Dan Politzer

Dan Politzer inquired about strategies to stimulate the Las Vegas leisure customer, potential structural pricing issues, and how Q4 estimates compare to Q3. He also asked about the balance between regional promotional strategy and capital investment in property amenities.

Answer

CEO Tom Reeg addressed Las Vegas pricing, emphasizing the market's value proposition and strong Q3 EBITDA despite softness. He highlighted $3.1 billion invested in regional assets since the merger, explaining current marketing as a way to reactivate customers to see these improvements.

Dan Politzer questioned the balance between the regional promotional strategy and capital investments in property amenities.

Answer

Tom Reeg, CEO, highlighted the $3.1 billion invested in regional assets since the merger, particularly in key properties. He explained that current marketing efforts aim to reactivate customers to experience these improvements, driving organic momentum and aggregate cash flow.

Dan Politzer asked about the strategic rationale, expected returns, and potential disruption from Durango's Phase 3 expansion, particularly its non-gaming components. He also inquired about the sports betting hold for the quarter and the year-to-date construction disruption impact compared to previous estimates.

Answer

Lorenzo Fertitta, Vice Chairman, explained that Durango's expansion is driven by strong guest demand for entertainment assets in a growing submarket, expecting similar high returns as the initial build. Stephen Cootey, EVP, CFO, and Treasurer, clarified that sports betting hold returned to normal in Q4 after an unfavorable Q3 last year. He quantified Q3 disruption at Green Valley Ranch at $2.5M-$3M and estimated Q4 disruption at Green Valley Ranch at $8M, with minor impacts at Durango and Sunset Station.

Dan Politzer asked about the rationale behind the Durango Casino Resort Phase 3 expansion, including the disruption impact and expected returns, particularly given the significant non-gaming component. He also inquired about the sports betting hold for the quarter and the cumulative disruption impact from ongoing construction projects.

Answer

Lorenzo Fertitta (Vice Chairman, Red Rock Resorts Inc) and Scott Kreeger (President, Red Rock Resorts Inc) explained that the expansion is driven by strong guest adoption, lack of local competition, and customer demand for entertainment amenities like movie theaters and bowling, expecting similar returns to the initial build. Stephen Cootey (EVP, CFO, and Treasurer, Red Rock Resorts Inc) clarified that sports betting hold returned to normal after an unfavorable prior year. He quantified Q3 disruption at Green Valley Ranch at $2.5-$3 million, with an estimated $8 million for Q4, and noted disruption at Durango and Sunset Station.

Dan Politzer asked about the challenging RevPAR environment in the economy segment, questioning if there are structural issues and what Wyndham is doing to manage factors within and outside its control.

Answer

CEO Geoff Ballotti stated that Wyndham sees no structural concerns based on leading indicators like booking lead times, lengths of stay, and cancellation rates. He explained that RevPAR divergence is driven by ADR, with upscale segments taking rate while economy and mid-scale are not. Wyndham is helping franchisees with discounting strategies, urging holding rates for leisure, and gaining share in mid-scale, particularly in weekday RevPAR index.

Dan Politzer asked about the challenging RevPAR environment, particularly in the economy segment, inquiring about factors within and outside of management's control, and whether there are structural issues concerning the economy segment's recent RevPAR trends.

Answer

CEO Geoff Ballotti stated that Wyndham sees no structural concerns in the economy segment based on leading indicators like booking lead times, lengths of stay, and cancellation rates. He explained that while occupancy is down across all chain scales, the divergence in RevPAR is driven by upscale segments taking rate more aggressively than the price-sensitive economy and mid-scale segments. Ballotti detailed actions to support franchisees, including strategic discounting and efforts to maintain rate on leisure travel, noting share gains in mid-scale brands.

Dan Politzer asked for details on Hilton's accelerating net unit growth, specifically the expected mix between conversions and new brands, and the contribution from accelerating construction starts.

Answer

Kevin Jacobs, EVP and CFO, explained that the acceleration in net unit growth (6.5%-7% for the year) is broad-based, driven by the post-COVID development cycle. He expects nearly 40% of openings to be conversions, with new brands like Spark and future conversion-oriented brands contributing. Strong new development starts (up 20% globally, 25% in U.S.) underpin the 6%-7% NUG for the next few years. Growth also comes from exporting core brands to emerging markets, with conversions making up 30-35% of total units.

Dan Politzer from Wells Fargo asked for a comparison of demand for Europe versus the Caribbean and the impact of the strong U.S. dollar. He also inquired about the company's perspective on potential changes to U.S. taxation of the cruise industry.

Answer

CEO Harry Sommer explained that strong European demand has been consistent and is product-driven, while noting the Caribbean is a smaller part of the summer deployment. CFO Mark Kempa added the strong dollar is an EPS headwind but not a major demand driver. On taxes, Sommer called the issue highly complex and declined to speculate, instead highlighting potential tailwinds from peace in regions like Northern Europe, which could benefit their large 2026 deployment.