Afternoon. My name is Jennifer and I will be the conference operator today. At this time, I would like to welcome everyone to the Q2 2017 Earnings Conference Call. All lines have been placed on mute to read some background noise. After the speakers' remarks, there will be a question and answer session.
Thank you. And I would like to turn the call over to Mr. Craig Billings, Chief Financial Officer. Sir, you may begin.
Thank you, operator. Good afternoon, everyone. On the call today with me in Las Vegas are Steve Wynn, Matt Maddox, Jim Sinatra and Maurice Wooding. Also on the line are other members of management from Macau, Las Vegas and Boston. I want to remind everyone on the call that we will be making forward looking statements on the Safe Harbor federal securities laws, and those statements may or may not come true.
I will now turn the call over to Mr. Wayne.
Win. Well, everybody has seen our numbers, and I'll confine my remarks to the most relevant points that I can think of at the moment. Construction in Boston has been our job has been bought out. The budget is fixed. The work is now approximately 11.5 months old.
We're a little ahead of schedule. We're on budget. We're very happy with our builder. And that project is moving quickly towards completion in April May of 'nineteen. And we're very optimistic about that situation and delighted with progress to date.
The results in Macau need a little interpretation. A whole percentage was high in one hotel and low in the other. But what is clear is that things are moving along. Our VIP business has picked up in both hotels. And the mid market is growing.
We still suffer the walk in, the walk in the dislocation of our walk in potential because of the extreme construction that surrounds us. There are 2 things about the construction that are worth noting. We concluded our financial agreement with Layton Construction when we opened the hotel last August 22nd. However, we retained $100,000,000 or more $1,000,000 to finish work yet to be completed and any defects. Layton has accepted complete responsibility for that.
They struggled a little bit with their own control of the job. But as a result, as they fixed things that had to be fixed and finished, we've taken 180 or more rooms out during the week, each of the past several weeks. And we get them back up on weekends, but we've had them down. We think this cleanup operation, this completion that Layton was obliged to perform, The tough phase is coming to an end by the end of August, which interestingly enough is a year after the place was opened, which gives you some notion of the complexity of these massive integrated resorts and what it takes to really polish them off. But it had no financial impact on us in terms of our relationship to Layton that had been concluded and there were more than adequate funds in the retention date to cover it, but it did impact our performance by kicking rooms out during the week and certain other discomforts that are associated with the fact that you still have a builder on the property.
We're hoping that will come to an end at the end of August September. But the second part of the construction aspect of the conversation has to do with our neighbors. We've discussed this in the past, but MGM in these final stages has enormous neighborhood implications, Streets have been blocked, barricades are up. And our conversations with our neighbors at MGM indicate that maybe this November part of the building, at least I don't want to speak for MGM, but in terms of our interest in talking to them, we've been given the impression that there will be a partial, if not that these obstacles will be removed when they commence operations this fall. And that will open up one side of our property, the west side of our property, which is the fronting side on the lake and the gondola and our entrances.
On the south side of our property, the SDM company, SJM rather, they had a fatal accident with a worker 3 weeks ago. And as part of the post accident procedure, the government of Macau stopped work on that job. And as of yesterday, 3 weeks later, they still have not recommenced the construction of that hotel. So it's opening day. And therefore, when the neighborhood clears on the south, it's still undetermined.
We also have construction on the north side of our property with the light rail or the monorail transportation link, which is one of the most powerful aspects of our company because it travels around two sides of our property, looking at our lake and our hotel, our fountains. And then the first stop with escalators down to the sidewalk is directly at our gondola station in the middle of our fountain feature. So that the completion of the red rail is not just a removal of a negative, but it provides an enormous positive for our traffic and the mass market. We look forward to that. It is being completed in a much more efficient and expeditious way than it has been the previous 2 years, even 3 years.
We even have the potential for a walkway to be completed in a matter of days that will allow us to use the bridge that's part of that station to get to the other side of the street even before the train or the monorail is in operation. And that could happen in here on the call. When do you think we'd be able to use the crosswalk, the elevated crosswalk and the escalators?
From an infrastructure point of view, it's due for completion in the next 4 weeks since
we can see escalators.
