MGM Resorts International

NYSE:MGM

Earnings Call Analysis

MGM Resorts Reports Record Revenues and Optimistic Outlook for Growth

MGM Resorts announced record third-quarter revenues, with consolidated net revenue climbing 1%, and adjusted property EBITDAR increasing by 2%. Las Vegas showcased strong demand, highlighted by a 3% rise in average daily rates (ADR) and a 250 basis point increase in occupancy. Regional properties also grew revenues by 3%. Notably, MGM China achieved a 14% revenue increase, prompting a special dividend of approximately $200 million for 2024. The company anticipates continued growth, aiming for a 9% increase in revenue for the year while maintaining healthy margins. Investment opportunities in digital operations and international markets were emphasized.

Record Performances Drive Positive Outlook

MGM Resorts International reported a record-breaking third quarter with consolidated net revenues reaching unprecedented heights. Notably, the Las Vegas segment witnessed revenue growth of 1%, paired with a 2% increase in adjusted property EBITDAR. Strong indicators, such as a 3% rise in Average Daily Rate (ADR) and a significant 250 basis points improvement in occupancy, underscore the resilience of the Las Vegas market. A key performance driver this quarter was the recovery from a prior cybersecurity incident, resulting in $37 million in business interruption proceeds, adding a substantial boost to revenues.

Regional Strength and Macau's Market Share

MGM's regional properties saw a 3% revenue increase and a 2% rise in adjusted property EBITDAR, attributed to robust slot operations and heightened customer engagement. In Macau, the company achieved a remarkable 14% year-over-year revenue growth and a 5% increase in adjusted property EBITDAR, maintaining a strong 26% margin. With a market share of 15%, MGM China continues to expand, highlighted by a special dividend announcement totaling approximately $200 million for 2024.

Digital Growth and Profitability in BetMGM

The digital segment showcased strong results, particularly for BetMGM, which achieved profitability and set a record in iGaming performance. The company reported a 70% increase in first-time depositors, indicative of strong customer acquisition strategies. Moving forward, MGM is optimistic about capitalizing on market growth, especially as it launches new products and integrates enhanced functionalities in response to sports seasons.

Anticipated Growth in Key Markets

Looking ahead, MGM Resorts is focused on organic growth strategies, with plans to enhance operations across both Las Vegas and regional markets. Company leadership remains confident in their ability to improve margins, aiming for mid-30s EBITDAR margins while navigating potential challenges. They project an improved EBITDA performance for 2025, despite potential short-term headwinds attributed to competitive pressures and economic fluctuations.

Development Plans and Future Opportunities

MGM is strategically positioned for long-term growth, with major developments underway in Japan and New York, as well as plans for expansions in the UAE and Thailand. Their development pipeline is considered unmatched, providing significant potential for earnings diversification and market penetration. With a strong balance sheet characterized by low debt levels and ample cash flow (approximately $944 million in free cash flow this year), the company is well-equipped to explore new opportunities and return value to shareholders.

Operational Strategies to Enhance Performance

MGM Resorts emphasized ongoing initiatives to optimize operational efficiency, targeting an additional $200 million in savings by refining cost structures. Improvements in customer pricing and engagement models are expected to bolster revenues organically. The exemplary service standard set by MGM employees across global locations plays a crucial role in sustaining high performance levels, contributing to the company's robust operational foundation.

Key Risks and Revenue Guidance

The management acknowledged potential risks, including fluctuating demand and economic conditions impacting high-end clientele, particularly in table games. As it pertains to table game revenues, particularly baccarat, there was an expected $80 million fluctuation compared to last year's performance, which may influence fourth-quarter results. Despite these nuances, MGM remains poised to sustain overall growth, targeting full-year revenue increases of around 9%.

Earnings Call Transcript 2024-Q3

[Operator]

Good afternoon, and welcome to the MGM Resorts International Third Quarter 2024 Earnings Conference Call. Joining the call from the company today are Bill Hornbuckle, Chief Executive Officer and President; Corey Sanders, Chief Operating Officer; Jonathan Halkyard, Chief Financial Officer and Treasurer; Kenneth Feng, Executive Director and President of MGM China Holdings, Hubert Wang, COO and President of MGM China Holdings; and Andrew Chapman, Director of Investor Relations.

[Operator Instructions] Please note, this conference is being recorded. Now I would like to turn the call over to Andrew Chapman. Please go ahead.

[Andrew Chapman, executive]

Good afternoon, and welcome to the MGM Resorts International Third Quarter 2024 Earnings Call. This call is being broadcast live on the internet at investors.mgmresorts.com, we have also furnished our press release on Form 8-K to the SEC.

On this call, we will make forward-looking statements under the safe harbor provisions of the federal securities laws. Actual results may differ materially from those contemplated in these statements. Additional information concerning factors that could cause actual results to differ from these forward-looking statements is contained in today's press release and in our periodic filings with the SEC. Except as required by law, we undertake no obligation to update these statements as a result of new information or otherwise.

During the call, we will also discuss non-GAAP financial measures when talking about our performance. You can find reconciliation to GAAP financial measures in our press release and investor presentation, which are available on our website. Finally, this presentation is being recorded.

I will now turn it over to Jonathan Halkyard.

