David Katz

David Katz asked for more details on the sports opportunity, specifically regarding its Total Addressable Market (TAM) or sizing. He also inquired about the duration and durability of real estate for live entertainment venues and sports opportunities compared to VICI's initial core casino assets, considering the long-term outlook.

Answer

John Payne (President and COO, VICI Properties) stated there isn't an exact number for the TAM but noted approaching 50-70 universities, all with a clear need for capital for sports infrastructure, in addition to professional sports teams and mixed-use facilities. Gabe Wasserman (Chief Accounting Officer, VICI Properties) added that most groups have a '9-figure need' for athletic infrastructure. Regarding durability, Mr. Wasserman explained that sports-anchored, mixed entertainment districts are emerging nationwide, with operators viewing these venues as 25-50 year investments, aligning with VICI's long-term, permanent capital investment horizon. Edward Pitoniak (CEO, VICI Properties) emphasized the focus on 'heavy assets, low obsolescence' (HALO) and the critical importance of assessing obsolescence risk and the 'relevant life' of real estate across all experiential categories.

David Katz sought more details on the sports opportunity, specifically regarding its Total Addressable Market (TAM) or sizing. He also asked about the duration and durability of real estate for live entertainment venues and sports opportunities compared to VICI's core casino assets.

Answer

John Payne, President and COO, indicated that while an exact TAM isn't available, VICI has approached 50-70 universities with clear capital needs for sports infrastructure, in addition to professional sports teams and mixed-use facilities. Gabe Wasserman, Chief Accounting Officer, noted that most groups have a 'nine-figure need' for athletic infrastructure. Mr. Wasserman added that operators view sports-anchored mixed entertainment districts and live entertainment venues as 25-50 year investments, aligning with VICI's long-term outlook. Edward Pitoniak, CEO, emphasized VICI's focus on 'heavy assets, low obsolescence' (HALO) and rigorously assessing obsolescence risk to ensure real estate relevance 20-30 years into the future.

David Katz of Jefferies inquired about the impact of new tax regulations, specifically bonus depreciation, on tenants' incentives to invest in properties and asked for elaboration on why convention facilities outside Las Vegas are considered underinvested.

Answer

CEO Edward Pitoniak confirmed that bonus depreciation is a powerful positive factor for operators investing in their buildings, noting VICI's property partner growth fund is available to help finance these improvements. Regarding convention centers, Pitoniak stated that many urban hotels and convention centers have seen significant underinvestment since the GFC. President & COO John Payne added that Las Vegas retained its convention sales teams during COVID, giving it a competitive advantage.

David Katz from Jefferies Financial Group Inc. inquired about the capital structure and pricing of the Red Rock loan and how VICI's approach to risk in new opportunities has evolved.

Answer

Management disclosed that the Red Rock loan is part of a $725 million facility and VICI's blended all-in yield is approximately SOFR plus 7%. CEO Edward Pitoniak and President John W. Payne emphasized that VICI's risk appetite is not based on general principles but on the compelling specifics of each deal, including the quality of the partner, location, and structure, reflecting a continuous learning process.

David Katz asked a broader strategic question about how investors should underwrite the various components of VICI's total addressable market (TAM), from embedded portfolio growth to new partnerships.

Answer

CEO Ed Pitoniak responded that VICI focuses on the 'total amount of the relationship,' developing high conviction in partners like Cain and Eldridge to create multi-billion dollar relationships over time. He stressed that VICI is focused on widening its TAM without diluting the quality of its relationships or investments, giving stockholders participation in compelling, best-in-class placemaking.

David Katz from Jefferies asked for VICI's long-term vision for its non-gaming investments, questioning if this segment could grow to become a more substantial part of the portfolio (e.g., over 10-15%) in the next three to five years.

Answer

CEO Edward Pitoniak framed the strategy in the context of growing the overall rent base by a target of approximately 3% annually. He explained that non-gaming opportunities are evaluated based on their contribution to this goal. While individual non-gaming deals are smaller than VICI's typical gaming transactions, they are still significantly larger than conventional net-lease assets and contribute meaningfully to incremental rent growth.

David Katz inquired about the standout growth in Kentucky Historical Horse Racing (HRM) properties, specifically how much is aided by Electronic Table Games (ETGs), their current rollout status, and the long-term growth potential in Kentucky.

Answer

CEO Bill Carstanjen clarified that ETGs were not a factor in the prior quarter's growth, which stemmed from product evolution and market building. He explained that ETGs, starting with roulette, are just beginning to roll out and will be expanded over time, adding to the holistic offering.

David Katz inquired about the standout growth in Kentucky HRMs, specifically how much is aided by Electronic Table Games (ETGs), the current stage of ETG rollout, and the long-term growth potential for Kentucky holistically.

Answer

William C. Carstanjen, CEO of Churchill Downs Incorporated, clarified that ETGs are just rolling out in February and were not a factor in the prior quarter's performance. He attributed Kentucky's growth to the continued evolution of the product, market building, and team improvements. He noted that roulette is the first ETG product being introduced, with plans to build on this offering over time.

David Katz inquired about the potential opportunity and prospective lift from Electronic Table Games (ETGs), particularly in Kentucky, and whether any financial projections or learnings from other markets have been considered.

Answer

CEO Bill Carstanjen highlighted ETGs as an important frontier for HRMs, representing both a technology and regulatory journey. He noted their potential to offer a comparable suite of offerings to traditional class-three facilities but refrained from giving specific predictions or news due to ongoing regulatory processes.

David Katz from Jefferies asked for a broader discussion on the New Hampshire market, seeking details on the potential investment size, return opportunities, competitive landscape, and the overall vision for the Casino Salem project.

Answer

CEO William Carstanjen stated that while full details will be shared after the transaction closes, the Salem location is strategically positioned to serve both the New Hampshire and Boston, Massachusetts suburban markets. He highlighted the site's excellent access and its planned offering of both HRMs and full table games, which he believes will be highly competitive in the region.

David Katz inquired about the long-term growth trajectory and earnings power for the Kentucky Derby, especially given the decision to temporarily pause major capital plans, and asked about the key drivers for future growth.

Answer

CEO William C. Carstanjen outlined several growth drivers, including the new NBC contract starting next year and future pricing power in new seating areas like the starting gate pavilion. He explained that due to current consumer hesitancy, they couldn't price the new area as aggressively as in past years but expect to increase prices in 2026 as guests experience the value. He affirmed the long-term growth model of improving experiences to drive wagering, sponsorship, and ticketing revenue remains intact.

David Katz from Jefferies followed up on The Rose, asking if the typical five-year payback target for gaming assets still applies. He also asked if the Kentucky HRM properties should be evaluated collectively and where they stand on achieving that payback.

Answer

CEO William C. Carstanjen confirmed that a five-year payback is the general target for gaming assets, noting that HRMs have often performed better. He affirmed this target applies to The Rose. For Kentucky, he explained that while each facility is managed individually, they are also viewed as a single supportive ecosystem for the state's racing industry.

David Katz inquired about the progress, any surprises, and the long-term potential of Churchill Downs' operations in Virginia.

Answer

CEO William C. Carstanjen explained that Virginia was a key component of the P2E acquisition and that execution on deploying HRMs, culminating in the Dumfries opening, is proceeding well. He expressed strong optimism for future growth, citing operational improvements, the large Northern Virginia market, and successful efforts by state authorities to curb illegal gaming machines, which provides a tailwind for legal operators.

David Katz inquired about the current state of the sales force, including any strategic or personnel changes, and compensation structures.

Answer

CEO Mark Wang commended the sales force for breaking the $3 billion contract sales barrier in 2024 and achieving 10% growth in 2025. He noted that while the team is strong, there is continuous focus on improvement, especially as the business expanded from 7 to 40 markets post-acquisitions, requiring ongoing team building and capability development in mid and small markets.

David Katz of Jefferies asked for more insight on new owner trends, the drivers behind their apparent strength, and any expectations for changes in consumer behavior post-election.

Answer

CEO Mark Wang expressed optimism that post-election clarity would be a benefit. He noted that while consumers continue to spend on travel, HGV is strategically focusing more on higher net worth customers to counter hesitancy in lower net worth segments. This shift may affect overall tour flow but is positively impacting VPG, driven by a strong travel backdrop and targeted sales efforts.

David Katz asked about the pipeline for more land-based/retail upgrade projects, given past effective investments and increased competition. He also inquired about the order of magnitude for these potential future projects.

Answer

CEO Jay Snowden reiterated opportunities in Louisiana, Mississippi, and Illinois for water-to-land conversions, analyzing projects for 15%+ cash-on-cash returns, with more details expected in 2026. He specified 'low single digit, less than a handful,' estimating 3 or 4 projects across the mentioned states.

David Katz asked about PENN's pipeline for more land-based or retail upgrade projects, given past effective investments and increased market competition. He followed up by asking for an order of magnitude for these potential future projects.

Answer

CEO Jay Snowden confirmed that PENN has more opportunities in states like Louisiana, Mississippi, and Illinois, specifically for water-based facilities. He stated that the company is analyzing the return profiles for these projects, targeting 15%+ cash-on-cash returns, and working with local leaders, with more details expected in 2026. Regarding the order of magnitude, Jay Snowden indicated a 'low single digit, less than a handful,' specifically mentioning approximately three or four projects across the three states.

David Katz from Jefferies asked if Penn would consider selling stable, non-growing land-based properties to redeploy capital into digital. He also inquired about Penn's positioning and interest in a potential Texas gaming legalization.

Answer

CEO Jay Snowden stated there is no plan to sell any assets, as liquidity is not an issue and the company has momentum with four major growth projects underway. On Texas, he confirmed Penn is extremely interested and well-positioned due to its ownership of two Class 1 horse tracks in major metro areas, and they are actively engaged in conversations.

David Katz inquired about the priority of technology initiatives, including digital transformation and integration with the Marriott platform, and sought to understand the specific dollar or earnings opportunity associated with these technology investments.

Answer

Matthew Avril, CEO, confirmed that technology, particularly digital and mobile app dynamics, is a key focus of ongoing modernization spending, including efforts to better connect with the Marriott platform. Jason Marino, EVP and CFO, added that while technology is an enabler, the primary growth opportunities lie in core execution and broadening the business perspective. He noted that mobile app enhancements offer real, though hard-to-quantify, business benefits like increased owner engagement and booking opportunities.

David Katz asked about the priority of technology initiatives, including digital transformation and mobile app development, within Marriott Vacations Worldwide's strategic plans, especially in relation to its partnership with Marriott International. He also sought to understand the potential dollar or earnings opportunity specifically driven by these technology investments.

