Benjamin Chaiken

Benjamin Chaiken asked about the 2026 cost side, specifically the 0.6 point impact from dry docks with more OpEx versus CapEx, and what a typical allocation might look like in future years. He also inquired about the step-up in emission allowance tax for 2026 and whether this step function is over for future years.

Answer

CFO David Bernstein explained that the dry dock allocation between CapEx and OpEx is difficult to project for future years as it involves small movements on large numbers and varies by the nature of the work. Regarding emission allowances, he confirmed the step function is over as Carnival moves to 100% coverage in 2026, up from 70% in 2025, with a slight increase in projected EU allowance costs.

Benjamin Chaiken from Mizuho Financial Group, Inc. asked about Carnival's capital return strategy, including timing, leverage targets, preference between dividends and buybacks, and long-term capital return as a percentage of free cash flow, as well as the near-term outlook for close-in demand and Q4.

Answer

CEO Josh Weinstein stated that capital returns are a board decision, but the company is nearing the 3.5x net debt to EBITDA target, enabling a pivot to shareholder returns. He emphasized the importance of reinstating the dividend, with buybacks also possible over time. CFO David Bernstein noted strong Q3 close-in demand and onboard spending, and reiterated the consistent Q4 yield guidance.

Benjamin Chaiken inquired about the pricing for Celebration Key itineraries, asking if the destination is already commanding a premium and what the marketing strategy entails. He also asked if the new loyalty program is a strategic move to encourage more direct bookings.

Answer

CEO Josh Weinstein confirmed that Celebration Key is already seeing a pricing premium in line with expectations, supported by a dedicated marketing spend that will continue to be leveraged for other destination projects. He clarified that the new loyalty program is not a push for more direct bookings and that travel agent partners will see the same benefits, viewing it as a tool to increase business and engagement through all channels.

Benjamin Chaiken inquired about whether Celebration Key itineraries are commanding a pricing premium, the marketing strategy for the new destination, and whether the new loyalty program is intended as a gateway to encourage more direct bookings.

Answer

CEO Josh Weinstein confirmed that Celebration Key is already achieving a pricing premium in line with their initial expectations. He noted that marketing dollars have been actively shifted to promote the destination. Weinstein clarified that the new loyalty program is not a strategy to push for more direct bookings, stating it is designed to benefit guests and travel agent partners alike, fostering broader engagement across all booking channels.

Benjamin Chaiken of Mizuho Securities inquired about recent consumer demand trends since the fourth quarter and sought clarification on the mechanics of the Q1 earnings beat flowing through to the full-year guidance, specifically questioning the impact of lower ALBDs.

Answer

CEO Josh Weinstein confirmed that a successful wave season and strong Q1 yields set a positive tone for the year. CFO David Bernstein explained the full-year guidance improvement was driven by the Q1 yield outperformance of $98 million and interest expense savings of $100 million. Josh Weinstein added that the Q1 cost beat was mostly due to timing, with permanent savings being offset by the lower ALBDs from unplanned dry docks.

Benjamin Chaiken inquired about the current level of customer awareness for the upcoming Celebration Key destination and sought more detail on the company's broader 'enhanced destination strategy,' questioning if it extends beyond Celebration Key.

Answer

CEO Josh Weinstein confirmed that customer awareness for Celebration Key is still in the process of ramping up, though early booking response has been positive. He elaborated that the 'enhanced destination strategy' is a broad, multi-year effort to make the company's private destinations a primary reason for booking a cruise. This includes rebranding Half Moon Cay to 'RelaxAway' to market its unique 'idyllic' experience, complementing the 'fun' offered at Celebration Key.

Benjamin Chaiken asked about the sources of recent cost savings and strong EBITDA flow-through, questioning if it was from leveraging a leaner fleet or active cost removal. He also inquired about the potential for further portfolio streamlining following the integration of P&O Australia into the Carnival brand.

Answer

CFO David Bernstein explained that the savings were not from active cost removal but from "hundreds of small items across the board," including crew travel, port savings, and sourcing efficiencies, which accounted for about half of the $100 million benefit. CEO Josh Weinstein commented on portfolio strategy, stating that while he would "never say never," the P&O Australia decision was unique and the company feels good about its current brand portfolio entering 2025.