We need government approval to be able to use it because it is connected in part to the station, but we believe that there's support that is up and running as soon as possible. It's a safety issue in crossing the road, so I think
we'll get support with it. Without it, we have virtually it's virtually life threatening across the street to our gondolas and our entrances. So we've been able to make money and have satisfactory progress in spite of these rather unique and unprecedented obstacles that we've faced. But nevertheless, our business grows. And we've settled one question beyond a shadow of a doubt in the last 10 months, and that is the cannibalization that was expected and the cannibalization that seemed to occurred with other companies including the Sands when they opened the UNCOTI, the downtown place took a hit.
In fact, we've continued to grow in our original Wynn Macau and Encore Complex. And I'm very happy to see that. Kieran has done a great job in running that place. He's on the call if anybody wants to ask Kieran about Macau, the original Macau facility. And Ian is on the call to answer questions that are more broad ranging and those concerning the Palace.
Finally, as we have the opportunity to do these on these calls every 90 days, We are proceeding with our finishing our drawings, getting our planning and drilling permits to begin the development of the golf course with our Phase 1 Lagoon, our lake of 27, 28 acres and our 150,000 square foot addition to our media and convention space fully integrated into this facility. This 10,000,000 square feet that we have already in this building. And we are proceeding with our planning and our development of the 1 140 Acres behind us. The real estate behind us in Encore, 10,000,000 feet is unquestionably the most powerful latent asset that this company owns. It's adjacencies of the Las Vegas Convention Bureau Sands, Exposition Center.
And most importantly, its integration with the 10,000,000 piece of the Wynn and Encore makes that piece of real estate without any possibility of debate the most precious piece of real estate in the resort industry in Las Vegas. And we have a lot of confidence in our ability to take that forward in the near future. We've had expressions of interest from a number of companies who want to come on this property and participate either in the form of joint ventures or ground leases and other financial arrangements. And those conversations have been very exciting and give me a lot of optimism about how we're going to take advantage of this asset in the next 4 or 5 years. And I think that pretty much is my take on the situation on this day, and we'll take questions now.
Our first question comes from the line of Felicia Hendrix with Barclays.
So this is kind of for the whole team in general. Just wondering, kind of after suggesting these results, what your postmortem per property is, because, you know, as we're analyzing it, certainly, you know, Wynn Macau, you did beyond fantastic on the VIP side. Wynn Palace is kind of close to our expectations. And in both properties, Mass was kind of lower than what we would have expected. So as you guys digest this and look at it, what's your thought per property?
It's very important. I'm going to take care first. It's very important when you're looking at this industry, whether it's ourselves or our neighbors like MGM and Venetian, it's very important that you don't get caught up in the very short term myopia that your professions demand in many respects because it's the big things that determine the long range viability of these places. And the history of our company is it gives undeniable proof of that. When you build better facilities, when you invest in human resources, this is a business that remains viable and growing over a long period of time.
So it's decisions that are not so much in the immediate analysis up frame that matter. So when we look at the numbers that you're looking at to answer you directly, we say the train is on schedule. The future of the company is being built intelligently with a strong foundation. And we take that as our principal responsibility. When you deal to the kind of customers that we deal to, when you deal at the level we do, in the gambling room, which is only less than half of our business, there's volatility.
So for example, in the last 4 days, in this Friday, Saturday and Sunday in this casino, just 10 or 15 international players contributed $12,000,000 in a small month. That's besides the full occupancy of the hotel and all the non casino revenue and the slot machines and the race book and the poker, the power of these enterprises, the power of these enterprises are defined by their ability to answer the real issue of Las Vegas. And you come to a destination resort and fulfill your expectations of looking big and exciting financial moments. Those kinds of moments take time to create. Once they are created, they endure.
And so you're talking to a big men and women in this company. And incidentally, we did a count up of all the most high paid people in the company, and 60 5 percent of them are women. When you talk to a group of ladies and gentlemen Wynn Resorts, you will find an upper high level of consciousness of what we're about and what really defines our short term and our long term success. And these are sort of chewy, laden with detailed conversations that define these good moments of experience. Wynn has emerged, the Wynn Emcore facility has emerged as the most celebrated hospitality installation in the world in terms of the awards and recognitions it receives for product and service.
