Marcus Corp
NYSE:MCS
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Marcus Corp
Earnings Call Analysis
Q4-2023 Analysis
Marcus Corp
The company reported a modest 1.6% growth in revenue, excluding the impact of the Skirvin Hilton sale, despite a slight overall revenue decline of 0.9% in Q4 FY2023. With an improved operating income of $1.2 million, up from a $2.7 million loss in the prior year, and a 10% growth in adjusted EBITDA, the company showed resilience in its financial health. For the full fiscal year of 2023, the company achieved a 7.7% increase in revenues and a staggering 27.8% increase in adjusted EBITDA compared to the prior year.
The Hotels division's adjusted EBITDA for Q4 grew nearly 31% from the previous year to $7.4 million, even considering the effect of the Skirvin Hilton sale. Excluding this impact, the division's adjusted EBITDA saw a 5.1% increase for the full year. In contrast, the Theaters division faced a challenge as a 1.2 percentage point drop in attendance and a 1.4 percentage point decrease in admission revenue were attributed to 1 less operational day during the crucial holiday season. Despite this, the division's full-year average admission price growth of 10.9% and a 5% rise in adjusted EBITDA depict a favorable pricing strategy and consumer acceptance.
The company's operational cash flow saw a significant 57% increase, a testament to its strong operational efficiency. Debt was reduced by $10.5 million, lowering the debt to capitalization ratio to a healthy 26%, and a net leverage of 1.2x, indicating cautious but efficient financial management. Moreover, the company balanced capital investments and debt reduction with shareholder returns, distributing $7.5 million via dividends in fiscal 2023.
Fiscal 2024's capital expenditures are forecasted to be between $60 million and $75 million, spread across hotels and theaters. This planned spend underlines the company's growth strategies and warns of potential timing impacts on actual capital spending during the fiscal year. The firm ended the year with ample liquidity—$55 million in cash and $276 million in total liquidity, showcasing a robust financial structure capable of swiftly seizing investment opportunities for growth.
The near-term outlook is cautious but optimistic, predicting a tight movie release schedule due to the preceding year's Hollywood production strikes that may affect wide releases in fiscal 2024. However, the company anticipates a recovery and even an exceeding level of product supply by 2025.
The company grew its Magical Movie Rewards loyalty program by 14%, reaching 5.8 million members. Investments in technology are planned to enhance marketing efforts and deepen customer insights. Additionally, labor efficiencies have reduced payroll and benefits expenses by about 2 percentage points, contributing to profitability.
The long-term vision remains focused on sustainable growth and outperforming the industry despite occasional quarterly variances. Recent market conditions indicate improved deal execution prospects in the hotel space, reflecting a slightly more favorable environment for transactions.
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Thank you for your patience, everyone. Good morning, everyone, and welcome to the Marcus Corporation Fourth Quarter Earnings Conference Call. My name is Chach, and I'll be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded.
Joining us today are Greg Marcus, Chairman, President and Chief Executive Officer; and Chad Paris, Chief Financial Officer and Treasurer of the Marcus Corporation. At this time, I'd like to turn the program over to Mr. Paris for his opening remarks. Please go ahead, sir.
Thank you, and good morning, everyone. Welcome to our fiscal 2023 4th quarter conference call. I need to begin by stating that we plan to make a number of forward-looking statements on our call today, all of which we intend to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act. Our forward-looking statements may generally be identified by our use of words such as we believe, anticipate, expect or words of similar import. Our forward-looking statements are subject to certain risks and uncertainties which may cause our actual results to differ materially from those expected. Listeners are cautioned not to place undue reliance on our forward-looking statements. The risks and uncertainties which could impact our ability to achieve our expectations identified in our forward-looking statements are included under the heading Forward-Looking Statements in the press release we issued this morning announcing our fiscal 2023 4th quarter results and in the Risk Factors section of our fiscal 2022 annual report on Form 10-K, which you can access on the SEC's website.
We will also post all Regulation G disclosures when applicable on our website at marcuscorp.com. The forward-looking statements made during this conference call are only made as of the date of the conference call, and we disclaim any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. In addition, we routinely post news releases and other information regarding developments at our company that impact our investors, customers, vendors and other stakeholders. You should look to our website, marcuscorp.com, as an important source of information regarding our company. We also refer you to the disclosures we provided in today's earnings press release regarding the use of adjusted EBITDA, a non-GAAP measure used in evaluating our performance and its limitations. A reconciliation of adjusted EBITDA to the nearest GAAP measure is provided in today's release.
All right. With that behind us, let's begin. This morning, I'll start by spending a few minutes sharing the results from our fourth quarter with you and discuss our balance sheet and liquidity. I'll then turn the call over to Greg, who will focus his prepared remarks on where our businesses are today and what we are seeing ahead. We'll then open up the call for questions.
