the company's been taking on since 2020 with the systematic renovation of all of our rooms here in Las Vegas. Very important because there wasn't much capital invested in the last decade in the rooms, but now we've gotten through basically all of the rooms at the Bellagio, all of New York- New York. Bill mentioned Luxor, Excalibur. Next year, we'll take on Aria, and then in 2027, 2028, Mandalay Bay. We have done this really with very little disruption at all to our revenues. This is important. We're going to reduce the average age of our rooms from about nine, since remodel, from about nine years a few years ago to four or five years now.
That will enable us to sustain growth in ADR and retention and growth of this high-value group business, among other things. Really important capital program, but not crazy in terms of maintenance CapEx. We're still spending only about 4%-4.5% of net revenue on maintenance CapEx in this market. I think doing things responsibly, like Bill mentioned with Luxor and Excalibur, pretty skinny expense, but still improving that room product while we're at it.
You presumably have enough space around the Strip that minimal to zero disruption to any type of group activity.
Yeah, certainly not to groups. The MGM Grand, that will have a bit of an impact on revenues this year just because at any time we have 850 rooms out as we go through it. That will be probably a $65 million impact for the year, one that we'll be able to cover with some of the efforts that Bill mentioned around our efficiency programs. In the past, though, I mean, we got through New York- New York, renovating that entire hotel with virtually zero disruption to revenues, so.
In terms of your positioning in the Las Vegas overall market and kind of some of the non-gaming stuff that's been added, like the Sphere, and we're talking about the Tropicana potential spot for the Oakland A's, how does that benefit overall visitation and kind of your business?
I know you've all seen, and some of you, I'm sure, have experienced by now the transformation to sports. I mean, what happened at T-Mobile in the heart, obviously, ultimately what led to Allegiant, and if anyone's been to a game there, I'm sure many of you have, if you go to a Kansas City game in San Francisco and pick a team, there are as many visitors as there are homebound, which is I sit not far from Mark Davis. He's not happy, and I'm loving it. It has a market increase. Look, we always filled the town. This has always been about, and frankly, will continue to be about yield and what you bring in and what RevPAR is during any particular event activity. Sports has been and will continue to be a key driver.
I had an opportunity to meet with John Fisher last week. Baseball is coming. It will happen. What is around it, what ultimately Bally's decides to do, time to tell. He shared with, and I think you probably saw last week, they announced the park, they announced the final design, they announced a sponsorship, which is interesting, the first of its kind for baseball anyways with Las Vegas and the city of Las Vegas. Every time someone comes up to the bat on the left shoulder is a patch that says Las Vegas. If you're left-handed, I think they get you put it on the right. All of that activity case is meaningful. If you think about us, I call it the Golden Triangle, but we've got T-Mobile, Allegiant, and now baseball.
Within that group, our 36,000 rooms are literally no more than 700-800 yards away. It is meaningful to us. Sometimes we do not, and I will give you a good example. Shakira, I just saw on the billboard as I was coming over here for Allegiant. I could argue that Shakira should be at T-Mobile all day, every day, for economic reasons and otherwise. She wants to be there, God bless her. It is our neighborhood. People walk over the bridge and they come back, not the end of the day for any of us. I feel the same way about baseball. I would not be surprised to see that ultimately the stadium there becomes the home of NFR at some point and other activity that will really solidify not only it and baseball and that location, but it is literally in our front yard.
We're pretty excited by all of that. It continues to drive yield more than anything else.
Got it. Switching over to the digital side of things and maybe starting with BetMGM, the guidance that the team at BetMGM gave assumes $250 million of incremental EBITDA. I think the flow-through is a little bit higher than peers. What are you seeing from that perspective? I think if we look at the state reports, handle, GGR share has all accelerated since some of these product improvements, but kind of talk about what you're seeing there.
Yeah, it pins itself to product improvement, full stop. There are two sides of it. There is product improvement. I'll give you a simple example. Like last year during the Super Bowl, not the Super Bowl, the one a year ago, we had a commercial. The commercial cost, system was all said and done, $13 million. Probably in retrospect, it was not the greatest idea. Frankly, nor was it a great commercial, to be honest. Other than that, it was fine. Our ability to pull back on macro, people know what BetMGM is now, particularly in the 28 states it is in for sports, our ability to pull back on marketing and really pump the product, single game parlay, omni-channel, a single wallet now. People can come here and take the money home with them, and they do speed, just some of the simple things.