[Jonathan Halkyard, executive]

Thanks, Andrew. Good afternoon, and thanks, everyone, for joining us today. I'm happy to report that MGM Resorts posted record third quarter consolidated net revenues and record third quarter revenue and adjusted property EBITDAR at MGM China. Additionally, we saw record ADRs in Las Vegas and record occupancy at our Regional resorts. These outstanding results are a testament to our MGM Resorts colleagues worldwide who are admitted to providing outstanding service to our guests every day. Thank you for your dedication, hard work and commitment to operational excellence. All of us on the senior leadership team are proud of what we continue to achieve together.

As a team, we continue to raise the bar here in Las Vegas and in our Regional properties. In fact, MGM has nearly doubled its EBITDAR in Las Vegas since 2019 and has grown Regional EBITDAR by almost 20% over that time period. We've improved our properties and operations to attract new sports and entertainment drivers. And as a result, our business is in a stronger position than ever.

Turning to the details of our results first in Las Vegas. Revenues were up 1%, while adjusted property EBITDAR was up 2%. We grew month-to-month during the quarter with many of our key metrics demonstrating strength, including a 3% increase in ADR, an occupancy increase of 250 basis points and 4% growth in slot handle.

The Las Vegas properties this quarter benefited from $37 million in business interruption proceeds related to the cybersecurity incident a year ago. In the fourth quarter here in Las Vegas, we're encouraged by the stability of demand that we're seeing. We're also gearing up for year 2 of F1 which, while not as large as last year's event, still brings significant economics to MGM during what has historically been one of the slowest weekends of the year, no more.

Within our operating model, our team is focused on driving organic growth through ongoing cost review and strategic customer pricing initiatives. These activities will combine to further bolster our organic growth story.

Now moving to the Regional properties. We grew revenues by 3%, while adjusted property EBITDAR increased by 2% driven by strong slot handle and growth in rated days, our best indicators of overall visitation to the properties. Our regional properties this quarter benefited from $15 million in business interruption insurance proceeds. The insurance proceeds we received in the quarter totaling $52 million, we believe, represent less than half of the funds we'll collect ultimately.

In Macau, MGM China achieved a record-breaking third quarter with net revenues increasing 14% year-over-year and adjusted property EBITDAR rising 5%, resulting in a 26% margin. Our market share for the quarter was 15%. Given our outstanding performance this year, MGM China announced a special dividend, bringing total dividends to MGM Resorts to approximately $200 million in 2024.

In digital, I'm very encouraged by BetMGM's third quarter performance. During Q3, we achieved profitability again, record iGaming results and a 70% increase in first-time depositors while stabilizing market share.

I'll conclude, as always, with a few thoughts on our free cash flow algorithm. Through the first 9 months of the year, our revenues have grown by 9%, generating $1.7 billion of cash from operations, with capital expenditures of approximately $750 million, this results in free cash flow of about $944 million.

Looking ahead, we plan to build upon this strong foundation with organic growth from our resort operations, building on our long-standing track record of outpacing the escalators on our fixed rent, incremental value from a commercial gaming license in New York, significant value generation from our online operations, both in North America through BetMGM here in the U.S. and globally through MGM International Digital, fixed rate interest with no near-term maturities and relatively flat maintenance capital, all augmented by opportunistic repurchasing of our shares.

Bill, over to you.

[William Hornbuckle, executive]

Thanks, Jonathan, and good afternoon, everyone. I'm happy to say that MGM is in a great position today due to the strategic choices we've made over the past decade. These choices have transformed MGM Resorts, giving us a strong financial foundation and unmatched growth opportunities. Our globally recognized brands, prime locations, development opportunities and evolving digital platforms enable us to reach more customers in more markets than any other company in our sector. .

We operate in a large scale with 18 global casino properties, over 75,000 employees worldwide and a total addressable market exceeding $150 billion, including both our physical resorts and online markets.

As we continue to expand internationally to drive long-term value to our shareholders, we remain bullish on our leading position in Las Vegas in the short term. First, Vegas has consistently grown over the past 30 years plus with the Strip's gross gaming revenues reaching all-time records in about half of those years, even in the face of various macroeconomic conditions.

As Jonathan noted, as we saw record ADR in the third quarter, which is a testament to the strength of this market. We're reinforcing our goal of being the industry leader in groups and meetings and have invested, as you know, over $100 million in the now complete [ Mandalay Bay ] Convention Center, which saw record catering and banquet results in 2024.

MGM's omnichannel advantage is now more than meaningful opportunity with the launch in the third quarter of single app single, wallet here in Nevada. Our relationship with Marriott continues to exceed our expectations. Bonvoy gifts are driving higher spend to our properties. And we also announced last week plans to rebrand our [ Delano Tower Manley Bay ] to a W Resort, which has significant brand recognition.

Over the past decade, Las Vegas has become a major player in the sporting world, while we're already home to many major sports leagues in America, the city continues to build on its impressive track record. A great example was the USC LSU game in September that saw a sold out [ Allegion ] stadium and demonstrates the growth potential beyond global events like the Super Bowl.

We're looking ahead to the relocation of MLB's -- as hosting the NCAA's Men's Final 4 in a few years and are hopeful and are working towards an NBA expansion team. These events will continue to draw more visitors to Las Vegas and our prime Strip footprint positions us to capture greater wallet share, driving the organic growth, we are confident Las Vegas will continue to deliver for many years to come.

