MGM Resorts International (MGM) Q1 2014 Earnings Report, Transcript and Summary

Good morning, and welcome to the MGM Resorts International First Quarter 2014 Earnings Conference Call. Joining the call from the company today are: Jim Murren, Chairman and Chief Executive Officer; 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 Mrs. Sarah Rogers.

Hi, good morning, and welcome to the MGM Resorts International First Quarter Earnings Call. This call is being broadcast live on the Internet at mgmresorts.com. A replay of the call will be available on our website. We furnished our press release on Form 8-K to the SEC this morning. On this call, we'll make forward-looking statements under the Safe Harbor provisions of the federal securities law. Actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from 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 also available on our website. Finally, please note that this presentation is being recorded. With that, I'll turn it over to Jim.

Well, thank you, Sarah, and good morning, everyone. Also here, right, we have Bobby Baldwin, Bill Hornbuckle and Corey Sanders for any of the particularly tough questions. We're obviously off to a strong start in 2014. Our net revenue growth was 12%. EBITDA growth was 19% year-over-year in the quarter. These results were driven by double-digit growth in our Las Vegas properties and, again, record results at CityCenter and at MGM China. At MGM China, Grant and the team clearly have done a great job of maintaining our impressive market share despite the new competition that has arisen over the past couple of years. And now, we are focused on increasing our market presence there. MGM Cotai, construction progresses rapidly. We have now commenced the fabrication of our tower facade in the factory, and we're making very good progress with steel fabrication and manufacturing of all the major plant components. As we've mentioned previously, our design of the entertainment technology and exciting interior design product is important to us, particularly around The Mansion, and that continues to progress. We expect that MGM Cotai will dramatically grow our main floor business and really redefine the high-end experience with that Mansion product. Here at home in Las Vegas, we continue to have made very smart targeted investments in our properties that are differentiating our product offering, and it has helped expand Las Vegas visitation. Some of these investments include also contributions from partners, which we're happy to bring along. And we're very focused on maximizing their and our return on capital. The new Strip frontage at Monte Carlo was a very good example. It's near completion, we've already opened up 3 restaurants, and we're already experiencing significant traffic increases on that side of the Strip. And at New York-New York, we look forward to opening up Hershey's next month, which will be a killer and drive a lot of traffic over to the New York-New York facade and continue that traffic increase when we open up Tom's Urban and Shake Shack in December of this year. Just in a couple of days, we're breaking ground on our new 20,000-seat arena with our partners, AEG. That, of course, is between New York-New York and Monte Carlo, and the work is progressing there on a park that will tie the arena to the rest of our Strip frontage. And that will include about 80,000 square-feet of very high-energy entertainment and food and beverage, all of that opens in early 2016, we think dramatically accruing to the benefit of those properties in the west side of the Strip and across the street at MGM. Over at Mandalay, the remodel of The Hotel into the Delano has already begun. We expect that to be completed in September, and we expect a significant increase in REVPAR once that important brand of Latin America, Europe and the East Coast is part of our family at the Mandalay campus. And of course, beyond that, we've recently announced plans to expand our already very successful convention center at Mandalay Bay. You know from prior calls, we're very focused on increasing our convention mix as a driver of occupancy. That drives rate and spend. And I think, certainly, the first quarter is a good example of the power of the convention business. By the way, our first quarter in convention was an all-time record first quarter, all-time in terms of our convention mix. This year, we expect to be near our prior peak for the entire year at around 16% of our total room nights coming from convention. And then to continue to grow this mix beyond that peak, we ultimately need more space. Mandalay Bay is the place to do that. It has 1.7 million square feet of convention space today. We're expanding that to 2 million square feet, and that will allow us to not only retain and grow our existing groups, which have asked us repeatedly for more space, but also to attract a wide array of new trade shows and corporate groups that currently do not fit, believe it or not, in our space. And that also, obviously, will have a major impact on overflow rooms for our sister properties. This will solidify our trade show business, while allowing us to increase our high-margin corporate business. All this opens late next year. We're expecting a great ROI from this in 2016. You also have noted the great trend globally on music festivals. We are in front of this trend in Las Vegas. We opened a festival lot near Luxor only a year ago. And more recently, we announced plans to develop 33 acres right next to Circus Circus, and that will be the largest festival lot on the Strip, and that will bring, next year, Rock in Rio. This event has been going on for about 20 years in Rio, and some of the biggest entertainers in the world have performed there. Last year's festival sold out its 600,000 tickets in 4 hours. We expect the U.S. version of Rock in Rio, which will open next fall, will bring approximately 300,000 people to Las Vegas to be staying and enjoying the music festival. This space, which we own and will be available for many other events, which we will produce or lease out throughout the years. This is a driver of incremental visitors to Las Vegas and will benefit the entire town from an occupied room nights perspective. Out in the regionals, we plan to break ground on MGM National Harbor in Maryland this summer. And again, we expect to open that in the summer of 2016. The much-anticipated MGM National Harbor, we believe, will be one of the most successful resorts in the United States once we complete it and employ 4,000 new jobs upon opening. In Springfield, Mass, we are scheduled to go before the commission in June, and we are hopeful for the awarding of the license for the Western Region. We also, of course, are continuing to follow the status of the pending referendum, which proposes to repeal the gaming legislation. So we'll have to wait and see about what happens there. But we certainly hope that we can help Springfield in its efforts to revitalize that city. I, personally, with Bill and others, are extremely focused on Japan, been there often, and believe it is a significant opportunity for the gaming industry and specifically for MGM. And we think it has great potential to be a driver of tourism if the country pursues the IR effort, we'll be over there again in a couple of weeks, right, Bill? We continue to leverage and focus on M life. Our loyalty program is clearly generating great productivity in our -- on our gaming floors. And our existing partnerships, such as the Hyatt partnership and Southwest Airlines, have been very effective customer acquisition tools. I'm really proud to say myVegas, our social game that we founded with Andrew Pascal and his partners, have vastly exceeded our expectations by providing us with over 850,000 average daily users on that social gaming site. We continue to add new partners to this program, and we've just recently announced a much-expanded relationship with Pinnacle Entertainment post its acquisition of our previous partner, Ameristar. This increases the size of an already strong regional gaming partnership from 6 to 16 properties. And now those customers have access to the best destinations that Pinnacle owns and in Las Vegas, through MGM, through M life. Our MGM Hospitality group is very excited. It has combined forces with Hakkasan to create a global hospitality development and management company. This partnership with the team began with the incredibly successful opening of the Hakkasan Las Vegas at MGM. And we're growing that relationship to develop hotels throughout the world using the Hakkasan brand, along with our brands, Bellagio, MGM Grand and SKYLOFTS. And we expect to really invigorate this non-gaming hotel company over the next several years. And with that, I'd like to turn it back over to Dan to talk about our operating results and financial position. Dan?

