MGM Resorts International (MGM) Q1 2012 Earnings Report, Transcript and Summary

Daniel J. D'Arrigo - Chief Financial Officer, Executive Vice President and Treasurer James Joseph Murren - Chairman of the Board, Chief Executive Officer, President and Chairman of Executive Committee Robert H. Baldwin - Chief Design & Construction Officer, Director, President of Project CityCenter and Chief Executive Officer of Project CC LLC Grant R. Bowie - President Corey I. Sanders - Chief Operating Officer Unknown Executive -

William J. Lerner - Union Gaming Group, LLC Robin M. Farley - UBS Investment Bank, Research Division Carlo Santarelli - Deutsche Bank AG, Research Division Cameron Philip Sean McKnight - Wells Fargo Securities, LLC, Research Division Joseph Greff - JP Morgan Chase & Co, Research Division Shaun C. Kelley - BofA Merrill Lynch, Research Division Mark Strawn - Morgan Stanley, Research Division Felicia R. Hendrix - Barclays Capital, Research Division Harry C. Curtis - Nomura Securities Co. Ltd., Research Division Steven E. Kent - Goldman Sachs Group Inc., Research Division Dennis I. Forst - KeyBanc Capital Markets Inc., Research Division

Good morning, and welcome to the MGM Resorts International First Quarter 2012 Earnings Conference Call. Joining the call from the company today are Jim Murren, Chairman and Chief Executive Officer; Bobby Baldwin, Chief Design and Construction Officer of MGM Resorts International and President and CEO of CityCenter; Dan D'Arrigo, Executive Vice President, Chief Financial Officer and Treasurer; Grant Bowie, Chief Executive Officer of MGM China Holdings, Limited. [Operator Instructions] Now I would like to turn the call over to Mr. Dan D'Arrigo.

Well, thank you, Ashley, and good morning, and welcome to our first quarter earnings call. This call is being broadcast live on the Internet at www.mgmresorts.com, and a replay of the call will be made available on our website. We furnished our press release on Form 8-K this morning to the SEC. And before we get started, I'd like to read a few Safe Harbors. On this call, we will make forward-looking statements under the Safe Harbor provisions of the federal securities laws. Actual results might differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause the actual results to materially differ from those in these forward-looking statements is contained in today's press release and in our periodic filings with the SEC, including our most recent Form 10-K. During the call, we will also discuss non-GAAP financial measures in talking about the company's performance. You can find the reconciliation of these measures to GAAP financial measures in our press release, which is available on our website. Finally, please note that this presentation is being recorded. And with that, I'd like to turn it over to Mr. Jim Murren.

Well, thank you, Dan, and good morning, everyone. Well, we had many accomplishments during the first quarter of this year. We completed several financing transactions at CityCenter and at MGM. MGM China paid a dividend of $400 million to its shareholders. We announced a partnership with Ameristar and launched the non-gaming component of M life, our rewards program. Here in Las Vegas, January and February were very strong months with increases in many of our core business levels throughout the properties year-over-year. Then we had March, where we faced 2 challenges, a very difficult citywide convention comparison and a poor table game hold. Despite these anomalies, growth in our Las Vegas resorts is continuing. We posted year-over-year growth across all major metrics. Net revenues, adjusted EBITDA, margins all grew year-over-year. We also cheated our REVPAR guidance of -- I think we said 2% to 3%. We're up 4% in our Las Vegas Strip properties. And we continue to believe that REVPAR growth for the year will be at least mid-single digit, with potential upside coming from the in-year-for-the-year convention bookings and retail segment strength. We grew both rate and occupancy, and our gaming volumes grew in table games and in slots. On the regional side, MGM Grand Detroit continues to perform well and had its second-best quarter ever. Detroit's performance was driven by record slot handle and revenue at that property. And in addition, both Beau Rivage and Tunica experienced significant year-over-year growth. CityCenter experienced a difficult first quarter from a hold perspective, with ARIA holding significantly below the prior year. I know ARIA is getting the high-end play and I know that they expect their customers to return the favor in future quarters. Bobby will discuss this in greater detail in a little while, and there are many great projects underway there to expand that business. MGM China reported another record quarter, with EBITDA growth of 21% and improved margins. Grant's going to go into further details about what's driving that and where we see continued growth opportunities. Beyond that, we're reinvesting in our resorts. As you know, we are actively pursuing growth opportunities in key gateway cities. We've recently been back from Japan, where we think the prospects are favorable, and more recently, in Toronto, which we find the opportunity there to be particularly exciting. We're spending time in South Korea and through MGM China in Taiwan, and of course, we remain highly focused on Western Massachusetts and we believe we're very well positioned on all these fronts. We continue to improve this company financially and operationally, and we're excited about our future. And with that, I'll turn it over to Dan to get into some of our operating results.