This morning, we reported our quarterly results, capping another year of significant progress in our overall company results. In Theaters, solid revenue growth was driven this quarter by a record-setting concert film and a diverse movie slate over the holidays. In Hotels, continued growth in group business and steady leisure demand drove revenue and delivered RevPAR growth that outperformed the industry in the fourth quarter.
I'll start with a few highlights from our consolidated results for the fourth quarter of fiscal 2023. Consolidated revenues decreased 0.9% compared to the prior year quarter, which includes the impact of the sale of the Skirvin Hilton that occurred late in the fourth quarter of fiscal 2022. Excluding the impact of the Skirvin sale, consolidated revenues increased 1.6%. Operating income for the quarter was $1.2 million, an improvement compared to a $2.7 million operating loss in the prior year quarter. Consolidated adjusted EBITDA for the fourth quarter was $18.2 million, an increase of 10% over the fourth quarter of fiscal 2022.
For the full year fiscal 2023, consolidated revenues increased 7.7% from the prior year and increased 10.3%, excluding the impact of the Skirvin sale. Operating income grew to $33.9 million, increasing over 3x our operating income of $8.3 million in fiscal 2022. And adjusted EBITDA increased 27.8% over the prior year to $108.7 million. While there wasn't anything unusual below operating income to note this year, as a reminder, I do want to highlight 2 items below operating income in the fourth quarter of fiscal 2022 that did not recur and are impacting comparisons of our net earnings and net loss to the prior year periods.
First, our fiscal 2022 4th quarter and full year results include a $6.3 million gain from the sale of the Skirvin Hilton. Second, our fiscal 2022 4th quarter income tax expense was negatively impacted by $6.7 million from a net increase in our valuation allowance on certain deferred tax assets. For the full year of fiscal 2022, income tax expense was negatively impacted by $7.4 million from the net impact of valuation allowance adjustments on these deferred tax assets. The net negative impact from these items was $1.1 million for full year fiscal 2022, and both of these items were excluded from our adjusted EBITDA operating results.
Turning to our segment results and beginning with hotels. Revenues were $62.9 million for the fourth quarter of fiscal 2023. The sale of the Skirvin Hilton negatively impacted division revenues by $4 million in the fourth quarter of fiscal 2023 compared to the prior year quarter. On a comparable hotel basis, total revenues in the fourth quarter of fiscal 2023 increased $1.5 million or 2.5%. Total revenue before cost reimbursements at our 7 comparable owned hotels increased over $2.1 million or 4% over the fourth quarter of fiscal 2022 as we continue to see strong demand for group and steady seasonal demand from leisure customers.
RevPAR for our comparable owned hotels grew 5.8% during the fourth quarter compared to the prior year. According to data received from Smith Travel Research, comparable upper upscale hotels throughout the United States experienced an increase in RevPAR of 3.6% during our fourth quarter compared to the fourth quarter of fiscal 2022, indicating that our hotels outperformed the industry by approximately 2.2 percentage points. When comparing our RevPAR results to comparable competitive hotels in our markets, the comparable competitive hotels experienced an increase in RevPAR of 6.3% for the fourth quarter of fiscal 2023 compared to the prior year quarter, indicating that our hotels slightly underperformed their competitive set by 0.5 percentage point. We believe this lower performance in the quarter compared to competitive hotels was generally due to the earlier recovery in our properties compared to the later recovery at some of our competitors in our local markets, as well as the impact of the continuing shift in our business mix with more growth in midweek group business at lower rates.
Breaking out the fourth quarter numbers for the comparable owned hotels more specifically, our overall RevPAR increase during the fiscal 2023 4th quarter compared to the prior year quarter was due to a 1.5% increase in our average daily rate, or ADR, and an overall occupancy rate increase of 2.4 percentage points. Our average fiscal 2023 4th quarter occupancy rate for our owned hotels was 59.2%.
Finally, with the increase in occupancy and growth in group business, our banquet and catering operations continued to perform well. Food and beverage revenue at our comparable owned hotels was up 4.8% in the fourth quarter of fiscal 2023 compared to the prior year. The division delivered $7.4 million of adjusted EBITDA for the fourth quarter, a nearly 31% increase over the prior year fourth quarter.
For the full year fiscal 2023, hotels adjusted EBITDA was $37.7 million. The sale of the Skirvin Hilton negatively impacted adjusted EBITDA by $3 million in fiscal 2023 compared with fiscal 2022. Excluding the impact of the Skirvin sale, adjusted EBITDA increased 5.1% in fiscal '23 compared to the prior year.