I don't say that in a braggadocious way. I mean, entrepreneurs look at Harvard Business Review, Fortune, Forbes Travel Guide, Parents Magazine, Finance Travel Magazine, every conceivable measurement of quality of product and service, we've managed to obtain a high level of success. And as we build these additional non casino attractions, we have to do the same thing again and again. That's pretty much our whole story. You've been listening to me for a long time, most of you.
It never changes. The way we define that challenge, the details of modernity using technology, using social media and all the this hotel is the first one that is all verbal. You can walk into our rooms and tell Alexa to turn on the lights, open and close the curtains, play Beatles or Beyonce or Frank Sinatra. You can do all that, change the temperature in the room, you do it verbally. So we think that as a technology, we try and stay ahead of the curve.
We're told by the people at Facebook that we're the most advanced of all casino companies in our use of social media. Our Nightlife people headed by Sean Christie and Alex Cordova are up to their ears in the use of those techniques. So let's see, the capital change, the overall strategy does not. And you folks want to add to that. I'm sure
to. Sure. In terms of market share at Macau, because I
think that's the question you're asking, what you see from Q1 to
Q2 is we actually, in Macau in total, increased our market share in VIP, mass, 10 slots sequentially. Not going as fast as we had hoped 12 months ago, but the programs are in place and we feel good about the direction that we're going.
Okay. So that's all helpful. Thank you for that. If we could just kind of drill down to Wynn Palace and perhaps talk a little bit on the math side and some of the programs that you've implemented there, giving conversations throughout the quarter and then talk about things that you commented on last quarter, I would have and I know the market on the mass side was down sequentially. I just thought that you guys would have done better given some of the changes there.
So perhaps you can just talk about that segment in wind power.
The mass, the mass is really affected by the seasonality of the neighborhood. I've said it so many times, I'm thinking I'm boring you, but mass is awful lot to do with access. And I've laid out the obstacles we face. I can tell you, I mentioned the west, the south and the north side of our property. I didn't mention the east.
Well, that's under construction too because that's the service yard in the whole headquarters for the light rail system. We're literally surrounded on 4 sides by things that are under construction that will all add to our mass. One of the reasons our mass numbers is so impressive downtown is because we're in the middle of everybody. Right now, we're on the edge and surrounded by fences. We're on the edge of everybody.
And we get surrounded again by SJM, by the monorail, by MGM, and we have our connectivity. The picture is going to change dramatically. And if you go to Macau and you look at this firsthand, you'll grin and shake your head, and you'll say, it's amazing this place runs as well as it does. We've dealt with a severe handicap here. Now when I say we've dealt with a short term handicap, we have an overwhelming advantage, and that is that we're in Macau to begin with and Cotai as well.
And that's a privilege that long term is sensational.
Ian, can I make one point? Sorry, Steve. One other severe handicap that we've had, particularly at premium mass level, is the smoking issue where there are spaces in town that have been grandfathered in. They were formally VIP and now they're being used for mass high limits and people are allowed to smoke and then they're competitors. And that all goes away at the beginning of 2019 and January 1.
Everybody has a level playing field. We will be the biggest beneficiary of that because we're operating handicapped right now.
Okay. And just quickly,
the rolling chips turnover at Wind Cow, is there anything you want
to talk?
Was that is there anything extraordinary or out of the ordinary rather than that?
During the quarter? Yeah. At Wynn Macau, we had probably the most unique statistical anomaly in my 50 years of doing this. And this is my 50th year. And that is that with enormous volume, one of our leading outlets lost money for the entire month.
Not only did they not hold correctly, they went minus. That's an outlet that in both downtown and at Cotai performs beautifully all the time. But April, the bottom fell out and all the players won 1,000,000 of dollars. And I think we ended up the month minus 10 or something. What was it?
Yes.
Minus 10
or 15. Not at Windhouse. Yes. Forget about plus 50. It was minus 10.
Look, on a whole, percentages are right. But during that quarter, in April, we had a statistical anomaly. Now we also had counterpoints to that in our history, but we did have one during the quarter in April. But other than that, we had nothing to say normal volatility even if it's exaggerated.
Your next question comes from the line of Joe Greff with JPMorgan.
Good afternoon, everybody. Craig, maybe the confirmation was given, I just didn't hear it there at the end. But could you break out what property level EBITDA was on a hold adjusted basis at Wynn Macallan Palace? If you didn't, could you provide that now? It was about $20,000,000 low at Palace and about $20,000,000 high at Windischal, off-site.
