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Takeaway: Perception of Vegas recovery remains much stronger than the data indicates. Another weak quarter from MGM

How to convinced the Street that normal is not normal - low hold blamed for tough quarter (19.8% is pretty close to the midpoint of 18-22% normal range unless my calculator is broken)


  • Very robust mass market growth at MGM China
  • Lower margins at Strip due to investments made to Delano, lower table hold, and increases in certain expenses
  • MGM Cotai: on schedule to open in Fall 2016; 
  • Delano completed at end of September:  has exceeded expectations
  • Monte Carlo/NYNY:  construction work disrupted performance
  • MGM National Harbor opening Fall 2016
  • MA: Confident on NO vote on Proposition 3
  • Japan IR debate:  remains active
  • Strip REVPAR:  6% exceeded guidance of 5%
  • Grew convention mix by 3% points; in 4Q, will increase convention mix by 2% points, will bring FY convention mix to all-time high of 17%.
  • 4Q REVPAR guidance: 5%
  • STRIP EBITDA:  -$40m due to lower table hold, higher employee benefits, and marketing costs associated with Delano
  • CityCenter:  improved profitability at VDara
  • Aria:  lower EBITDA due to lower table hold %
  • Vdara:  96% OCCU, 12% in REVPAR
  • Crystals:  another successful quarter
  • $545m cash at MGM China
  • MGM $1.2 bn: available liquidity; MGM China $1.4 bn available liquidity
  • $404m cash CityCenter ($157m in restricted cash); total debt: $1.5bn
  • 3Q:  $103m capex (wholly-owned); $46 (National Harbor/MA), $98 MGM China ($17 at MGM Macau, $81m at MGM Cotai)
  • MGM China
    • Slot handle: 5%; revs: -7% due to lower hold
    • Mass: drove 75% of profits
    • Will continue to allocate tables to mass floor
  • Las Vegas consumers:  feeling better, lower gas prices; +4% visitation YTD
  • Mandalay:  will increase conv space in 2015 by 300k sq ft

Q & A

  • -$40m breakout excluding low table hold impact:  70% related to changes in employee benefit side; 30% impact from Delano/Monte Carlo
  • Flow through has been more volatile.
  • MGM China margins:
    • Controlling costs in tough revenue environment
    • Mass business - pretty steady and consistent
  • Convention 1Q 2015:  pace continues to get better; 
  • 2015 convention mix should be higher than 17%; low single digit growth in convention business 
  • Goal is to increase REVPAR in every quarter in 2015.
  • MGM China VIP/Mass margin pressures?
    • Some operators have been discounting. Does not motivate customers. MGM China does not see need to discount.
    • Premium mass outperforming in the Peninsula
    • Highest EBITDA/per room in the industry
  • Low Bellagio 3Q REVPAR:  have started to push rates.  Convention rates were lower than what they could have been. 
  • 3Q Low table hold:  Mirage - largest decline  on a YoY basis; MGM Grand (held well last year, held more normal this year); Bellagio table hold (being a little better this year at normal levels)
  • REVPAR:  luxury/core pretty consistent; revenue spend up 3-5% on luxury and core properties; consumers getting more healthy
  • REVPOR was 6% in 3Q, strong performance
  • 2015:  convention business will be stronger in the city than 2014, will build share and benefit core properties 
  • 4Q:  having a great convention quarter; mix up 3% points;  but tough comps in 4Q 2013.  Shake Shake coming in mid-December.
  • F&B Vegas EBITDA:  +9% in 3Q, driven by catering business driven by strong convention calendar; 
  • Excited about Genting project:  will drive new customers to Las Vegas