In the regions, we continue to experience stable results across the portfolio, supported by a rational promotional environment and a stable economic backdrop. Looking ahead, we expect our regional properties to remain reliable sources of free cash flow with almost all of our properties being market leaders located in affluent areas and operating with relatively low capital requirements.

In Macau, we had yet another record quarter of growth driven by robust mass market volumes, our exceptional Golden Week performance, which just concluded with volumes up 20% compared to 2019 underscores the region's post-pandemic recovery and the resilience of the general economy and positive momentum still in Macau.

Our team continues to perform at a high level, and we remain confident in our long-term ability to sustain market share in the mid-teens. We're also investing in several capital improvements across our properties aimed at protecting our premium mass market position and driving organic visitation. These initiatives include the renovation of Macau's villas and conversion of base rooms and [ Cotai ] into suites, increasing our suite count by 25%.

Additionally, we are excited around the upcoming launch of our new show, MGM 2049 scheduled to open by the year-end. It's produced and directed by [ Johnny Moe ] the creator of the 2008 Beijing Olympics opening ceremony. And in connection with our government commitments, we're also excited by the new poly museum in MGM Macau to further expand on our cultural nongaming offerings and to drive visitation.

In digital, same as in our land-based business, we're also always focused on continuing to enhance the customer experience. This quarter, BetMGM launched a single account, single wallet feature in Nevada for football, and the results were immediate and profound leading to a doubling of first-time depositors here in the state.

We also further integrated Angstorm, enhancing our Parley product offerings and through the first 8 weeks of the season, we saw a 200 basis point increase in the percent of bets coming from both traditional parlay and same game parlays. As we move to the football season, we are closely monitoring this increasingly encouraging metrics as first-time deposits, retention and reactivation to ensure sustained growth and engagement.

Internationally, in the third quarter, we entered into a strategic venture with the Grupo Global, Latin America's largest media group based in Brazil. This venture is meaningful as it allows us to leverage MGM's legal Vegas technology and gain access to 70 million people, providing invaluable insights into Brazil's consumer market. This aligns with our broader strategy to expand our digital footprint globally and tap into emerging markets. We aim to launch in January of '25 pending licensing approval.

In terms of development, we are making significant progress in Osaka, aiming to complete ground preparation starting main construction in the middle of next year. In New York, we continue to advance our zoning requirements and plan to submit our RFA sometime as well in the middle of late next year.

Beyond these accomplishments, we are actively pursuing other global growth opportunities, including the UAE and Thailand. These initiatives will fuel future growth and diversify our geographic reach and our earnings sources. Our momentum is backed by a solid balance sheet, characterized by low debt and significant liquidity ready for strategic deployment with a strong pipeline of initiatives spanning short, medium and long term, we are well positioned to sustain growth and drive future success all while returning cash to shareholders.

Of course, none of these ambitions can be made possible without the commitment and dedication of our people to improving service consistently and delivering operational excellence 24 hours a day, 7 days a week. I'm always mindful of their efforts and always grateful for their loyalty to MGM Resorts and our guests.

With that, operator, we'll now take questions.

[Operator]

[Operator Instructions] Today's first question comes from Joe Greff with JPMorgan.

[Joseph Greff, analyst]

I'd love to start with Las Vegas. Obviously, numbers here were a little bit soft on the table game volume side. Can you tell me what's going on? Or are we just kind of seeing broad normalization in that segment? And as we kind of think about the go forward in Las Vegas, are we kind of thinking that, that trend continues and we're sort of looking at this $700 million or a little bit less kind of run rate quarterly EBITDA with margins that are in the -- more towards the low 30s versus the mid-30s, like what you guys reported here in the 3Q ex the insurance proceeds benefit.

[Jonathan Halkyard, executive]

Thanks, Joe. It's Jonathan, and I'll address that one. First of all, in terms of our margin expectation, we continue to believe that our Las Vegas operations can produce margins in the mid-30s on an EBITDAR basis. As it relates to your first question or the first part of your question, it's clear, our table game drop was down year-over-year pretty significantly, and this was due almost entirely to our high-end [indiscernible] business. And I mean this is the way this business is and that the timing of the trips from these largest customers is not, of course, our choice.

And so some of that just didn't fall in this third quarter as we would have expected it to and certainly as it did last year. Then we, of course, have -- we have the varying fortunes of our hold percentage and that has some fluctuation year-to-year. Although I'd note it was pretty normal during the third quarter.

So I do look at these as mostly timing issues. There's nothing that we're seeing in the table games business that would indicate any kind of softness going forward, we still think that, that's a robust part of our business.

[William Hornbuckle, executive]

And Joe, maybe a couple of points of color. Our gross profit on the balance of -- take baccarat out of the equation, on the balance of our database and all of our programs and programming, I think for the quarter was up 12%. And so I think it shows you take out the top 6 or 7 players where there was a substantive swing either between mix -- not mix, between hold and not showing up. It accounts for a great deal of the miss.

And then maybe another top line, 7 of our 10 properties had revenues up across the board for the quarter. I can assure you it was the top ones because of [indiscernible] did not. But I think to think about it fundamentally, and you think about some of the things we talked about earlier, ADR, slot handle up, fundamentals are still strong, and we're excited by that continuing to move forward.