Answer

Matt Avril, Chief Executive Officer, confirmed that technology is a focus of modernization spending in 2026, particularly for digital dynamics and mobile app development, and to better connect with the Marriott platform. He noted a strong relationship with Marriott International for exploring value creation. Jason Marino, Executive Vice President and Chief Financial Officer, added that while hard to quantify, mobile app enhancements are a key initiative to improve owner engagement, near-term bookings, and inventory utilization, which are expected to yield long-term benefits.

David Katz of Jefferies sought further clarification on the 50 basis point increase in the loan loss provision guidance, asking if it reflected conservatism given positive external data and improving delinquency trends.

Answer

CEO John Geller clarified the guidance adjustment is not about conservatism but about reacting to current data. He emphasized that while delinquency trends are positive, they have not yet returned to the lower levels seen historically, and the company wants to see that improvement sustained before reconsidering the reserve.

David Katz of Jefferies requested background and context on the genesis of the company's new cost and revenue modernization initiative, asking how the program came about and what its primary drivers were.

Answer

John Geller, President and CEO, explained that the initiative is an acceleration of plans already identified following past acquisitions, with the primary goal of speeding up growth. He emphasized that the effort focuses on overcoming obstacles to growth by investing in technology to consolidate systems, improve marketing and sales efficiency, and digitize the customer experience, which has created significant energy and a clear path forward for the organization.

David Katz of Jefferies requested more details about the newly formed 'strategic business operations office,' asking about its specific purpose, operational structure, and the scope of the growth opportunities it will pursue.

Answer

CEO John Geller described the office's primary goal as adding 'velocity to execution' for both new and existing initiatives related to growth and cost efficiencies. He clarified that the focus is mainly on internal, organic growth within the core Vacation Ownership and Exchange businesses, while also exploring adjacent opportunities and new product launches.

David Katz of Jefferies questioned the drivers behind improved tour flow activation, the mechanics of acquiring less expensive inventory, and sought more detail on the planned non-core asset sales.

Answer

CEO John Geller attributed better tour activation to enhanced data and analytics for improved customer targeting. CFO Jason Marino clarified that less expensive inventory is sourced by adjusting the prices paid to owners through repurchase programs. Geller identified the primary non-core assets for sale as the Sheraton Hawaii Resort hotel acquired from ILG and a retail parcel at their Waikiki resort.

David Katz asked about any other drivers that might cause quarterly differences in seasonality or earnings cadence throughout FY 2026, beyond the flagged Q1 margin impacts and costs.

Answer

CFO Oliver Chow mentioned legacy legal costs in corporate for Q1 and the timing of CapEx cycles (Canada VLT vs. Class III replacement) as potential drivers of quarterly differences, but generally expects a similar shape to 2025. President and CEO Matt Wilson clarified that R&D and CapEx spending in 2026 will be a similar percentage of revenue as in 2025 and 2024, with some front-run CapEx for markets like Indiana.

David Katz asked about any other drivers for quarterly differences in seasonality or earnings cadence throughout FY 2026, beyond the flagged Q1 margin impacts from costs.

Answer

Oliver Chow, CFO, mentioned legacy legal costs in corporate in Q1 and the timing of the broader CapEx cycle, which will cause quarterly mix variations (e.g., Canada VLT vs. Class III replacement). He expects a fairly similar shape for 2026 relative to 2025. Matt Wilson, President and CEO, clarified that investments in R&D and CapEx will remain a similar percentage of revenue as in 2025 and 2024, with some front-running CapEx in new markets like Indiana, which is considered a high-conviction investment.

David Katz from Jefferies inquired about the current state of the asset trading market, specifically if Xenia Hotels & Resorts is observing increased activity in the $50 million-$200 million sweet spot and if investors should anticipate more acquisition activity from the company in 2026. He further asked about the criteria and types of assets Xenia would be interested in adding to its portfolio, given a potentially more active market.

Answer

Chairman and CEO Marcel Verbaas confirmed increased product availability and broker optimism in the asset trading market. He stated that while share repurchases have been prioritized due to valuation gaps, a narrowing of this gap would make external growth opportunities more appealing, with a desire for such opportunities to materialize over the next few years. He reiterated that the $50 million-$200 million range is the sweet spot, emphasizing a focus on increasing portfolio quality and location. While not targeting specific markets (especially those with high current concentration like Orlando, Houston, Phoenix), Xenia seeks opportunistic acquisitions that align with its strategy of pivoting between demand segments, particularly interested in assets that could bolster the group segment, but also open to corporate transient or leisure-focused properties if the opportunity is compelling.

David Katz inquired about increased activity in the asset trading market, specifically within the $50 million-$200 million range, and whether Xenia Hotels & Resorts anticipates more acquisition activity.

Answer

Marcel Verbaas, Chairman and CEO, confirmed increased product availability and broker optimism in the asset trading market. He noted that Xenia has been active in share repurchases due to a valuation gap but would pursue external growth opportunities if pricing becomes more attractive. He specified that the $50 million-$200 million range is Xenia's sweet spot, and while they have concentrations in Orlando, Houston, and Phoenix, they are open to under-concentrated or new markets, prioritizing assets that fit their strategy of pivoting between demand segments, especially group.

David Katz of Jefferies inquired about Xenia's strategy for stock buybacks and asked for perspective on the varied performance outlooks across the lodging industry, particularly concerning group, leisure, and business transient demand.

Answer

EVP & CFO Atish Shah affirmed that buybacks remain a valuable tool, balanced against leverage targets. Chair & CEO Marcel Verbaas explained that Xenia's portfolio is well-positioned due to its strong group setup and lower dependence on large citywide conventions, with current trends aligning with initial 2025 expectations.

David Katz asked for clarification on the entertainment business's expected decline in Q1 and color on its cadence for the year, and sought an updated view on the long-term earnings power of the entertainment business.

Answer

Patrick Moore, Chief Executive Officer of Opry Entertainment Group, attributed the Q1 decline to the Opry 100 NBC special launch in the prior year and a shift in concert count, with more concentration in Q2 and Q3. Colin Reed, Executive Chairman, described the entertainment business as "awfully valuable" with "extraordinary" growth opportunities over the next 2-3 years, citing potential for more amphitheaters, Category 10s, Ole Red, and development around the Opry House. He noted the board reviewed a very attractive long-range plan for the business.

David Katz sought clarification on the entertainment business's expected Q1 decline, asking for details on the cadence for the year and its drivers. He also requested an updated view on the earnings power of the entertainment business looking out a few years.

Answer

Patrick Moore, Chief Executive Officer, Opry Entertainment Group, attributed the Q1 decline to the Opry 100 NBC special launch last year and a shift in concert count/concentration to Q2/Q3. Colin Reed, Executive Chairman, emphasized the high value and extraordinary growth opportunity in live entertainment, particularly with country music's global popularity, mentioning expansion plans for amphitheaters, Category 10s, Ole Red, and undeveloped land around the Opry House, noting the long-range plan is very attractive.

David Katz of Jefferies requested more details on the company's cost productivity plan and asked about observed consumer behavior trends within the Entertainment segment.

Answer

Executive Patrick Chaffin detailed the productivity plan, which includes moving away from contract labor and focusing on hiring top-tier talent to drive efficiency, in a joint effort with Marriott. Regarding entertainment, Executive Patrick Moore noted that live music is a resilient sector and local/regional travel trends are strong, with no current signs of economic weakness impacting the business. Executive Colin Reed added that the post-COVID desire for experiences continues to fuel growth.

David Katz asked whether any new or marginal competition in the company's key markets could be having an impact on performance.

Answer

Executives including Patrick Chaffin, Colin Reed, and Mark Fioravanti collectively dismissed the idea of new competitive threats, stating that no new supply is being built that truly resembles their unique, large-scale group-focused assets. They emphasized that the company's strategy is driven by internal analysis of market opportunities and enhancing their own portfolio, not by external competitive pressures. Mark Fioravanti reiterated that the goal is an incremental, high-impact change to the business mix.

David Katz asked if 2027 could mark a shift to an 'offense' strategy, potentially involving acquisitions, following successful non-core divestitures and deleveraging. He also sought confirmation on whether most non-core assets are expected to be sold within 2026.

Answer

Tom Baltimore, Chairman and CEO, expressed excitement about pivoting from defense to offense, anticipating a re-rating of the company and new acquisition opportunities. He highlighted the optionality provided by the streamlined core portfolio and fee-simple ownership of key assets. He confirmed that the goal and mission is to sell most non-core assets within 2026, acknowledging potential external factors.

David Katz asked if 2027 could mark a shift to playing offense and acquiring new assets, following the successful divestiture of non-core hotels and deleveraging. He also inquired if it's reasonable to expect most non-core assets to be sold within 2026.

Answer

Tom Baltimore, Chairman and CEO, expressed excitement about the potential pivot from defense to offense, highlighting the team's hard work in reshaping the portfolio and the opportunity for a company re-rating. He noted that a streamlined core portfolio offers significant optionality for future growth. Tom Baltimore confirmed that the goal and mission is to sell most non-core assets within 2026, acknowledging potential external factors but emphasizing the team's commitment to the task.

David Katz requested a deeper analysis of the complex demand dynamics in Hawaii, seeking to unpack the recovery progress and understand the factors influencing performance.

Answer

Chairman and CEO Thomas Baltimore provided a detailed overview, attributing near-term challenges to the lingering effects of a 45-day labor strike. He outlined the sequential RevPAR improvement expected through 2025, from a 13% decline in Q2 to high-teens growth in Q4. He also noted the RevPAR index is recovering, domestic airlift is strong, and while Japanese tourism lags, the long-term outlook remains positive due to muted supply growth.

David Katz asked about the strategic decision to reduce the number of core hotels from 25 to 20 and sought clarity on the cost and timing certainty for the significant planned CapEx, particularly the transformative renovation of the Royal Palm in Miami.

Answer

Chairman and CEO Thomas Baltimore explained the portfolio strategy is to focus on the top 20 assets, which account for approximately 90% of the company's value, and to recycle capital from non-core assets. For the Miami project, he expressed high confidence, stating that permits are secured, contractors are in place, and the project is on track for completion before the World Cup, with expected unlevered returns of 15-20%.

David Katz asked about the intended market positioning of the Royal Palm resort in Miami after its significant renovation, considering the competitive landscape.

