Wynn Resorts, Limited (WYNN) Q2 2013 Earnings Report, Transcript and Summary

Good morning, and welcome to the Wynn Resorts Second Quarter 2013 Earnings Call. Joining the call on behalf of the company today are Steve Wynn; John Strzemp; Matt Maddox; Kim Sinatra; Gamal Aziz; Maurice Wooden; Scott Peterson; Ian Coughlan, President of Wynn Macau; and Robert Gansmo, CFO of Wynn Macau. [Operator Instructions] Now I would like to turn the call over to Mr. Maddox. Please go ahead, sir.

Thank you, and good morning, everyone. Before we get started, I just need to remind everybody that we will be making forward-looking statements under the Safe Harbor of federal securities law, and those statements may or may not come through. So with that, I'm going to turn it over to Steve, who is actually in Macau right now, to kick off the call.

Yes. Just came in and it's 8:30 at night here and 12 hours earlier than Las -- actually later than Las -- than New York. And we reprogramming some of our fountains with Kenny Ortega and the group. That was a lot of fun. Today has been a really good day for us. We signed our contract with -- the final contract with a guaranteed maximum price with Leighton. And that fixed 2 things: our guaranteed maximum price, and we know the cost of the project now is $4 billion, maybe a little less, but no more than $4 billion; and we know the completion date is -- we have an early completion date of January '16, so we make Chinese New Year in 2016. And if they miss the early date, which they don't think they will, it's April '16, not '17. So we're well underway. Our foundations are coming up on the last few months of all of the pilings and caissons and stuff that had to go so deeply into the earth to support the new building. But it was 2.5 years in design. It's by far the most aggressive, ambitious and lovely project that I've ever been involved in my 47 years. And I think that it's going to be a great addition to Macau. I think it's going to further enhance the growing strength of the Cotai area. And so that's been very good news for all of us, and the earnings are -- I'm happy with it. For the year, I tend to look at things on a broader brushstroke perhaps than some of you will in your questions. But between Las Vegas and Macau, we're about $100 million ahead of where we were this time last year, and that's pretty good when we're pushing $1.6 billion last year. We're tracking towards a healthy gross for the year. In Macau, we did $292 million, and last year was $302 million. But last year, we had a $21 million unique onetime-only credit adjustment, in which we credited ourselves $21 million. If we compare apples to apples, we'd be a little ahead this year. Many of you ask questions about mass marketing and VIP trending. We're basically up in the non-casino revenue. We're a little behind in slots, not in coin in, but in a whole percentage. And the mass market sequentially was behind the second quarter to the first, but it's been a bouncing ball with us because we're 22% ahead in July, with 3 days to go, in mass marketing, so we're very happy. Our run rate, we were able to get more efficient. Our run rate of operating this place is a little less than it was last year. We have about 10% at current levels, between 10% and 11% of the revenue in this 30-odd casino market. But we do have 1/6, or 16% of the profits. And that's the most important thing we're concerned about, is the bottom line. So without further ado, Ian is here. I'm with my colleagues in Macau this week, and we're all on hand early in the morning in Las Vegas to take your questions.

[Operator Instructions] Your first question comes from the line of Joseph Greff of JP Morgan. Joseph Greff - JP Morgan Chase & Co, Research Division: Steve, we also have a broad brush question here. The Macau media of late has been reporting on the government potentially looking at concessions, sub-concession renewal discussions starting perhaps as early as 2015. Can you talk about your expectations or views on what, if any, changes they may be looking to place around the renewals? And I'll leave it as broad as that.

Well, I was, in fact, in such conversations today, and I feel very comfortable being in Macau. I think I certainly don't have anything to do with the specifics of the government's final decision. But I know that the matters to be addressed in '15, and speaking for myself after 12 years in Macau, I feel sanguine and comfortable about being here and plan on being here a lot longer. I think that probably answers your questions. Joseph Greff - JP Morgan Chase & Co, Research Division: Okay. And then and maybe this is for you, Matt. The margins in Macau were about 210 bps below what we were looking for. Volumes are basically right in line. Were there any adverse mix shifts in VIP between direct and junket or maybe even a mass between premium versus non-premium assets that would account [ph] for some of that?

Yes, Joe, that's exactly right. We held less than 2% in our direct program. And as you know, in the direct program, the margins are higher. So while our overall junket, all those 2.94% we held high on the junket space and really, low in our direct, and that was the reason. Joseph Greff - JP Morgan Chase & Co, Research Division: And was there anything weird on the mass side overall?