Okay, great. Thank you for that. I was hoping sticking to Macau, can you talk about your premium mass business? How can you talk about I don't know if you've picked that this way, but what percentage of your total mass revenues or profitability relates to premium mass? And can you talk about the relative growth rate between premium mass?
And Steve, I know you referred to a little bit of what you characterize as mid market and the mid market NAS. Could you talk about those relative interest rates in both Macau properties? That would be helpful to understand. And, George, this is Matt. Everybody, all the competitors want to know what your breakout is of premium mac relative to mac.
So we really don't want
to get into percentages of where we're driving our business. We don't want to sell you.
Okay. Sure. Maybe a way to ask this question in any kind of a generic way for you to the extent I have a high level view and would appreciate your views Is when you look at the Macau market now, say, where it was earlier in calendar 2017 and you look at where it is now, are you seeing the market being driven more by VIP here in the 3Q and the 2Q versus the 1Q. I know the 1Q, if you adjust to that revenue classification from the government, it has been more NASH driven. Is that reversed here in Q2 or has it reversed here more recently?
And if that's the case,
what is driving that change? Actually, Joe, I'm not the right guy to ask the question. I've had my nose down on work in the backyard here. Ian or Sergey, you need to be transferred. I'm not trying to split the question, Joe.
I'm just not open for detail.
We opened ZYN Palace with very strong VIP business, particularly in the junkets, and that strength has continued. And the remarkable aspect of everything is we didn't cannibalize our business down from the VIP level in the trunk of the category. So that's been an area of strength. It continues to grow. Sequential growth in John's business downtown has been significant 2 quarters in a row.
And we're built to take care of VIP customers at all levels. And our properties serve the VIP customers very well. We're known for that. So when that area of the business is growing, we do well.
Capitalization, I want to point out hastily, is again a reflection of when you build these places with a solid foundation, physically, programmatically and in terms of human resources, The notion of cannibalization doesn't really apply. And John, the question you're trying to
get to is what happened to mass in the Q2 for the market. And I think that in the Q2, it is evenly flow for the market in June. And so we're not going to sit here and predict which direction mass is going after 90 days. The business still feels good across our properties in both the premium segment and in the regular mass segment.
Your next question comes from the line of Carlos Ghosnier with Jefferies.
Hey, everybody. Good afternoon. Just a follow-up on Joe's question Matt, you referenced you've been growing share sequentially from the ones you did see here, both obviously kind of across all segments. I was just wondering, like, in terms of when you referenced that, are you referring to the math and VIP in the way that they historically been categorized by the operators or more kind of looking at the DICJ quarterly metrics? Yes.
It's a quarterly metric. Okay. Understood. And then, Dean, if I could, you guys seem to have had a streak of very good luck, obviously, some bad luck at Talos this quarter. But hopefully, I'm looking into it.
If you look over kind of the last five quarters, the property has been holding over 3.3 percent on close to $65,000,000,000 of rolling ship volume. Has anything changed there that's kind of creating this run?
Ian, Ian, I want to join in that answer. It's important for the investment community to understand that one of the consequences of the type of buildings we build and the way and the money we spend on human resources, Our properties have a stickiness, an attraction to a big caliber of gambler that to a certain extent we enjoy to a greater extent than our competitors. When you talk about a whole percentage, Observe Win Las Vegas. We always hold in the mid-20s, enormously more year in, quarter in and quarter out than our neighbors. It's not an accident.
It isn't about luck. It has to be it's part of this program. It's highly self conscious and highly articulated. We have more profitable casinos, pound for pound, foot for foot. I mean, we have someone who has 9 casinos, we obviously with 3, don't compare.
But when you compare any single operation of gaming in Macau, casino floor for casino floor, you'll see that we always hold higher. It's because people play longer and they're wealthier and they have more discretionary income than others. And that results in a different business plan. I stress that enough. When you look at us, you have to understand it and you've got to be conscious of the history.
We just took a
look take a look
at the single performance in terms of whole percentages and stuff like that. The win, it's easy to look at that because the numbers are easier to compare because we don't have the chip roll and the repurchase, which is a complex. And people buying chips at the cage in China in the mass casino sort of distorts. When you use a traditional form of measurement, Lynn Las Vegas answers the questions you're asking about Lynn Macau. We always hold higher.