Benjamin Chaiken inquired about Vail Resorts' current view on pass benefits, particularly the importance and focus on third-party benefits, and whether the recent price adjustment for lift tickets suggests a future evolution for the overall pass structure, such as extended deadlines or different price points.

Answer

Rob Katz, CEO of Vail Resorts, stated that while third-party benefits can marginally move the needle, direct research indicates that price and access to desired resorts are the primary drivers for guests. He clarified that extending the pass deadline is not anticipated, as the current discount structure relies on pre-season commitment. Angela Korch, EVP and CFO, added that the 30-day advance ticket's refundable nature maintains a significant price delta with non-refundable passes, aligning with the strategy of rewarding greater advance commitment.

Benjamin Chaiken asked about the largest 'holes' or areas where Vail Resorts is lacking in its pass product offering, beyond just the strategy, and what the company is trying to solve for. He also inquired about the thought process on adding additional member benefits or perks to the pass to increase year-round utility, referencing other passes that provide ancillary benefits.

Answer

CEO Rob Katz stated that the company doesn't necessarily see gaping holes in its broad pass portfolio but believes there are opportunities to optimize pricing relationships and benefit structures across its many products, similar to the Resource Efficiency Transformation Plan for resorts. He cited Epic Friend Tickets as an example of an identified area for improvement in benefits. Regarding additional perks, Rob Katz confirmed it's something they need to look at, ensuring any new benefits are impactful and not just 'window dressing,' whether from the company or third-party partnerships, beyond the existing Epic Mountain Awards discount.

Benjamin Chaiken asked about the largest 'holes' or areas for improvement within the pass product offering, seeking to understand what specific problems Vail Resorts aims to solve. He also inquired about the thought process behind adding additional member benefits or perks to the pass to enhance year-round utility.

Answer

CEO Rob Katz stated that he doesn't see a missing product but rather opportunities to optimize the pricing of existing products against each other and for different segments, as well as to refine pass benefits, which have largely remained unchanged. He likened this to the Resource Efficiency Transformation Plan, focusing on optimizing after a period of rapid growth. He identified Buddy tickets/Epic Friend Tickets as an area already addressed. Regarding additional benefits, Katz expressed interest in exploring them but emphasized that they must be impactful and 'move the needle,' not just 'window dressing,' citing Epic Mountain Rewards as an existing ancillary discount program.

Benjamin Chaiken asked for an update on the Park City guest credit program, seeking any early data on retention or success and the financial impact on EBITDA. He also requested performance statistics for the first season of My Epic Gear and plans for its future rollout.

Answer

CEO Kirsten Lynch stated it was too early to quantify the impact of the Park City credit program but noted the cost is not material and is included in guidance. For My Epic Gear, Lynch reported strong guest feedback, high incrementality, and an expected 40,000-50,000 members in its first year. The company continues to view it as a transformational opportunity.

Benjamin Chaiken of Mizuho posed high-level questions about whether rising lodging costs are a limiting factor for the Epic Pass value proposition and if Vail desires more owned lodging. He also asked if the post-pandemic environment had hindered M&A and if conditions for acquisitions are now more favorable.

Answer

CEO Kirsten Lynch stated the company is pleased with its mix of owned and partner lodging, which provides guests with diverse options. On M&A, she highlighted recent European acquisitions (Andermatt-Sedrun, Crans-Montana) as progress, noting that while the ski resort market is challenging to forecast, Vail remains focused on strategic opportunities in North America, Europe, and Asia, but couldn't predict if normalization would unlock more deals.

Benjamin Chaiken from Mizuho asked whether the conversion rate of lift ticket guests to passholders was in line with expectations, despite the smaller pool of guests. He also inquired about the potential evolution of the Epic Pass to include non-skiing benefits to smooth seasonality.

Answer

CEO Kirsten Lynch confirmed that the primary driver of the new pass sales decline was the smaller audience of lift ticket guests, but also acknowledged a secondary impact from a lower-than-expected conversion rate. On evolving the pass, Lynch agreed that adding value beyond the ski season would benefit the company and noted they are always exploring new ideas, acknowledging that the passholder base has changed, leading to shifts in spring versus fall purchasing decisions.