Thanks, Jim. In the quarter, our wholly owned domestic resort casino trends continued to improve. Our casino revenues were up 9%, driven by table game volumes, up 5%; and our slot handle, up 7%. We saw year-over-year volume improvement in both our national and international rated table games play, and believe that this is being driven by market share gains and the continued rollout of our M life customer loyalty program. As Jim mentioned, unfortunately, our casino results were negatively impacted by hold in the quarter. Had we held at the midpoint of our range, we would have generated an additional $25 million in EBITDA at our wholly owned properties and approximately $7 million for our share at ARIA, assuming a midpoint of a hold range for ARIA. Given these adjustments, our property EBITDA -- adjusted property EBITDA would have been $509 million versus the $477 million we reported. Our room trends continue to improve. Our wholly owned domestic hotel revenues increased 3% year-over-year. That increase was despite having over 70,000 rooms out of service at the MGM Grand due to the current room remodel that's underway. And overall, we were still able to increase our occupied room nights by approximately 60,000 in the quarter, reflecting a gain in market share, as well as the continued strength in demand for our Las Vegas Strip resorts. It is clear that the underlying trends remained positive. But as anticipated, due to the difficult citywide convention comparison in March, our convention mix was down slightly year-over-year. Our luxury resorts were able to fill their convention room nights with in-house bookings and reported REVPAR up 7% in the quarter, while our non-luxury resorts reported a REVPAR increase of roughly 3% in the quarter. Those resorts obviously felt that impact of the citywide much more than our luxury resorts. As mentioned earlier, we've had a busy start to the year and have made several accomplishments in improving our balance sheet. In January, we completed a successful and well-subscribed bond offering, which was upsized from $500 million to $850 million. In March, we upsized another deal to $1 billion at 7.75%, due 2022. This issuance was the lowest bond yield issuance we've had since 2007. And we were also active in working with our lenders on the bank front. We amended and extended our senior credit facility to February 2015. And in March, we subsequently paid off the nonextended portion of our bank term loans. As a result of these transactions, our interest rate on our extended $1.8 billion credit facility was lowered in mid-April by 200 basis points to 5%. As a reminder, our average domestic borrowing cost is approximately 8%. So for every 1% improvement in rate, that equals approximately $125 million in annual interest rate savings. And as we go forward, we believe there'll be additional opportunities to further reduce our borrowing cost and improve our overall free cash flow levels. At the end of March, we had excess cash of roughly $800 million, which includes our share of the Macau dividend, which we received in the quarter, of $204 million. On a net debt basis, we finished the quarter just below $12 billion in debt, excluding MGM China. At CityCenter, we were also busy on that front, with Bobby and the team there. But we issued $240 million of first-lien notes, an attractive yield of 5.82%. We also repaid and replaced the remaining $75 million of term loans with a revolving facility, giving CityCenter greater financial flexibility going forward. And at the end of the quarter, that facility was undrawn. We will continue to look to be opportunistic in terms of extending our debt maturity profile and financing opportunities. And our focus now really shifts to MGM China, where we'll look to put a new financing package in place as we continue to finalize our Cotai development plans. During the quarter, we spent approximately $114 million, 1-1-4, including about $9 million at MGM China in CapEx. Our MGM Grand room remodel program continues to progress nicely with roughly 2,300 rooms completed, and that project is on budget and on time to be completed by September of this year. Going forward, to help with your modeling a little bit, we expect our stock compensation expense in the second quarter to be about $9 million or $10 million. Depreciation expense in the second quarter is estimated to be about $230 million to $235 million. Our interest expense in the first quarter, gross, was about $284 million, which included approximately $6 million for MGM China and $23 million in noncash amortization. We estimate that our gross interest expense for the second quarter will be down, our first quarter numbers about $275 million to $285 million, which includes about $6 million for MGM China, and again, $23 million in amortization costs. We anticipate that our effective tax rate during the second quarter will be approximately 3%. And with that, I'll turn it over to Bobby to talk about CityCenter