It's one of the goodies that has to do with our program. Ian, you can take your picture.
So what we've seen with particularly
holes and
the jump ups is when we have extremely high volumes, then we do see the hole better. When you have less volume, we have higher volatility, which has been an issue with pallet applications. And using these things over time, sort themselves out. That's right.
Great. And thank you very much. Sure.
Your next question comes from the line of Thomas Allen with Morgan Stanley.
Hi. So last week, there
were some stories about junkets asking their customers to remove deposits. How are you thinking about the strength or longevity of the junket system at this point? We don't pay attention to the annuities. I mean, what we're saying is people who go on vacation in America and China and decide to go to a destination resort that includes the gaming room, those people tend to have the money and that provides them choices in life. And they don't usually allow their preferences to be altered.
They overcome changes, But they do what they like to do. Golfers find golf courses. People who like to gamble and want to go to a fancy resort, find a place that gives them what they want. They've got the money to deal with change, and they do. So the nuance of moment to moment developments doesn't change human nature.
And therefore, it doesn't in the long term ever change us. So we heard what you heard. We said, okay, That's interesting. Next case. We didn't pay much attention.
Okay. Thank you. And then just your occupancy continues to rise. How are you allocating rooms between cash and confidence at
this point? And how are you thinking about it going forward? Thanks. So
I think it went to tower is up 60 basis points, and I think it continued to
be pretty it's still too high as wind power shifts. So both buckets would be helpful.
Occupancy is in the mid nineties of both. I think we allocate rooms to the most valuable customers, Downtown Macau has been pretty consistent in allocating over 80% to our casino customers and the rest is cash. Over in Colesize, it's a different market. We are up to close to 60% in comp rooms at the moment for casino and we plan to give even more rooms over to comp.
And we would like very much in Phase 2 in Cotai to add a whole bunch of rooms so that we can improve the mix for everybody. And as soon as the government lets us, we'll build some more beautiful hotel towers with or without gaming. That's not the most important thing. We just want the people to stay in the hotel, to have their meetings there, shop, eat in our restaurants. We don't want to gamble.
That's their business. But we'd like to have more rooms. We were constrained by a height restriction because of our proximity to the airport. So that location had good news in bed that was attached to it through the first stop from the ferry terminal right next door to the airport and all that stuff. But we couldn't go as high as we wanted to.
So 1700 rooms was all we could get in that first structure. But we have property on both sides of our land concession and already we've built the connections to those sites to the additional real estate so that we can have more rooms. And depending on our the permissions that are in the latitude given to us by the government, we would erect beautiful hotel towers with convention and meeting space and as many as we were allowed to do it, which would change the mix. That's the end of my answer.
Your next question comes from the line of Sean Kelly with Bank of America Merrill Lynch.
Hi, good afternoon. I think a couple of questions here have been sort of trying to get on the same topic, which is the sequential some of the sequential figures we're seeing at Talend. So I guess my question is this. I mean, if we look at the big sequential growth you saw this quarter at the peninsula. Do you really care or are you concerned at all with the fact that customer support and management is going faster than Palace?
Or do you kind of even plan and run the business that way? Are you happy to sort of service the customers where they want to
go right now? That's okay. What you just said at the end, we don't care. It's all one big thing. We it's one integrated resort in 2 locations.
To us, it's 61 Avenue does the other. You already know why the Palace is a little retarded because of the neighborhood. To us, it's all one thing. Same ownership. It's all up in 2 locations.
We would care less where the money comes from.
And Steve, when we look
back on this 3 to 5 years from now, do you think we are going to be looking at a Palace property that is setting We see the much bigger ramp from here in the mass market given some of the factors you mentioned, or do you still think that there's room for the VIP and the, you know, higher escalators through comping appropriately and just getting to discover the property, is there still more growth and more potential there?
I think we'll look back and see Macau grow and prosper. With that growth will come concomitant growth in the mid and premium market levels as well as VIP. As the market gains traction and receives broader visitation in the Pacific Rim and from Mainland China, from everywhere else, Taiwan, Japan, As the market grows, all those segments will creep up. It always happens sort of proportionally. Unless someone restricts a certain part like we had the restriction of the VIP.