Shifting to Theaters, our fourth quarter fiscal 2023 total revenue of $98.6 million increased 1.1% compared to the prior year fourth quarter. Comparable theater admission revenue increased 4.1% over the fourth quarter of 2022, with comparable theater attendance decreasing 3.5%. It is important to note, our fiscal calendar negatively impacted our revenue and attendance comparisons over the prior year periods. Our fiscal year ended on December 28 compared to December 29 in fiscal 2022, resulting in 1 less day in our fiscal fourth quarter during the busy week between the holidays compared to the prior year while adding 1 day in late September when business is significantly slower. The loss of the day between the holidays had a 1.2 percentage point negative impact on attendance growth and a 1.4 percentage point negative impact on admission revenue growth compared with the prior year fourth quarter.
According to data received from comScore and compiled by us to evaluate our fiscal 2023 4th quarter results, U.S. box office receipts increased 5.6% during our fiscal 2023 4th quarter compared to U.S. box office receipts during the fourth quarter of fiscal 2022, indicating that our comparable theater admission revenue lagged by approximately 1.5 percentage points. However, the recovery in our admission revenue is relative to pre-pandemic periods in fiscal 2019 compared with the recovery of the U.S. box office continues to outperform the industry. During the fourth quarter of fiscal 2023, our comparable theaters' admission revenues were 69.4% of admission revenues in the fourth quarter of fiscal 2019, which compares to a 68.2% U.S. box office recovery during the same period.
For the full year fiscal 2023, our comparable theaters' admission revenues were 81.3% of admission revenues in fiscal 2019, which compares to a 79.4% U.S. box office recovery during the same period, indicating that our recovery in admission revenues has outperformed the recovery of the industry during 2023. Our average admission price increased by 8.3% during the fourth quarter of fiscal 2023 compared to last year. The increase in average admission price in the quarter was significantly impacted by Taylor Swift: The Eras Tour, which represented approximately 63% of the increase in our average admission price and more than offset the headwinds from the high percentage of 3D and PLF ticket sales in the fourth quarter last year from Avatar: The Way of Water. The balance of the increase in average admission price was due to strategic pricing actions and our Value Tuesday pricing changes implemented earlier in the year.
For the full year of fiscal 2023, average admission price increased 10.9% compared to the prior year. Our average concession food and beverage revenues per person at our comparable theaters increased by 3.1% during the fourth quarter of fiscal 2023 compared to last year, driven by inflationary price increases implemented during the year and higher check averages across our circuit. For the full year fiscal 2023, per capita average food and beverage revenues increased by 5.2% compared to the prior year.
Theater division adjusted EBITDA of $14.7 million during the fourth quarter of fiscal 2023 increased approximately 5% compared to the prior year fourth quarter. Shifting to cash flow and the balance sheet. Our cash flow from operations was $34 million in the fourth quarter of fiscal '23. For the full year, cash flow from operations was $102.6 million compared to $93.2 million in the prior year, which included approximately $28 million of nonrecurring income tax refunds and government grants received during fiscal 2022. Excluding these nonrecurring items from the prior year, cash flow from operations grew $37.4 million, an approximately 57% increase.
Total cash capital expenditures during the fourth quarter of fiscal 2023 were $12.9 million. And for the full year fiscal 2023, total capital expenditures were $38.8 million compared to $36.8 million in fiscal '22. During 2023, the majority of our capital expenditures have gone to renovation projects in the hotels business, with the balance going to maintenance projects in both of our businesses. As we have shared with you previously, we expect a ramp up in our capital expenditures in fiscal 2024 as we continue several renovation projects in our hotel division and invest in maintaining and enhancing the customer experience in theaters. For fiscal 2024, we expect total capital expenditures of $60 million to $75 million, with $40 million to $50 million in hotels and $20 million to $25 million in theaters. Of course, the timing of some of these planned expenditures could impact our actual total capital spending during fiscal 2024.
During 2023, we reduced long-term debt by $10.5 million, ending the year with a debt to capitalization ratio of 26% and net leverage of 1.2x net debt to adjusted EBITDA. While we invested in our businesses and reduced debt, we also returned $7.5 million in capital to shareholders in fiscal 2023 through our quarterly dividend, which we increased to $0.07 a quarter in the third quarter. We remain committed to returning capital to shareholders while maintaining the strength of our balance sheet and liquidity. We ended the fourth quarter with over $55 million in cash and $276 million in total liquidity. As we have discussed before, we have always believed in maintaining a strong balance sheet with a manageable amount of debt, including owning the majority of our assets.
We believe our strong balance sheet is a strategic advantage. As Greg will discuss further, our recently announced investment in a joint venture to acquire Loews Minneapolis Hotel is a great example of our financial flexibility and ability to move quickly when opportunities to invest in future growth arise. With that, I will now turn the call over to Greg.
Thanks, Chad, and good morning, everyone. I'd like to start today by reflecting on fiscal 2023. We started the year with an expectation that both businesses will continue on their trend of growth, with theaters continuing to recover with an increase in film supply and hotels continuing to grow occupancy.