Well, thanks, Jim, and good morning, everyone. We are continuing to deliver consistency and improved operations as this is our sixth consecutive quarter of year-over-year Strip EBITDA growth and margin improvement. In fact, here in Las Vegas, our wholly owned properties were all up in both of those measures, and margins increased by over 200 basis points year-on-year. Flow-through was 55%, in line with our expected range of 50% to 60%, despite a lower hold comparison in the quarter. Both our luxury and non-luxury properties on the Strip pushed occupancy and rate and drove mid-teens EBITDA growth. Our luxury Strip properties grew EBITDA by some 17%, and our combined mid-tier and value resorts increased by some 15%. On the casino side, international gaming business remained strong, and our domestic rate of play continues to improve. In fact, we saw increases in volumes across each of our casino segments, Baccarat, non-bacc table games and slot handle versus the prior year. We guided for 10% Strip REVPAR growth during the first quarter and achieved 14%. This growth was driven by 2 percentage points of occupancy improvement and 12% ADR lift. We are exceptionally proud of this performance due to the collective efforts of our revenue management team and our leisure and convention sales team to proactively manage our room inventory, which is allowing us to better yield our rooms. The first quarter was a record in terms of convention room nights, as Jim mentioned earlier, and this is due to this collaborative effort. In the second quarter, despite the Easter calendar shift, we plan to continue to grow our convention mix and rate year-on-year. Based on current trends, we expect second quarter REVPAR to grow by approximately 5%. Moving over to CityCenter. CityCenter recorded record results, with resort operations up 2%. ARIA's EBITDA decreased slightly due to a difficult hold comparison, as ARIA held about 150 basis points below the prior period. On the hotel side, ARIA was able to grow REVPAR by some 14% year-over-year, driven by both improvements in occupancy and ADR. Vdara had a record quarter, with hotel occupancy of 89.5%, an increase of over 400 basis points, and ADR increased 16% to $185, driving REVPAR up 21% to $165 in the quarter. Crystals continues to gain more traction and it, too, recorded record results, with EBITDA increasing some 30% year-on-year compared to the prior quarter. On the balance sheet front. At MGM Resorts, we currently have approximately $1.2 billion in available liquidity under our revolver, while MGM China had approximately $1.5 billion available at the end of the quarter as well. Interest expense decreased by some $16 million year-over-year during the quarter. As a result, our continued efforts to lower our borrowing costs and reduce debt. We expect this trend to continue as we move forward. Our cash balance at the end of the quarter was approximately $1.1 billion, of which $556 million was a cash balance at MGM China. CityCenter's cash balance at the end of the quarter was $345 million, which included approximately $72 million of restricted cash. And their outstanding debt balance at the end of the quarter was approximately $1.7 billion. To put this all in perspective, CityCenter's net debt at the end of the quarter was roughly $1.5 billion. And leverage on a trailing 12 basis at the end of the quarter was effectively 4.7x at CityCenter, a remarkable improvement in that balance sheet over the past couple of years. During the first quarter, we spent approximately $72 million in CapEx related to our domestic operations. MGM China has spent approximately $121 million, of which $14 million was spent at MGM Macau and approximately $107 million, 1-0-7, was spent on our development of our Cotai project. And with that, I'll turn it over to Grant for his MGM China report.