Thank you, Dan, and good morning, everyone. For the first quarter of 2012, CityCenter resort operations generated adjusted property EBITDA, of $32 million, with ARIA reporting adjusted property EBITDA of $19 million. As mentioned, we were severely impacted by a low hold percentage. For the quarter, however, Vdara, Mandarin and Crystals all achieved record-level adjusted property EBITDA. When comparing year-over-year quarterly results for ARIA, hold affected adjusted property EBITDA by -- affected us by $26 million. As you know, we're in the gaming business and hold percentages can go both ways. This quarter, it went against us. In addition to the hold percentage impact, we also experienced a decline in table games volume and lower hold percentage in slots as well. There was also a property tax credit that benefited us in the quarter in 2011. Despite these factors, we continue to see a strengthening in the fundamentals of our business, as demonstrated by year-over-year growth in slot handle, REVPAR, occupied rooms, food and beverage revenue and retail sales. We continue to be pleased with the manner by which business volumes are increasing at ARIA. March occupancy at ARIA was the highest since the opening, coming in above 92%. Looking out for the next 2 quarters, room bookings are significantly outpacing last year. In fact, we expect occupancy in the second quarter to be the highest ever for ARIA, driven by continued growth in convention business, as our world-class convention space continues to gain traction in the marketplace. Convention business is also robust for 2013. It was announced this quarter that Viva ELVIS will be ending its run in August and we will be welcoming a new show, Cirque du Soleil production Zarkana, to ARIA in the fourth quarter of this year. Zarkana is a proven and established show that has been seen by more than 1.2 million guests in New York City, Madrid and Russia. We anticipate that Zarkana will provide a significant increase in show revenues, while also generating incremental traffic throughout the resort, and we're very excited for this new residency here at ARIA. Construction is also underway on Javier's, a Mexican restaurant that is extremely popular in Southern California. This well-known brand will be located off of the casino floor and will add energy and a unique experience to ARIA when it opens this August. At Vdara, as mentioned earlier, Vdara reported record adjusted property EBITDA of $5 million, up 69% from last year. Revenue increased 40% year-over-year, due in large part to an increase in occupied rooms. Additionally, we are pleased to have grown the ADR despite a significant increase in room inventory as compared to last year. Vdara continues to succeed in fulfilling a niche in the market as the premier non-gaming, non-smoking boutique hotel. Crystal's first quarter 2012 adjusted property EBITDA was $7.1 million, up 21 -- pardon me, 27% from 2011. The increase is the result of higher rents, new store openings and expenses stabilizing at lower levels. Three new tenants have opened in 2012 and currently, 86% of Crystals is under lease. Finally, 2 significant interior modification projects at Crystals were completed in April that promote more direct pedestrian access to ARIA from the Cosmopolitan bridge and the Gucci entrance off Crystals. Both properties appear to be successful -- or both projects appear to be successful at increasing the pedestrian flow through the ARIA casino and resort. And that concludes my report. I'll turn it over to Grant Bowie. Grant?

Thanks, Bobby. MGM China continues to perform well. For the first quarter, net revenues were $702 million. This was up 18% year-on-year, while adjusted property EBITDA reached $165 million, and this includes $12 million of branding fees. If we exclude the branding fees, adjusted property EBITDA was $177 million, and this is a 21% increase year-over-year. Our EBITDA margin before branding fee improved to 24.5% from 24.6% last year, due mainly to higher VIP hold percentage, continued improvement in main floor contribution and the impact of the efficiencies from the implementation of our key performance indicators. During the first quarter, we were able to drive growth from each of our revenue segments, with our market share remaining consistent at approximately 10%. And this is despite the addition of significant new capacity into the market. In our VIP business, volume grew by 6% year-on-year. We were able to add one new junket operator during the quarter and this contributed to our volumes, and we also benefited from a VIP hold of 3.2% for the quarter. On the main floor, table win was up 16% and our slots were up 20% year-on-year. The success of our main floor was the result of our continued effort to better-yield floor. Our slot growth has outperformed the market, and our March slot revenue was an all-time high for us. The slot performance, in particular, was driven by strong customer acceptance and increased use of the slots in our supreme and platinum gaming areas. We continue to seek out growth opportunities by driving improved operating performance; through continued volume and yield improvements; by innovation in our slot product; and programs designed to increase visitation to our property, as well as the expansion of our existing site. In terms of the volume growth, we are working to improve overall player and visitor numbers, and one tool we use to drive that is to increase and improve our Grand [indiscernible] events. We had great success with our winter skating arena and we've just opened a butterfly exhibit in April, which will be in the Grand [indiscernible] for the next 8 months. Our expansion project on our level 2 is underway and upon completion, we'll have 40 gaming tables, which are available from our existing table inventory of 427 units. We continue to put a lot of effort into our Cotai project to refine and enhance our design, and we believe the government approval for our loan grant application is imminent. We are well prepared to commence construction as soon as we are given the green light by the government. Our plans call for a truly unique MGM experience, which will have approximately 500 tables, 2,500 slots, 1,600 rooms, and we have a budget of approximately $2.5 billion to be spent over a timeframe of 36 months. At the end of the first quarter, MGM China had approximate cash of $575 million, debt of $552 million and adjusted leverage ratio of approximately 1 -- or 0.86, to be precise, based on a trailing 12-month EBITDA. In closing and in response to the often-asked question re: dividends, the board continues to monitor our financial position and will determine the future timing and amounts of -- based on the company's capacity to meet all of its obligation opportunities. And with that, I'd like to turn back to Jim Murren for his closing remarks.