Then of course, you see the relationships change. But under normal conditions, it proceeds pretty much very partial. At least that's my take on it. I don't think you've spoken a different way.
No, no, I think you're right. One thing about Wynn Palace that we also haven't talked about is we are building some new amenities that are going to be great attractions for the mass market. They'll be opening next year. More restaurants are coming in the next 9 months that are going to continue to add to that
For Chinese New Year. Yes. Incidentally, what Matt just said is true of each of our hotels all the time. That's true. We never leave any of them open.
For example, in a week or so, on the 4th August, we redid the whole north end of Wynn Las Vegas where the race sports book are located and where a big deal bar and delicate center are located. We closed the whole north end of Wynn, decided that we wanted to make it more exciting. We knew gorgeous screens, a brand new bar, new VIP seating sections for race and sports people. We've updated the restaurant. And we're going to this Friday morning, we're going to take the wall down.
And everybody is going to be dazzled because the entire north side of Wynn is going to look different than it is when we put the wall up the day after the Final Four. None of these hotels stays the same. And we think of ourselves, if we're not growing, we're going backwards. If we're not adding new and exciting nuance to each of our properties for our repeat visitors, then we're not keeping the promise that is the backbone of this corporation. So what Matthew said, if things are going to open between now and Chinese New Year, well, that's going to be true in Las Vegas.
And you'd be damn well sure that when Boston opens up, we'll be tinkering with that. We buy more real estate so that we can grow Boston. We're buying up the neighborhood, make Everett the destination, convention and entertainment element of the metropolitan area in Boston and Central Massachusetts, we never leave these things alone. That's one of the reasons why we hold a higher percentage of tables and why our room rates stay high. So these places never keep static.
Thank you very much.
Your next question comes from the line of Robert Farley with UBS. Great. Thanks. And just circling back to Wynn Palace. You outlined a couple of the challenges for the property and kind of different time lines for when somebody work inside the property will be done in a month, MGM opening by year end, maybe the light rail and FGM sort of further out.
When we think about the ramp up of the property, how much is the difference between what the property is doing now and what you think it can be doing when all is said and done. How significant are the changes that happened by the end of this year versus maybe light rail and things, other things that may take longer, just sort of manage our expectations about the ramp up?
Interesting question, Robin. How to think about that one? Wow. You know, that's the kind of question I ask myself. Any of my colleagues want to help me out with this one?
That's a very provocative question.
Robin, my take is like we said last quarter actually, the ramp is going to take us longer than what we told you guys in our Analyst Day last April. Those forecasts are still what we project, but we need the infrastructure in place. Our programs are moving forward. And so we're big believers in that property and in Wynn Macau. But we have to get through really, as we said, 2017 to see a lot of these things start to have happen.
So that's what we said last quarter and that's still how we feel.
You know, example, if they turn on those escalators, that's an item, you can't get across the street now. It's very tricky to understand that. We can look at the numbers from our neighbors and compare ours to them per table against Matt and say, well, suppose that if we're less per table, I don't know, are we than one of them? Will the number per table change?
It should. We're right at fair share right now and our properties have always been 1.2 to 1.3 fair share. And so I believe that's
where Palace is going to go. It has all of the elements in place. Yes. If we're 1:1 on revenue versus a percentage of the revenue versus our percentage of the equipment in the market. We're 1 to 1.
That's the only time it's ever happened in my career in 50 years. In New Jersey, we were 1.68. And the more hotels that opened, we increased the margin of excess margin over 1 to 1. So if we're 1 to 1, Matt, right now, and the neighbors are 1 to 2, 1 to 2, we've always been 1.2, 1.3, look at Wynn Macau, then that would be a bare minimum. And that building, Wynn Palace is the fanciest thing in China by far.
So And I
have one question that you would grow to a premium to your fair share. I was just thinking about time frame. And so it sounds like maybe from Matt's comments that a lot of things by year end sort of will a lot of the biggest and most the biggest hurdles for you will by the end of 2017. Is that fair?
I don't know, Rob. It depends. What are they going to do with the light rail? What happens when MGM got open in November? And when they open, will it be a complete opening, a partial opening, will there be blockades left?
What really is going on with SJM? They asked us if we would link SJM to us. Well, one of our on the Indian land on the south side of our property, the corner of it is directly off of the center corner of SJM. They want to have a connection. Well, I say, great, let's do it because it goes right into our retail.