We had a plan for the year that focused on improving the guest experience, mitigating labor inflation through improving labor productivity and efficiency and controlling our costs across the company. As I look at our performance during fiscal 2023, the year came together pretty close to our expectations, and I'm pleased with our results and how we managed our businesses. Not everything played out exactly as we expected. Some things didn't work as well as we expected, and some things surprised to the positive. Through it all, our team adjusted to changing conditions, flexed when we needed to and remained focused on delivering great experiences to our guests. We ended the year with very good results and are in a position of strength with a balance sheet that supports our focus on investing in our future growth.
The fourth quarter and fiscal year that we're reporting today completes a year of significant progress, and we're pleased to be sharing these results with you. I'll start with our hotel division. Chad covered the highlights of another solid quarter, so I will focus my comments on the year overall looking ahead. After a record year for the division in 2022, we entered the year knowing that the pace of growth was going to moderate as we transitioned from the pandemic recovery to a normalized level of business. We also knew that following the divestiture of the Skirvin Hilton, our reported division results will be negatively impacted. As we reflect on the year, our comparable [ bolt ] hotel results were solid and were in line with our expectations. In our owned hotels in fiscal 2023 compared to fiscal 2022, occupancy grew by 3 percentage points. Average daily rate grew by 3.3%, and RevPAR grew by 8.4%. Our RevPAR growth was comparable to year-over-year RevPAR growth for upper upscale hotels nationally. Our RevPAR growth was 70 basis points below our comp sets -- competitive sets, which, like theaters, we attribute to the early recovery at our properties compared to the later recovery of some of our competitors in our local markets.
When evaluating our results against pre-pandemic fiscal 2019, our fiscal 2023 RevPAR growth of 4.5% outperforms both national upper upscale RevPAR growth by 6.5 percentage points and outperforms the competitive sets by 3.8 percentage points. Throughout the year, our leisure business normalized a bit back to pre-pandemic patterns, with some extended weekend leisure travelers pulling back as work patterns return to more in-office work. But even with this change in customer travel behavior, we still had a very solid leisure travel year. Our sales and marketing teams executed exceptionally well, capitalized on returning group demand during 2023. And as a result of this focus, our group business continued to grow and increase midweek occupancy.
For the year, our group business increased from 35.6% of our total rooms mix in fiscal 2022 to 37.2% in fiscal 2023, continuing a trend that began in 2022 and moving back towards our pre-pandemic group mix of approximately 40%. Operationally, our team executed on plan to get our staffing levels back to where they need to be to deliver the hospitality and guest experience that our customers expect. We improved guest satisfaction scores in the vast majority of our portfolio, while changing our staffing models and improving labor productivity to keep our operational headcount below pre-pandemic levels to help offset the labor inflation impacting our industry.
Overall, we're very pleased with hotels results for 2023 and all that we accomplished. Looking forward to 2024, there is a lot to be excited about in our hotel division. While we share the general industry outlook for low- to mid-single-digit RevPAR growth in 2024, there are a few factors that we believe will drive outperformance in our results that are specific to our portfolio of hotels and resorts.
First, with Milwaukee set to host the Republican National Convention in July, we expect our third quarter results will benefit from a week of sellouts at over 1,200 rooms at our 3 downtown Milwaukee hotels. While we are typically very busy at these properties during summer weekends, we expect the conventional result in high mid-week daily rates drive significant banquet and catering business for group events related to the convention and strong business in our restaurant outlets in the hotels. The RNC will be the first major event to be hosted in Milwaukee's newly expanded convention center, which now will have approximately 300,000 square feet of exhibition hall space as well as expanded ballroom meeting space, doubling the overall size of the center. We are not only excited about the RNC's impact on Milwaukee's convention business in 2024. We are optimistic that the event will serve as a showcase for larger scale events that Milwaukee can now host, setting up future bookings for a greater number of events as well as larger convention events in the long term.
Second, our overall group bookings look strong. Our group room bookings for the remainder of fiscal 2024, or group pace in the year for the year, is running over 25% ahead of where we were at this time last year and 10% ahead of where we were at this time last year, excluding the impact of the RNC. We look out a bit further to fiscal 2025, group pace is up over 40% ahead of where we were at this time last year as we are seeing event planners starting to book events further out. We are also seeing similar increases in banquet and catering booking pace for 2024 and 2025.
Third, we will be completing major renovation projects in 2024 at the Pfister Hotel and Grand Geneva Resort and Spa that we expect will continue to drive group business and support our premium rate position in our markets. At the Pfister, we will complete extensive guestroom and lobby renovations in our historic tower to enhance the guest experience, which follows the ballroom meeting space renovation that we completed in the fall last year. At Grand Geneva, we will complete the ballroom and meeting space renovation in the first half of the year. This project follows our guestroom and lobby renovations over the last 3 years and substantially completes our interior renovation of the main lodge of the resort. We believe the renovations at these properties are helping to support the strong group bookings that we are seeing for future events.