[Joseph Greff, analyst]

And just to kind of give us some sort of perspective on baccarat's composition within the total table games drop. If we were to look at trailing 12 months or 2023, what percentage of drop comes from baccarat and if we were to look at segment margins on that, how do they compare to the rest of either the gaming segment or to the overall Las Vegas Strip portfolio?

[William Hornbuckle, executive]

Corey is looking for the exact number, but maybe I'll put it in perspective. And we hate doing this because every time we do this, we get the other side of this coin, but hold was off down, although normal 15% from the year before. And between that and this business, it's like an $80 million [indiscernible] for us. So you can understand the quantum of that number versus anything that -- particularly as comparative to last year.

[Corey Sanders, executive]

If you look at year-to-date, it's about 30% of our drop is baccarat.

[Operator]

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

[Shaun Kelley, analyst]

Bill or Jonathan, wanted to ask about BetMGM a little bit. So the high-level question is maybe just on the strategy here. Bill, it sounds like you're encouraged by some of the Angstorm KPIs that you're seeing so far. But can you walk us through just sort of how you're evaluating that more medium term, specifically in the context of -- we have seen sort of the fight change a little bit by some of the other operators in the market who have started to kind of pivot to focus a bit more on the icasino side with some success there. So how are you kind of seeing the 2 business lines, OSB versus iGaming progressing? And how do you think about allocating resources there in the medium term?

[William Hornbuckle, executive]

Yes, I'll kick it off. Look, we've said and we still believe this, particularly with the new product lineup coming into the third and fourth quarter for football that 2024 was going to be an investment year. I think the new product, and I call out our friends and Entain that ultimately deliver this for us. It has done what it needed to do. It is faster. Our parlays are up a couple of hundred basis points, as I indicated earlier. Our retention is up, which we think is positive. The top line -- the very top line of GGR is up close to 20% for the quarter.

And so we find ourselves continuing to want to invest to grow the top line. Our quantum of our iGaming business is substantive. And we ultimately could take a different strategy remembering and recognizing to get prepared for this launch, we've committed commercially to both terrestrial as well as sponsorships into the third and fourth quarter, [indiscernible] if we want to stop tomorrow, we couldn't necessarily. So we are studying it. We like what we see early on in terms of these green shoots. We think they're meaningful. We think they'll pay dividend in the long run for sure.

And the other surprising thing to me, iGaming, even in a state like New Jersey is up plus double digits. And that's a state that said, iGaming -- I don't know, 15 -- I can't remember how long it's been, but it's been an extended period. So we continue to see growth there as well. And our business is substantive that the moment we want to turn philosophically to, I think, what others have done, it's there for us. But as long as we're seeing top line grow by 20%, I think for the rest of this year, we're going to be in the mode that we're in.

[Shaun Kelley, analyst]

That's helpful. And then maybe just my follow-up, just kind of continuing with the same thought. Just I think generally, the profit targets given the investment year imply the loss in the second half where I think is supposed to be similar to what you saw in the first. Obviously, the quarter was pretty good. So should we sort of manage or expect a bigger dip in Q4, just given, I think, the timing of the way some of the expenses hit? And then any investment in Q1 or early next year around Brazil?

[William Hornbuckle, executive]

Yes. So as it relates to BetMGM, I think what we said earlier in the year is going to hold true. I think that's a good way to look at the business. And in terms of -- we're going to launch a big market. Now remembering our partner, Globo has put in -- this is not a standard sponsorship deal. This is truly an equity deal. They've put in advertising dollars for equity. And so the expense of that, while meaningful to all of us, will be handled and looked at differently -- not differently, but it will be part of what they do in terms of the business. We provide the technology. They provide the media platform.

And so -- but yes, we're going to launch in a new country. And so that number will be in the tens of millions over the course of the year. But we -- time to tell where we ultimately end up. There's probably going to be a lot of competition. There's already many, many folks who have operated inside the gray market there. We love Globo as a partner and its scale. It literally controls about 80% of the eyeballs in Brazil. And we think where our product offering is going to be substantive and meaningful.

[Operator]

The next question comes from Carlo Santarelli with Deutsche Bank.

[Carlo Santarelli, analyst]

Bill, I just wanted to ask about something you mentioned about the $80 million baccarat swing. Clearly, as we look at the fourth quarter, you guys had tremendous kind of luck presumably with high-end customers in the 4Q last year, whole percentage comparison, one of the toughest I could recall in a very long time. Could you guys maybe try and put some parameters around that, whether it's from -- well, I guess, EBITDA perspective, we could all do the GGR perspective, but to kind of give us a sense for how we should be thinking about just that headwind alone as we think about the fourth quarter?

[Jonathan Halkyard, executive]

Sure, Carlo, it's Jonathan. Yes, I -- we look fondly on that quarter for the quarter of 2023. If memory serves, we did $860 million or $870 million or so of EBITDAR. The -- I think the simple math is that probably benefited us by about $70 million during the quarter -- during the entire quarter. So we're, of course, fighting the good fight to attract customers back to our properties, including those customers.

And then the other thing I would mention, though, is that as we look forward, we've talked about November a bit, but as we look forward in December, we are seeing some very healthy group environment and pretty healthy pricing for the hotel -- hotels in our system here in Las Vegas as well. So there are some offsets to that, but it was about a $70 million number last year.