Benjamin Chaiken of Mizuho Securities asked for quantification of the disruption impact from the Suncoast renovation in Q3 and expectations for Q4, given that performance was in line with the prior year despite ongoing work. He also inquired if there were any construction-related watch-outs for Q4 at Sky River ahead of its Q1 expansion opening.

Answer

Keith Smith, President and CEO, stated that quantifying the disruption at Suncoast is difficult due to fewer slots, walls, and ceiling work, but confirmed revenue and EBITDA were in line with the prior year, indicating customer resilience and effective management. For Sky River, Keith Smith clarified that all current construction for the Q1 expansion (parking garage, added casino space) is external, so there will be no negative impact or construction disruption to ongoing operations in Q4. The second phase (hotel, restaurants) will also be external.

Benjamin Chaiken asked for quantification of the disruption impact from the Suncoast renovation in Q3 and expectations for Q4. He also inquired about any construction-related watch-outs for Sky River in Q4 ahead of its Q1 opening.

Answer

President and CEO Keith Smith explained that quantifying Suncoast disruption is difficult, but Q3 performance was in line with the prior year despite ongoing construction. He clarified that Sky River's expansion construction is external, so there will be no negative operational impact in Q4 from that ahead of its early next year opening.

Benjamin Chaiken asked about the quantifiable impact of new tax laws on tips and overtime, the size of the senior customer base, and the reason for lower share repurchases in Q2 despite a lower stock price.

Answer

CEO Keith Smith said they could not yet quantify the tax benefit but noted it's a positive, adding that seniors (65+) make up about 40% of their customer base and over-index on spend. He explained that Q2 share repurchases were limited by a blackout period related to the FanDuel transaction.

Benjamin Chaiken asked what surprised management most about the successful Treasure Chest investment, what learnings could be applied to future projects like the potential Par-A-Dice renovation, and why the company isn't moving forward with Par-A-Dice sooner.

Answer

President and CEO Keith Smith said the most surprising aspect of Treasure Chest was the overwhelming customer demand, which reinforces that older riverboats are no longer competitive. He explained that moving on Par-A-Dice is not immediate because the company is committed to a disciplined capital pipeline to manage spending, and the design and bidding process for such a project takes time.

Benjamin Chaiken asked if the company had analyzed the potential impact of a 'no tax on tips' policy and inquired about the company's broader ambitions for its iGaming platform.

Answer

Executives Josh Hirsberg and Keith Smith acknowledged a potential benefit from the tax policy but confirmed they had not conducted a formal analysis. Regarding iGaming, Keith Smith reiterated that the strategy is to serve existing customers in their core markets, not to become a national B2C leader. He described it as a modest investment that is performing well, with no plans for significant acquisitions to expand it.

Benjamin Chaiken of Mizuho Financial Group, Inc. asked about three additional hotel assets under sale agreements, whether their disposition could increase shareholder returns, and for an update on business trends in China.

Answer

CEO Mark Hoplamazian confirmed that further asset sales could create opportunities for increased shareholder returns next year. Regarding China, he described the environment as one of "caution and conservatism" due to policy impacts and trade friction, noting that total fees from China represent roughly 7% of Hyatt's total fee base.

Benjamin Chaiken requested an update on the Playa transaction, noting that language in the earnings release seemed to imply a faster timeline for asset sales than the 2027 date previously discussed. He also asked for color on the number of potential buyers.

Answer

Mark Hoplamazian, President and CEO, stated that Hyatt expects to be in a position to sign an agreement for asset sales in the near future but could not provide a more specific timeline. He clarified that the 2027 reference was for a broader $2 billion asset sell-down commitment, not exclusively Playa assets, and highlighted Hyatt's history of exceeding its disposition targets.

Benjamin Chaiken inquired about the drivers behind the expected acceleration in organic net unit growth for 2025 and asked for an update on hotel attrition rates.

Answer

President and CEO Mark Hoplamazian detailed that the 2025 net rooms growth outlook is significantly improved, with 40% of the annual target already opened in the first six weeks. He cited a higher number of pipeline openings due to prior year delays, strong conversion activity, and a front-loaded opening schedule. He also noted the outlook conservatively accounts for potential attrition from the Lindner Group's insolvency.

Benjamin Chaiken of Mizuho Securities asked about the performance trajectory of the Distribution and Destination segment and whether the recent high rate of room attrition would persist into 2025.