No, only in June. So that number that everyone was focused on, there was some hold issues in June in both slots and mass tables. But overall, it was pretty normal.

That's been corrected -- I mean, it's corrected itself in July. Joseph Greff - JP Morgan Chase & Co, Research Division: Got it. And that 22% number, Steve, that you mentioned, that's a sequential number? Or is it a year-over-year number?

That's year-over-year, but it's up sequentially, too, in double digit.

Robert Gansmo is here. What does the sequential look like?

Sequential, it's up about 13%.

It was 13%, Joe.

Or I'm sorry, it's 20 -- 22% up year-over-year, and we're -- our run rate is probably about flat with Q1, which is our best mass gaming quarter and up 13% over Q2.

Right. Joseph Greff - JP Morgan Chase & Co, Research Division: Great. And my last question, Matt, of the $2.5 billion of cash and investments, how much of that is Macau related?

Half. It's right at half between the -- in the Asian subsidiary.

Incidentally, I forgot to add, we had another nice quarter in Las Vegas at $130 million. Just thought I'd mention it.

Your next question comes from Felicia Hendrix of Barclays.

Steve, since you mentioned Vegas, I'll ask. The margins were actually much better than we were looking for. I was wondering if you could discuss some of the initiatives you might be taking on the cost side there?

Well, you know what happens. Because of our sort of a premium niche that we have here in Macau and that customer base makes its way to our place in Las Vegas. And the same thing is true in Brazil, Chile, Colombia and Mexico. Last year, we won about $600 million at the tables and another $170 million, $177 million in slot machines. 52% of that is Asian, 24% is Latin, 24% is domestic. And in slot machines, I'd say $25 million or $30 million of the $170 million is international. So we -- our brand, because of the market segment we cater to, tends to benefit from the international market. And these emerging markets, a lot of people are enjoying success outside the United States, and they make their way to Las Vegas. And I think that we're one of the first choices for that kind of visitation, and we cater to that business aggressively. That would be my comment. It does introduce volatility to our business, but we've got so much of it. We can afford to deal high because at any given moment, we have a handful of people playing $100,000 or $200,000 a card in games. So we're benefiting from that. I think that's probably the most relevant answer I can give as to our margins. International, we're not dependent upon the United States primarily, but from outside.

And Felicia, as you'll notice in the press release, we talked about the $12.2 million credit in the quarter as we, every June, do a historical analysis of our collections in Las Vegas.

Yes. And Ian, in Macau, you guys talked a bit about it, and it was very helpful. I think Steve mentioned about what's going on in the mass side. Obviously, everybody there is now trying to go after the premium mass customers so I was just wondering if you could talk about how competitive that environment is. And obviously, people are sampling new products. As you talk to some of your customers who might be sampling, what are they saying? And are they eventually coming back to you guys?

The mass market high-limit side is hypercompetitive. It remains hypercompetitive, and we've just been focusing on taking care of our customers, delivering high-quality service and try not to get into the heavy discounting promotional battle that's in the marketplace. A number of our competitors have corrected mistakes they've made in the past. They've also built new facilities, and they're ramping up their business. We are maintaining a very nice quality level of business. We opened Encore, and it was a success from the first day we opened. It continues to be the mass market high-limit area in the marketplace that our customers are very satisfied. People do shop around. People will move for discounting. But players always gravitate back to quality and service consistency, as we're that in Macau, and that's what we've been focusing on.

And just quickly, Ian, do you expect any construction disruption from the hotel renovation?

There's mild disruption, and we're not doing heavy renovation. We're refurbishing our guest rooms. We're doing all 600 keys in our Wynn tower, and we're just over 7 years old. They've been incredibly well received. We've taken the pallette from Wynn Las Vegas tower suites and rooms. And so far, the reactions have been excellent. We've done 5 floors so far. We'll be finished by late November. So very little disruption. We have 100 keys left to sell. We think that there might be mild impact from that on the gaming side, but overall, it's been very well received and very few complaints.

But we are out of order with the portion of our ...

100 rooms, approximately.

Yes, about 1/6 of our rooms. So we're operating a little bit of a deficit, especially since we have such a high utilization of our rooms by VIP customers. It's very, very difficult for us to sell rooms for straight cash here because we have such a large component of high rollers and bigger players that justify complementary services. We have only a 1,000 rooms here, and they are used all the time, all the time.