We believe that these 3 factors should set up the hotel division for a strong fiscal 2024, and our team is focused on the successful execution of these major projects and preparing for what we expect will be a very busy summer. The reinvestment in our existing properties to maintain and enhance their value is part of our overall portfolio management strategy. And we believe these investments provide substantial returns to our shareholders over the long term at these core assets.
We've talked in the past about our ongoing portfolio management process, which includes evaluating each asset's competitive market, strategic positioning, financial performance over time, current valuation and expected future returns as each asset approaches its next capital investment cycle. Our investment decisions are focused on value maximization as the determining factor for whether we hold, reinvest or divest a hotel. These investments will be significant over the next 2 years, with up to $50 million of capital expenditures expected for the hotel division in 2024.
Finally, we've continued to work on our growth strategy and are actively seeking opportunities to invest in new hotels and increase the number of rooms under management. Our growth may come in several different forms, including acquiring new management contracts or hotel management businesses, seeking opportunities where we may act as an investment fund sponsor or as a joint venture partner in acquiring or redeveloping additional hotel properties. This year has been a challenging market for hotel transactions, but we've been persistent and have looked at many deals.
During the year, we made an investment in business development talent with the addition of [ Tiffany Donato ], who joined us in September as our Chief Investment Officer of Marcus Hotels & Resorts. She brings a significant track record of successful hotel transaction experience to the division. Two weeks ago, we announced our investment in a joint venture that has reached an agreement to acquire the Loews Minneapolis Hotel, a 250-room full-service luxury hotel in downtown Minneapolis. We expect the deal to close in the first quarter. And while we aren't disclosing the terms of the deal today, our expected investment in the hotel is approximately $2 million to $5 million, depending on the final level of investment from limited partners.
We believe this is an exciting opportunity to create value by investing in an attractive asset with a focused management strategy, while adding another premier destination to our portfolio of branded and independent lifestyle hotels. We have experience operating in the Minneapolis market, and we have assembled a great team to execute our repositioning strategy at the hotel. This is a long-term investment play in what we believe is a good real estate asset acquired at an attractive valuation and what we expect to be a recovery market over the long term. We're excited about the opportunities for future growth in the hotel business, and I'd like to congratulate Michael Evans and our Hotels and Resorts team for delivering a great year.
Shifting to our Theater division. Chad went over the numbers for the quarter with you, including our strong increases in per person revenues. I'd like to start with a few highlights for the year, and then look forward to fiscal 2024 and beyond. First, I think the biggest story of 2023 was the growth in the number of wide releases and huge audiences that came out to see them. We had 110 wide releases in 2023, a significant increase from the 85 we had in fiscal 2022, which was disrupted by supply chain and production issues.
Second, there were a number of surprises. If you asked me a year ago to predict the biggest movies of 2023, I don't know that I would have come up with Barbie, Oppenheimer and Taylor Swift: The Eras Tour in my top 10. In fact, if you had asked me in August what the biggest movies of the fourth quarter would be, Taylor Swift: The Eras Tour wasn't anywhere on our radar, yet it was our #1 attraction for the fourth quarter and our #10 film for the year.
Third, and related to my last point. Audiences came out the theaters to see a very diverse range of films in the big screen. We saw everything from action and superhero to family and animated comedy, romance, drama, horror, concert films and even musicals. And so much of it worked with audiences. It was a great reminder to content creators and studios that audiences want diversity and some of the assumptions of the past about what works were dispelled by the surprise successes of some of these films. In general, we believe the success of a more diverse movie slate that is less dependent on a limited number of large films is better for the industry and better for promoting moviegoing.
Finally, alternative content had a big year. It was led by Taylor Swift: The Eras Tour, which was a very special and unique artist [indiscernible] fan base. Swifties came in droves to see Eras on the big screen with immersive sound, dancing in the aisles. With an incredibly powerful event cinema experience that was best watched in the company of other fellow Swifties and one that could never be replicated in your home. But alternative content was more than just Eras. It included Sound of Freedom, which incidentally was a close #11 for us this year, The Chosen and Renaissance, a film by Beyonce.
Overall, we were very encouraged by the progress the industry made in 2023, reconnecting with audiences and the commitment the studios have continued to show to theatrical exhibition as they realize how important it is to their investments in movies. As for our execution, our team made a lot of progress as well. We had a strong year of per capita revenue growth, with average ticket price growing 10.9% during the year. As we've shared previously, we made a number of changes to ticket prices from our price optimization and revenue management initiatives, most notably our Value Tuesday changes. While our pricing initiatives are the primary driver of our increase in average ticket price, I do have to thank Taylor Swift for 1.2 points of our per cap increase for the year.