Well, thanks, Dan, and good morning, good evening, to everybody. The first quarter, again, of 2014, was another record, as indicated by Jim, here at MGM China, with net revenue growth of 26% year-over-year to $941 million, and property EBITDA up 33% year-over-year to $257 million before the branding fee of $16.5 million. Our property EBITDA margin increased by 130 basis points year-over-year to $27.3 million due to higher contribution for high-margin main floor business and also increase in our VIP hold percentage. VIP turnover increased by 12% year-over-year. Our overall hold rate was 3% compared with 2.8% last year. Main floor table game win increased 45% year-over-year. Our main floor table games win outperformed the Macau market growth of 40% and the Peninsula growth rate of 31% during the first quarter. Slot handle increased by 12% year-over-year, and revenue was up 15%. Slot hold was 4.8% in Q1 compared to 5.1% last year. MGM Cotai is well underway, as Jim mentioned. In the meantime, we're executing on our yield-focused optimization initiatives, and we continue to see opportunities to improve the efficiency at MGM Macau. We're also looking across segment table yield improvement opportunities between the VIP and the mass, as well as product upgrades to refine the MGM experience to our customers. We're also focused on building our customer base to drive growth, which will help us to prepare for the opening of MGM Cotai in early 2016. MGM Cotai will be -- will greatly expand our operations in Macau, as the property will have almost 3x as many rooms that we currently have at MGM Macau, approximately 2x the gross floor area, which will expand and allow us to offer a greater variety in terms of retail and entertainment. In addition, our plans call for incremental slots and table games versus that [ph] kind [ph] of property. And with that, I'll just turn it back to Jim for his closing remarks.

Thank you, Grant. We want to give you plenty of time for your questions, so I'll just be brief here. We are confident that this is going to be a great year for MGM Resorts. We're obviously off to a strong start. And given the exciting projects we have in the works, many of which open this year and into '15 and '16, and the trends that we're seeing, that gives us reason for that confidence. The Las Vegas market here is rising, and MGM's position within the market is growing. Our market share is improving in a growing market. And with the property improvements that we are making, combined with more robust and targeted marketing in social media, we are significantly increasing our market share amongst this growing market. You know that Las Vegas is the #1 trade show destination in the United States. I think we have held that position for about 20 years, and we host about double the top shows of any other city. The key to growing this market will be the collective efforts of driving both the trade show business and the corporate business. And our improvements to our hotel product at Bellagio and MGM, our improvements to our hotel product at The Hotel to Delano and the expansion of our convention center will help drive that business. As you know, we control about half of the rooms that cater to the convention market, and we have a very large percentage of the convention space. And we are the only operator that can provide such a wide variety of rooms and entertainment offerings. And we're finding, through our convention sales efforts, that is a significant competitive advantage. And that is why we believe we're separating from the pack as the best-positioned company to benefit from the recovering corporate and convention business in Las Vegas. We have, we believe, the most talented and respected individuals running this effort, led by Mike Dominguez, who has been working on this very important strategic initiative. He has a great team. They know what they're doing, and the results prove that out. And we believe that you're going to see more opportunities for upside surprises in the future out of the convention side because of our physical superiority and our personnel. In Macau, MGM China, obviously, continues to grow. We've sustained our market share, and we're growing our business. And we will, as Grant has said, more than double our footprint in Macau when Cotai opens in '16. But that is not the end of the story. We are actively pursuing a variety of other potential growth opportunities, so that the smallest in Cotai and in Macau, we believe, will not always be the smallest. We expect to be a growing and larger presence in that exciting market over the ensuing years. And obviously, we have Maryland and Massachusetts to look forward to in the regional markets. And selectively, we're looking at key high-growth opportunities like Japan. And so with that, I'd like to turn it back over to the operator so we can move into the Q&A section of our call.

[Operator Instructions] You do have a question from Carlo Santarelli from Deutsche Bank.

For starters, and then I just have one follow-up. But you guys, obviously, spend a lot of time talking about the convention business and the mix. And I know, Jim, in your remarks, you made reference to the expansion at Mandalay. Could you kind of walk through the cadence of how the mix will change on a year-over-year basis through the rest of the year?