Your next question comes from Carlo Santarelli of Deutsche Bank.

Steve, now that you mentioned, obviously, having the guaranteed maximum price in place for Cotai and having a better sense of the timeline of that project, as well as maybe a clearer sense of what's going on in some of the domestic projects you guys are currently in the process of. How are you thinking about capital allocation here throughout the rest of the year 2014 as you're cognizant of the spend required for the other initiatives?

It's a perfect Matt Maddox question. Matt will be the main guy to answer it.

Carlo, as you know, on capital allocation, we have -- we put in $1 a share dividend per quarter to provide investors with stability as we go through this growth phase. As we -- as new projects come onboard, we plan on always keeping that $1. If there's excess cash flow available at the end of the year, then the board will decide what they want to do with it. Wynn -- just so you know, on Cotai, we just are about to sign an additional $200 million accordion on our bank facility at LIBOR plus 175. So Cotai's pretty much fully financed, and future projects are really just speculative right now. And we -- again, we have that $3.5 [ph] billion

At under 2.5, 2.5 or less.

That's correct.

Matt did a wonderful job.

And just an update for Philadelphia and Boston.

Nice to be investment-grade. Philadelphia and Boston, well, we're hard at it, as you know. 5 or 6 applicants in Philadelphia for that remaining license. There'll be shenanigans, I'm sure. Someone told me that the SugarHouse people wanted to say that the State of Pennsylvania doesn't have the right to issue a license that they took back previously. Sort of a ludicrous, preposterous thing. But those guys, if they think that we're going to win, they don't want to see us there until the last possible minute, and I don't blame them. If -- when you see some of these facilities, they're boxes of slot machines. They don't have really any tremendous magnetism to sort of cater to the locals. In Massachusetts, we got through our host agreement nicely, made a guaranteed payment to the people at Everett that helps them enormously, plus a lot of other improvements we're doing to make the area pretty and give it a good invitation to people to visit. And then, we had our host community required vote, and we've got 80 -- almost 87% of the people who were enthusiastically in support of us. We're waiting for the State of Massachusetts to finish its suitability investigations on the various applicants in Springfield and Boston. And then, of course, the folks at Suffolk Downs, for example, one of the applicants from Boston, they have to finish their host agreement and then have a vote in their communities, whatever those communities are. And so we have to wait on them to find out what's going to happen, which will probably be after the first of the year, and maybe sooner in Pennsylvania. But that's not a schedule we control. But we have designed facilities that we think will be profitable and give us a tremendous return on equity. We sit with a lot of cash, and in today's world, we can't make very much money on our cash. But when we deploy it in our own business, then it's another story. I think I may have said this in a previous call, but we see $900 million in Pennsylvania, with a $300 million or $400 million equity investment that we can make $150 million or $175 million on. We see Boston at $500 million or $550 million. We think we can make $300 million on that equity. And we think we can borrow a conservative amount of money at favorable rates to make up the balance of projects in the form of mortgage financing. So it's a way to pick up $400 million, $500 million with our new concept of Urban Wynn. Now this idea of Urban Wynn, which is being suggested to the authorities in Pennsylvania and Boston, it's worth repeating, if I didn't say it before. The era of the grand hotel is gone. The day of the Waldorf Astoria, the Plaza Hotel, the place that people go to stay and visit, that isn't happening anymore because of the cost of rooms, of construction and the Internet, hotels.com, kind of pressure on pricing. So what you get is stores on the ground floor and then some office floors, and then some hotel floors and then some condo floors. Mixed-use buildings that are places to stay, but they're not places to visit. When the government of Pennsylvania or Massachusetts decide, however, that they're going to put the casinos at the city, now we have a horse of an entirely different color. And where we have stood off from racinos and riverboats, it's not our thing. We build hotels that people like to come and stay to -- stay at. We specialize in high-class service and big rooms, fancy bathrooms and great restaurants and good food and all that jazz. You notice all that's non-casino talk. A slot machine, a blackjack table has 0 power. They're commodities. They're the same everywhere in the world, in a dumpy little box of slots or in a fancy place like a Highline Casino. It's the non-casino things that drive the business. So now, with these new laws in these states that allow metropolitan casinos like Boston, for example, Philadelphia, we can build a beautiful hotel with an atrium lobby, with restaurants that have indoor, outdoor experiences, shops, a wonderful spa, meeting rooms that have gardens outside and then down the hall, completely set -- and a room, that's 800-or-more square feet, with 175- or 80-square-foot bathroom, separate shower, separate tub, water closet with a bidet and john, 2 sinks, makeup area for the lady, integrated closets. We can do all that in big rooms that have sitting areas and large screen televisions that does not exist in New York, London or Boston or Philadelphia at the moment. But we can build what I call the grand hotel, and then, if you're a person that wants to gamble, go down the hall. Families can enjoy everything I just mentioned without ever seeing a slot machine or a blackjack table. But if you go down the hall, as if you were going to ballroom, in the convention area, you go through double doors, adults only and there is a casino with Starbucks and a deli and a food court and noodle kitchen and bars and a sports bar and all that other razzmatazz that makes a casino exciting. And they'll have separate access for parking that's covered and heated so the people can drive their car right to their favorite slot machine. That is an urban casino, and I think that we're going to see more cities open their doors and invite the kind of projects that Massachusetts and Philadelphia are encouraging. And I want to have 1 or 2 right away so that I can demonstrate the model for this kind of project just the way Mirage and Bellagio, sort of set the stage for destination resorts of a modern era in Las Vegas. So I'm interested in this, and Matt and Gamal and all the rest of us and Kim, we've been at it, working on this. Now we don't know whether we'll win or not, but we sure as heck will put our best foot forward.