Answer

CFO Joan Bottarini explained that while Q3 was impacted by hurricanes, the leisure booking pace has accelerated, supporting a stronger Q4 outlook for the distribution business. President and CEO Mark Hoplamazian characterized the high attrition in 2024 as a temporary 'blip' resulting from specific properties not meeting brand standards and does not expect that elevated level to continue.

Benjamin Chaiken of Mizuho Financial Group, Inc. inquired about the largest opportunities to grow iGaming share and sought clarification on the company's cash tax outlook for 2026 and 2027.

Answer

CFO Felicia Hendrix clarified that cash taxes are projected to be lower by $50 million in each of 2026 and 2027. CEO Jay Snowden identified the largest iGaming opportunity as converting land-based Penn Play loyalty members, particularly slot players, to the Hollywood iCasino app. CTO Aaron LaBerge added that the 'Spin It' free-to-play game has also been a successful funnel for acquiring new cash players.

Benjamin Chaiken asked if the early success of the stand-alone iCasino app would prompt increased marketing investment. He also inquired about the thought process behind choosing between a term loan or rent for the Council Bluffs project and the availability of flexible financing for future projects.

Answer

CEO Jay Snowden confirmed they will 'continue to lean in and push on iGaming' as long as they see attractive customer acquisition costs and strong retention. Regarding financing, CFO Felicia Kantor Hendrix explained that while a term loan appears more attractive than escalating rent, they value the optionality provided by their partner GLPI and will make a final decision later. Snowden added that they expect to have flexible financing options for future projects due to their healthy landlord relationships and balance sheet capacity.

Benjamin Chaiken of Mizuho Financial Group, Inc. asked about the upcoming Missouri launch, inquiring about the expected pace of customer acquisition, CAC expectations, and whether external marketing spend was close to flat year-over-year, excluding Jackpocket.

Answer

Co-Founder & CEO Jason Robins confirmed that external marketing was basically flat year-over-year ex-Jackpocket. He expects the Missouri launch to look similar to past launches like Ohio and Massachusetts, but potentially with a more accelerated curve due to its timing in the middle of the NFL season. He anticipates 'fantastic' CACs because all major sports besides baseball will be active.

Benjamin Chaiken of Mizuho asked about the upcoming Missouri launch, inquiring about the expected pace of customer acquisition and CAC. He also asked for confirmation on whether external marketing spend, excluding Jackpocket, was roughly flat year-over-year.

Answer

Co-Founder & CEO Jason Robins confirmed that external marketing was essentially flat year-over-year, excluding Jackpocket. For the Missouri launch, he expects a trajectory similar to Ohio or Massachusetts but with a potentially more accelerated curve due to its timing during the NFL season, which should lead to 'fantastic' CACs.

Benjamin Chaiken asked how the combination of Jackpocket's exit from Texas and a softer digital ad market affects the external marketing budget for the year. He also inquired about the timeline for integrating Jackpocket into the main app and its updated profitability outlook.

Answer

CEO Jason Robins explained that any potential for increased spending due to softer ad prices is offset by the reduction from Jackpocket's Texas exit, resulting in a net wash and keeping the marketing budget on track. He expects the Jackpocket integration to be completed in the second half of the year and noted that the asset is now expected to be around breakeven for the year due to the Texas shutdown.

Benjamin Chaiken of Mizuho asked how DraftKings is forecasting the customer acquisition opportunity for 2025, given its unpredictability in 2024, and sought to confirm the hold impact in October.

Answer

CEO Jason Robins explained that due to its unpredictability, they approach customer acquisition cautiously in forecasts. He also noted that the full-year inclusion of Jackpocket and potential for large lottery jackpots are factored into the 2025 marketing budget. Robins confirmed that the analyst's estimate of a 500 basis point negative hold impact in October was 'about right.'

Benjamin Chaiken of Mizuho Financial Group, Inc. inquired about the monthly contract sales trends for June and July, the updated loan loss provision guidance, and the status of the sales recovery in Maui post-wildfire.

Answer

CEO John Geller confirmed a sequential improvement in contract sales, with June up 3% and July slightly higher, but noted Maui sales were flat year-over-year with some lingering operational headwinds. CFO Jason Marino explained the loan loss provision guidance was raised by 50 basis points to 12.5% for the year, reflecting Q2 factors including minor defaults in Asia, despite overall delinquencies being at a two-year low.