Answer

Chairman and CEO Thomas Baltimore explained that the renovated Royal Palm will be positioned as an upper-upscale lifestyle resort, tucked just underneath the highest-end luxury properties like St. Regis and Aman. The goal is to capture a diverse customer base by significantly raising rates and doubling EBITDA without competing at the absolute top tier of the market.

David Katz asked a broad, strategic question about how Park Hotels & Resorts incorporates the risk of recurring weather events into its underwriting for capital spending and potential acquisitions.

Answer

Chairman and CEO Thomas Baltimore detailed a proactive and comprehensive approach to weather resiliency, which he said distinguishes Park from its peers. He cited examples like pre-deploying first responders, installing tiger dams, moving critical building systems above grade, and sand nourishment projects. He asserted that this focus has led to lower insurance costs and that weather risk is a key factor in all investment underwriting.

David Katz asked if GLPI considers putting limitations or boundaries on exposure to a singular tenant like Bally's during a high development phase, particularly for Las Vegas and New York, or if they are comfortable compensating with cap rates, terms, and coverage.

Answer

Desiree Burke, Chief Financial Officer and Treasurer, stated that GLPI does not have a hard limit on tenant exposure, citing the large exposure to Penn, and instead focuses on the four-wall coverage and investment quality of each opportunity. Brandon Moore, President, COO and Secretary, clarified that GLPI did set a project-specific limit of $175 million for Las Vegas and would take a similar approach to New York, capping exposure based on project underwriting, the situation, and other capital sources, without diving headfirst into every opportunity. Carlo Santarelli, Senior Vice President, Corporate Strategy and Investor Relations, noted that New York will have no shortage of funding suitors.

David Katz asked if GLPI considers putting limitations on exposure to a singular tenant like Bally's during its high development mode, or if it's comfortable compensating with cap rates and terms, and inferred if similar limitations might apply to the New York project.

Answer

Desiree Burke, Chief Financial Officer and Treasurer, stated that GLPI does not have a hard limit on tenant exposure, focusing instead on property-specific four-wall coverage. Brandon Moore, President and Chief Operating Officer, clarified that project-specific limits are set (e.g., $175 million for Las Vegas, $1.1 billion for Chicago) based on underwriting, and GLPI does not dive headfirst into every opportunity. For New York, Mr. Moore confirmed a project-specific approach, considering the total project, tenant situation, and other capital, and Carlo Santarelli, Senior Vice President, Corporate Strategy and Investor Relations, noted many suitors for New York funding.

David Katz of Jefferies asked about the pipeline for new tenants, particularly from operators who have historically been philosophically opposed to the sale-leaseback model, and whether that could change over the next 3-5 years.

Answer

Senior VP & Chief Development Officer Steven Ladany acknowledged that converting sole proprietors and family-owned businesses takes time and relationship-building, but noted the 'ice cube melts' over time, citing Cordish as a past example of a successful conversion. President & COO Brandon Moore and Chairman & CEO Peter Carlino emphasized that cultivating long-term relationships is key to being the 'landlord of choice' when these operators are ready to monetize their assets.

David Katz of Jefferies asked for updated thoughts on the total addressable market (TAM) and opportunity within Native American gaming, and whether more deals similar to recent ones could be expected.

Answer

President & COO Brandon Moore stated their view of the TAM is unchanged and that they have had many productive meetings with tribes. Opportunities range from refinancing and expansions to greenfield developments. He noted that while there is significant interest and they are optimistic, it is too early to predict the magnitude or number of actionable deals as they continue to underwrite both the opportunities and the tribal partners.

David Katz from Jefferies requested an update on GLPI's role in the redevelopment of the Tropicana site in Las Vegas and sought clarification on the nature of collateral in tribal gaming deals, specifically the ability to manage non-gaming assets.

Answer

President and COO Brandon Moore stated that GLPI's priority for the Tropicana is preserving its parcel's value while Bally's finalizes the integrated resort design, after which GLPI will determine its funding involvement. Regarding tribal collateral, Moore clarified that GLPI's lease structure allows it to take possession of the buildings and operate non-gaming amenities. He emphasized that the comprehensive collateral package provides significant leverage to work with a tribe to resolve any potential issues.

David Katz inquired about the Marriott Transformational Capital Program, specifically asking for more color on the selection of hotels, the timing, and the expected outcomes. He also asked for details on the reimbursement cadence for modeling purposes.

Answer

President and CEO Jim Risoleo explained that the selected hotels are great assets needing repositioning, with the goal of significantly increasing Yield Index and achieving mid-teens cash-on-cash returns, citing past success with 8.7 points of Yield Index gain. Executive Vice President and CFO Sourav Ghosh provided details on operating profit guarantees: $2 million from MTCP2 and $24 million from HTCP in 2025, and an expected $19 million in 2026 ($7 million from HTCP and $12 million from MTCP2).

David Katz from Jefferies inquired about the rationale behind the specific hotels chosen for the Marriott Transformational Capital Program (MTCP 2), the expected outcomes, and the financial cadence of operating profit guarantees.

Answer

Jim Risoleo, President and Chief Executive Officer, Host Hotels & Resorts, stated that the selected assets are strong properties needing repositioning, with an expectation of meaningfully increasing Yield Index and achieving mid-teens cash-on-cash returns. Sourav Ghosh, Executive Vice President and Chief Financial Officer, detailed that MTCP 2 generated $2 million in operating guarantees in 2025 and is expected to provide $12 million in 2026.

David Katz asked about the implications of Host's asset sales and investments, the portfolio's outperformance, the potential for more asset trading in the market, and how Host broadly thinks about valuation and capturing differentiated value in the public market.

Answer

President and CEO Jim Risoleo discussed Host's opportunistic capital allocation strategy, highlighting successful asset sales like the Washington Marriott Metro Center at a 12.7x trailing EBITDA multiple. He emphasized the company's differentiated, investment-grade balance sheet with over $2 billion in liquidity and 2.8x leverage. Risoleo attributed outperformance to over $2 billion invested in ROI projects since 2019, yielding an average RevPAR index share gain of over 8.5 points for 20 stabilized properties, significantly exceeding the 3-5 point target. He noted the transaction market remains tepid but Host's relationships and balance sheet enable unique deals, such as seller financing.

David Katz asked about Host Hotels & Resorts' asset sale strategy, the potential for more market trading, and how the company broadly considers valuation and differentiated value capture in the public market, given its recent outperformance.

Answer

Jim Risoleo, President and CEO, explained Host's opportunistic capital allocation for dispositions and acquisitions, highlighting strong execution on recent asset sales like the Washington Marriott Metro Center at a 12.7x trailing EBITDA multiple. He emphasized Host's strong balance sheet with over $2 billion in liquidity and a 2.8x leverage ratio as a key differentiator. Risoleo attributed the company's outperformance to strategic capital allocation since 2018, including over $2 billion in ROI projects, which have led to significant RevPAR and EBITDA guidance increases. He noted that transformational renovations have yielded an average RevPAR index share gain of 8.5 points, well above the 3-5 point target. He also mentioned the tepid transaction market but highlighted Host's ability to provide seller financing as a competitive advantage.

David Katz of Jefferies asked for an update on the Turtle Bay resort in Hawaii, inquiring about performance surprises and seeking clarification on its inclusion in comparable RevPAR calculations.

Answer

President & CEO James Risoleo reported that Turtle Bay's hotel operations are exceeding pro forma expectations, benefiting from its integration into the Ritz-Carlton system. He noted a change in plans for a golf course renovation is affecting total resort results, but the core hotel is performing well. EVP & CFO Sourav Ghosh confirmed the hotel is included in the comparable hotel results.

David Katz of Jefferies asked for an update on the Turtle Bay resort, inquiring about performance surprises and clarification on its inclusion in comparable hotel results.

Answer

President & CEO James Risoleo reported that Turtle Bay's hotel operations are exceeding pro forma expectations, driven by its integration into the Ritz-Carlton system. He mentioned a change in plans for the Fazio Golf Course renovation is affecting the resort's total results, but not the core hotel performance. EVP & CFO Sourav Ghosh confirmed the hotel is included in the comparable results.

David Katz followed up on capital allocation, asking when the company might consider returning more capital through increased repurchases or other one-time events.

Answer

President and CEO James Risoleo affirmed that Host will continue to be thoughtful about share repurchases and dividends. He noted that the company would have likely been more active in the market had it not been in a blackout period when the stock price weakened. He reiterated a 'wait-and-see' approach, balancing capital return with operational priorities and long-term value creation.

David Katz from Jefferies asked for an update on the potential sale of non-core assets and the current conditions of the hotel transaction market.

Answer

President and CEO James Risoleo dismissed a prior report about hiring an advisor for a portfolio sale as a rumor. He affirmed that Host is comfortable with its portfolio and under no pressure to sell, though it will remain opportunistic. He characterized the transaction market as slow due to high interest rates and a wide bid-ask spread, which he views as an advantage for Host given its strong balance sheet and liquidity.

David Katz asked for commentary on the labor market outlook and whether recent leisure transient softness was driven by travel decisions or pushback on high rates.

Answer

President and CEO James Risoleo expressed optimism on the labor front, crediting strong property managers like Marriott and Hyatt. Regarding leisure, he stated there has been no pushback on rates, with ADR remaining up 50% versus 2019. He attributed softness to an imbalance where more Americans are traveling internationally, but expects this to normalize over time.

David Katz asked about the expected duration of the elevated removal process for underperforming properties and its impact on Net Unit Growth (NUG), and the long-term normalized NUG levels for Choice, considering industry trends and international growth.

Answer

Patrick Pacious, President and CEO, reiterated that the Q4 2025 removals were elevated and that the company expects to return to positive U.S. NUG this year due to a strong pipeline and conversion speed (3-7 months for openings). Scott Oaksmith, Chief Financial Officer, added that the pronounced culling was partly due to a few years of limited new construction, but termination rates are expected to normalize in 2026-2027. Patrick Pacious emphasized that industry NUG is primarily driven by international expansion, where Choice is also growing significantly, and the return of new construction, particularly in the extended stay segment.

David Katz asked how long Choice Hotels expects the current period of property removals to last before net unit growth (NUG) increases, and what a reasonable long-term normalized NUG level for the company would be.

Answer

Patrick Pacious (CEO) reiterated confidence in achieving positive U.S. NUG this year, citing the pipeline and rapid conversion speed (3-7 months for conversion hotels). He noted that the Q4 2025 removals were elevated compared to normal. Scott Oaksmith (CFO) added that the pronounced culling is partly due to a few years of low new construction across the U.S. industry, and termination rates are expected to trend back to historical normals in 2026-2027. Patrick Pacious (CEO) emphasized that industry NUG is largely driven by international expansion, an area where Choice is growing significantly, and by the return of new construction, particularly in the extended stay segment where Choice continues to outperform.