Your next question comes from Thomas Allen of Morgan Stanley.

Just 2 on Macau. What's the latest on the high-end slot initiative you've been talking about the past few quarters? And then it seems like some of your Macau competitors have been more aggressive at pushing table minimums than you have been. Do you think that's fair to say? And is that potential opportunity for you?

If they've been more aggressive in pushing table minimums than we have, then you've just told me something I didn't know. Linda, do you want to respond to that?

[indiscernible]?

Table maximums or minimums, what did you mean, sir?

Table minimums.

What did you mean exactly? Do you think that other casinos in Macau have upped their minimums more than we have?

Yes. I mean, if that's not fair to say, then we're wrong. Or I misread it, but ...

We don't know that. But hell, with the kind of the customer base we've got, we've got as many high limit, high-minimum tables as anybody. And mostly joints in Cotai are dealing to mass market. In the VIP area, we're right there.

I think what you also see is that basic -- we have an average bet that significantly exceeds the minimums anyway, so I'm not sure that raising the minimums actually has much impact.

We never would have focused on that if you hadn't asked us the question.

Table minimums are very -- actually we change our minimums...

. Constantly.

[indiscernible] day-to-day, yes.

And we're -- Linda just said, I don't think you hear. We're on this phone in the -- that we change these minimums by the hours each day, but it's not an item that's relevant to us, and I don't think that particular thing should be relevant to you. How we manage minimums is an asterisk in this game. It's how many people are betting the maximum. I'll try to be helpful. I'm sorry.

No, no, no. It is helpful. That is helpful. And then just on the slot initiative?

Well, you want to answer that?

We opened a newly renovated high-limit slots area. We also extended the facility. It's been very, very well received. Clearly, our competitors, we all learn from each other. We got ahead of other people, they got slightly ahead of us, we're back ahead of them again. So we're very happy with how it turned out. Our customers have been very happy with it. So next time you're in town, we'd be happy to show you.

But we just don't throw money at it. This chasing the top line is a fruitless exercise unless it results in the bottom line. And so I want to repeat, we may have 10% or 11% of the top line volume because of all the new hotels that have opened, but we have 1/6, 16% of all the profits at these 32 casinos here -- or 33, and that's the number that I'm really focused on, the bottom line. And we watch everybody. We'll see all the earnings at the end of the second quarter. We heard Sands say they had a -- they did a wonderful job. I don't know how Caesar's and Melco did yet. We'll find out soon enough. But we're perking along at $100 million a month, maybe a little better.

Just on Vegas, the view that there may be a recovery in Vegas. How do you feel about that? And then your non-gaming appears to do very well. Should we take that to imply that you're not getting any impact from all the new F&B in the market?