Benjamin Chaiken from Mizuho asked for a detailed bridge from 2024 EBITDA to the 2025 guidance, seeking specifics on a ~$15 million rental business headwind, potential management compensation headwinds, and the year-over-year impact of the loan loss provision in Q1.

Answer

John Geller, President and CEO, explained the rental headwind consists of a ~$10 million non-repeating benefit from 2024 and a mix shift to lower ADR markets in 2025. He also confirmed headwinds from higher variable compensation (~$15-20 million) and a project spending shift (~$8-10 million). Jason Marino, EVP and CFO, added that the loan loss provision will be a slight headwind in Q1 but a net tailwind for the full year 2025.

Benjamin Chaiken of Mizuho Securities questioned if there were any lumpy or non-recurring items affecting the implied Q4 contract sales outlook, besides the noted hurricane impact. He also asked about the drivers for higher year-over-year sales and marketing expenses and the potential for future cost leverage.

Answer

CEO John Geller and CFO Jason Marino confirmed no other significant lumpy items are expected to impact Q4. Regarding marketing costs, John Geller explained that the higher sales reserve provision (a deduction from revenue) mathematically increases the S&M expense as a percentage of revenue. He stated that future improvements will come from more efficient marketing and higher VPGs.

Benjamin Chaiken of Stifel inquired about recent contract sales trends for March and April, the drivers behind the maintained full-year EBITDA guidance, and specific internal initiatives aimed at accelerating revenue.

Answer

CEO John Geller confirmed contract sales were down about 4% in March and similarly in April, but noted positive VPG growth for first-time buyers in April. Geller and CFO Jason Marino explained that the EBITDA guidance is supported by accelerated cost savings from their modernization initiative, now expected at $35 million for the year, up from $15-$25 million, plus additional savings from a more favorable inventory product cost mix.

Benjamin Chaiken of Mizuho Financial Group, Inc. sought clarification on the net impact of moving to more 'Fun and Sun' itineraries in 2026. He asked whether the combination of tailwinds (occupancy) and headwinds (price) would be a net positive, neutral, or negative for both yields and costs relative to the company's normal algorithm.

Answer

CEO Harry Sommer confirmed the directional thinking was correct but declined to give specific 2026 guidance, reiterating the company's commitment to its algorithm of low to mid-single-digit yield growth and sub-inflationary cost growth. CFO Mark Kempa added that the primary focus is on margin expansion, which is driven by both top-line growth and cost control, ultimately leading to deleveraging.

Benjamin Chaiken asked about the return on investment (ROI) for the Great Stirrup Cay enhancements and whether these investments are marketable enough to drive pricing. He also questioned if the 2026 shift towards more Caribbean itineraries would be a net yield tailwind, considering the potential offset of lower pricing despite higher occupancy.

Answer

CEO Harry Sommer confirmed that the Great Stirrup Cay investments meet the company's long-term ROI thresholds and will be marketed heavily to drive both cruise pricing and on-island spend. He stated that the 2026 itinerary shift is expected to be a net yield tailwind. He also highlighted that it will be a 'double benefit,' providing a modest yield tailwind and a significant cost tailwind due to simpler logistics compared to exotic deployments.

Benjamin Chaiken asked for an update on the specific cost-saving examples mentioned at the Investor Day and inquired about the distribution of dry dock days between the first and second halves of the year.

Answer

CEO Harry Sommer reiterated that cost-saving efforts are consistent with Investor Day themes, focusing on processes that are invisible or of low value to guests to avoid impacting the experience. Management deferred the specific question about the distribution of dry dock days to a post-call follow-up.

Benjamin Chaiken asked for details on the strategic goals of the renovations at Green Valley Ranch and Sunset Station, beyond a simple refresh, and sought clarity on the free cash flow impact of bonus depreciation in 2026.

Answer

Scott Kreeger, President, and Frank Fertitta, Chairman & CEO, explained the renovations are strategic repositionings. Sunset Station aims to become the 'Red Rock of the East Side' to serve growing communities, while Green Valley Ranch is being elevated to a luxury property. Stephen Cootey, EVP, CFO & Treasurer, noted the 2026 tax benefit from depreciation will depend on future capital plans but will be a positive factor.