Our Marcus Passport program that we launched at the beginning of fiscal 2023 has been successful in bringing customers out for more consistent moviegoing. This program allows customers to purchase a passport ticket with access to every movie that is playing as part of Marcus Theatres film series. Our film series showcased multiple movies, celebrate specific genres, holidays, franchises, filmmakers and more. The program launched last year at this time with the Best Picture passport featuring the 10 Academy Awards Best Picture nominees, followed by additional series throughout the year, including Winter and Summer Kids Dream Passports for each -- each featuring 12 family films. [ Aspect ] Cinema Passport, Hunger Games Passport, The Chosen Passport, Disney Pixar Passport and a Holiday Season Screening Passport. We expect to continue to expand our Marcus Passport offerings in fiscal 2024.
We grew our Magical Movie Rewards loyalty membership by 14% to over 5.8 million members. We continue to develop more ways to leverage Magical Movie Rewards to deliver marketing and promotions tailored to our customers' preferences. We have additional investments in technology planned for our loyalty program in 2024 that we expect will drive greater insight into our customers and enhance our marketing programs. And finally, like in our hotel division, the theater team has made significant improvements in labor management with a focus on guest per labor hour and operating hours management. We decreased operations payroll and benefits as a percentage of admissions and concessions revenue by approximately 2 percentage points in fiscal 2023 compared to the prior year.
Overall, it's been a year of great improvement and strong execution by our theaters team and we're proud of these results. Looking ahead, in the near term, we expect the shutdown of movie production during the Hollywood strikes last year will have a negative impact on the number of wide releases during fiscal 2024. As I've said previously, the disruption from the strikes was not helpful to the industry just as we were getting our momentum back in 2023. Thankfully, this is behind us and movie production ramped back up, but it does create a short-term content supply challenge. As of right now, we are projecting 95 to 100 wide release films in fiscal 2024, with the box office that is back-end loaded to the second half of the year.
As is seen in the daily domestic box office reporting, the first quarter was off to a slow start given the lower number of wide releases in January and February. With that said, we are thrilled with the early reviews and strong advanced ticket sales for Dune Part 2 and see a stronger margin to gradually improving release calendar as we head into the spring and summer. In the long term, our view remains optimistic on the business and industry, and we expect the product supply will get back to and potentially exceed 2023 levels in 2025.
Finally, while we closed 600 performing theaters during fiscal 2023, we continue to evaluate opportunities to grow the circuit again by adding interactive locations. These opportunities may include management contracts, taking over existing theater leases or partnering with landlords and acquisitions. We believe our strong balance sheet positions us well to execute on the strategy as attractive growth opportunities arise.
As Chad discussed in his remarks, in 2023, we returned $7.5 million to shareholders through our quarterly dividend. The Marcus Corporation has a long history of returning capital to shareholders, and we remain committed to paying a dividend as we move past the more significant capital investments in our hotels [ planned for the ]
[Audio gap]
we view the world through a long-term lens. Our rate of improvement will vary from quarter-to-quarter and year-to-year, as it likely will in 2024, but I'm confident that we will continue to make consistent long-term progress. We manage the business day to day, but at the same time, look at the overall performance of our investments with the goal of long-term sustained growth and industry outperformance.
Finally, I would like to once again express my appreciation for our dedicated associates at the Marcus Corporation. Their outstanding work and commitment to serving our customers is responsible for our success, and we appreciate all that they do every day. They are our most important asset. So on behalf of our Board of Directors and our entire executive team. Thank you to all of our associates. And with that, at this time, Chad and I will be happy to open the call up for any questions you may have.
[Operator Instructions] Our first question today comes from Eric Wold from B. Riley Securities.
So a couple of questions. I guess, one, you know you talked about the Milwaukee convention center expansion and kind of the group pace you're seeing this year kind of with and without the RNC then into next year. Can you maybe dive into the those kind of figures a little bit more in terms of kind of what rates you may be seeing versus last year and kind of how -- I guess more broadly, how you expect the expansion you mentioned to kind of boost kind of occupancy and RevPAR maybe in the region overall in the coming years?
Well, Chad, I think, looking up for some specific data to try and help give you some color on that, Eric. But overall, it should be beneficial to the overall market. That's the whole point of the convention center. The convention center actually was designed -- just to give a little color on what they did -- is -- we have a very tight -- we have a limited season here at Milwaukee. It isn't beautiful 12 months a year. It's getting better, though. This winter. But -- so 1 of the challenges that we had with the convention center was its size, and it basically could handle 1 convention at a time. Now -- and what would happen is there's that setup and takedown period that happens when you bring in a new convention. The -- and during that time, the convention center, you can't use the convention center, which -- look, the reason we build a convention center is to provide an economic benefit to the entire community, whether it's through selling hotel rooms and the room tax and all of that generates and the economic activity that generates or car rental or ride-sharing usage or retail or restaurants, all the things that a convention center brings. It's the generator. It's not the entity itself.