Well, sure. The mix is always the highest in the first quarter, and it will be very strong this quarter as well, and then the weakest quarter is always the third. So the cadence from a convention perspective is likely going to follow the seasonal trend. Strongest in the first quarter, good in the second quarter, weakest in the third and then flat or up in the fourth. That said, I'm excited, we're excited of the fact we just got, what was it, a week ago, Corey? A piece of business for the third quarter. It's a Fortune 100 tech company. It hasn't been to Las Vegas since, I think, 2008, and they've just booked a huge piece of business for the third quarter. I think it's around 17,000 attendees coming just in a piece of business that we didn't expect. So that's -- the in the year, for the year has been our friend this year, and so I don't know how it's going to work out entirely, but it's getting better than we thought.

Great. That's helpful. And then, Grant, if -- I do hate to ask this in light of the great results that you guys produced, obviously, for this quarter. But clearly, a lot of noise around the Macau market and some struggles that some of the junket community might be having. Is there anything that you can say at this time on that issue?

I guess, the comment I'd make to start with this comment, it's noise. We continue to see solid performance from our junket operators. I think everybody is looking for things that they are concerned about. But frankly, from our junket operators, things are steady. Yes, it's been a quieter month. But frankly, we've had really 2 or 3 very, very strong months. And I think the biggest issue is that I think we've got to keep reminding ourselves is that the mass market is now getting to that point where it's anchoring most of the operators' EBITDA performance, and we see that as being strong growth. The junkets will always be very important and a key component of our business model. But really -- the focus really now needs to be on the mass market and that strategy that we've talked about for so long, it's really starting to kick in, and that's where the performance is.

Maybe -- Grant, maybe I'd add, just to remind everyone, I think in the first quarter, Grant, 70% of your EBITDA came from mass.

That's right.

Yes. And so it is -- I think anchoring is a very good way of characterizing that.

Your next question is from Joe Greff from JPMorgan. Joseph Greff - JP Morgan Chase & Co, Research Division: Obviously, the VIP, the junket question over those -- over the last month has been front and center for all you guys, so thank you for clarifying that. With 70% of your EBITDA coming from mass, do you see ways to continue to grow that? I mean, where does that sort of max out or level out at, Grant?

We've been wondering that question. But frankly, the team here is really solid. The continued focus on extracting every last opportunity is really important. But the other critical point is that the customer flow, the supply chain, is just continuing to be really strong in that mass market. And we are seeing a lot of incremental new play coming in, particularly at the upper end of the market. So we're just very confident, very positive and very pleased with the way that we're executing on the strategy. So we just keep working harder, as we've indicated. And we're looking at redeploying table assets to where we can maximize those opportunities; working closely, again, with the junket operators to improve the yield on their product, just as we've been able to do on our mass. So we still see good continual growth going forward. Critical for me, and I think as we spoke last time you were out, we really want to start building that market presence and getting that footprint in terms of expanding our market penetration as we build out for Cotai. So those are all positives to actually increase it, because market penetration is still relatively low. Joseph Greff - JP Morgan Chase & Co, Research Division: Great. And then, Dan, as my follow-up, can you just revisit with us your planned CapEx spend for this year domestically?

Yes. Here, domestically, Joe, we're anticipating spending about $425 million, which includes our contribution to the arena joint venture as well this year. So nothing has changed from our previous guidance at this point.

And Joe, if I could jump in, Joe, back to Macau. We mentioned the mix of EBITDA for mass. You might not know, but only 45% of our table mix is mass, so 70% of the EBITDA came from mass, but our mix is only 45% tables. But I would have to remind folks another point, too, is that, as you know, this company separately has a joint venture with Diaoyutai. That is a joint venture that's developing and managing hotels in China. So we are literally, as you know, a partner with the Chinese government, with the state department. And we've opened up 2 hotels already, and we have many others underway. A big effort of this is to help develop the Hospitality business in China and to develop a presence in Mainland, China, which we believe tangentially will accrue to the benefit of our mass business in Macau. So I would remind that that's a differentiator that we have versus the other concessionaires is a relatively good and rapidly growing presence in Mainland, China.

Your next question is from Harry Curtis from Nomura.

Just a quick follow-up on Vegas. Can you just talk about -- Jim, you talked about in the year, for the year. I'm assuming that's also -- that it also applies to in the quarter, for the quarter. What's happening with the trend in call volumes from your corporate customers? Is it -- does it seem to be accelerating from here?

It has, it is. You want to take that, Sarah?

Sure. We are seeing, in terms of corporate mix last year, it was about 55%, and that's picking up this year to closer to 60% in terms of bookings, and that's higher margin, particularly in the F&B side.