Look, as I've said before, we think the drivers are non-casino into the business, not the casino. We think the casino is a result, not a cause. And so we're really assiduous in complying ourselves to that, and our nightclubs weren't just about who the best disc jockey was for the moment because that's a very changing scene. Our nightclubs and that food and beverage revenue that we're so proud of, that you're noting, is a result of years of planning before we -- and we were 2.5 years before we broke ground on Cotai, working every week. Las Vegas is the same thing. Those nightclubs, they're more than just great big boxes of places to put tables and prop up a DJ. They're environments, and those environments have an emotional effect on the people that come to us, and we design to emotion. And then, when the competition decides to challenge us by paying a disc jockey more money or -- for example, which is a popular idea these days, and take a disc jockey from $200,000 to $400,000 a night, it doesn't have the effect that you would imagine. Our customers stick to us with loyalty not because of any other reason except that we offer a better environment for them. At the end of the day, when you're recreating, when you're out playing at night, when you're going to a nightclub, it's where -- it's the environments you're in that matters. So I think our food and beverage numbers are reflecting the fact that we can withstand a competitor challenge in Las Vegas, and we have -- as you know, you can compare us to anybody on the Strip. Even my own places, my own older places, practice hotels like Bellagio and Mirage, we hold our own against bigger hotels even, more rooms like MGM. We hold our own. And they throw plenty of money in the customers, boy, but we bank on other things that are more enduring I think is the way to say it.

And any view on if there's a recovery in Vegas underway?

I've always been sort of neutral about using the word recovery. I think that Las Vegas is doing better than it did last year, but the extra capacity that came on during the recession was poorly timed. Some of it was Encore and Wynn, city center. We all could have picked a better time to build those buildings, so I'm including myself in that group. But it is what it is. The amount of money that's lost in Las Vegas in the last 4 years in terms of abandoned projects and markdown values from Frontier and the Stardust property to Fontainebleau and Cosmopolitan city center and places like that has been astronomical. I don't even like to think what the number is, but Las Vegas is perking along because of its tremendous choices that are available to people of every income level. The infrastructure in Las Vegas is almost impossible to duplicate, and that's the reason why it survives California, Indian gaming and all these other jurisdictions. It doesn't get any easier, but Las Vegas is managing to hold its head up. And if we had a real recovery in the United States and I don't think we are having a real recovery in the United States, I think we're having a limp-wristed sort of crawl out of a hole. But recovery is a more robust word, and I don't see it in the country as clearly as the politicians do, who are trying to sell up to the people. I think most of it is baloney. I think real inflation is way north of 10% [ph] . Everybody's dollar is going down, buying power and living standards going backwards for my working people of America, and that's taking a toll on what you would call a recovery. So I don't see it so...

Your next question comes from Cameron McKnight of Wells Fargo.

A question first for Steve and/or Linda. Could you offer some thoughts on the macro outlook in China? We've seen a lot of ambiguous macro data recently. And specifically, some data that we see and collect indicates that sentiment amongst high-end Chinese consumers remains very strong. Just wondering if you can talk to that and some of what you're seeing in your business specifically.

Well, obviously everyone's aware of the liquidity issue in China. We're pretty cautious of how we handle our credit and collection. So we really haven't felt any effect on our business or economy area.

Our customers are not pessimistic, but Linda is careful about the credit. We always are, as you know, hearing that from us for years now. It's been 47 years I've been in business, we've never had an adjustment to our reserve, all these 47 years [ph] .

Great. And then just as a follow-up, we've seen some of the visitation growth pick up over last couple of months, and specifically in the data, we're seeing northern Chinese visitation pick up. Are you seeing some of that reflected in your customer mix?

In general, yes. We actually see a pickup across -- besides north and also through the Guangdong province area. So both sides are picking up.

You don't always see a natural reflection on the breakout of visitor arrivals into the city and the people that are staying directly in the casinos. So day tripping activity has reduced and moved away from Guangdong, and there are more overnight stayers with all the extra rooms in Cotai. There are people coming and staying 1 or 2 nights, and they're coming from further afield. The high-speed train network is certainly helping, and the increase in the individual visitor scheme is also benefiting, so we are getting people -- more people coming and staying longer.