David Katz from Jefferies asked for a detailed breakdown of the 'other revenues from franchised and managed properties' line item, seeking clarity on the drivers of its non-reimbursable components and their future growth prospects.

Answer

CFO Scott Oaksmith directed Katz to a new reconciliation in the investor presentation. He explained the Q4 figures, noting the non-reimbursable portion generated about $14.5 million in EBITDA, up 16% YoY. Oaksmith identified ancillary fees for services like the proprietary property management system (Choice Advantage) as a key growth driver, which is expanding to Radisson properties and extended-stay brands. He expects these fee-for-service revenues to grow in line with overall room growth.

David Katz asked about the marketing fund's deficit, questioning if it would balance by year-end, and inquired if the increased focus on group travel is solely a result of moving upscale or part of a broader strategic initiative.

Answer

CFO Scott Oaksmith explained the marketing fund is managed over a long-term, 5-year cycle and is not expected to break even annually, projecting a year-end cumulative surplus of $25-$30 million despite a 2024 deficit. CEO Patrick Pacious clarified that the group business focus is broad-based, impacting the extended-stay and mid-scale segments in addition to upscale.

David Katz inquired about the single most positive aspect of the current earnings report, seeking to identify a key highlight from the company's performance.

Answer

CEO Geoff Ballotti identified development as the most exciting aspect, citing accelerated net room growth, record 72,000 organic room additions (up 13% year-over-year), and a growing pipeline. He emphasized strong new construction openings (up 50% domestically) and solid conversion activity, along with a record 870 deals signed for the full year.

David Katz inquired about the single most positive aspect of the earnings report, seeking to understand management's key highlight.

Answer

CEO Geoff Ballotti identified development as the most exciting aspect, citing accelerated net room growth, a record 72,000 organic room additions (up 13% from 2024), a 50% increase in domestic new construction openings, and a record 870 deals signed, which has led to a larger and stronger development pipeline.

David Katz inquired about the momentum expected in net unit growth (NUG), including gating factors and prospects for 2026 to be similar or better, across different geographies.

Answer

CEO Geoff Ballotti expressed confidence in the NUG outlook, noting acceleration in higher fee segments with a record 48,000 organic rooms opened year-to-date, up 9% year-over-year and 29% versus 2019. He highlighted sequential growth in net rooms added each quarter, with 70% of new rooms in mid-scale and above, and a strong pipeline (21st consecutive quarter of growth, up 4% year-over-year) with 60% international concentration.

David Katz inquired about Wyndham's momentum in net unit growth (NUG), including gating factors, expectations for next year's NUG, and geographical focus.

Answer

CEO Geoff Ballotti expressed confidence in Wyndham's NUG outlook, noting acceleration in higher fee segments and a record 48,000 organic rooms opened year-to-date, up 9% year-over-year and 29% versus 2019. He highlighted sequential NUG growth each quarter in 2025 and a strong pipeline, which has grown for 21 consecutive quarters, up 4% year-over-year. Ballotti emphasized that 70% of new rooms are in mid-scale and above segments, with 60% of the pipeline being international, showing steady growth across Europe, the Middle East, Eurasia, and Latin America.

David Katz of Jefferies inquired about the underlying factors contributing to pressured RevPAR in Wyndham's segments and sought insights on when a return to growth might be expected.

Answer

CEO Geoffrey Ballotti explained that while RevPAR was down, performance varied by region, with softness in the Sunbelt offset by strength in industrial and energy markets. He noted that pricing is holding steady and key metrics like booking lead times and cancellation rates are stable or improving. Ballotti expressed optimism for a return to long-term growth, citing low supply growth and positive consumer travel intent research.

David Katz of Jefferies asked for an update on the development engine, specifically regarding geographic resource allocation, progress in regions like Asia, and the company's strategy for using key money.

Answer

CEO Geoffrey Ballotti highlighted accelerated development in Asia, with 90% more room openings and a focus on direct franchising over master licenses for higher FeePAR. He also noted strong growth in Europe and Latin America. CFO Michele Allen explained that the key money strategy is selective, prioritizing high-quality, revenue-accretive deals in strategic markets like Germany, while not deploying capital in places like China. She confirmed the strategy is working, with deals delivering higher FeePARs.

David Katz asked for clarification on the 2025 guidance in the context of the longer-term guide through 2026, questioning whether the 2025 outlook is conservative or if a significant acceleration is expected in 2026.

Answer

CFO Michele Allen affirmed confidence in the 8.5% longer-term adjusted EBITDA CAGR, noting that growth is already accelerating. She highlighted that controllable factors like system growth, royalty rates, and margins are performing well, and ancillary revenue is set to meaningfully accelerate in 2025. This momentum is expected to build into 2026, implying a slightly higher growth rate, especially in a positive RevPAR cycle.

David Katz asked for Wyndham's outlook on leisure travel demand for 2025, given a peer's cautious commentary, and inquired if the company's ancillary fees are positioned to grow at a much higher rate than core RevPAR-driven fees.

Answer

CEO Geoffrey Ballotti stated that Wyndham is not seeing any softness in leisure demand, citing positive indicators like longer booking windows and resilient consumer spending. CFO Michele Allen confirmed that both in the short and long term, ancillary fee streams are expected to grow at a faster rate than the core franchising business.

David Katz inquired about the notional sales targets or long-term vision for the new brands (Sports Illustrated, Eddie Bauer, Accor, Margaritaville) and sought an update on the Blue Thread partnership, including its sales contribution and potential app connectivity with the newly launched Club Wyndham and WorldMark apps.

Answer

President and CEO Michael Brown stated that the four new brands are expected to represent a growing percentage of the overall sales mix, moving from high single digits in 2026 to double digits and then teens in subsequent years, with outsized growth compared to core brands. He reaffirmed the Blue Thread partnership with Wyndham Hotels as critical, with its sales contribution stabilizing at about 3% of total sales, and confirmed plans for future co-connectivity between their respective apps.

David Katz asked for a notional sales amount or long-term vision for the new brands (Sports Illustrated, Eddie Bauer, Accor) to understand their future opportunity. He also inquired about the aspiration and vision for the 'Blue Thread' partnership with Wyndham Hotels, its sales contribution, and how it connects with the newly launched Club Wyndham and WorldMark apps.

Answer

Michael Brown, President and CEO, stated the goal is for the four emerging brands (Margaritaville, Accor, Sports Illustrated, Eddie Bauer) to represent a growing percentage of overall sales mix, moving from high single digits in 2026 to double digits and then teens in subsequent years. He confirmed the Blue Thread partnership with Wyndham Hotels remains critical, with sales from Wyndham Rewards members stabilizing at about 3% of total sales. Mr. Brown added that while focused on establishing their own apps first, they will seek co-connectivity with Wyndham Hotels where possible.

David Katz of Jefferies asked about the scale of the international opportunity with the Accor brand, its potential to become a significant growth driver, and the comparative economics of international versus domestic sales.

Answer

CEO Michael Brown described the Accor partnership as an incremental growth driver targeting new customer databases, rather than a fundamental shift to international markets. He projected new brands could each contribute $200-$400 million in sales over time. Brown expects the profitability of international sales to be similar to the U.S. and does not anticipate a significant change in the company's 90% domestic revenue mix.

David Katz from Jefferies asked for an update on business trends observed in April and for insights into the Travel and Membership (T&M) segment, seeking to understand the 'solid core' of the pressured business.

Answer

President and CEO Michael Brown reported that the Vacation Ownership business continued to perform well in April with stable KPIs. He acknowledged ongoing pressure in the T&M segment from industry consolidation but noted this was factored into guidance. CFO Michael Hug added that while loan delinquencies rose in March, collections improved in April, leading to a prudent increase in the full-year provision forecast to 21%.

David Katz requested a high-level perspective on consumer strength and asked if the current loan loss provision guidance represents a long-term aspirational level.

Answer

President and CEO Michael Brown cited consistent VPG, stable consumer sentiment, and steady forward bookings as signs of consumer health. Executive Michael Hug added that the gap between current and historical delinquency levels narrowed in late 2024. Regarding the loan loss provision, Hug clarified that while the 2025 guidance is around 20%, the longer-term aspirational range is 18-19%, though strategic decisions to grow the loan portfolio could influence this.

David Katz inquired about the company's broader strategy for managing recurring major weather events and asked about the key drivers behind the sales force's strong execution, such as leadership, tools, or culture.

Answer

CEO Michael Brown attributed the company's resilience to weather events to its geographic diversity and ability to secure favorable insurance rates for HOAs. Regarding sales execution, he credited a solid, dynamic leadership team and a strategy that rewards salespeople with higher-quality tours (due to higher FICO standards) and higher VPG, leading to increased efficiency and higher sales satisfaction scores.

David Katz asked about Caesars' value proposition in the increasingly competitive regional gaming landscape, considering pressures from skill games and iGaming. He also sought clarification on whether the observed leisure weakness in Las Vegas reflects a K-shaped economy, segmenting performance between higher-end and lower-end customers.

Answer

CEO Tom Reeg highlighted Caesars Rewards as the company's chief differentiator in regional markets, creating a hub-and-spoke system that leverages destination properties and provides a significant revenue lift. Regarding Las Vegas, Tom Reeg (CEO) stated that while premium play holds up better, the situation is more nuanced than a simple K-shaped economy, with location (Center Strip vs. ends) also playing a significant role in performance.

David Katz asked about the holistic view of regional gaming, considering pressures from skill games, HRMs, and potential iGaming competition, and how Caesars' value proposition differentiates itself in this busy landscape. He also inquired about segmenting the leisure weakness in Las Vegas between higher-end and lower-end customers to understand if it aligns with a K-shaped economic recovery.

Answer

CEO Tom Reeg emphasized Caesars Rewards as the company's chief benefit and unique offering in regional markets, leveraging its hub-and-spoke system with Las Vegas Strip and destination properties. He noted that legacy Eldorado properties saw mid-single-digit revenue lift purely from entering the Caesars Rewards network. Regarding Las Vegas leisure weakness, Reeg stated that while premium segments generally hold up better, it's not a simple premium-good/value-bad scenario. He pointed to similar hotel numbers between Caesars and MGM (which has a higher premium skew) and suggested that location, with Center Strip performing better, adds nuance beyond a simple K-shaped economy explanation.