[William Hornbuckle, executive]

And I would say it will be helpful, the Formula 1, despite the slow start on rooms and some of that's not catch-up-able. When it comes to gaming, we're looking at an equal, if not better theoretical entry into that event. Now as you know, anything can happen but we are excited by at least at the high end, what that event continues to generate for us in terms of people coming in.

[Carlo Santarelli, analyst]

Great. And then just as it pertains to the 3Q, it looks like [indiscernible] revenues promotions in the gaming segment were somewhere in the range of like 46% of your gaming revenue in the period. Is that -- that's up year-over-year. There's clearly moving parts. Obviously, you had a nice hold comparison in the third quarter last year that's going to shift that percentage around a little bit. But is that level of kind of reinvestment that 44% to kind of 46% window you've been in for the first 9 months of this year, a decent go-forward rate, given kind of the mix you're shooting for and hotel room nights you're shooting for and the -- obviously, the maximizing profit within the business?

[Jonathan Halkyard, executive]

Yes. I would say it is a pretty decent rate. We had a good level of casino room nights during the third quarter. And that's -- so that reflects in the contra expenses, but I think that it's a safe level going forward. .

[Operator]

The next question comes from David Katz with Jefferies.

[David Katz, analyst]

I just wanted to go back to the sort of [indiscernible] some progress there. I think Bill [indiscernible] in the past, you've said that you sort of like to own all of it one day, if you could. And I just wanted to get a sense for if that's still true and how you think about in the context of repurchasing stock versus keeping powder dry for that? No follow-up question.

[William Hornbuckle, executive]

Yes. David -- I think I heard your question, but for some reason, it was extremely loud. Look, our relationship with Entain continues to strengthen. I think I've said it last call, stating on this call. We think the management change has been productive, and I think in the long haul will be good for both their business and ours. We like the product and the direction it's going and what we've done.

And so we like where we are with them. There's always room for improvement on both sides of this. But for now, that's our position, and that's really all I'm going to say about it.

[Operator]

The next question comes from Stephen Grambling with Morgan Stanley.

[Stephen Grambling, analyst]

Just I guess focusing on operating expenses, I think that when we adjust out the insurance proceeds, it's around 6% year-over-year in the Regions, 3% in Vegas. Was there anything unique in either of these numbers this quarter?

And then as we think about next year, are there any puts and takes to consider in operating expenses as we think about what level of growth you need to hold margins?

[Jonathan Halkyard, executive]

So yes, Stephen. On the expenses, there were some unusual items in both Las Vegas and the regions. In Las Vegas, we had collections expense of about $20 million over last year in the third quarter. And that is a formulaic exercise that we do, looking at our casino receivables. There's no -- there's nothing that indicates any kind of degradation in the credit quality or the payments of our casino customers. It's just the way the timing worked out.

And in the regions, we had about $15 million of unusual expenses year-on-year. Those related to -- one was a kind of an operational issue we had in Atlantic City in July, and then there was a worker's comp accrual and so on. So about $15 million in the regions.

In terms of OpEx for next year, there's really nothing that I would call out right now. And I would also add -- just one more thing. I would add that in the -- in Las Vegas and in the regions, our FTE count was flat to even down that 1% year-on-year.

[Stephen Grambling, analyst]

That's helpful. As a follow-up on BetMGM, just to clarify, I think you said 20% growth in revenue or maybe that was GGR. Can you clarify what that split maybe looked like between iGaming and OSP?

[William Hornbuckle, executive]

Yes, hold on one second. Let me get you the number. It's very small. Sports was a little over [ 20%, ] and iGaming was almost at that same point. They're both on par really, interestingly. .

[Operator]

The next question comes from Dan Politzer with Wells Fargo.

[Daniel Politzer, analyst]

I have a digital question, more on the direct digital business. Bill, you talked in the past, I think, around putting about $1 billion into this endeavor. I guess where do we sit here today relative to that number? I think you got pushed, LeoVegas, some live dealer, Grupo Globo. And along with that, when could we expect to see a return there?

[William Hornbuckle, executive]

Yes, we're -- as it relates to raw capital, we're all in. We don't anticipate any more capital in BetMGM. We don't anticipate any more acquisitions as it relates to MGM Interactive, in-house, we call it, which is the LeoVegas arm and some of the other stuff we've told you we've been doing.

And look, we have three markets under launch right now, U.K., Netherlands and soon to be Brazil. I think by the late part of next year, all of that will manifest itself, unless there's something else that breaks of scale, I think as we come out of '25, we're going to be something substantial across the board leading into '26. And I think for us to think about '26 and beyond $400 million, $500 million in cash flow and then some is just not out of the -- as I kind of suggested earlier, we could turn the lever on some of it today and push half of that out to the front door, I think. So I think that's a reasonable expectation.

[Daniel Politzer, analyst]

Got it. And then just turning to Macau. You've lost a little bit of share in the quarter. I think that was the second quarter in a row. Is there -- how should we think about maybe the impact of the [ Londoner, ] which I think is kind of in the stage of the reopening. And along those lines, obviously, there's some stimulus that's been introduced to the market. When could we maybe look for that to be measurable or to see if there's any impact there?

[William Hornbuckle, executive]

Kenny or Hubert, you want to handle that one, please?