And one major reason why we are doing this convention expansion in Mandalay is the -- it's the corporate customers that have been really very vocal in telling us that they need more space, and we have the availability of land right there. And we think that's going to have a big impact of more carpeted space, more ballroom space, will drive a lot more F&B and high-margin business.

And then my follow-up question is, I think, one of the discussion points for next year is how difficult the comp is going to be for the first quarter of '15. As you look into '15, are you finding some success filling some of the gaps as conventions cycle out? And to what degree do you have some -- how solid are your bookings now for '15 so that you feel confident that this trend that we're seeing, that's beginning to develop in '14 actually follows through to '15?

Well, yes, we did have a great convention citywide, CON/AGG, in the first quarter. But I don't know if we talked about this before, but January, our REVPAR was up 10% and February, REVPAR was up 9%. So if you stripped CON/AGG out entirely, we would've been up around 9% or 10% in the first quarter without that major convention. And obviously, that's much stronger than we had anticipated when we gave the 10% overall guidance, knowing that CON/AGG was going to be there. So yes, we have great in the year, for the year, but we are way ahead of our pace, typically, and we expect a very strong first quarter in 2015.

And Harry, if you look, we're up double digits, on pace [ph] year-over-year, '15 to '14. And when we look at Q1 as of now, we're actually up compared to where we were last year also.

Your next question is from Thomas Allen from Morgan Stanley.

For the Strip, obviously, most of the focus on your REVPAR growth, which is understandable, given the profitability of that business. But I believe gaming is still 40% of your revenue on the Strip. Can you just help us think about your outlook for gaming revenue kind of for the rest of 2014 and beyond? Are you expecting low-single-digit growth, mid-single-digit growth, high-single-digit growth? There's obviously some of the regional operators have tempered expectations for the rest of the year, so just wanted to hear your thoughts on the Strip.

Sure. Our international business remains strong. That was the only bright spot during the recession, and it continues to be a good story for the market and for us. The good news is the national business continues to improve, and you can -- that's evidenced in our slot handle and also our slot win. And also, you see that in our national play when you're looking at some of our non-Baccarat table revenues. We can't predict what our gaming revenue will be going forward, but we can say that more people are coming to Las Vegas. We had a big growth, so far, in visitation to Las Vegas in February. The March numbers are out, I think, today, right, Sarah?

Yes.

Did it come out?

Yes.

How did we do? Do you know?

We did well.

Okay, I figured...

Market share continues to be up for us, so that's a good sign. Even when you strip out, Thomas, the Baccarat numbers, our slot handle and our non-Bacc table game market share continues to grow, and that's a good sign as well. And I'll also point out that what's important on the domestic front is a lot of the events we have in our arenas and our entertainment venues, and that part of the business for the remainder of this year looks exceptionally strong.

And this is a follow-up. There have been some news reports recently about independent properties on the Strip that are potentially up for sale. You obviously still have your stake in CityCenter and The Hotel towers, and the retail section have been talked about potentially being sold in the past. Can you just give us an update on your thoughts there?

Well, there's really no change in our philosophy. We love owning what we own at CityCenter. We wish we owned all of it, and our partner loves owning what it owns. So I think that, that 50-50 JV is going to remain in place for some time to come. The idea of selling pieces of CityCenter like, for example, Crystals, was something that we explored last year. We did not choose to go down that path, and I'm glad we did not because the NOI there continues to grow, and we expect a record year out of Crystals in 2014, and probably better yet next year, Bobby [ph], in 2015. So we're not actively pursuing any divestitures at this point in time on the Las Vegas Strip. And we're also not actively pursuing any acquisitions on the Las Vegas Strip. And to be -- to put a finer point on that, we have no interest in leveraging up this company for an acquisition, nor do we have any interest in diluting the shareholders for an acquisition. We're very happy with what we own. And the fact that we have a lot of EBITDA, a lot of cash flow potential in what we own, as the operating leverage is clearly in our favor. And I think we are going to stay pat for now.

Your next question is from Shaun Kelley from Bank of America Merrill Lynch.

Jim, maybe to follow up on just that last comment regarding more as it relates to dispositions, but trying to think through -- you continue to see a pretty big delta between the high-end portfolio and the lower end or kind of more value-oriented properties on the Strip? It does seem like both performed well in the first quarter, but can you just give us an update on your thoughts on maybe what you guys are doing to narrow the gap between some of those properties?