The plan that the government of Macau implemented in 2002 to change this place and make it destination city rather than a day trip city, that plan, that goal, which led to the expansion of the concessions is by and large taking foot and is thriving. The construction of the fabulous hotels in Cotai is causing people to come and stay overnight. Macau is becoming a destination resort, not just the Baccarat game, but neighborhood Baccarat game. It's happening as they planned. As -- it was a very articulated program that led to the 2 new concessions that Galaxy and my company received and which supported the expansion of the 3 sub-concessions of MGM and Melco and the Sands. And it's all happening thanks to Sheldon Adelson, thanks to Jamie Packer and Lawrence Ho, thanks to the Lui family. Francis has done a great job with Galaxy. These are smart guys, and they're doing really nice places, beautiful and big rooms, lots of choices. This place is getting very powerful, and it's supporting, on an ever-increasing basis, still a good growth rate. I can't wait until this 28 or 29 months goes by so that we can get open in Cotai because we're going to toot our horn when that time comes. And we've taken into account these guys and what they've done, these competitors of ours. Man, it's put us on our game. You don't take anything lightly in -- competitively in Macau. These are smart people and they've got money and they know how to deploy that capital. So there's a lot of choices, fun things to do here, and it's the first time that any city has ever, ever begun to offer the choice that Las Vegas, Nevada, U.S.A. has offered. Thank god they're 6,300 nautical miles away, so there's room for both of us. And I'm happy to be in both markets, but -- and it's just great. But Cotai is causing this town to change. This is not Atlantic City in the sense that it's a local market. This has now become a place where people travel to. Stays are getting longer.

[Operator Instructions] Your next question comes from Harry Curtis of Nomura.

Two quick questions. First, what will be your annual cash contributions to the project in Cotai? And then, secondly, Steve, if you could talk to the special features that Cotai will have that should lift its ROIC comparable to what you're doing on The Peninsula?

Matt, you want to answer the capital contribution one?

Sure. Harry, just for some CapEx history, so we've spent about $300 million to date. I would expect us to spend another $300 million for the rest of this year, likely $1 billion in 2014 and then the vast majority of the rest of the spend in '15, leaking over into the beginning of '16. We'll probably utilize between 30% and 40% of our free cash flow when you look at our model, and we currently have $2.5 billion of debt with -- over $1 billion of cash on hand and $1.5 billion revolver undrawn right now. So that's basically how we'll shake out. And then one last thing I want to point out, a lot of people quote various numbers for construction costs for projects in Cotai. Our $4 billion is all in. If you look at hard costs, plus owner supplies, plus FF&E, what a lot of people like to quote, the thing that hits the cash flow, that's $3.5 billion. The remaining $500 million, preopening expenses, our land lease payments through 2016 and capitalized interest.

All of that money gets paid after we open, too.

That's right.

So Harry, does that take care of that part of your question? And I'll get to the features. Right, Harry, did you get -- did Matt deal with that satisfactorily? So now about the features. We are famous or well known or earned our bones anyway by having the public entertained. It started with a volcano at the Mirage. [Technical Difficulty] Anyway, then we had the pirate show, the pirate ships that sink, then we had dancing waters, et cetera, et cetera. And then we get the tree of prosperity and fountains here in Cotai. Cotai is going to be, in one respect, if you're on the outside, reminiscent of the Bellagio. We've got an 8-acre lake that's strategically placed in front of the hotel, and we placed all of the high-end gaming on the water and the restaurants on the water. We filled the lake with new versions, new technology of water that dances in colors of lights. It's a very complex, expensive, very advanced water and light show, including fire. Then, from the street, in front of our property and surrounding the lake and going into the hotel is a Doppelmayr gondola that holds 8 people at a time, with several thousand hour capacity. And that gondola is equipped with music and air conditioning, and people get off the monorail, the light rail that stops, where -- the light rail that the country is building, starts at the ferry terminal, we're the first stop. It goes around 2 sides of our 52-acre site, the north side and then finally, the west side. And in the middle of the west side, approximately in the middle of the lake, on the street in front of the center line of the lake and the hotel, the light rail comes to an end and makes a stop, its first stop as it journeys through Cotai. And the name of the hotel is the Wynn Palace. Wynn Palace is the name of the hotel, and the light rail stops at the midpoint of our lake and bridges go the west, to City of Dreams, the Hyatt and MGM. And they go to the east to our sidewalk because we're opposite both MGM and the City of Dreams. Each of their site is approximately 1/2 of ours. And people load the gondola as they come down the escalator from the light rail, so they go around the lake, then they stop, they get off the light rail, the monorail, and they go into the gondola. They rise above and go around and through the lake and through the fountains and then get inserted into the building, into the retail promenade. At the north and south entrances of the hotel -- there are 3 major ways into the hotel besides the gondola. That's our attempt to capture the light rail traffic by making an irresistible kind of e-ride for them to experience. But there's a north, south and a bus entrance, 3 different entrances, north and south atrium and then a bus entrance at the east side. And in each of those 3 arrival moments, we have placed attractions and features. For example, and I haven't announced this before, but I mean I think it's time to share with everybody, I mean we're far enough down the road, the theme of this hotel is flowers, floral things. The use of flowers, of water and natural light and flowers has been taken to a new level for our company. And we have, in this atrium, floors that open. And from the horticulture department below, big huge displays of flowers ascend, and they change every month. One of the things that was charming about Bellagio was it was seasonal. We had fall and winter and spring and summer. If you remember, we had autumn, oranges and browns in the autumn. We had Christmas, poinsettias and Christmas trees at Christmas. In spring, cherry blossoms in the spring. In this hotel, huge, if you can imagine the floats of the Rose Bowl Parade, but imagine instead that they are intricate 5-, 6-, 7-meter tall sculptures that are 10 or 12 meters wide on variable height lifts that are like wedding cakes, and these things vary from a full carousel of horses, like a merry-go-round that go round and round and up and down to calliope music, 2 hot air balloons of multicolors like in Around the World in Eighty Days, to peacocks and tigers and other fanciful objects. It changes every month, all made of real flowers. These are multistory atria that go up, and these kinds of fantasies take place to music 24/7. Am I beginning to shape the picture for you Harry? Or did you leave?