[Xiaofeng Feng, executive]

Okay. This is Kenny. I think Londoner opened in September. There -- and we -- as you guys all know, like Geographically, Cotai MGM -- Cotai is like 4, 5x smaller compared to Las Vegas Strip. MGM Cotai is always trying to become a destination of this like region. One -- we believe more new products, more newer, more products in the market and the MGM Cotai will benefit. And as -- Bill just commented at the beginning, like our outstanding performance like a Golden Week, further proved [indiscernible] opened like all of us benefited.

[Zhi Qi Wang, executive]

I think that -- this is Hubert. I think that we're looking at a longer-term market share to stabilize around mid-teen level. So this is what we have communicated to the Street in the past. I think that we are confident that we can deliver this number. I think that in the next year, particularly in the second half of next year, where we have all the projects completed to create incremental revenue, I think that we'll be in good shape, maybe some upside surprise with these products coming online second half next year.

[Daniel Politzer, analyst]

And then just any comment on the stimulus and when we might be able to see that in the market? And that's all for me. .

[Xiaofeng Feng, executive]

I mean the -- China economy, like, as we all know, like we still believe the stimulus matters, they are still unfolding. Like Macau is a very special segment of the overall regional economy like particularly for MGM, like we are very focusing on premium mass, like from the visitation and also from the GGR, you can see how resilient they are. So we want to see like if there are more measures like stimulus measures, definitely, like we will all benefit in the long run.

[Operator]

The next question comes from Brandt Montour with Barclays.

[Brandt Montour, analyst]

Great. First question is on Las Vegas. Just curious, when you look at the third quarter by month, if you saw any sort of different trends throughout the month July, August, September, I'm assuming weather maybe had an impact on 2 of those months, but then also thinking about that question, but again, taking out that business that you called out and leaving just the [indiscernible] business, and just focusing on the database and the more stable side. Did you see any sort of changes throughout the quarter? And then how does that same trend go into October?

[William Hornbuckle, executive]

I'll start and Jonathan can fill in any detail or query that I miss. Look, July was -- I know you've seen this and know this in the numbers, was pretty bad for the entire community, including us. We had 8 days in a row of 120-degree heat compounded with I-15 was relatively close for 3 days due to a truck rollover with a battery and that they didn't seem to -- know what to do with it. So July was impacted substantively and then the quarter got better. August was better. We had some substantive convention business in. And then September as well came in well. Ultimately, some of the core things that we'd hope for ADR -- AC, slots of note, all produced leaning into our casino database to make that happen. So I don't know if you got...

[Corey Sanders, executive]

Yes. The other thing I would add is, July did have 2 less weekend days. The UFC fight the year before was actually in June. We're -- so it was in July last year, it was in June this year -- at the end of June. So we didn't get the July 4 benefit there. And there's a pretty big international soccer game at the end of July that we also missed. Then as we got into August, September and even what we're seeing in October, it feels fairly normal, very similar to what business has been. And I think we're pleased with what we see.

[Jonathan Halkyard, executive]

Yes. For October, our occupancy here in Las Vegas will be 97%. Revenues are steady and still seeing the nice growth in slot handle and our regional properties actually are having pretty a strong October.

[Brandt Montour, analyst]

That's all really helpful. And then just a follow-up on Las Vegas. Again, just looking at a little further, obviously, not giving -- asking for guidance or anything, but just your feelings on looking out to '25 for the business that you do have visibility in, grouping convention, what the pace that you're seeing so far is for the full year? And then any sort of quarters where there's calendar movements or changes or things that we should keep in mind for modeling purposes?

[Jonathan Halkyard, executive]

Yes. I think that as we look broadly in 2025, we do see overall cash rates in Las Vegas growth. And a couple of key calendar items, I'm sure you're aware of this. We had -- with the Super Bowl last February, that will impact us year-over-year, probably to the tune of $60 million to $70 million in the month of February. .

The only other thing that I would call out as we look to '25 generally is we will be -- actually already started modestly, a renovation of the MGM Grand Hotel's standard rooms. So this is 4,000 standard rooms, it's a fantastic property. It's time to do that. And that will have an impact in our results, although we'll, of course, do our best to migrate that demand to our other properties here in the city. But those are probably the only 2 big 2025 items I would call out.

[Operator]

The next question comes from John DeCree with CBRE.

[John DeCree, analyst]

Maybe one, I guess, kind of -- capital management -- to build off of the comments about some of the growth CapEx you're doing. For some of the larger stuff is -- in the past, [indiscernible] MGM was quite large in a full renovation, but is there an opportunity to utilize your partners do anything of more substance or kind of how well Vegas has been growing, monetize some of your capital improvements? Is that a kind of a consideration in this financing strategy at all?

[William Hornbuckle, executive]

John, I think you muscled on the -- what partners? We didn't catch that.

[John DeCree, analyst]

Your [ RE ] partners. There's expansion plans at Bellagio, a big renovation of the rooms at MGM Grand, is financing from them or monetizing some of your growth CapEx and consideration in the financial strategy?

[Jonathan Halkyard, executive]

Yes, it's a very good question. I'm glad we asked for the clarification. [ VICI and Blackstone ] are great partners of ours. We do look at that as a financing option. I think not to speak for them, but I think they would stand ready to help us in that regard if we felt as though that made sense in terms of cost of capital. I think we would probably not go that way to finance a renovation of the property. But to the extent we contemplated an expansion of 1 of our businesses in Las Vegas or the regional markets that would absolutely be something we would look at.