Through the hallway, the care condition and we're in business and we're connected to their 2,000 or 3000 rooms. Same thing with MGM. I'm a little confused about the timing on those properties. And I'm a little confused about the improvements in the neighborhood and how they affect us. But I've got complete confidence that the Palace will be the show pony, both financially and physically, when these questions are resolved.
I'm just frustrated with even you the kind of answers. But your question really meant that I had to know how it was going to come in chronologically. So I don't, Robin.
Okay. That's fair enough. Thank you. Your next question comes from the line of Harry Curtis with Nomura Instinet.
Hi, guys. I have a general question and then a housekeeping item. The general question is the DIC growth of 35% according to the DICJ in the quarter was pretty exceptional. And years ago, maybe 6 to 8 years ago, I recall a rule of thumb that the government was fine with a 15 plus a growth rate around 15%. And I'm specifically referring to the VIC segment.
And just as of your experience or knowledge, is there a growth rate that the government is comfortable with? Or can the JAKIS business grow at an over 20% growth rate without the government's objection as long as its customers and liquidity sources are legitimate.
The regulatory agency has tightened its controls and supervision of the direct operators. I think that's the form of expression that has been adopted. And we don't know of any arbitrary number that is in government thinking on this subject. Only thing we do know is that they wanted to improve the standards of property investigative activity, and they've done that. Can the main operators sail way through as they always have.
I remember when we were getting licensed to Massachusetts, the question was, well, Macau has a reputation that's pretty questionable in some quarters, especially in Massachusetts. And I remember that we said, well, wait a minute, let's put this matter to rest. We told each of our operators that they had to go, in addition to being licensed in Macau, they had to go to the organized crime criminal division of the Hong Kong Police Department and get certificates of clean bill of health certificates. They actually would investigate someone and then come to a conclusion and make a statement in writing that the person was free of any criminal association. And every one of our operators went instantly and did it without hesitation.
And that impressed the folks in Boston. We were happy to do it because we wouldn't want to do business with anybody that couldn't have such an examination. So the regulatory issue is the one that I think is at stake here. I don't know that anybody has an arbitrary number about growth rates.
Is there maybe a different way of asking the question is
the
is it the fact that or junket liquidity, do you think that that is maybe more of a relevant question versus government policy? And where I'm going with this is, you
look at
the fees to run-in cycles. And in your view, now that we're in an upswing again, what could slow it in the next year or so?
Harry, as you know, we've been through all of these cycles, I guess. So there are the macro issues we all understand. And then there are the changes in regulation that could slow down liquidity. But to try to guess what might happen in the future, I think is not the right thing. What I would tell you is that we are seeing the same faces and new people in our VIP rooms and in our premium area.
So that is a good sign about the health of the market. I really don't want to guess on what could slow down liquidity in the future.
And ladies and gentlemen, we have reached our allotted time for questions. And I would like to turn the call back over to your investors for any closing remarks. I
thought today's questions were well thought out and insightful, especially as all of the investment and analysts grow for and reach out for the kinds of information that will predict the future. And I know that's the job of analysts and advising the public on their investment decisions. We do the same thing in protection of our shareholders. Read the tea leaves, so to speak, try and anticipate the future. And the most certain part of the future, which is change and how to build these enterprises so that they are equipped to handle change that have the agility, the flexibility that's necessary for any commercial activity in this world.
And I want to go back and say that in answer to all of the detailed inquiries that were brought up in case Q and A. What will determine the future, believe me, will be the same fundamentals that have done it decade in and decade out. How carefully are your buildings and your facilities designed and executed with care and professional input? But most importantly, what is your human resource profile? Because only people make people happy And these places, their agility is measured in terms of the morale and the attitude of the people who engage the public every day in these buildings.
If you want to have an insight, beyond the questions and answers you get from us on an orderly basis, go to these hotels, interview employees, feel the vibe, eat the food, stay in a room, talk to the employees, see if they're proud, see if this job they have is a measure of their own self esteem. Do that survey, do that inquiry and you can predict the future because when you get that information, you will know who will control every market and outperform the competition. And that is all we got to say today is to run out of these conversations. Talk to you next night. And thanks.
Thank you for your participation. This does conclude today's conference call, and you may now disconnect.