Dan Politzer

Dan Politzer followed up on Boyd Gaming's support for iGaming in Virginia, questioning the rationale given their new property development and asking about the chances of legislation passing. He also inquired about concerns regarding Strip demand potentially bleeding into the locals business and any signs of fatigue from that customer base.

Answer

President and CEO Keith Smith declined to comment on the chances of iGaming legislation passing but reaffirmed general support for iGaming as complementary to land-based business, broadening the customer base, and not detrimental, while emphasizing the importance of bill details. Regarding Strip demand, Mr. Smith stated they haven't seen any impact on the true local residents' market, even historically, and expects increased discretionary income for Southern Nevada consumers from tax legislation. CFO Josh Hirsberg added that weakness is focused on the Orleans (destination), with other parts of the locals business performing well.

Dan Politzer questioned the company's rationale for supporting iGaming legislation in Virginia, given its significant land-based resort development there, and asked about the chances of such legislation passing. He also inquired about concerns regarding Strip demand weakness potentially bleeding into the Las Vegas locals business.

Answer

President and CEO Keith Smith declined to comment on the chances of iGaming legislation passing in Virginia but reiterated the company's general support for iGaming as a complementary business that broadens the customer base, based on past experiences in states like Pennsylvania and New Jersey. Regarding the Las Vegas locals business, Keith Smith stated there's no concern about Strip weakness bleeding over, as the strength comes from true local residents who typically don't play on the Strip. CFO Josh Hirsberg added that the locals business continues to perform consistently, with weakness isolated to destination play at the Orleans.

Dan Politzer inquired about MGM Resorts' strategy for returning to growth in Las Vegas, specifically focusing on the first and second quarters, and asked about any one-off financial impacts in the fourth quarter for modeling purposes.

Answer

CEO Bill Hornbuckle and COO Ayesha Molino highlighted stabilization, upcoming events like CON/AGG, strong high-end luxury performance, the success of the Holiday Gift Shoppe, and the positive impact of the MGM Grand room remodel. CFO Jonathan Halkyard clarified that table hold contributed approximately $20 million to the Las Vegas bottom line in Q4 and noted that corporate expenses, typically $110-$115 million, included some non-recurring items in Q4/Q1 of the prior year.

Dan Politzer asked about DraftKings' discussions with regulators regarding prediction markets and the company's comfort in proceeding where some peers have not. He also questioned how the prediction market product might evolve, specifically if it will remain limited to sports or expand to broader offerings.

Answer

Jason Robins, Co-founder and CEO of DraftKings, affirmed numerous conversations with regulators and policymakers, gaining comfort in their approach. He noted that focusing on states without legal online sports betting aligns with both regulatory sensitivity and market opportunity. Mr. Robins believes the primary volume and opportunity for prediction markets will remain in sports, citing overseas trends and U.S. growth drivers, while acknowledging other innovations are less proven.

Dan Politzer asked about the current environment in Las Vegas, including share gains and Q4 trends, and expectations for group growth in 2026. He also inquired about the puts and takes between the low, base, and high-case EBITDA scenarios for Wynn Al Marjan Island, particularly given the apparent lack of competitors.

Answer

CEO Craig Billings and COO Brian Gullbrants explained that Wynn Las Vegas reacted to the summer by focusing on rate over occupancy, leading to a record August and strong Q4 momentum, with 2026 group pacing ahead despite an Encore Tower remodel headwind. For Wynn Al Marjan Island, Craig Billings stated that GGR market size is the primary driver for EBITDA scenarios, and the absence of near-term competition likely introduces conservatism into their base case estimates.

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 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 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, 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 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 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.