I think Harry dropped off.

Our final last question comes from Robin Farley of UBS.

I have 2 questions. One is I wonder...

Robin, did you hear what I just said? Robin, could you hear me?

Yes, yes. All of that. I'm not sure what happened to the last question. but we could all hear you. So we heard all of your -- all the great descriptions. So thanks for sharing.

He was asking what the features are. So I started to discuss some of them.

That was great to get that level of detail. I wanted to ask if you have expectations for timing of anything in Japan.

No. I mean, you can read the newspapers, and you know all about what happened in the election, and you know that they've got an initiative to consider it during '14. Where that takes the government and what they will do to follow through is unknown at the present time. There is certainly speculation. We all are paying very close attention. But to say anything with any degree of certainty would be totally speculative at this point.

Does that affect your level of interest or the degree to which you're pursuing things there?

I would sure as heck be interested in Tokyo or Osaka, if we were given the opportunity. Naturally, Robin, we'd have to measure the business opportunity, tax rates, rules, sort -- all that sort of thing. But I'm assuming that if Tokyo did a thing like that -- the government of Tokyo did a thing like that, they'd probably follow the successful models of Macau and Singapore, something like that. So I would imagine if they do legalize it in Tokyo, we will all be hot after it.

Great. And then my other question, which is getting a little bit more into the market share shift on The Peninsula among the premium mass. I know there were some comments earlier about how hypercompetitive that is. I wonder if you could just -- there are moving pieces here with you added new capacity that I guess was there for 2/3 of the quarter, the high-end slot area. I think you mentioned something about hold issues in the month of June. It sounded like you were making that comment about slot business but maybe I misheard you. So I just wanted to clarify basically these different moving pieces and now going forward, once you have your high-end slot room in place, I guess, how you expect market share to sort of play out versus how it did in Q2.

So Robin, the level of inquiry that your question represents, it gets into crystal ball stuff. When Ian made the remark earlier that the guys got smart, they did a better job with their high-end slot areas and got a little ahead of us. And then, we caught up and we've redone a bunch of areas to make them sexier, and it looks good to us now. And a lot of bigger players came, so they won some big jackpot, so hold fluctuated a little bit, and on the amount of coin in, it matters. But it really doesn't. It really doesn't matter at all. This mass gaming area and our ability to hold customers and to grow or to hold our position in the face of Cotai and the other competitors is something we just have to watch play out. Remember, I said that we were up over July, but we were down in June. It bounces around in our place because we got so many big players. It's hard to give you -- to quantify this. I know we try all the time, but to tell you the truth, Robin, it's sort of a waste of time for all of us. I think you have to look at the macro trends. So whatever Robert Gansmo said about the whole percentage in June, it doesn't matter much because it's offset by the whole percentage in July, and I really don't want to go there. It's the kind of super detail that seems to matter on these kinds of calls, but really amounts to nothing in the long run.

We have no further questions at this time. I would to like to now return the floor to management for any closing remarks.

That was nice talking to you.We'll see you in 90 days. We'll see what happens then and maybe for other jurisdiction-specific [ph] things. Thank you, everybody.

Thanks.

This concludes your conference. You may now disconnect.