Benjamin Chaiken asked for a comparison of the return on investment (ROI) profiles for the company's various ongoing capital projects and requested clarification on the amount of accrued interest returned as part of the North Fork financing.

Answer

Executive Stephen Cootey highlighted the Sunset Station renovation and the Durango high-limit slot room as compelling return projects. Executive Scott Kreeger added that the Green Valley Ranch room remodel should have an immediate positive impact on room pricing. Cootey clarified the $110.5 million North Fork repayment covered nearly all accrued interest, leaving a ~$69.6 million principal balance now accruing at a high rate.

Benjamin Chaiken from Mizuho asked for the value of the development note associated with the North Fork project and the expected timing for its repayment.

Answer

Executive Stephen Cootey confirmed the note's value is approximately $156 million as of year-end. He indicated that with project financing expected to close in the current quarter, there is a possibility some of the note could be repaid this year, earlier than the original 2028 expectation.

Benjamin Chaiken of Mizuho Financial Group, Inc. asked about the expected guest attach rate for the Royal Beach Club in Nassau. He also sought clarification on the comment that the Costa Maya (Perfect Day Mexico) destination would be the size of Magic Kingdom and inquired if related costs were included in Q3 guidance.

Answer

Michael Bayley, President and CEO of Royal Caribbean International, estimated that with roughly 3 million guests visiting Nassau in 2026 and a beach club capacity of around 1 million, the attach rate would be about 33%, suggesting demand may exceed supply. President & CEO Jason Liberty confirmed the Perfect Day Mexico footprint is comparable in acreage to Magic Kingdom, emphasizing the scale of the project which will cater to fewer guests to ensure a 'perfect day' experience. CFO Naftali Holtz confirmed that operating costs for the recently acquired Costa Maya port, as well as ramp-up costs for the Paradise Island beach club, are included in the Q3 cost guidance.

Benjamin Chaiken asked for an update on the pricing strategy for the Royal Beach Club day pass and sought clarification on why new ships were described as a 140 basis point yield headwind in the third quarter.

Answer

Michael Bayley, President and CEO of the Royal Caribbean brand, stated that pricing details for the Royal Beach Club in Nassau will be announced at an upcoming event. CFO Naftali Holtz clarified that the Q3 yield headwind is due to the timing of new ship deliveries; specifically, Star of the Seas enters service very late in August, resulting in fewer available passenger cruise days (APCDs) and a less impactful load factor ramp-up within that quarter.

Benjamin Chaiken from Mizuho inquired about the new Royal Beach Club in Nassau, asking about its pricing strategy, expected passenger volume, and whether its startup costs are in the 2025 guidance. He also asked how its cost efficiency might compare to CocoCay.

Answer

Michael Bayley, President and CEO of the Royal Caribbean brand, stated the all-inclusive Nassau product will go on sale in April and is expected to host about 1 million guests in its first full year. He noted that while smaller than CocoCay, it will be a very efficient and profitable operation. CFO Naftali Holtz confirmed that ramp-up costs are factored into the late 2025 guidance.

Benjamin Chaiken sought clarification on comments about the Texas cruise market's size and penetration. He also asked about the drivers of this underpenetration and how the ancillary revenue model for the new Paradise Island beach club will compare to CocoCay.

Answer

CEO Jason Liberty clarified that Texas, not the entire Gulf Coast, has a similar population to Florida but half the cruise penetration. Royal Caribbean International CEO Michael Bayley added that Perfect Day Mexico will enable more short cruises from Texas, a key growth driver. He also explained that unlike CocoCay's mixed model, the Royal Beach Club on Paradise Island will be an exclusive, 'all-for-pay' experience, requiring a ticket for entry.

Benjamin Chaiken of Mizuho Financial Group, Inc. sought clarity on the drivers for the implied acceleration in contract sales in the second half of the year, including the timing of the Sports Illustrated launch. He also asked about the strategic importance of the new Margaritaville and Sports Illustrated resort projects.

Answer

CEO Michael Brown confirmed expectations for back-half acceleration, driven by easier tour flow comparisons and higher VPGs, providing confidence in the VOI sales forecast. He clarified that the Sports Illustrated brand will not be a meaningful contributor until late 2025. Brown emphasized that new brand projects like SI and Margaritaville are strategically important for accessing new customer databases and meeting lifestyle-specific travel demand.