We're not the fastest, but we're twice as fast as we were. I think we've stopped losing share. I don't think, I know we've stopped losing share. I think we see a lot of green shoots, particularly in January, February, and March so far. Everything we have seen would suggest that the projection we've given is real and that we think we can hit that target. The flow-through is about 70%. You'd go, that's interesting. I would suggest historically maybe we did some things that we've learned from, marketing-wise and expense-wise.
Makes sense. You recently launched the Nevada single wallet. Can you kind of talk about the benefits that you're seeing there? I would imagine that it's pretty great considering.
Yeah, it is. Look, we're the only one that has it here. It's early days. To the extent I can come here and take my money home and continue in Colorado or any one of these other states that allow this is compelling. It speaks to omni-channel. We have a ways to go in tying the backend out from a rewards and a recognition perspective, but particularly for premium customers. We host at BetMGM, just like you host in any one of our brick-and-mortar casinos, players. They have a host assigned to them. They look after them. They take them here to the Super Bowl. We had a whole contingent come out for the Super Bowl that were just from BetMGM. After four years, we're dialing all of that in and beginning to make it, I think, more and more meaningful and starting to show.
If we kind of look at what both you've said and what we can see from the Illinois State Data Reports in terms of parlay mix, you've obviously done a lot there in terms of improving the product and getting your handle mix and bet mix up there. How do you think about the live betting opportunity as a way to continue driving engagement?
I think it's real. We were part of, and we BetMGM underwrite the purchase of Angstrom, which was a big quant house that basically sits in London. There's about 50 folks in a room who sit there all day, every day, looking at odds, playing with odds, giving us real product and comfort around that product. Our single game parlay cards, our live card, it's as a percentage of our business has continued to increase like double digit every quarter. We are getting more and more excited by that. It is margin. You can appreciate at some point the top line's going to begin to plateau or slow. For our business, can we get to 11%, 12%, 13% margin, particularly on some of those products? I think the answer is yes.
As we hopefully wait for, and we think there's a couple more states left for iGaming in the near future. I won't say the immediate future, but I think for us, it is about margin and it's about product. And that is the key differentiator between where we were versus where I think we'll ultimately get to.
In terms of iGaming legislation, we've seen a lot of it proposed since Ontario went live in 2022. What do you think is the reason that it hasn't gotten passed? What do you think needs to happen in order for some of these states to get over the finish line?
I think it's somewhat when a state has a need for tax. And so we tend to look at the blue states, if you think about who actually allows it today, just by the way they're governed, the programs they put in play, and the need for tax dollars. It wouldn't surprise me to see Maryland, New York, Illinois, hopefully and ultimately Alberta this year consider and put in play iGaming just for that very reason. It's not the panacea we had hoped. I think you all know this in our business, and I think in just about our competitors. iGaming in six states, but arguably in three, is two-thirds of our top line and the vast majority of the bottom line in terms of contribution. What happens in Michigan, Pennsylvania, and New Jersey are meaningful.
To the extent a single state comes on board, there are big numbers to be had there.
Yep, makes sense. When we think about your wholly owned digital business, how do you think of growth there? I think you got it to similar loss this year to last year, obviously contemplating the launch in Brazil. How do you think about same-state growth there from a revenue perspective and also next states on the horizon?
Remember, that business is not U.S.
Sorry, next countries.
I think there's two things we're trying to do. There's three things we're trying to do. Tipico, which was the sports betting software we bought, just went in play this week, excuse me, last week in Finland, operating slick and fast, which is great. Now, Finland's not exactly the world's largest market, but it's up and it's operating. We're going to take that to the Netherlands. We're ultimately going to take it to Brazil this summer. The idea of converting off of Kambi to our own system, that's just a margin game. I mean, we pay in 10, 11, 12% for Kambi, and now we're not going to be doing that. It's a good product. In fact, it's a very good product. We're excited for that. We got Push Gaming, the other acquisition we made with inside that business, to now a BetMGM.
It's gotten licensed in the U.S. So BetMGM can begin to carry its products. And so that's a big deal and a big differentiator year- over- year. We're excited for them. Brazil, though, is the push. Brazil is really where it's all going to be about. We think initially it's an $8 billion market. We have an amazing partner in Globo. I mean, think about CBS, ABC, and Disney combined in the context of media and eyeballs. And so as we begin to dial that up, and we will begin to do so soon, everyone is struggling with in Brazil right now getting people online. You have to have facial recognition, and to get through a sign-up process is extensive.