Thank you, Grant, and thank you for being up late at night. As we reflect on the first quarter, our takeaway is that the fundamentals of the business are getting stronger and the foundation for growth here in Las Vegas is broadening. We know this because we grew even in the face of the aberrations we discussed and we're growing now. That's good news for Las Vegas and good news for MGM. And looking forward, we're confident we can accomplish many milestones in the quarters ahead. We see great opportunities in international gaming, in our U.S. regional expansion, in online gaming and social media to come. The second quarter has some great events for the city. Floyd Mayweather is fighting this weekend at the MGM. And also next month, Pacquiao is fighting in June with -- against Bradley. And so these are major events, more than we had a year ago, and they drive casino play for the town, and largely for MGM. Over in Macau, Grant's enjoying Golden Week right now. I have to say it's off to a great start. Our forward-booking pace remains quite strong, as our convention base is solid and the retail segment booking trend's continuing to improve. Again, this supports our thesis of a broadening recovery in Las Vegas. We expect convention mix to increase year-over-year during the second quarter, and most notably, our convention pace is up significantly in 2013 and '14. Based on our current booking trends, we expect mid-single-digit REVPAR growth in the second quarter and as I said, we have a strong forecast for the year. We're driving future growth initiatives in fields where we believe we can yield high returns on investment. In the hospitality division, we've opened our first hotel in China, MGM Grand Sanya, and we are well positioned in key gateway cities around the world. We expect this hospitality business to grow, bear fruit for all of our shareholders. I'm very proud of our efforts with M life. We are seeing tangible benefits of capturing increased customer spend at our properties. We think this will continue and expand with the recent addition of our non-gaming amenities to our rewards program. We're very actively now cross-marketing our regional properties to drive market share and increase visits to Las Vegas, and we expect this trend will only improve with the marketing relationship we have created with Ameristar. New growth markets in gaming will likely emerge, and we have positioned ourselves internationally to effectively compete there. And we're very excited to say that this quarter, along with our partners -- in the second quarter, we're launching a social gaming site which recreates the Las Vegas Strip experience and exclusively features our brands. We believe that this product will be superior to what you currently see in the market and will be a strong customer acquisition and brand extension tool for us. And of course, we continued to remain aggressively focused on pursuing federal legislation for online poker and we're keenly aware of what's going on, on a state-by-state basis for those opportunities, which we think will likely emerge. So with that, operator, I'd like to turn it over to you so that we can get to the Q&A section of our call.

[Operator Instructions] Our first question comes from the line of Bill Lerner with Union Gaming.

A question and then a very quick follow-up. You -- Jim or Grant, I guess, you've been more measured over time in your Cotai approval commentary until now -- or until this morning. What makes you say approval's imminent? And then a quick follow-up.

You want me to take that, Grant? And then you can follow up. We believe that the announcement of the land transfer to Wynn was -- is an important step and we believe that we will be following shortly thereafter. We believe our process through this since 2007 has been deliberate, measured and tracking to that type of outcome. And I would say that the opening of capacity in the marketplace, in a very measured approach the government has taken to growth and the very recent announcement with Wynn bodes very well for MGM. But Grant, you want to add to that?

I think I just want to add that, clearly, the Wynn announcement has now cleared the air. And from our perspective -- and most importantly, we've put a lot of time and effort into the process, both in our dialogue with the government and understanding exactly their position. But most importantly, we're making sure we get the product that we know will add considerably to the diversification of the industry here in Macau.