David Katz inquired about the digital segment's Q4 performance, its sequential cadence, the $500 million run rate target, and an update on game outcomes impacting results.

Answer

CEO Tom Reeg stated that game outcomes are the major swing factor for Q4 digital, noting that hold for the first four weekends was above last year but below budget, impacting the quarter's results.

David Katz asked for an update on the Digital segment's Q4 outlook, considering seasonality and the target of a $500 million run rate.

Answer

Tom Reeg, CEO, stated that game outcomes are the primary swing factor for Q4, noting that outcomes haven't substantially improved in the first four weeks. He explained that Q4 has the highest volumes due to football but also carries higher fixed costs, making hold volatility more impactful.

David Katz of Jefferies asked for more detail on the accelerated performance of the Digital segment, the key drivers for reaching the $500 million EBITDA run rate, and whether new aspirational targets for 2026 and beyond could be discussed.

Answer

CEO Tom Reeg expressed high confidence in reaching the $500 million EBITDA target on schedule, pointing to continued momentum, the roll-off of over $70 million in partnership expenses by 2027, and strong customer acquisition potential from the new single wallet in Nevada. While hesitant to set a new specific target, Reeg stated he expects to generate 'substantially more' than $500 million in digital EBITDA in the coming years, especially with potential new iGaming jurisdictions.

David Katz asked about the differing progression of the iGaming and sports betting businesses within the Digital segment and sought confirmation of positive trends in Las Vegas continuing into the second quarter.

Answer

CEO Tom Reeg explained that while sports betting currently generates more EBITDA, he anticipates a legislative push for iGaming in 2026-2027 as states seek revenue. He noted the inherent volatility in sports betting hold, contrasting it with the steady, strong growth of iCasino, which he views as a core strength for Caesars. Reeg also confirmed that business trends in April were consistent with the first quarter across all segments.

David Katz inquired about the company's strategy for balancing stock buybacks with debt reduction and asked for updated thoughts on potential non-core asset sales.

Answer

CEO Tom Reeg stated that the top priority remains reducing lease-adjusted leverage towards 4x, with the vast majority of 2025 free cash flow earmarked for debt paydown. He mentioned that while the easiest non-core asset sales are complete, there has been an increase in inbound calls about other assets, though no transactions are imminent.

David Katz sought clarity on the transition of the Danville property from its temporary to permanent facility, asking if there would be a period of EBITDA dislocation during the ramp-up. He also inquired about the current competitive and promotional environment in Las Vegas.

Answer

CEO Tom Reeg explained the Danville transition will be seamless, with the temporary tent operating until the moment the permanent facility opens, thus avoiding any operational downtime or EBITDA dislocation; the change is primarily a margin story. He also stated the Las Vegas market has been 'remarkably stable,' with no evidence of a negative shift in the promotional environment and business running at high-90s occupancy.

David Katz asked for clarification on the 2026 revenue guidance, specifically what factors could drive revenue higher, whether prediction market revenue is included, and what could cause the wider EBITDA range to be higher or lower.

Answer

Jason Robins (Co-Founder and CEO, DraftKings) clarified that no revenue from prediction markets is included in the 2026 guidance, representing pure upside. He explained that the core business also has significant upside, emphasizing that handle should not be viewed in isolation. Mr. Robins highlighted that a substantial increase in Net Revenue Margin (from approximately 6.5% to over 9%) naturally impacts handle growth, even as overall revenue increases. He also noted that non-NFL sports handle is currently experiencing double-digit growth.

David Katz inquired about potential drivers for higher revenue in 2026, specifically asking about the inclusion of prediction markets revenue in the guidance and factors influencing the EBITDA range.

Answer

Co-Founder and CEO Jason Robins stated that no revenue from prediction markets is included in the 2026 guidance, representing potential upside. He also explained that handle slowdown is a natural consequence of higher net revenue margins and promo optimization.

David Katz inquired about the confidence in the OSB hold percentage swinging back to normal after recent customer-unfriendly patterns, and the journey of hold percentage over the past year. He also asked for a comment on the value added by new board member Greg Went.

Answer

Jason Robins, Co-founder and CEO of DraftKings, explained that while Q3 experienced negative outcomes, Q2 saw positive outcomes, demonstrating the business model's strength. He emphasized that outcomes normalize over time, and short-term fluctuations are expected. Regarding Greg Went, Jason Robins highlighted his expertise in investing, long-time gaming investment background, strong investor perspective, capital markets knowledge, and public affairs connections, anticipating significant contributions to the company's strategy.

David Katz asked about DraftKings' OSB hold percentage, specifically addressing the recent pattern of "customer unfriendly" outcomes and seeking confidence that hold rates will normalize. He also inquired about the value Greg Wendt brings to the board.

Answer

Jason Robins, Co-founder and CEO of DraftKings, acknowledged the frustration but noted Q2 2025 had positive outcomes, driving strong Adjusted EBITDA. He emphasized that outcomes normalize over time, making multi-year modeling smoother, though short periods can see significant variance. Regarding Greg Wendt, Mr. Robins highlighted his expertise in investing, long-time gaming investment background, strong perspective on investor thinking, capital markets knowledge, and public affairs connections, expressing excitement for his strategic contributions.

David Katz of Jefferies followed up on prediction markets, asking about potential customer crossover from existing products, the status of conversations with state regulators and other stakeholders, and the overall strategic thinking regarding capital allocation for this opportunity.

Answer

Co-Founder & CEO Jason Robins characterized DraftKings' current stance as being in 'monitor mode.' He indicated that they are taking a measured approach and watching how the market unfolds with other operators before engaging in active discussions with regulators or making significant capital decisions.

David Katz of Jefferies followed up on prediction markets, asking about potential customer crossover, the status of conversations with state regulators, and how the company is balancing this opportunity with its stock and cash flow.

Answer

Co-Founder & CEO Jason Robins explained that these considerations are why DraftKings is taking a measured approach. He indicated the company is currently more in a 'monitor mode' regarding active discussions with regulators and will learn by observing how the market unfolds for other operators.

David Katz inquired about DraftKings' M&A strategy, including boundaries for deals, use of capital, and tolerance for leverage. He also questioned the management's confidence in the convergence of structural and actual hold rates, given recent volatility.

Answer

CEO Jason Robins explained that M&A is evaluated against other value-creation options like buybacks and organic investment, citing recent tech acquisitions as successful examples. Regarding hold rates, Robins expressed 100% confidence that recent unfavorable outcomes are random, stating that models will adjust to any fundamental sport changes over time, ensuring structural and actual hold converge.

David Katz from Jefferies asked for an update on the trajectory of in-play betting in the U.S. and the factors needed to increase its mix. He also questioned the decision-making process behind not raising EBITDA guidance despite a strong start to the year.

Answer

CEO Jason Robins identified two key drivers for in-play betting growth: continued product improvement, such as market uptime, and collaboration with broadcasters to achieve low-latency streams. Regarding guidance, both CFO Alan Ellingson and CEO Jason Robins emphasized that it is very early in the year and they prefer to remain prudent, noting the provided range already accounts for potential variability.

David Katz of Jefferies asked how DraftKings plans to mitigate the impact of sports outcome volatility, or the 'luck factor,' and what operational levers are available to create more predictable financial results.

Answer

CEO Jason Robins acknowledged that short-term volatility from sports outcomes is inherent but normalizes over longer periods. He explained that as adjusted EBITDA grows to become a larger percentage of revenue, the financial impact of these outcomes will diminish significantly, eventually becoming a 'rounding error' on a much larger earnings base.

David Katz sought an updated perspective on the broader Las Vegas market, specifically the long-term opportunity for Wynn's assets to continue growing top-line or bottom-line, beyond current refurbishments.

Answer

President & CEO Craig Billings described Las Vegas as a more multifaceted destination since COVID, with new demand sources appealing to Wynn's customer segment. He emphasized Wynn's strengthened position for high-value customers and the benefit from incremental wealth creation driven by technology and AI. Billings also noted their significant land bank for future expansion, stressing a long-term strategic view (5-7 years out) for growth.

David Katz requested an updated comment on the longer-term growth opportunity for Wynn Las Vegas, considering market diversification, the necessity of refurbishments, and the potential utilization of its land bank.

Answer

President & CEO Craig Billings highlighted Las Vegas's evolution into a more multifaceted destination appealing to Wynn's high-value customer segment, where Wynn has strengthened its competitive position. He emphasized the tremendous EBITDA and return on invested capital from the property and the long-term potential of their significant land bank, driven by incremental wealth creation from technology and AI, focusing on a 5-7 year strategic arc rather than short-term market fluctuations.

David Katz asked for an update on the state of the Macau market, including what's driving its growth (e.g., mainland dynamics). He also inquired if the bifurcation of high-end outperforming low-end, observed in the U.S., is a similar dynamic in China/Macau.

Answer

CEO Craig Billings described China as a giant, complex, and dynamic economy, making it difficult to attribute Macau's growth to specific factors, but expressed long-term bullishness. He confirmed that Macau is a premium-led and premium mass-led market, aligning with the observation of the high-end performing better, and noted shifting industrial policy creating new pockets of wealth.

David Katz of Jefferies asked for Wynn's perspective on the promotional and credit environment in Macau. He also inquired about the role of entertainment as a market driver and Wynn's participation in it.

Answer

CEO Craig Billings described the promotional environment as competitive but noted that reinvestment rates have been stable for several quarters. He acknowledged entertainment's role in driving visitation and revealed that Wynn's largest concession commitment is a new event center at Wynn Palace, slated for completion around early 2028, subject to government approvals.

David Katz asked for more detail on the competitive landscape in Macau, including how it manifests and how Wynn responds, and whether the environment has worsened compared to 6-12 months ago.

Answer

CEO Craig Billings described the Macau market as highly competitive for the premium mass customer, characterizing it as 'hand-to-hand combat.' He noted the promotional environment has stabilized and is actually better than 6-12 months ago as operators have found their footing post-COVID. Billings stated Wynn competes on service, product quality, new amenities, and data-driven marketing.

David Katz of Jefferies asked about Wynn's long-term growth strategy beyond Al Marjan, including potential opportunities in New York or Thailand, and followed up on the specific timing and considerations for developing the Las Vegas land bank.

Answer

CEO Craig Billings outlined their focus on large 'battleship' style assets, highlighting active but early-stage exploration in Thailand and a disciplined approach in New York. He emphasized that the current priority is Wynn Al Marjan. Regarding the Las Vegas land, he stated that timing must be right for the global business and that any development must target an adjacent customer base to avoid cannibalization, reiterating that the immediate focus remains on the UAE project.