We think we've found something very specific and special to us in Globo because of the way they sign up people for movie subscriptions and everything else and all their other products. We think there's leverage off of that database and off of those people, which I think ultimately will uniquely position us to really excel there because if you're not online already, it's laborious. We are excited by where that goes. We have to really begin to dial that up within the next four to six weeks. I think Brazil will be that story. I think that business as is, BetMGM in a couple more markets, U.K. is stabilizing, Brazil goes from $0.5 billion- $1 billion top line business.
For those who follow our company's financial results closely, I'm sure most of you do, just this past quarter, we began breaking out MGM Digital along with our other main reportable segments, Las Vegas, the regions, and MGM China. We are doing that purposefully so that our shareholders and potential shareholders can see the progress that we are making in these digital businesses. When we think about Brazil, obviously there is not a ton of information on kind of how the market is trending so far. I think if you think about it from your perspective and what you have seen, is it similar to in Ontario because we had kind of a gray market here before it officially went legal? It sounds like you are saying that it is going to be much better, it could be much better.
It will be bigger, for sure.
I'm for sure.
I believe it will be bigger. You can put for sure and take it for granted. It will be bigger. Yeah, look, as you know, it was a gray market. So Betano and a lot of these other brands had been there and continued to go forward. Unlike some markets, they did not make them reset, so they could just keep going, which is what it is. We have got catch-up to do, particularly all the new legit licensed brands have catch-up to do. I think we will get there. When Globo has on television a betting odds show with the top guy, I am trying to put an equivalent to it here in America, but just pick your favorite Fox Sports show promoting the site, promoting gaming, promoting activity, promoting odds, promoting how he has a view on certain games. I mean, it is a big deal there.
We are everywhere there right now in terms of brand because of their exposure. Again, I mean, we'll see, but I think it's Ontario plus over the long haul.
Got it. Moving on to maybe talking a little bit about Macau, yourselves as well as peers kind of talked about a longer tail to the Chinese New Year this year. Is there anything underlying that you think drove the longer tail?
I think there was an active understanding from the government in Beijing and the Xi administration to extend some spend and spending. I think they were promoting that in general. Macau was a benefactor to that, of note. The tail was long. What we've seen, it's not new. I mean, we saw that two years ago, last year, and now this year, they have extended stay. It goes, particularly last year and this year, the first three days are kind of at home, family, friends. They show up in a place like Macau and they'll extend for a week. We saw, for lack of a better word, an additional week from what historically you would call the Chinese New Year's period. It was great. Macau has continued to perform well.
You've all seen, I think you're all on top of these numbers. February, I think we almost pushed 18% share. We're holding our own in March. We clearly held 16 and change in January. I hope and I believe after a couple of years now, we're a mid-teen share place, full stop. I believe that. I believe the things we've done there in terms of product offerings, incentives have worked well given our scale. Remembering we're the smallest keyed licensee there. We have 2,002 keys. Everyone else is well above us in some instances. We're holding real share. I'm proud and pleased of what they've done there. They particularly understand their customers, the premium mass and how to cater to them. I think it's working.
It's something like high single digit room count share, correct?
Yes.
About 12%, 12.5% table game share. We're routinely doing 15-16% revenue share. I think it speaks to their focus on that segment and just some of the technology advantages that we have and the execution of the management team there. It's exceptional. I'd also remind everybody that what really matters also to MGM shareholders is the dividend flow from MGM China to MGM Resorts. Last year, between the dividends and our license fees, around $200 million. Just the equity value of MGM China, probably about $10 a share when it comes to MGM Resorts shareholders. Real value there that we don't see entirely reflected in our share price, one of the reasons we're such aggressive repurchasers of our own stock. I always try to get my commercial for sure.
Yes, yes, yes. It did weave.
From a market perspective, I think a lot has been done outside of COVID to try to get people back into the market. We're still missing a certain percentage of visitation. What do you see the market doing in terms of being able to drive incremental visitation from here?