Okay. And then to follow up quickly, maybe for Dan or even Bill. In Vegas, when looking at all the data points out there, March seems to be an anomaly. Can you talk about why? Obviously, CONEXPO rolled off 100,000-plus delegates, but can you quantify it perhaps? Do April and May look as strong as January and February?

Bill, this is Dan, and maybe I'll ask Corey to jump in as well. But clearly, when you look at that one week year-over-year comparison, it had a dramatic impact on the operating leverage in the business, predominantly, in a lot of ways to our -- what we call our core properties, but our mid-tier and our value-orientated properties, so not just from an ADR standpoint. When there's 100,000-plus higher-spending individuals up and down the Strip, that obviously -- that tide rises all the ships on the Strip from a leverage standpoint. When we look at our January, February, and even 3 out of 4 weeks results in March, they were strong across the board, sans hold for a second in March, which the volumes all bode well. Corey, do you want to quantify?

Yes, just we did quantify it, Bill, because taking 120,000 attendees out for a week and replacing it with a lot less attendees absolutely had an impact on our business. And when we looked at it, it actually probably had close to a 3% increase in REVPAR for the entire quarter on the company, not just the month. And we would've had a very positive REVPAR growth in March if you just took that week out. From an EBITDA perspective, excluding any gaming win or loss, it probably was about a $15 million to $16 million impact on our bottom line just from that one week.

I was just going to say, Bill, so while REVPAR was up 4%, you're saying that if that was not there, it would've been what?

It would've been a little over 7%.

Over 7%. Okay.

Our next question comes from the line of Robin Farley with UBS.

Just to get some clarification. When you talked about -- in an approval in Cotai, is that -- just looking at the Wynn process, in September there was the announcement that they had agreed to terms with the government and then the official gazetting took this additional sort of 6 months or so. So is the part that you think is imminent, is that agreeing to terms? Or has that already happened, but it's not necessarily something that you felt was -- needed to be in an 8-K? Or in other words, I'm just wondering which stage is the imminent one.

You want me to take that, Grant, or do you want to do it?

Well, my comment is that the imminent announcement that we're waiting for will be the relation of the draft land concession and the processes that we're looking to do is obviously ensure that, that moves as quickly as we possibly can. And much of that has to do with the status of the -- our project in terms of its ability to be executed. So the process, as you understand, is that when you get the draft land concession, that process in terms of agreeing to those terms can actually be very -- quite quickly. And then we want to parallel that with moving forward with getting all the appropriate approvals to commence construction. But they're parallel, but need to be all completed, and then we hope that the land concession gazetting can be handled judiciously.

Okay, great. That's helpful. And then just switching over to Las Vegas. And I understand the impact in Q1 and you mentioned that '13 and '14 paces up significantly. It sounded like in your opening comments, you were kind of looking for in-the-year-for-the-year business to pick up, or that you're seeing that pick up. Can you tell us what, for the remaining 3 quarters, group nights on the books versus the prior year, how that's pacing?

Corey's looking for that, Robin. I can tell you where we're seeing it segment-wise, because I was looking at this yesterday. We're seeing good strength in-the-year-for-the-year in the technology companies, health care. Automotive, as well, has been quite strong. And our lead numbers have been up really, and I know we had a great number in December. Do you have any of that, Corey, at your tips?

I don't.

On convention mix, we said that we expect convention mix to be flat to slightly up year-on-year this year.

Yes, the rooms are really close, the pacing's pretty close to prior year's pace.

And we're up -- at CityCenter, we're up. 250,000 room nights versus 188,000, so it's about 70,000 room nights increase at CityCenter compared to last year.

We'll get you more, Robin, we just don't have it...

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

I was just hoping you guys could provide a little bit more granularity. When we look at the segments in Las Vegas and try and get our hands around all the moving parts -- obviously, hold with an influence, with the convention calendar having an influence as well. But if you would look at kind of your core gaming segments as well as your core room segments, thinking about it from a margin perspective and flow-through to margins, with obviously gaming and other revenue seemingly leading hotel room revenue, I can understand why the margin is depressed. But could you talk a little bit more about maybe some of the limited flow-through that we did see in the quarter?

Yes, I'll turn that over to Corey for that.