But the problem was it doesn't generate when it's in setup or take down. So when they built the center, when they made the decision to expand the center, the idea -- look, obviously, we can handle bigger conventions and the RNC is an example of that. But what should be -- what we're aiming to have happen with it is that you can back to back conventions. And so -- and that -- and we certainly have room in our hotel supply, especially on the west side of our town to handle more customers. And that -- and that should be the benefit of having the convention center being able to handle back-to-back conventions to just help the existing supply of hotels get better, and that should drive over time, higher rates and better occupancy.
And Eric, I guess -- sorry, Eric, let me just take a part on the -- on your question on the impact of the RNC. When you look at the third quarter, I'm not going to get into the specific impact of what the sell-out for the week means in terms of the rate that that's going to be at. But in terms of the uplift to the quarter for the portfolio overall, you should think about this as like an 8% to 10% RevPAR uplift for the division in the quarter. And there's a lot of other things that happened in that quarter. It's our peak season. It's our biggest quarter of the year. So there could be other puts and takes. But when we just look at what they are and [ C ] could mean, that's sort of how we think about it.
That helps. Maybe to just rephrase my broader question a little bit differently. Obviously, the -- they can handle now 2x the number of the conventions. I'm not going to make the assumption that the number of conventions in town doubled. But let's say, take a number, let's say, the number of conventions that the Milwaukee hosts goes up by 50% annually because of this. If you were to get what you normally get as your share of bookings and room rates and food and beverage from the convention business and that goes up by 50% as you maintain your share of that increased convention business annually going forward, what could that be into kind of annual revenues and EBITDA because of that?
I don't know that we have that number. I don't think it's that robust though. Even if that were to happen. Because remember, it is our busiest season. And we still have -- it will displace some business. It will drive some occupancy, but it will also displace some business at higher rates, but that's not a straight 50% add-on. So I don't know off the top of my head what we're projecting at the convention center for what it will mean. We can find that data.
Yes. And I'd just say, Eric, in terms of how they're booking events into the center, the building is going to open in May. And some of the event planners are going to want to see it done. And so the impact is probably more of a late '25 into '26 type of -- hitting the new run rate. And so we'll have, I think, have a better sense of what the feedback is from event planners as they get through the first summer here with the center opened, and then we can start to quantify what that impact could mean to us.
And even on top of that, like for example, there's a -- right after the RNC, there's conference of event planners coming here to see the new convention center. They have their annual conference, and they go check out whatever that, I guess, the shiniest, newest thing is. And they're coming here. And so that's when they're going to be able to evaluate our convention center, our hotel product, the whole market. But remember, these things are planned out years in advance. So this is -- you got to have sort of a really long-term perspective on this. It's great for the long term, but it's -- but you have to have a long-term thought for us to build up.
Okay. And 2 more quick questions. I guess 1 on -- just quick on the theater side. I know you closed a number of theaters last year. Is there anything -- I know if you can only come for valuation, but is there anything you can think of that's -- this year that's likely to be closed or exited?
Yes, I don't know -- we did quite a bit of pruning last year as we look at underperforming theaters. And as we look at lease maturities this year, nothing significant.
With the Loews Minneapolis agreement, I guess, one, how robust is the pipeline right now for additional deals, maybe relative to how it was a year or 2 ago? And then would you put that $2 million to $5 million investment kind of towards the lower end or the higher end of what you would consider for future deals?
The pipeline is better than it was a year ago. It's not like -- we're not -- it's not going crazy because the market is still -- it's still been somewhat with the financing markets, it's still somewhat tough to get transactions done and get buyers and sellers that come together. I read today that the housing market -- that now, the homeowners are starting to understand what the value is. So the transactions are happening there. So maybe that will happen in the hotel market.
But there are transactions happening. And so we have -- and we've got more -- we brought on Tiffany, and we're seeing better flow. As for the dollar amount, it's probably -- I was thinking about -- it's probably in the range, remember, we have 2 partners on this deal. So we're only really picking up 1/3 of the equity overall, and we'll take some limited partners even on our end as well. And so it's probably somewhere -- probably somewhere in that range even going forward.
Yes. I'd say it's pretty average. You could see us do deals in this structure in the $5 million to $10 million range, depending upon how big the asset is and how many other folks we have in the deal. But this is -- we'd like to do more of these with this structure.
[Operator Instructions] The next question on the line is from Jim Goss from Barrington Research.
All right. I'd like to pursue a little more on what Eric was just raising. The -- I know you always are rethinking business mix. And in recent years, you've taken this asset-light approach to hotels, but it does reduce the relative impact of the hotel space and your business mix. Now this might be a little bit more than some of the other equity stakes you've taken in some of the hotels. But I wonder if you just talk more broadly about what you think the mix should be, given how hotels have acted recently for you relative to some of the issues you've had in the theatrical side?