David Katz asked if there was any discernible impact from China's economic stimulus on Macau's performance and what specifically underpins management's confidence in the market's outlook.

Answer

CEO Craig Billings stated that it was 'a bit early' to see a direct impact from the stimulus measures. He noted that demand during October's Golden Week was encouraging and pointed to historical precedent from early 2016, when similar stimulus led to a substantial positive impact on both visitation and GGR. This historical context and recent holiday strength contribute to the company's bullish long-term outlook.

David Katz of Jefferies inquired about the growth trajectory of Hilton's luxury and lifestyle segments, specifically asking if the duration and economic intensity of contracts are increasing and if there's an accelerating trend as more rooms come online, impacting fees and cash flow.

Answer

Chris Nassetta, President and CEO of Hilton Worldwide, confirmed that as luxury and lifestyle brands (now 8 brands with 1,000 hotels) gain scale and network effect, they tend to feed on themselves, driving higher market share and owner adoption, thus spinning the economic flywheel faster. He noted that many lifestyle brands like Tempo, Motto, and Canopy are still relatively small but poised for significant growth. For luxury, he highlighted the momentum of Waldorf Astoria, Conrad, and LXR, with a strong pipeline and performance. Nassetta expects the upper mid-market and lower upper upscale segments to see the most volume growth long-term due to demographic concentration.

David Katz asked about the growth trajectory of Hilton's luxury and lifestyle brands, specifically whether the duration and economic intensity of contracts are increasing and if there's an acceleration as more rooms come online.

Answer

Chris Nassetta, President and CEO of Hilton Worldwide, confirmed that as luxury and lifestyle brands (now 1,000 hotels across 8 brands) achieve scale and network effect, they create a self-feeding flywheel, driving higher market share and owner adoption. He noted that many brands like Tempo, Motto, Canopy, and Graduate are still relatively small but poised for significant growth. Nassetta highlighted the strong momentum in luxury, particularly with Waldorf Astoria, and expects continued spectacular growth in the pipeline for these segments.

David Katz inquired about Hilton's strategy in the luxury segment, how it balances tangible and intangible returns, and the competitive landscape in this high-end market.

Answer

Chris Nassetta, President and CEO, stated that luxury is important for its halo effect and aspirational product, though not a huge EBITDA contributor. He noted that a disproportionate amount of key money goes to high-end properties. Hilton has a strong luxury footprint (600+ properties with SLH partnership, 100+ in core brands in pipeline) and a top-performing loyalty program (approaching 70% Honors occupancy). He expects continued focus on luxury but anticipates broader economic growth in the U.S. to narrow the performance gap between mid-market and high-end segments.

David Katz of Jefferies inquired about the growing momentum in Hilton's luxury and lifestyle segments and its implications for the company's economic model and long-term RevPAR potential.

Answer

President and CEO Christopher Nassetta explained that luxury brands, while not the largest profit source, create a crucial "halo effect" for the Hilton Honors loyalty program. He positioned the broader lifestyle segment as a "mega category" with thousands of potential hotels, essential for attracting diverse customer segments and strengthening the overall network effect to drive market share and serve any travel need.

David Katz requested more detail on the Asia Pacific region, particularly China, asking about the economic intensity of development deals there and on-the-ground development trends.

Answer

CFO and President, Global Development, Kevin Jacobs explained that much of the growth in China for brands like Hampton and Hilton Garden Inn is through a capital-light, joint venture franchise model with attractive economics. He noted that Hilton is increasingly growing its other brands in China with full, market-rate fees, which is expected to drive fee-per-room growth over time. Jacobs also mentioned that the company is not investing its own capital in these regions, resulting in high-yield returns.

David Katz asked about Hilton's growing traction in the luxury segment and how the company is balancing this strategic growth with the higher capital requirements, such as key money, needed to compete in that space.

Answer

Kevin Jacobs, CFO and President, Global Development, acknowledged that capital contributions can be higher in the competitive luxury space but noted that much of the recent growth was capital-light, like the SLH partnership. He stated that key money is still used in 10% or less of all deals and that the 2025 capital expenditure guidance of $250-$300 million is in line with their Investor Day forecast and represents a sustainable run rate.

David Katz asked for insight into how Hilton is achieving an outsized share of hotel conversions, questioning if it's due to simple 'shoe leather' or specific drivers like the use of key money.

Answer

President and CEO Christopher Nassetta attributed the success primarily to performance. While acknowledging the company's 'scrappy' and 'gritty' approach, he emphasized that owners are making long-term commitments (20+ years) based on the strong performance of Hilton's brands and its high market share, which gives them confidence in achieving strong returns on their investment.

David Katz asked about demand levels in the Las Vegas Valley, specifically comparing performance between the Strip and local markets, and identifying any pockets of weakness or strength.

Answer

Scott Kreeger, President of Red Rock Resorts, highlighted strong hotel performance, outperforming the Strip's RevPAR when adjusted for Green Valley Ranch renovations. He noted robust regional and national customer gaming demand, attributing it to investments in high-limit rooms and overall asset quality. Stephen Cootey, EVP, CFO, and Treasurer, emphasized Red Rock's gaming-centric locals market model, which relies on frequent repeat visitation and offers a distinct value proposition compared to the Strip's tourism and convention focus. Scott Kreeger added that properties are strategically located in growing areas.

David Katz asked about demand levels in the Las Vegas Valley, specifically how Red Rock Resorts' performance compares to the Strip and other destination pockets, and any observed pockets of weakness or forward-looking strength.

Answer

Scott Kreeger, President, highlighted strong hotel performance, outperforming the Strip in RevPAR (adjusted for Green Valley Ranch renovations), driven by strong sales and high ADR at Red Rock and Durango. He noted robust regional and national gaming demand, attributing it to investments in high-limit rooms and asset quality. Stephen Cootey, EVP, CFO, and Treasurer, emphasized Red Rock's gaming-centric locals market model, distinct from the Strip's tourism/convention reliance, with high repeat visitation. Scott Kreeger added that properties are strategically located in growth areas.

David Katz inquired about Red Rock Resorts' capacity to manage two major development projects simultaneously, seeking an updated perspective on potential overlaps. He also asked about the company's leverage ratio outlook for the next 12 months and the near-term cash taxpayer status, including the impact of accelerated depreciation from recent tax legislation.

Answer

Scott Kreeger, President, indicated that while two major projects could overlap, it would likely be minor, with one winding down as another starts. Stephen Cootey, EVP, CFO, and Treasurer, confirmed comfort with the current 3.89x net debt to EBITDA, expecting any leverage spikes from development to be temporary. Frank Fertitta, CEO, and Stephen Cootey highlighted significant tax benefits from accelerated depreciation on projects like Sunset Station, Green Valley Ranch, and Durango, reducing near-term cash tax payments.

David Katz inquired about the company's ideal leverage range over time, considering its significant capital spending and capital return initiatives.

Answer

Stephen Cootey, EVP, CFO & Treasurer, responded that the company's approach to leverage is unchanged, expressing comfort with the current position due to rising EBITDA, a flexible credit agreement, and no near-term debt maturities. He stated that the focus for the second half of the year is on completing the ongoing renovation projects at Durango, Sunset, and Green Valley.

David Katz followed up on the REIT topic, asking if there was any hypothetical path for the company to operate leased properties in the future. He also requested an update on trends observed in the lowest end of the customer database.

Answer

Executive Stephen Cootey responded that while they would 'never say never,' the company strongly prefers owning its assets for long-term strategic and financial flexibility. Executive Scott Kreeger stated that the lower-end customer segment remains stable, while noting growth in the VIP, regional, and national segments. Executive Lorenzo Fertitta added that all customer age groups were up year-over-year.

David Katz of Jefferies asked about the company's long-term strategic thinking regarding the balance between 'harvest mode' (deleveraging) and 'investment mode' (new projects) beyond the current pipeline.

Answer

Executive Stephen Cootey stated that leverage is currently at a comfortable 4.1x and declining as Durango ramps up. He expressed comfort with the current leverage level but noted they would be willing to let it float higher for the right investment opportunity, especially as interest expenses are decreasing.

David Katz requested clarification on the tough Super Bowl comparison from the prior year and asked for an update on the long-term expansion plans for the Durango property.

Answer

Executive Lorenzo Fertitta explained the Super Bowl comp is difficult for Hotel and F&B due to high volume, but noted the company actually lost money on the game itself last year, making the sports betting aspect a potential tailwind. Executive Scott Kreeger stated the current Durango expansion is a preliminary phase to enable future options, with decisions on larger phases pending a market assessment in the first half of 2025.

David Katz inquired about Net Unit Growth (NUG) and investment spending, specifically asking if Marriott's key money policy has changed, if the year-over-year amount included in the guide is different, and if NUG could theoretically be accelerated by spending more.

Answer

CFO Leeny Oberg explained that 'a bit more' key money is required across all tiers due to financing and construction costs, which is an industry-wide trend. She noted that while the pipeline includes more luxury and full-service deals (which tend to require more key money), the investment for new development is not meaningfully different year-over-year. Marriott maintains financial discipline, and key money deals are more valuable per key. CEO Anthony Capuano added that the aggregate key money per deal signed in 2025 was lower than in 2019 and flat to 2024, underscoring their disciplined capital deployment.

David Katz inquired about net unit growth (NUG) and investment spending, specifically asking if the key money policy had changed, if the year-over-year amount included in the guide was different, and if NUG could be accelerated by theoretically spending more.

Answer

CFO Leeny Oberg explained that while a bit more key money is required industry-wide due to financing and construction costs, Marriott's strong pipeline in luxury and full service generates higher fees and NPV. She noted that roughly 40% of investment is for existing hotels, and Marriott's free cash flow allows for spending on great deals without constraint, maintaining financial discipline. CEO Tony Capuano added that while aggregate key money might have increased, the amount of key money per deal signed in 2025 was lower than in 2019 and flat to 2024, illustrating continued discipline.

David Katz asked for clarification on the increase in investment spending, particularly seeking color on the trends and drivers behind key money allocations.

Answer

Leeny Oberg (CFO and EVP of Development) clarified that the increase in investment spending was primarily due to clearer visibility on non-development-related expenditures, such as tech transformation investments and owned lease CapEx, rather than a change in key money philosophy or amounts. She noted that key money use in new unit development remains consistent.

David Katz inquired about the recent increase in Marriott's investment spending, seeking clarification on the drivers behind this trend and specific color on how key money contributions are trending.