Yes, great. We've been watching this also. In the first 2 months of the year, when we had the right mix in there and the mix was supported by the convention base, our flow-through was in excess of 50%. The March impact was mainly the shift in CONEXPO leaving, and you have a lot more occupied core rooms at a lower rate. So we have -- we were actually up 60,000 rooms. We had 77,000 rooms out at MGM and we replaced those with the core rooms. So you're seeing an impact on your room rate because of that core shifting to the core for the rooms and we think that's an anomaly that happened just in that one event.

And your next question comes from the line of Cameron McKnight with Wells Fargo.

Question for -- a question for Jim or perhaps Grant, how are you thinking about financing on Cotai?

Well, let's turn it over to Dan.

I'll jump in real quick. I think when you look at it, obviously, the facility we did a couple of years ago was state-of-the-art at the time and is now probably -- we're probably paying too much and it's way underutilized. We'll look to probably do a $2 billion to $2.5 billion financing package at the MGM China level, and that free cash flow will be more than sufficient to do everything we want to do at MGM China from a development standpoint, as well as continue to look at future dividend opportunities.

And I think we would add that we're at a position now in terms of our design development, we've chosen all of our architects. We have board approval at MGM China in terms of the programming and design of what we're doing. We've been costing this building out more precisely. That, combined with our favorable outlook from a land perspective, means that we are gearing up that financing process right now and look to do that certainly by the end of the year. Right, Dan?

Okay, great. And Jim or Corey, how was the -- how's the convention and event calendar looking for the balance of the year on a year-over-year basis?

Well, we have no more aberrations. We have no more of these things we have to talk about. And their calendar looks solid.

Convention calendar looks solid. And we've -- as Jim mentioned, we obviously have a good fight calendar this quarter. And the back half for the concert calendar and events calendar is picking up nicely in 2012 versus last year.

Yes, and the convention mix is going to be up in this quarter. It will be up about 1 -- at least 1%.

And I think the event calendar is really back-loaded, and especially at the Grand with some great events. Madonna's in October. When you look at our first quarter numbers, the fact that the garden was not as busy as it was the year before and we have those increases in gaming numbers, I think that -- it shows the market is recovering even on the casino side here.

Our next question comes from the line of Joe Greff with JPMorgan. Joseph Greff - JP Morgan Chase & Co, Research Division: Jim, on your commentary about mid-single-digit REVPAR growth in Las Vegas in the second quarter and the back part of the year, how much of that is driven by price? How much of that is driven by your anticipated occupancy increase, because I'm presuming it's a mixture of both. And so if it is driven by some occupancies, are you -- and given the volume increases on the tables and slot handle, are you having to add much to FTEs in Las Vegas?

So it's a combination of both, Joe, and we think that those trends are going to be growing in the year, but it's a combination of both, slightly more occupancy. You could see we're already at fairly higher occupancies, but improved mix and pricing at the different price points. And we are not anticipating adding any FTEs, to any material nature at all, for the entire year.

Yes, for having 66,000 more occupied rooms, we were actually up 0.4% FTE. So it's -- for the most part, it's flat. Joseph Greff - JP Morgan Chase & Co, Research Division: Got you. And then looking back at the quarter and the adverse hold, was that primarily at the Grand and MIRAGE, just eyeballing the year-over-year EBITDA results?

That was predominantly, Joe, at Bellagio, Mirage and Mandalay. The Grand held, I'd say, within a normal range, but it's predominately at those 3 out of 4 properties, excluding ARIA, of course, if you have those numbers [ph] . Joseph Greff - JP Morgan Chase & Co, Research Division: So then looking at the wholly owned Las Vegas EBITDA result adjusting for hold, what has been the EBITDA margin on an adjusted basis?

I've got to take a look at that. I think it would've been up about 40 or 50 basis points, I think, on a comparable basis.

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

I just wanted to ask about CityCenter. Bobby, I think in your comments, you had given a little bit of indication, something about a property tax benefit in the first quarter last year. But I was just trying to understand, because even when we hold-adjust the numbers, I felt like the margins were a little bit lower than what we were expecting. So I kind of wanted to get your sense for how we should -- kind of what do you think is the right stabilized margin there, kind of with normal hold, because I think in the second quarter, you have a tough hold comp, too.

Well, the property tax benefit was about $4 million. That's the first part of it, and the remaining question had to do with the margin going forward?

Just kind of -- like, I mean, now that you've been -- the property's been up and running for a while, just kind of what are you thinking about the kind of the run rate margins there? I mean, directionally, should this be in-line with kind of what you've been able to do at Bellagio? Or is that too high? Or kind of with the mix of high-end, how should we think about normalized margins there?