Yes, we felt that it was important early on, over the last 3 years, to try to emerge out of the recession to invest in the luxury properties. And if you will look at the composition of our CapEx from, say, 2010 forward, over 80% of our CapEx here on the Strip was in the luxury group, remodeling rooms, upgrading facilities. That, I think, was the right call. And luxury today is about 18%, 20% below its all-time peak cash flows that would've been back in 2007. Core, on the other hand, which represents the other half of our wholly owned rooms, core is down still over 30% off of its peak. And we believe there's opportunities to recapture that cash flow in both core and in luxury. And I think you'll see these kind of CapEx -- efforts at Monte Carlo and New York-New York, along with the park and the arena, will accrue to the benefit of core. Between the 2, there's over $350 million of annual cash flow that we have not yet recaptured. And we have every intention of recapturing that cash flow. And so, if you look forward in 2014 and beyond, you'll see continued targeted investments in some of our luxury properties like the Delano, for example, and other room remodel projects. But you're also going to see us spend money in these core properties, where we believe we can get very superior ROI's through driving incremental traffic into those buildings, particularly, as the citywide improves. The citywide effort is something that we all collectively are working on here in Las Vegas, because that drives a lot of visitation to the core properties that we own and our competitors own. So it's a -- whereas before it was so heavily skewed toward our investments in luxury, which I think worked. Now it'll be balanced between continued investments in luxury and investments in core.

That's really helpful color. And I guess, then, to kind of dig a layer deeper. I mean, would you see any opportunity, given the margin disparities in some of those lower-end properties are so much higher, and there's a lot of operating efficiency in this business, any chance to maybe consolidate 1 or 2 of those properties and then recycle the building or sell it off to somebody who may have better use for the property or may be able to give you a pretty decent multiple on the property itself?

Well, I'm not an analyst anymore, but I do think that multiples are going to be rising here. And of course, there are a couple of properties on the market right now, so it'll be interesting to see what they fetch. We're rooting them on. And I think that given the availability of capital and the increasing optimism of Las Vegas as an emerging recovering market, I have to believe you're going to see more interest in people making asset purchases here. And so, we'll always look at that. We're not wedded to anything. But that said, because our database is growing so rapidly in M life, we don't believe that the reduction of property here is necessarily the way we can have to grow our revenues or our productivity in the remaining properties. We feel like we have a far large-enough database to occupy the buildings that we do own. The key for us will be to continue to make these buildings more relevant in the future and invest money that has superior ROIs. The -- when you do what we're doing at Monte Carlo, imagine the traffic difference between Monte Carlo that almost nobody walked into from the Strip, to now, we're getting tens of thousands of people walking into Monte Carlo from the Strip. The same phenomena is occurring at New York-New York. The impact to those buildings will be very profound. And when you build a $350-odd-million arena at 20,000 seats, and we know that we turn away 100 events or so a year, and that we'll be able to control the portfolio of 3 arenas between that, Mandalay and MGM to drive more business, and then working with a powerhouse like AEG to program the plaza that's in front of the arena for festivals, food, wine, music festivals. The amount of foot traffic in that neighborhood is going to go up demonstrably. And that, we believe, will be the story in 2016 and '17. The story this year is, we believe Las Vegas will have a really solid year, all benefit -- all should benefit, particularly the convention-oriented properties. 2015 looks, to us, based on the pace that Corey mentioned, to be even a better year. But in '16, if you go out that far, and you think about capital improvements that we're making. And the strong effort that Caesars has made with The LINQ, which is terrific. And other public spaces, open spaces like our festival lot and other traffic generators, I think you're going to see visitation in Las Vegas much higher than the 40 million people. And we believe that visitation will be 45 million to 50 million people over the next few years, and that will accrue to the home team. And we're, obviously, the home team here.

Your next question is from Felicia Hendrix from Barclays.

So Jim or Dan, margins at the Bellagio were a lot higher than expected. Just wondering if there's anything specific there? And perhaps you can highlight some other properties that might have shown upside to your expectations in the quarter?

I think, overall, Bellagio's performance was just akin to the power within this property. I mean, there was no singular event or item, really. It's just the power of the pricing in the building, the clientele, and it was just an overall strong quarter for Bellagio. Obviously, Mandalay benefited from the strong event calendar in the first quarter. And you see the power of that building around the convention. I'm really proud of the job that the MGM Grand did this quarter. They were up against an extremely tough hold comparison on the casino side and still improved ever so slightly year-over-year with the strength of the non-casino component. So we did touch less in terms of our overall hold year-over-year, but the performance across the board was pretty strong. And there was really nothing in any of the Strip properties that, one way or another, that stands out within that.

Okay, helpful. And then...

I'm sorry, I was just going to remind everyone, our FTEs are flat. We know what our expenses are, both in terms of payroll and non-payroll-related expenses. And obviously, our revenue, the story is a revenue growth. Our revenues are growing. And that flow-through Dan mentioned, even with a slightly lower hold year-over-year, accrues to the benefit of properties like Bellagio and Mandalay and MGM.

And then just on ARIA, was the only driver of the lower year-over-year revenues the hold, the lower hold?

Yes.

Yes.

Everything else was up.

Okay, great. And then, Jim, just moving to your regional development program, just wondering if you could touch on that, provide us an update on your progress on the various projects. And have you seen any change in the budgets there?