[John DeCree, analyst]

That's helpful, Jonathan. And maybe one of the Marriott partnership. In prior quarters, you've given us some color about some of the metrics that you've seen and KPIs and how well that -- how well that's going. And as you look into '25, if anything has changed as you get further along in the partnership, are you kind of seeing kind of continued expansion or utilization of that? And so just love to get your kind of updated thoughts on how that partnership is going and kind of what you're seeing.

[William Hornbuckle, executive]

I'll kick it off. So as of last week, we did 2,500 room nights a day, which is an all-time record. We're probably pacing 20% above our own expectation for the year. The group business continues to come in and it's interesting groups. I think I mentioned this last call, but -- it's not -- huge groups that we knew because of the business that we're in already, but it's mid-tier, 200 to 300 room groups, Midwest stuff we had not focused on, and I think they're going to be a really good opportunity for us to bring in that we might not otherwise have seen and gotten to. .

And then the utilization, it's 70% cash, 30% redemption, and we like that, particularly because of the additional spend that these folks bring in. So we're, I think, very pleased with where we are.

[Corey Sanders, executive]

I think the upside, in particular is the W and what we're doing at the [indiscernible] that property had very little brand recognition and was we weren't able to sell it on the Marriott channel. So now with the change of that name, and we believe that will be in place by the beginning of the year. We think there's some upside on the ADRs and the occupancy at that property.

[Operator]

The next question comes from Barry Jonas with Truist.

[Barry Jonas, analyst]

I just wanted to make sure on F1, are you still looking at that sort of $30 million-ish year-over-year EBITDA headwind? Or has anything changed at all since Q2 earnings call?

[William Hornbuckle, executive]

No. I think we're still looking at the same number. The thing that we can't replicate is when it was first announced last year, it sold out relatively quickly, and particularly our hotels. And so the leverage on that kind of yield type time frame, we were selling rooms at Bellagio for $2,000 a night. And so it's really the big 3 that will carry that burden.

The other thing is the construction of the Fountain Club out in front that some of you have maybe seen or experienced, it's incredible. That being said, last year, it was capitalized, this year, it needs to be expensed. And so you put the combination of those 2 things together unless we get really lucky in the casino and all things can happen, we think that number holds.

[Barry Jonas, analyst]

Got it. Got it. And then just for a follow-up. I wanted to see if there's any update on some of those other international development opportunities you're looking at, whether that's UAE or Thailand?

[William Hornbuckle, executive]

In Thailand, I've made my third trip. We'll continue to monitor it. we've said we're going to do that in consort with MGM China Holdings. [indiscernible] and I just made a trip there. It's working its way through the legislation, ultimately, hopefully, through their parliament. We hope by early next year, something will be announced. We like what we hear to date in terms of tax. We like the investment ratios that we hear. Obviously, it's a great place to build relatively cheaply as compared to other markets. The cost of doing business there is extremely low.

So from an operating margin perspective, we love the opportunity it could bring. But I think we're still a long way away from getting it to the finish line. UAE, we continue to monitor closely. There's obviously a couple of other opportunities that will probably come forward. We love our position in [ Porto ] Island. That has started in earnest and construction is now starting to come out of the ground. They're pouring foundational concrete as we speak. And so that's a late '27 project.

And so we'll see, ultimately, once the decrees come out by Emirate, who wants to do what. But we're keenly focused on it. And we would love -- we love our Dubai project. I would particularly love it, obviously, if it had gaming.

[Operator]

The next question comes from Steve Wieczynski with Stifel.

[Steven Wieczynski, analyst]

So Bill, look, I fully understand you guys don't give formal guidance. But if we think about next year, can you maybe help us think -- help us think from a high level how you guys are thinking about your major markets? Essentially, trying to understand if you think you'll be able to grow EBITDA both in Vegas and your regional assets given some of the headwinds and whatnot that you've already called out.

[William Hornbuckle, executive]

Look, we are suggesting in 2025, particularly in those 2 markets that we can improve. It will be massive. But I think one of the ways we're going to do that and get our margins back on track is we've started on a -- I hate to use the word program, but we've started on an initiative that we're trying to get $200 million out of the bottom. And we're thinking -- for getting the obvious places to go get revenue, we think there's a few more to get revenue off of the top. And so we think that will be accretive to margin more than anything else.

We think the markets continue to grow at a couple of percentage points. You heard Jonathan. We do have some headwinds. We've got the Super Bowl. We've got some of the other things that we mentioned. But the bar that all of this has been set at and the level that we're at, we think we have some room to grow and go particularly in the long run here.

[Steven Wieczynski, analyst]

Okay. Got you. And then second question, if we go back to Macau real quick. If we look at the third quarter, the margin in Macau came in just a little bit, probably a little lower than what we were kind of looking for. Is there anything there you would call out in terms of pressuring the margin in the third quarter? And then maybe also a little bit more color on the current promotional environment that's happening right now over there.

[William Hornbuckle, executive]

Yes. Let me handle the front end of this, and then Kenny and/or Hubert could kick in. Look, I mentioned the show earlier for a reason, that's coming with expense. It's a major show and it's something we're all pretty excited about as well as the expenses surrounded by launching a museum, it's an amazing museum once anybody and everybody sees it.