Well, it should be, going forward, 25 -- around the 25 percentile. And of course, I think you can expect the margin to be about 25%. Of course, we want to grow the volumes.

And then the last thing was -- I think you mentioned that you did have a lower table volume in the quarter, too. Did I catch that right?

Yes, it was about 7.5%.

Okay. But was that primarily on the, like just on the high-end side? Or was there something else going on, on the mass?

80% of that was Baccarat, so some of it was timing.

Yes, and also, this year, we had the big Chinese New Year's party at Bellagio. Last year, we had it at ARIA. So it's a -- just a shift year-over-year of where we hosted our major event. It had a lot to do with it.

And our next question comes from the line of Mark Strawn with Morgan Stanley.

One quick question on just the REVPAR trajectory as you go from 1Q to 2Q. If we're looking at kind of a plus 7% adjusted number for the first quarter, adjusted for that big show rotating out, I think you said at least mid-single digits. Does that mean you're confident that you could come in ahead of that if -- in quarter bookings, or stronger than expected, given that there don't seem to be any major calendar anomalies going forward?

I think, Mark, that's the intent. Obviously, a lot is reliant on the in-the-year-for-the-year on the convention going forward, as well as continuing to gain traction on our retail pricing. And that is our goal, obviously, to continue to maximize that composition.

Okay. And are you seeing any -- at maybe some of your higher-end properties, seeing any pushback on rate as you try to push rate there, maybe like we saw in some of the other releases so far this quarter?

We have not really.

Our next question comes from the line of Felicia Hendrix with Barclays.

Dan, just to go back to something in your prepared remarks and also in the press release, where you talked about table volumes being up. I was just wondering if you could parse out for us how the mass did versus how Baccarat did.

Yes, roughly -- how that works out, roughly about -- here on the Strip, about 7% increase in table game drop and about a 3% increase in Baccarat [ph] for our wholly owned Strip properties.

Yes. And then, Grant, can you help adjust your results for the hold for us? And also, there's been a lot of debate lately about what theoretical hold should be in Macau, and definitely, I don't want to have that conversation now. But when you do that adjustment, are you using the 3% or the 2.85%?

I think what we're seeing, that the market is starting to stabilize closer towards that 3%. And I think it has to do now that the volumes have grown to a sort of a fairly strong mass, and recognizing that most of the operational commission programs are now on revenue share. Then I think that what we're now seeing that, that normalized percentage is probably slightly drifting up, but I'm not going to be unequivocal because I'll make -- I'll repeat the comment that Bobby made, that we're in the gaming business and the hold percentages do move around. But that's what we're starting to see as an emerging pattern for us, anyway.

Okay. So -- I mean, would you prefer when we adjust it to use -- for us to use the 3%?

Until we have a really bad month, then I'll come back and I'll tell you another one. But we're fairly conservative and we're cautious, and we have tended to err to the lower side of that -- to the ranges. But we're now starting to see a pattern where it's certainly stabilizing closer to that 3%, but I don't want to make that [indiscernible]absolute, but that's where we're seeing our trend.

Okay. As always, I appreciate the intellectual honesty. And then you added a junket, a new junket. Do you have any plans to add further junkets?

Yes, we've actually -- we'd like to keep a continual pipeline of opportunities, and that's where that's happening. And some of the work that we're doing around the property is reconfiguring existing spaces, repositioning tables to get them into better configurations. And we'd like to think that we might be able to accommodate one or maybe 2 going forward -- additional, going forward in the next 2 quarters.

Our next question comes from the line of Harry Curtis with Nomura.

Just a quick question related to Vegas. If you go back to 2006, 2007 and the volume or number of your room nights, how close are you now to that peak? And where I'm going with this question is, I'm wanting to get a sense of at what level you feel more confident in lifting your ADR as you get closer to that volume of room nights.

Yes, we're looking at this right now, Harry. You want to look at -- we have all the convention room nights that far back. Are you talking about total room nights or just convention room nights?

The convention room nights, because that's what seems to be what's driving the train here.

So just to give you a basis, for 2007, we're about 1.8 million convention room nights at our company. And in 2011, we went to 1.6 million.

So would that imply that you really are that close to the line in the sand where you can get more aggressive? Or is there something else going on that keeps you a little bit more cautious about driving rate higher?