Look, I believe it's clearly stabilized. $30 billion is not a real number. I think it's only north of that from here. Obviously, China will continue to keep a watchful eye on the market and what it's doing. The days of $45 billion plus in growth, we may not see that for a while, frankly, or if ever. They have willingly and openly let it continue to grow. We have not seen any real concern around border crossings, visas, holdbacks for three years now. I mean, coming out of the pandemic, there were issues. We haven't seen anything now for, this is the third year, particularly through Chinese New Year's, where it was not a significant issue. Will it double? No, but will it continue to grow rationally? I think the answer is yes.
As long as it's a rational growth, I think everyone, including most notably the government, will be happy and satisfied with where we are and where it's going. I know you all know this, but this is a good example. We've all been asked to push into those things, both from capital and operating expense perspective, that motivate non-gaming travel. We've done two things of note there. We have a world-class museum and a partnership with a group called Poly. They're the cultural museum institute of China, really the government. We just put 500,000 people through since the first of the year, our new museum. Big deal. We just opened a show last month, a month and a half ago now, with Zhang Yimou. Zhang Yimou was the guy who created the 2008 Olympic opening ceremony.
He did a show called 2049, which is the year that Macau gets turned back over to China, by the way, if you're wondering why 2049. We continue to do those kinds of things that draw in additional visitors. Not necessarily tailored specifically towards gamers, but like Las Vegas, even though they say they don't come to game, they do game.
What is some of these non-gaming investments? What effect do they have on margins longer term?
I think you've seen most of it. I think it's appropriate to think of those properties in the mid-20s and continuing to do that. I don't know that we'll be over 30 with some of that overhead, but I think 25%, 26%, 27% margins in those properties for the foreseeable future is very real and very obtainable.
Let's switch over to Japan. Could you give us an update on progress there?
I'm literally heading there Sunday. We're at a point where it's time for finalization of construction contracts, pricing, and real green light. I will come away from that with that understanding this week. It's slated for April going in the ground with pylons and the build cycles through the middle of 2025. None of that has really changed. We'll be out next week sitting down with all the final contractors, understanding final pricing, etc.
As far as from where we are right now, you are the only operator in terms of a competitive market for the time being?
Yes.
What about some other areas of opportunity? There's been a lot of talk about Thailand and regulations seem to be discussed quite frequently. What's your latest take there?
I think something happens there. I think it won't go as fast as they would like to think it will. There's just, once you get into it, as you all know, there's a lot to it. I don't think it needs to take as long as it did in Japan, but there's a lot to it. I would like to think by first part of next year, first or second quarter, there's real legislation and there's a real process that's been identified. They've talked about five locations, two in Bangkok and three other locales. We've stated publicly that if we did anything there, it would be through our MGM China entity. That's still the plan and/or the point of access, if you will. An amazing marketplace.
I say nothing's cheap to build anymore, but cheap to build, like it's 35%-40% on the dollar compared to anything here, and even cheaper to operate. If you were lucky enough to get a license and build something of substance, it's a meaningful market. I think the margin in that business would be pretty extensive.
The MGM China balance sheet is really under-levered compared to the performance of that business. We think its prospect. That is the appeal potentially of using that balance sheet as a vehicle to develop property in Thailand. Looking at the consolidated balance sheet, you guys have obviously purchased, I think, 40% of your float since 2021. What is the sustainability of the pace of share purchases there? What are your other capital priorities in terms of the balance sheet? It really does depend in part on the trading value of the stock. I normally would have said that we would be coming to the end of that program. At these levels, we feel as though it is about as attractive an opportunity for capital allocation that we have as buying the company we know best at these valuations.
We bought over $2 billion of stock, I think, back in 2023 and almost that much in 2024. I do not think that those amounts are necessarily going to continue. At these levels, we think it is a very attractive use of our capital. Other priorities for capital allocation will be investment in our properties here in Las Vegas, not only maintenance, but some growth capital investments. Unfortunately, as optimistic as we are about the prospects for these digital businesses to inflect this year to profitability, they will not require any additional capital investment. BetMGM has its own credit facility now. Probably will not even need to draw on that much. The wholly owned digital businesses we think are well capitalized and will not require any additional capital to get to where they need to go. Maybe one last one quickly.
Is there anything that you would consider, any type of asset that you would consider non-core that you would consider selling at some point?
Yes.
All right.
Yes.
All right. Thank you very much.
Thank you.
All right. Thanks, everybody.