And so while we're excited by those and hopefully delivering on the promise we made to the government, they do come with some expense. I've been led to believe and do that the promotional environment is actually lessened in the context of expense with some of the programming that was going on earlier in the year. So Kenny and Hubert, you want to talk about that in terms of cost and how you think about it for '25?

[Xiaofeng Feng, executive]

Yes. Okay. Thanks, Bill. This is Kenny. Like in the third quarter, we had a onetime cost to payroll and some costs related to entertainment spend to help fulfill our concession commitment. But we still aim a margin -- operating margin of mid- to high 20s. But as you now know, we are managing our dynamic business. Industry revenue growth, seasonality, hold, lag factor, event scheduling, they all affect margins. But we are very, very disciplined on gaming promotions and incentives. They are very -- we expect them to be -- continue to be steady. I think -- but we still focus on incremental EBITDA dollars. This [indiscernible] our position. Hebert, any further?

[Zhi Qi Wang, executive]

Yes. As I mentioned previously, I think that some of the projects that we're working on currently, such as expansion of our high-end gaming area at MGM Macau with -- conversion of -- the renovation of the villa product at MGM Macau and also the conversion of the suites at MGM Cotai, I think that will put us in a better position competitively in this market.

When these projects coming to completion and fruition in the second half of next year, we expect the margin to continue to improve.

[Xiaofeng Feng, executive]

Yes, I just want to add a little bit like particularly on the MGM Macau side, like MGM Macau is a 17-year old property like since the third quarter or mid of this year, we started a few very, very meaningful projects [indiscernible] our mini like event center and also our gaming floor refreshment programs and a couple of like F&B outlets. The goal for development is really to make sure all these products to reflect the relative trend of the customers. So we are -- all these projects, we are expecting to be done by the middle of next year. So once all these projects finished, we all believe we are going to have continue to lead our Macau market.

For Cotai side, our villa projects -- not villa, our suite conversion project, we are expected to finish by the end of next year. We are going to convert about 160 standard rooms into about 60 suites. So it will give us more competitive advantage like on the Cotai side as well.

[Operator]

Today's last question comes from Chad Beynon with Macquarie.

[Chad Beynon, analyst]

Wanted to ask about Vegas demand. You guys noted the Marriott benefit. But I guess what I'm trying to get at is what you're seeing in the mix of casino guests at this point? Are you seeing any deterioration in terms of what that core group is doing in terms of visitation.

And then more importantly, for '25 when you're hoping for growth, will the casino guest piece of the inventory, should we expect that, that goes down and they'll be replaced with more group and kind of Marriott business travelers?

[Corey Sanders, executive]

Chad, this is Corey. I think what we're seeing with the casino guests is pretty consistent what we've been seeing throughout the past few years. It's pretty solid. We are hitting the database in a decent way using our cross-regional functionality in a great way. We don't -- that mix is, I think, where we like it right now. And I wouldn't envision that on changing that much next year. As we look at Marriott, it's really a transient play and hopefully moving out some package business, and that will be our strategy for next year also.

[Chad Beynon, analyst]

Great. And then just overall on the bricks-and-mortar side of things, the retail side, has anything changed in terms of M&A opportunities as you kind of look at other markets where the hub and spoke could make sense or kind of long-term iGaming. It seems like there's a number of assets in kind of big cities that could potentially fit the portfolio.

[Jonathan Halkyard, executive]

Thanks, Chad. It's Jonathan. Our criteria are fairly restrictive in terms of the additional assets that we would acquire. We really like our position in Las Vegas with the disposition of the Mirage and the acquisition of the [indiscernible]. As it relates to regional markets, it would have to be a market we're not currently in. It would have to be a property of significant scale to really make a difference for the consolidated enterprise and have a quality level that is coherent with our brand positioning.

So that leaves a pretty small list, but it's -- we think we are good operators of regional properties and so we remain open to those possibilities. It's just a pretty narrow set.

[Operator]

This concludes our question-and-answer session. I would like to turn the conference back over to Bill Hornbuckle for closing remarks.

[William Hornbuckle, executive]

Thank you, operator. Just a couple of thoughts before we leave. And again, I appreciate everyone's time this evening. Las Vegas and regional trends, as we've hopefully indicated, are solid. They've been solid throughout the years, and we anticipate that to continue. I think in the presentation, you'll see a couple of graphs that are meant to demonstrate that.

Macau continues to perform well. We're proud of what we've been able to do and the whole re-ratcheting of the market share. And we're -- it's obviously continuing to contribute dividends. And this year, we hope -- we have pulled out $200 million and expect that to continue.

Our digital business, we feel is on a path to positive earnings in both the U.S. and internationally. And we think there's significant TAM opportunity between both of those when it's all said and done. And we think that manifests itself late '25 into '26 and beyond.

I think our development pipeline is unmatched with properties in Japan, New York and the potential of UAE and Thailand. I think those are going to be incredible opportunities over time for the company. And again, the fundamentals, the question about is Las Vegas met its match in '23. While '23 was an incredible year, the fundamental signs of the business remains strong whether it's ADR, slot handle, et cetera, we feel really, really good about it. And in Macau, we continue to break records despite our size.

So Overall, we're exceptionally well diversified, and we're very optimistic about both our near long -- near, mid and long term, and we hope you are as well. So we thank you for your time, and have a great evening.

[Operator]

The conference has now concluded. Thank you for your participation. You may now disconnect your lines.