Answer

CFO Leeny Oberg clarified that the increase in investment spending was primarily due to clearer visibility around non-development-related expenditures, such as the timing of tech transformation investments and owned lease CapEx, rather than a change in key money philosophy or amounts. She noted that key money used in new unit development remains consistent.

David Katz of Jefferies asked for a big-picture view on Marriott's expansion into other channels like residential, affiliation deals, and the Ritz-Carlton Yacht Collection, inquiring about their long-term potential and economic models.

Answer

President & CEO Anthony Capuano explained the strategy is to keep loyal guests within the Marriott Bonvoy ecosystem for all their travel needs. CFO Leeny Oberg detailed the attractive economics, describing affiliation deals as classic high-ROIC franchise models and ventures like the media network and co-brand cards as high-return, low-capital-intensity adjacencies that enhance the overall platform.

David Katz of Jefferies questioned the updated Net Unit Growth (NUG) guidance, asking for the puts and takes behind the 'approaching 5%' figure including citizenM. He also asked why the full-year EPS guidance remained unchanged despite a slight reduction in other metrics.

Answer

CFO Leeny Oberg clarified that the NUG guidance is simply a refinement based on greater visibility into the year, not a change in outlook. On the stable EPS guidance, she explained that the lower RevPAR impact was offset by a less negative foreign exchange impact, a small fee contribution from the citizenM transaction, and a stable outlook for Incentive Management Fees (IMFs).

David Katz of Jefferies inquired about the evolution of management contract terms beyond key money, such as contract length and fees, and whether the market has become more competitive, forcing changes to the overall deal structure.

Answer

CEO Tony Capuano emphasized that the company's dealmaking fundamentals remain consistent, focusing on long-term, stable contracts and not compromising on core fee structures even when using capital tools like key money. CFO Leeny Oberg added that the company continues to achieve a good premium in net present value on contracts where key money is used, indicating strong returns.

David Katz from Jefferies asked for details on the areas of strength versus weakness within the leisure travel segment and inquired about the long-term evolution of Net Unit Growth (NUG), particularly with unconventional deals like MGM.

Answer

CFO and EVP, Development Leeny Oberg noted that Q3 leisure transient RevPAR was roughly flat, with slight growth in luxury and premium offset by a slight decline in select service. President and CEO Tony Capuano explained that while the vast majority of NUG will remain traditional franchise and management deals, the company will continue to evaluate creative partnership opportunities that leverage the strength of the Bonvoy program, distinguishing the MGM deal as unique from more traditional structures.

David Katz followed up on Boyd Gaming's M&A strategy, asking for more detail on the 'right market, right price, right characteristics' criteria and the company's current views on Opco versus Holdco structures. He also inquired if operating improvements or capital investment into a target would be considered as part of an acquisition strategy.

Answer

President and CEO Keith Smith reiterated the consistent M&A discipline. He acknowledged the industry's evolution towards more Opco structures and stated Boyd Gaming is willing to accept Opco, despite preferring Holdco, as structure is not a deterrent for the right asset, price, and market. Mr. Smith confirmed that past acquisitions have largely seen improved EBITDA through better execution and often received additional capital, affirming they would 'absolutely invest in these properties' post-acquisition.

David Katz followed up on M&A criteria, asking for more detail on the 'right market, right price, right characteristics' framework, particularly the company's current views on HoldCo versus OpCo/PropCo structures. He also asked if value creation through operating improvements and capital investment in acquired targets is on the table.

Answer

President and CEO Keith Smith reiterated that M&A discipline remains unchanged, acknowledging the industry's evolution means accepting OpCo structures is necessary, though HoldCo is preferred. He confirmed that structure is not a deterrent if the asset, price, and market are right. Keith Smith also affirmed that past acquisitions have shown improved EBITDA through better execution and many received additional capital, indicating a willingness to invest in acquired properties to drive growth.

David Katz sought updated thoughts on internal portfolio investments, including expected returns, timing, and hurdle rates. He also asked for clarification on how the Orleans project, categorized under maintenance, aligns with growth-oriented earnings power.

Answer

CFO Josh Hirsberg explained that growth capital projects generally target a 15-20% cash-on-cash return, citing Treasure Chest, Ameristar St. Charles meeting space, and Cadence Crossing as examples. He noted that Suncoast and Orleans renovations, while maintenance capital, are showing positive early signs, and the Orleans project is a blend of maintenance and growth.

David Katz of Jefferies sought an update on Boyd Gaming's internal portfolio investments, including their expected returns, timing for those returns, and hurdle rates, to aid in future forecasting. He also asked for clarification on whether the Orleans project, being in the maintenance budget, is held to the same 15-20% return standard as other growth projects.

Answer

Josh Hirsberg, CFO, stated that a general rule of thumb for growth capital projects is a 15% to 20% cash-on-cash return, which has been met or exceeded on projects like Treasure Chest, Ameristar St. Charles meeting space, and the upcoming Cadence Crossing. He explained that projects like Suncoast and Orleans renovations are in maintenance capital, making it difficult to distinguish between maintenance and growth components for a precise return calculation, though early signs at Suncoast are encouraging.

David Katz asked for an update on Boyd's criteria for M&A, including hurdles, size, and target markets, given the changing industry landscape.

Answer

President and CEO Keith Smith responded that the company's M&A criteria have not changed. He reiterated their focus on acquiring significant, high-quality assets in strong markets that feature stable regulatory and tax environments.

David Katz asked about Boyd's capital allocation strategy for M&A, focusing on risk tolerance, leverage, and the company's preference between opco/propco and fully owned structures.

Answer

President and CEO Keith Smith explained that while Boyd prefers holdco acquisitions, they are not dissuaded by opco structures. He reiterated their flexibility on increasing leverage for a strategic acquisition, provided there is a clear path to deleveraging. He emphasized a disciplined approach focused on strategic fit and asset quality.

David Katz asked about the competitive landscape and tax structure in Norfolk, Virginia that supports the company's confidence in its new project, and also inquired about the company's current appetite for M&A, leverage, and risk.

Answer

President and CEO Keith Smith expressed high confidence in the Norfolk project's success due to the large population of 1.8 million residents with very few competing casinos, comparing it favorably to the much more saturated Las Vegas Locals market. Regarding M&A, Smith reiterated a disciplined approach, stating that the company is comfortable with its current mid-2x leverage and would only temporarily exceed that for the right opportunity, with a clear path to de-leveraging.

David Katz asked about the company's appetite for M&A in the current environment and requested more specific details on the drivers of customer trends, such as visits versus spend per visit.

Answer

Executive Keith Smith affirmed that the company's disciplined and strategic appetite for M&A remains unchanged by recent market volatility. Executive Josh Hirsberg clarified customer trends, stating that growth from the core customer is driven by both increased frequency and higher spend, with a slight lean towards higher budget. For lower-end database customers, the trend is similar, while the volume of unrated play is growing.

David Katz asked about the rationale behind the increased commitment to Celebrity River Cruises, specifically regarding the ability to induce trial from existing customers versus taking market share from competitors.

Answer

Chairman and CEO Jason Liberty stated the commitment to River Cruises is driven by research, customer trust, loyalty, and demand for an elevated river experience from their large database of loyalists. CFO Naftali Holtz added that demand exceeded expectations, with roughly 80% of bookings coming from existing customers new to river cruising, indicating market expansion potential.

David Katz asked about the information and inputs driving the increased commitment to Celebrity River Cruises, and the ability to induce trial from the current customer base versus taking share from existing river cruise companies.

Answer

Jason Liberty, Chairman and CEO, reiterated that the increased commitment to River Cruises is driven by extensive research into customer trust, loyalty, and desire for an elevated river experience. He emphasized the strong demand generated from their massive database of loyalists. Naftali Holtz, CFO, added that demand exceeded expectations, with approximately 80% of bookings coming from existing Royal Caribbean Group customers who are new to river cruising, indicating a significant opportunity to expand the market rather than just taking share.

David Katz followed up, specifically asking if any disruption is contemplated for the lobby renovations over the next couple of years.

Answer

Patrick Dumont, President and COO, responded with a direct "No."

David Katz asked about the potential for construction disruption at Marina Bay Sands from the upcoming expansion project, given the property's current momentum. He also followed up on Macau's strategy, inquiring whether credit is being used as a competitive tool.

Answer

President & COO Patrick Dumont assured that the expansion construction will not be disruptive to current operations as it is taking place on an adjacent site, unlike the recent in-building renovations. Regarding Macau, Grant Chum, President & CEO of Sands China, clarified that credit-based play is a very small and consistent portion of their GGR, extended to some premium patrons through a long-standing direct rolling program, and is not a significant part of their new strategy.

David Katz asked if the recent Golden Week results were materially stronger than the company's internal expectations and what the specific drivers of that outperformance were.

Answer

Chairman and CEO Robert Goldstein declined to answer the question, citing the company's established policy of not commenting on current quarter performance during its earnings calls.

David Katz sought clarification on what management means by a 'competitive' market in Macao, questioning if it implies a shift away from the recently 'benign' promotional environment, particularly in the premium mass segment.

Answer

Chairman and CEO Robert Goldstein disagreed with the characterization of the market as benign, stating that competition for every segment is intense in a market with reduced top-line revenue compared to 2019. CEO and President of Sands China Grant Chum added that the market has always been competitive and their commentary reflects an intent to compete harder using their newly available assets. He clarified that the strategy is to aggressively deploy new products and engage customers, rather than signaling a specific change in promotional tactics.

David Katz asked for clarification on the fixed versus variable cost structure within Carnival's model to understand potential leverage in a better-than-anticipated year. He also inquired about the estimated cost savings, both upfront and ongoing, from the proposed DLC unification.

Answer

CFO David Bernstein explained that with ships operating at full capacity, most costs are essentially fixed, but the company continuously optimizes through efficiency initiatives and AI. Regarding the DLC unification, he confirmed that the cost savings are in the 'neighborhood' of a few million dollars upfront and ongoing, with a quick payback of less than two years, in addition to streamlining governance and reporting.

David Katz asked for clarification on Carnival's capital allocation, specifically if leverage needs to fall below 3x before substantial, recurring capital returns to shareholders would begin, and the expected progression. He also inquired about any other potential large capital projects or investments that might defer the planned leverage reduction.

Answer

CFO David Bernstein stated that while it's a board decision, Carnival can begin considering returning capital to shareholders as they progress through 2026. CEO Josh Weinstein clarified that they don't need to be *under* 3x leverage; rather, once they have line of sight on 3.5x, they can pursue both deleveraging and shareholder returns. Regarding future capital projects, Mr. Weinstein mentioned mid-life ship refurbishments (like AIDA Evolutions) and a potential Phase 2 of Celebration Key. He emphasized these are accretive but significantly smaller than new build costs, and no large projects are expected to materially defer leverage reduction.