Well, first in Maryland, I was just there last week. Bill, you were there a week before.

I was.

We're right on track. We expect to break ground there this summer and maybe in a couple of months, right, Bill? July or August?

Yes.

And we're still on track. We're working through with the county, which has been a very constructive, good process. In the meantime, we've been -- primarily Bill and the team, they've been working on design and development and programming with Lorenzo Creighton, who, of course, is the President of that property. And the budget hasn't changed. We've talked about the $1 billion budget, plus or minus. And we've also -- I've said that I think it's going to be the most profitable non-Las Vegas commercial casino resort in the United States, and we have an over/under over here, and I've got the over. I won't tell you the number, but I got the over. So we're very, very, very excited about that. The development work and the land assemblage is really apace in Springfield. But as I said earlier, we're really waiting on what happens with that repeal referendum position. And we won't know that, Bill, until...?

June 13 is the scheduled, hopefully, award for us in Mass. We go before the commission on June 13. And then, the Supreme Court needs to rule before July 9 because that's the final submission date to put something on the ballot in November. So if the Supreme Court does not let the referendum go forward, we'll be in motion within 30 days shortly thereafter. Obviously, if it goes forward all the way to November 6 or 7, whatever election day is, we'll have to wait and see the results of that come November.

And one thing I should mention on that is that we're preparing for this growth. And I think we put out a press release -- I know we put it out internally. I hope it went out to the public as well, is we capped [ph] Anton Nikodemus, who has -- was the head of -- President of Monte Carlo and then ran Casino Marketing. He has the role of COO of our Regional Resorts. So Anton not only now overseas Detroit and Mississippi, working with George Corchis down there in our Southern operations, but also this effort in Maryland and in Massachusetts. So we've developed the architecture -- the management architecture to grow this company. And Anton, we're excited for him, and he's the right person to do this. So we're -- no change in budgets, no real change in timetable, but for the uncertainty that's outside our control in Massachusetts. And really, that has been our focus in the United States on the regional side has been really only on those 2 markets.

And are you willing at all to opine on the success or failure of the repeal the deal effort?

No, I'm not -- I hardly know what I'm going to do today. I don't know what's going to happen then. All right, Bill's willing to opine...

We track polls, and it is polling favorably. We hope and believe it's a bad question, the Supreme Court will take that action and shoot it down. But if it doesn't, to date it's pooling favorably, meaning gaming can improve...

Yes, correct. So let's see what happens.

Your next question is from Steve Wieczynski from Stifel, Nicolaus. Steven M. Wieczynski - Stifel, Nicolaus & Company, Incorporated, Research Division: So Jim, a question about M life. You talked about how well that is going. But is there any way you can -- I don't know if you can quantify this or maybe just walk me through. So your tiers in terms of somebody in Sapphire or Pearl, have you started to see guys move up that ladder, basically meaning use your program in terms of a tiered program making people or helping people -- I guess that's not the right word -- but start to show improved visits or spend per visit?

Yes, I'll turn that over to Bill.

Yes. Interestingly, maybe not as much from Sapphire to Pearl, where we've seen single-digit transition, but most notably at the higher end, in the Platinum, which is just short of our top-end NOIR. We've seen double-digits now for several quarters, 11%, 12%, where people are migrating up into that region. Remembering a little over a year ago, we began to recognize non-gaming spend because it's such a big part of our portfolio, particularly here in Las Vegas. And so it's paid significant dividends, and I think we can see it in the overall results. But again, the higher end is double-digit growth in terms of transition upwards. Steven M. Wieczynski - Stifel, Nicolaus & Company, Incorporated, Research Division: Okay, great. And then, Jim, going back to your comments about Maryland. I guess, what gives you so much confidence in that property? Is it the location? Is it the demographic of D.C. and Northern Virginia? And how do you overcome the -- Maryland's ridiculous tax rate?

Well, we'll start with the region itself. You have -- when we were -- to try to find a destination that could be more than just a local destination, we'd look at where the airports are, so you have not 1 but 3 airports within a very easy drive. And of course, Southwest is the biggest partner to BWI and our biggest partner here in Las Vegas. You would look toward what are the national, international draws and being 13 miles from our nation's capital is about as good a draw as you can get, particularly for international customers. We have done quite a bit of work on the demographic population of the resident population in Maryland, Virginia, the District and that's highly affluent, highly diverse, high propensity to game market. We do not believe Virginia will have gaming, probably in my lifetime, and I want to live a long time. And we've seen the results from Maryland Live!, which are well-publicized. We have never seen a location, specifically at National Harbor, where the vehicular circulation is so conducive to easy travel, coming over the Woodrow Wilson Bridge from Virginia, circulating around the interstate system, being able to park very conveniently and have a multiple of amenities already in place at National Harbor with Gaylord, with the attractions that The Peterson Companies have already developed. So it's a combination of knowing a bit about the market based on a long history of gaming in the region, the knowledge that we are the sole license holder in Prince George's County, and that it will be the last casino license in the state of Maryland. The results from Charles Town, West Virginia, which are publicized by that public company and the knowledge that so many of their customers are coming from Maryland or Virginia that will far more conveniently want to go to a beautiful resort like we're going to build at National Harbor. We have a high degree of confidence knowing everything that we know about the market and also knowing about the very strong regulatory regime in the state of Maryland. The State Lottery Commission runs one of the best gaming commissions in the United States. All of that factors into my confidence for a very strong operating performance.