Jim, I don't think that we have a set mix at this point. It's going to be sort of what -- where do we see the best opportunities for our capital? And right now, where we're seeing opportunity is on the hotel side. To the extent that theater opportunities pop up, we're looking at them as well. And it will -- it's just sort of just -- I can't sit here and say, well, we got X percent figured for each one. Right now, the best opportunity looks to be on the hotel side. But we'll see what happens with theaters.
And I said, I don't know what's going to happen with that mix. Neither of our -- for us, we want to grow our businesses always. But neither of them really has -- or has a big scale benefit. We're not -- we don't see huge scale impacts. Because whether theaters, the scale really comes from marketing big national movies, which the studios are doing. And for hotels, it's the big -- generally the national marketing elements of the big hotel companies. And so -- it's not that -- that doesn't mean we have to say, okay, we've got to get to a certain scale size. We just want to keep growing them, creating opportunities for our associates, creating opportunities for investment.
Okay. And the -- I don't know if I recall you saying it was basically a 30 or 3 partners. So this does seem like a little step-up in the equity that you've taken relative to some other recent transactions. So that's of interest. Also, IMAX in its call was talking about a greater number of domestic opportunities for IMAX locations. And I know your focus is on your own PLF brands. But I wonder if you have any appetite in any of your areas for additional IMAX involvement? And also, is there a likelihood you would try to continue to pursue the multiple PLF brand options that you have in a number of your locations?
Look, it all comes down to what the deal looks like. As of now, the deal hasn't -- you can imagine -- IMAX has our phone number. They know how to find us, and we saw, of course, a thought to them through the years. But when we sit down and do the math, it makes more sense to continue with our UltraScreens and SuperScreens, which should perform beautifully. And I would tell you, I think I've [ support ] historically, probably the first PLF in the history of the business came from us many, many years ago. And with the first UltraScreen, which that theater doesn't even exist anymore. I think how long ago that is. And but -- it's a numbers question, Jim, and we just -- right now, we like ours.
The only thing I'd add to that, Jim, is -- and we've talked about it a little bit during the year is the operational flexibility that we get from our UltraScreens in terms of scheduling and content and flexibility to what we're showing. It allows us to be really nimble, particularly in locations where we have multiple PLFs. And we are looking at -- for 2024, a few opportunities to add some PLFs to the existing circuit and conversion. So not huge numbers, but we did some of that in 2023, and we're looking at a few more.
But I would also tell you, our PLF percentage, I think, is amongst the highest in the industry. In terms of attendance, PLF relative attendance, PLF is very high in ours.
All right. And 1 final one. You and others have talked about some additional alternative content popping up here and there. And I know you've been very creative in, say, creating a discount day. I think you were 1 of the early ones in doing that sort of thing, maybe the first. Do you have any similar thoughts to create some habit toward alternative content, maybe target? I'm not even sure what I have in mind exactly, whether it be a certain genre, movie or something like that on another weekday or day or something like that to maybe take advantage of the opportunity and the data you're able to exploit with your loyalty program to create an event that might make more out of the day than it would have been otherwise as you did with the discount in movies?
Well, I don't -- Jim, that's -- I would tell you that -- I like your thinking. And I don't have anything to tell you right this minute specifically, but -- but you hit on all the exact points, right? And we talk about how we're going to -- how we will continue to build with alternative content. And it is -- you're absolutely right. Our loyalty program is hugely important so that we can -- because as I just talked about a minute ago, at a national level, the scale is really important from the studio side, right, because they really need to be able to -- look, no matter how good an alternative content get, that's still going to be the huge piece of our business.
But our last customers are our most profitable. To the extent that we can build up our alternative content business, the ability to reach and talk and know who our customers are is of paramount importance, and we are stressing that inside the business. And then the idea of could you create a day, I'm not sure if it's a date, but the underlying importance is this idea of our business is one of momentum and no matter what it is, the more you come, the more you want to see. And so figuring out how to develop more frequency in an alternative content environment is extremely important as well.
So you are on to the important stuff. It's still R&D. We are working on things like that. A perfect example is Passport. Our Passport program is how do we sort of eventize and create something special around a bundle of alternative content? Harry Potter was unbelievably successful. And that really in a way was alternative content because it's [ reporatory ] content at this point. And we've got our Oscar Passport that -- no alternative content right this minute. Some of it could almost be, but it's how do we do things like that and know our customers better, and that's where it does become important to leverage our loyalty program. So you're right on.
All right. Well, thank you very much. Appreciate it.
At this time, it appears there are no other questions. I'd like to turn the call back to Mr. Paris for any additional or closing remarks.
Thank you, operator. We'd like to thank everyone for joining us today for our business update. We look forward to talking with you again in early May when we release our first quarter results. Until then, thank you, and have a great day.
That concludes today's call. You may now disconnect your lines at any time.