Obviously, Harry, there's a lot more room inventory on the Strip in comparing those periods. The other part of it is the citywide phenomenon. I mean, we've done a good job of driving market share increases and driving our convention mix back up. But as you saw in March, we've got to get that lift in the citywides again that we once had back then, in order to continue to drive the pace of the room side. So that's going to be -- and when you look at the improvements there, we're doing a good job on the citywides, but it troughed at about 4.3 million convention attendees. Last year, it was at 4.8 million. It peaked at 6.3 million attendees in the convention side on citywide. So we've got more work to do in terms of citywide, and that's going to help us to continue to drive rate going forward.

Harry, do you want the 2012 estimate, since we have it?

Sure, and through '16 would be wonderful.

The 2012 forecast for the entire company, including ARIA, we expect to exceed 2007 convention room nights.

Our next question comes from the line of Steven Kent with Goldman Sachs.

I was just a little confused. In the beginning of your commentary, you talked about that maybe some of your luxury hotels were doing a little bit weaker than some of the -- or a little bit stronger. I frankly forgot which way they were going, but you made a distinction between sort of luxury and the rest of the market. And then there's obviously been an issue with conference convention. Maybe I've missed something, but aren't those linked? Don't a lot of convention-goers stay at MGM, Mandalay Bay and Bellagio? And aren't those sort of the luxury or -- maybe I missed -- heard it wrong.

Yes, I think you're flipped a little there. When you look at the first quarter and the impact that we saw, obviously, the Bellagios, MGMs, Mandalays and Mirage can backfill a large citywide event, and they did that in the first quarter. They were actually up much stronger in terms of REVPAR, about 7%, versus the mid-tier and value properties who were at about a 3% increase. So that was the distinction we made in looking at that -- those 2 parts of the market.

And the luxury-convention mix for the first quarter was almost 29%, which is almost at peak levels.

And then just on this hold issue. Obviously, a bunch of people are asking it. Was there any change in the way the customers were playing? Were they moving around more frequently? Were they moving to competitive properties? Is that one of the reasons why the hold didn't normalize?

No, at ARIA, we have the same length of play that we would expect normally and that we enjoyed last year. So it's mostly the swing of Lady Luck.

And it was across a few different table game types. So it's not like it was all Baccarat. I think during the quarter, we even -- perhaps in 21 nipped us as well. So...

And our next question comes from the line of Dennis Forst with KeyBanc.

I wanted to get a clarification on the convention room night projections, but then I had a question for Grant, if that's okay. The convention room nights in '07, I think Corey said $1.8 million. Was that for all properties? Did that include Treasure Island back then?

Treasure Island. That -- was Treasure Island in '07? It would've been de minimis.

It would've been de minimis.

Okay. And then the 2011 1.6 million room nights, did that include ARIA? Did that include all your owned and joint venture properties?

The 2011 number? That did not include ARIA.

It did not. So the one -- the record level in 2012 is not apples-to-apples with the 1.6 million in 2011, correct?

Yes, that's correct.

But if you included ARIA, what would that number have been?

It would've been close to 12.

Okay. So between '11 and '12, it looks like it's going to be a similar number of convention room nights for the whole company?

Correct.

Okay, great. And then for Grant, if you're still awake, I wanted to ask about traffic at your property, maybe the Peninsula area in general, since the opening of Sands Cotai Central. Have you noticed any change in the amount of both major players, room guests and just walk-in traffic?

Not really. And this is now, what, our third opening? Third property opening in Cotai since we've been on. And really, the impact seems to be getting smaller each time. If there's any impact within the short run that we've looked at, it's around the 3% to 5% in traffic, but it's not necessarily showing up in play. But that's also being affected by the fact that the -- that we've just come out of that pre-Golden Week cycle. That's a little bit difficult to really put a handle on it. We have obviously studied the traffic and the spend, and I think we just need a little more time. I think we need sort of that 30 to 45 days is what we're now starting to see as the indicators. But by and large, things for us are very stable. And I think it's worthy of pointing out that for the quarter, the Peninsula is still generating 60% of all of the revenues in the city. And so the Peninsula is still really strong, and most importantly, it yields strong as well, and that's probably one of the key points.

2007 does not include Treasure Island.

And I think, apples-to-apples to get to that point, Dennis, is that yes, it'd be flattish, but our convention mix will be up this year versus last because we have fewer rooms in service because of the room remodel at the Grand.

And there are no further questions in the queue at this time.

Well, thank you, operator, and thank you, everyone, for joining. We're around for any follow-up questions throughout the course of the day.

Thank you.

And thank you, ladies and gentlemen. This does conclude today's conference call. You may now disconnect.