Your next question is from Steven Kent from Goldman Sachs.

Just a small question. The investment for the park in Las Vegas, can you just give us a little bit of how you think of the return thresholds on investments like that and compare that to some of the other opportunities you have out there?

Sure, Steve. The -- I'll take that one because these guys tease me because we're spending more money on pavers than they think we should. The park itself, in and of itself, we think, will generate a reasonably good return by virtue of the fact there'll be 80,000 square feet of food and beverage anchoring the park, both on the Monte Carlo side and on the New York-New York side. So in addition to Shake Shack, which I mentioned earlier, there'll be a beer garden. Robert Mondavi, Jr. is doing a big wine restaurant. Cuba Libre will be over on the Monte Carlo side. We have Dirk's [ph] over there as well, country music, and we're going to expand the Diablo space to wrap around Monte Carlo. So we can understand through those tenants that we're providing the corn [ph] shell, they're putting in the capital what the cash flows will be for MGM Resorts by virtue of that. We can hypothesize about the foot traffic that will accrue to the west side of the Strip by virtue of the vastly improved circulation at Monte Carlo and at New York-New York. And the traffic counts that we're conducting daily now are evidence that that's working. That this high-quality open space that creates a great pedestrian experience is encouraging people to walk along that boulevard on our side, and we're seeing F&B and gaming revenues as a result of that. We have done an ROI on the arena itself, the $350-odd-million arena. And AEG and MGM are comfortable with the ROI of that arena. And so, it's a combination of anticipating the traffic in that neighborhood to those adjacent resorts and the F&B that we're adding. That said, we're spending a substantial amount of money in the park to create the kind of environment that does not exist here in Las Vegas today, a beautiful desert park that will be fun during the day and at night as a social gathering place, and based on the fact that we know demographically here in Las Vegas that the average age of people coming here has declined by 5 years in only the last 5 years. So 5 years ago, the average age was 51 years old. It's 46 today, and it's still falling. That's great news for Las Vegas. And we have a very good feeling for what those customers are looking for, particularly the millennials, the 18-to-like-30 year olds, that are going to represent about 50% of U.S. travel by 2020. They don't want to be cooped up inside a resort. They want to -- they are spontaneous. They want to experiment. They want to zoom in and out of places. They want to collect experiences, and they're looking for these type of environments. That's what they do when they travel. And we see this also with our international customers that are 18% of Las Vegas' visitors today on its way to probably 25%. They're used to these public spaces, piazzas or plazas or hanging out urban parks. So we're very, very strong on this point. We believe that this is a dynamic change for Las Vegas. And we'll know in a couple of years if we're as right as we think we are. But the early numbers out of New York-New York and Monte Carlo, and I think the success of The LINQ, which I'm very confident will be a big success, and these festival lots that we are developing at relatively little capital, but huge traffic-generators, will be the reason why Las Vegas, along with the convention business we talked about earlier, will be the reason why Las Vegas continues to grow its visitation.

And I would add, Steve, that between the arena and park, it will make New York-New York and Monte Carlo stickier and more demand, especially on event weekends. So I would expect to see the ADRs being able to go up there when that project's complete.

Your next question is from Cameron McKnight from Wells Fargo.

A question for Jim or Corey. As we look out to the second quarter and think about your 5% REVPAR guidance, when we look at our survey data, clearly, April has been impacted by the timing shift of Easter, but we're seeing strength in May and June, and we're seeing trends accelerate. Just wondering if you could give us some additional color there.

Cameron, I think that's accurate. I think April was challenged a little bit with Easter. May does look very good, very strong, very similar to what we saw in some of the first quarter months outside of CONEXPO. And then June, it's a usual month and there'll be pockets where we'll be able to have some decent rates, but it's in between Father's Day and graduations, we have hits and misses there.

Thank you very much.

All right. Thank you, all, for joining us. And as always, if you have any questions, please feel free to reach out to any of us. Thank you for joining.

Ladies and gentlemen, this does conclude today's conference call. Thank you for participating. At this time, you may now disconnect.