Benjamin Chaiken of Mizuho Securities asked for more color on the exchange business, questioning if the accelerated decline was due to a comparison issue or a change in consumer behavior. He also requested an updated timeline for the Sports Illustrated property sales.

Answer

President and CEO Michael Brown explained that the decline in exchange transactions reflects an ongoing industry evolution toward internal exchanges, not a comp issue, and noted the company's Travel Club is growing to help offset this. Regarding Sports Illustrated, he stated that a conversion property will be put into the trust this year, which will enable sales to commence in 2025, though the specific deal is not yet finalized.

Benjamin Chaiken asked about the low cost of product in the VO segment and the drivers of recent revenue growth in the Travel & Membership segment.

Answer

Executive Michael Hug attributed the low cost of product to normal quarter-to-quarter fluctuations in inventory sold. President and CEO Michael Brown explained that the Travel & Membership revenue growth reflects a disciplined strategy of growing the travel club business by focusing on quality partnerships and maximizing existing affiliate relationships. He also clarified the next Sports Illustrated project will be a property conversion.

Benjamin Chaiken asked about the potential for long-term increases in the cost of VOI as inventory mix shifts to new development, and requested an update on the progress and trajectory of the Accor Vacation Club business.

Answer

CFO Michael Hug stated that with four years of pre-COVID priced inventory for the core business, significant cost of sales pressure is unlikely in the near term, and future pressures could be offset by tailwinds like lower interest rates. CEO Michael Brown reported that the Accor integration is ahead of schedule, having achieved its initial EBITDA target early, with four sales sites reopened and plans for international growth.

Benjamin Chaiken requested clarification on the new cost guidance, asking if the 'down 3% or more' figure is net of inflation. He also inquired about the components of the incremental $60 million in 2026 savings and whether the company would seek entitlements on the Maryland land before selling.

Answer

CEO Richard Zimmerman clarified the 3% reduction applies to operating expenses and SG&A, excluding COGS, and is an all-in, inflation-inclusive number. He noted the incremental $60 million in savings for 2026 comes from the ongoing corporate reorganization and initiatives dependent on tech stack harmonization. Regarding the land sale, he confirmed the company is working closely with local jurisdictions on entitlements to maximize value while ensuring an efficient timeline.

Benjamin Chaiken asked for clarification on the comparability of the October attendance surge versus Q3 trends and questioned the levers to improve legacy Six Flags' EBITDA, asking if reaching 2019 attendance levels would yield comparable profitability.

Answer

CFO Brian Witherow confirmed the 20% October attendance lift was on an apples-to-apples basis. CEO Richard Zimmerman asserted that growth will not come from aggressive discounting but from improving guest satisfaction and capital investment, pointing to recent season pass strength. Brian Witherow used legacy Cedar Fair as a proxy, noting it is near 2019 attendance but with significantly higher EBITDA, suggesting a similar potential for the Six Flags assets.

Benjamin Chaiken asked for a rank-ordering of the three key customer cohorts for the Wynn Al Marjan resort (local inbound, Dubai residents, destination luxury) and for more detail on the expected demand from Dubai residents.

Answer

CEO Craig Billings declined to rank the three cohorts, emphasizing that each is 'incredibly important' and plays a distinct role in the resort's programming. He drew analogies for each segment to different aspects of the successful Las Vegas business model: non-lodging visitors, a locals market, and a fly-to destination market.

Benjamin Chaiken from Mizuho inquired about Wynn's view on the potential pace of new gaming licenses in the UAE. He also asked for a breakdown of the most important customer cohorts for the Wynn Al Marjan project.

Answer

CEO Craig Billings expressed confidence in having a 'very, very healthy lead' in the UAE, stating they don't see a second license being issued anytime soon. He detailed three key customer cohorts for Al Marjan: existing inbound tourists, affluent residents of Dubai and the UAE, and destination luxury travelers, including high-value gaming customers that Wynn is adept at attracting globally.

Benjamin Chaiken inquired about the balance sheet optimization strategy, seeking details on the composition of the $951 million in current notes, the securitization plan for this balance, and the process for utilizing the warehouse facility.

Answer

CFO Daniel Mathewes clarified that of the unsecuritized receivables, about $200 million are 'scratch and dent' loans not immediately securitizable. He stated the plan is to term out the warehouse facility debt via the ABS market in the summer, with the vast majority of the remaining notes being securitizable over time. A portion will be retained for operational needs like replacements in existing deals.

Benjamin Chaiken asked how the company is thinking about capital allocation, particularly share buybacks, given that pausing the large Churchill Downs project frees up significant capital, and whether this allows for more aggressive repurchases.

Answer

CEO William C. Carstanjen stated that the core question is always where to deploy capital for the best shareholder return, and buybacks are one tool they have been using. While the pause on the project changes capital timing, he did not signal a major shift in strategy, noting the team is evaluating the market but does not yet see a 'sea change' that demands significantly different behavior. He indicated they will 'keep our powder dry' and deploy capital appropriately as conditions evolve.

Benjamin Chaiken from Mizuho asked for a clearer view of the underlying performance trends in Virginia by dissecting the results from recent months, attempting to strip out noise from weather and the election.

Answer

CEO William C. Carstanjen declined to provide specific monthly performance details but reiterated his confidence in the positive trajectory. He emphasized that the team is executing its standard playbook for new properties, which involves building the customer database and learning player behavior. He stated the trends are strong and that he looks forward to providing a fuller update next quarter.

Benjamin Chaiken asked about the potential path to expanding beyond the 5,000 HRM machine limit in Virginia and whether existing properties have additional capacity.

Answer

CEO William C. Carstanjen responded that while the current focus is on delivering on existing commitments, the company believes the Virginia model is a 'shining example' of a successful partnership. He expressed hope that by proving the model's value, the state will be a 'willing listener' to future discussions about expanding both racing and, consequently, the number of HRMs. He was careful not to make promises on matters outside the company's control.

Benjamin Chaiken questioned the company's ability to achieve its 2-5% annual admission per capita growth target, given recent performance below that range. He also asked for confirmation of the 2024 cost savings amount and whether the 2025 savings target is dependent on revenue performance.

Answer

CEO Marc Swanson explained that the primary focus is on total revenue growth, which requires balancing pricing and attendance. He noted that continued investment in new attractions and park upgrades supports the long-term pricing strategy. CFO James Mikolaichik confirmed that the ~$50 million in 2025 cost savings is not dependent on revenue and is a continuation of a multi-year strategic program. He also affirmed that 2024 savings were approximately $50 million.

Benjamin Chaiken asked if Q1 at Marina Bay Sands was a clean year-over-year comparison and sought further interpretation on the sequential market share loss in Macao, given rooms were also out of service in Q4.

Answer

President and COO Patrick Dumont described the MBS quarter as 'totally normal' and indicative of the business's strong performance, even against a tough prior-year comparison that included major events. CEO and President of Sands China Grant Chum addressed the Macao share question by explaining that the Londoner Grand ramp-up was very soft in Q1 as they lacked the full room complement, but they will be in 'full ramp-up mode' from April onward.

Benjamin Chaiken of Credit Suisse asked for quantification of the incremental advertising spend and whether the current level represents a new run rate. He also requested the expected fuel and currency headwind versus 2019 for the second quarter and the remainder of the year.

Answer

CFO David Bernstein quantified the incremental advertising as representing about 1.5 percentage points of the net cruise cost increase versus 2019. CEO Josh Weinstein added that the spending is fluid and adjusted based on performance. For the financial headwinds, Bernstein stated the Q2 impact from fuel and currency versus 2019 is about $75 million, with a full-year impact of approximately $430 million.

Benjamin Chaiken requested clarification on the FY23 booked position's evolution since the last update, asked if booking trends differed between European and non-European itineraries, and sought a breakdown of Q4 cost increases between core, ramp-up, and COVID-related expenses.

Answer

CFO David Bernstein clarified the 2023 book position has improved to exceed 2019 levels following protocol relaxation, with North American brand bookings up 30% in recent weeks. CEO Josh Weinstein added European brands also saw a spike. Bernstein noted Q4 costs are not a good forward indicator but estimated COVID protocols contribute about $1.00 to $1.50 to the cost increase per ALBD.