David Katz from Jefferies sought clarification on Carnival's capital allocation remarks, specifically whether leverage needs to reach "inside of three times" before more substantial, recurring capital returns begin, or if it could start earlier. He also asked about any other potential large capital projects or investments that might impede or defer the planned leverage reduction.

Answer

CEO Josh Weinstein clarified that Carnival can begin pivoting to shareholder returns once leverage is in sight of 3.5x, not necessarily waiting until under 3x, and can "walk and chew gum." CFO David Bernstein reiterated that capital return is a board decision, with details on size and timing to be determined in 2026. Josh Weinstein stated that future capital projects would primarily involve accretive mid-life ship refurbishments or potential Phase 2 of Celebration Key, which are significantly smaller than new builds and not expected to defer leverage reduction.

David Katz from Jefferies sought clarification on the leverage target for initiating substantial recurring capital returns, specifically if getting below 3x net debt to EBITDA is a prerequisite, and asked about any potential large capital projects that could defer leverage reduction.

Answer

CFO David Bernstein clarified that the company can begin considering capital returns as it approaches 3.5x net debt to EBITDA, not necessarily waiting until under 3x. CEO Josh Weinstein added that while there are opportunities for midlife ship refurbishments and a potential Phase 2 of Celebration Key, these investments are significantly smaller than new builds and are expected to be accretive without deferring leverage reduction.

David Katz asked for more details on the recent sale of the Costa Fortuna, inquiring about the sale price or valuation multiple and the strategic thinking behind it, including whether such sales are part of a regular recycling of assets.

Answer

CFO David Bernstein confirmed the sale was part of the normal course of fleet revitalization. CEO Josh Weinstein added that the sale was opportunistic, driven by an attractive offer. He noted it will not negatively impact Costa's European capacity, as a slightly larger ship from Asia will be redeployed to Europe, actually increasing capacity there. He stated the sale price was "nicely overbooked value" but did not provide a specific multiple.

David Katz asked for more details on the recent sale of the Costa Fortuna, inquiring about the valuation or sale multiple and the strategic thinking behind the transaction, including whether it's part of a larger recycling exercise.

Answer

CFO David Bernstein and CEO Josh Weinstein characterized the sale as an opportunistic move within the normal course of fleet revitalization. They received an attractive offer that was in the best long-term interest of the company. Weinstein noted the sale price was 'nicely overbooked value' but did not provide a specific multiple. He also clarified that Costa's European capacity would actually increase, as a slightly larger ship previously used for charters in Asia will be redeployed to Europe.

David Katz from Jefferies asked for evidence of consumers trading down from land-based vacations to cruises and inquired about the rationale and timing for the recent sale of a Seabourn ship.

Answer

CEO Josh Weinstein reframed the 'trade-down' concept, stating that consumers are increasingly recognizing the superior price-to-experience value of cruising, evidenced by record new-to-cruise guest growth. Regarding the ship sale, he explained it was a simple, unsolicited cash offer that was determined to be in the best interest of shareholders.

David Katz inquired about the potential for variability in the 2025 cost guidance and what factors could lead to a more favorable outcome. He also asked about long-term leverage aspirations, specifically if a 2.0x net debt-to-EBITDA ratio is a target.

Answer

CFO David Bernstein identified the timing and magnitude of cost efficiency initiatives as the largest variable that could improve the cost outlook. CEO Josh Weinstein clarified that the current leverage target is to achieve investment-grade metrics (around 3.5x), not a specific 2.0x target. He explained that future capital structure decisions will balance balance sheet strength with shareholder returns once the investment-grade goal is nearer.

David Katz asked if there were any small pockets of consumer weakness embedded within the broadly positive results and outlook. He also inquired if the company was observing any "trade-down" dynamics, where consumers might be choosing a cruise over a more expensive vacation.

Answer

CEO Josh Weinstein stated a clear "no" to both questions. He described demand as broad-based across all brands, booking trends, and onboard spending, highlighting that onboard per diems accelerated from Q2. He asserted that the company is not seeing evidence of a trade-down effect, but rather is successfully convincing new guests to try their product because they want the experience.

David Katz asked about the measurable returns on technology investments, specifically how Vail Resorts tracks improvements in ancillary spend like ski school or lift, and whether the recent lift ticket discounting represents a reset in lift ticket revenues, separate from pass revenues, and if these decisions are generating incremental revenue now or setting up future growth.

Answer

Rob Katz, CEO of Vail Resorts, explained that technology investments improve digital guest experience and conversion, with returns being easier to track than for new lifts. He highlighted the My Epic app's role in driving sales through in-app commerce for lift access, ski school, and rentals. Mr. Katz confirmed that lift ticket initiatives like Epic Friends, dynamic pricing, and the 30% off promotion are expected to add revenue this year, which is factored into guidance. He noted that while there will be an impact this year, the full effect will take time to integrate into guest behavior.

David Katz asked about Vail Resorts' strategies for improving single-day or walk-up visitation, specifically whether these include adjustments to price schedules or existing pricing strategies. He also inquired about the role of data gathering in the company's new media channel strategy, questioning if it's primarily for future intelligence or simply for better connection.

Answer

CEO Rob Katz clarified that the company views lift tickets broadly, encompassing advanced purchases, and is exploring more creative pricing and advanced window options to align with guest decision-making. He noted that Epic Friend Tickets offer a 50% discount on walk-up prices. Regarding data, Mr. Katz expressed confidence in their extensive existing guest data. He explained that the shift to new media channels is about leveraging this data with sophisticated tools like paid media networks, lookalike modeling, and social platforms (including TikTok) to personalize and target communications more effectively, rather than primarily gathering new data.

David Katz inquired about the company's strategy for single-day visitation and walk-up window sales, specifically if adjusting price schedules or pricing strategies are part of improving walk-up visitation. He also asked how the strategy of reaching customers through new media channels contributes to data gathering for future intelligence, beyond just being the right connection channel.

Answer

CEO Rob Katz clarified that the company views lift tickets broadly, including advanced purchases, and is looking at all prices, including walk-up. He noted that Epic Friend Tickets offer a 50% discount on walk-up prices, and there's room for more creative pricing on advanced tickets. Regarding data, Rob Katz stated that Vail Resorts already has extensive guest data and the new marketing approach is about leveraging this existing data more effectively across various paid media networks, social media, and influencer channels, rather than primarily for new data gathering.

David Katz asked about strategies for single-day visitation and walk-up window sales, specifically if pricing adjustments are part of improving these segments. He also questioned whether the new media channel strategy aims to gather more data for future intelligence or primarily to improve connection.

Answer

CEO Rob Katz clarified that while walk-up tickets exist, most lift tickets are advanced purchases. He highlighted Epic Friend Tickets as a 50% discount on walk-up prices and noted opportunities for more creative, tailored pricing for advanced windows. Regarding data, Katz expressed confidence in existing extensive guest data. He explained the new strategy focuses on leveraging this data through various paid media networks, lookalike modeling, social media, and influencers to personalize and target ads more effectively, rather than primarily gathering new data.

David Katz from Jefferies asked about Vail Resorts' strategies for single-day visitation and walk-up window sales, specifically inquiring if adjustments to price schedules or pricing strategies are being considered to improve these visitation segments. He also followed up on the company's new media channel strategy, questioning whether it primarily focuses on better connection channels or also aims to enhance data gathering for future intelligence.

Answer

CEO Rob Katz clarified that the company views lift tickets broadly, including advanced purchases, and is exploring more creative pricing for various advanced windows, not just walk-up. He noted that Epic Friend Tickets, offering a 50% discount on walk-up prices, are part of this effort to tailor pricing to guest decision-making. Regarding data, Katz expressed confidence in the extensive guest data already possessed. He explained that the new media strategy leverages this existing data with sophisticated tools across paid media networks, social media, and influencer partnerships to personalize ads, target prospects through lookalike modeling, and engage on platforms like TikTok, rather than primarily focusing on new data gathering.

David Katz of Jefferies inquired about Vail Resorts' overall labor strategy, particularly concerning rising living costs and union relations. He also asked about strategies for mitigating weather volatility beyond the advance commitment model.

Answer

CEO & Chair Rob Katz emphasized that employees are core to the guest experience and the company is committed to supporting them, including working constructively with unions. Regarding weather, Katz reiterated that the advance commitment strategy is critical, adding that fostering thriving resort communities also helps attract visitors during lower snow years.

David Katz inquired about the company's progress in Europe, asking about traffic patterns, learnings, and any observed visitation from the U.S. He followed up by asking about pricing acceptance in a market where lift tickets are traditionally cheaper.

Answer

CFO Angela Korch noted that the company is in a learning phase with its two Swiss resorts, with the primary growth opportunity seen within the European destination market. CEO Kirsten Lynch added that the European market currently resembles pre-Epic Pass North America, with expensive season passes and cheaper lift tickets, and that unlocking the potential there will be a thoughtful, long-term process.

David Katz from Jefferies requested a breakdown of the puts and takes within the fiscal 2025 guidance, considering the strong start to the North American season versus weakness in Australia. He also asked for insights derived from the company's expanding guest database.

Answer

CEO Kirsten Lynch reiterated that Q1 results and pass sales were in line with expectations. While early season conditions are strong, the company is looking at a mix of indicators, including lodging, and believes it's too early to change guidance with the most critical part of the season ahead. She described the 25-million-guest database as a key competitive advantage for driving future growth, particularly in ancillary businesses.

David Katz from Jefferies inquired about expectations for pass sales in Switzerland and the growth trajectory for the European market. He also asked for an update on the performance, learnings, and benefits of the new My Epic app.

Answer

CEO Kirsten Lynch described Europe as a significant long-term opportunity that will be a gradual ramp-up, similar to the early days of the Epic Pass in North America. Regarding the My Epic app, she stated it is on track with expectations, particularly the mobile pass and lift ticket feature. The goal for next season is to increase adoption and pilot the My Epic Assistant feature to drive further efficiencies.

David Katz asked for more color on the master agreement with Home Inns, specifically regarding the economic intensity of the deal, which he presumed to be lower, and its anticipated impact on net unit growth over time.

Answer

Mark Hoplamazian, President and CEO, Hyatt, explained that the partnership with Home Inns, which started with UrCove by Hyatt, has been successful in attracting Chinese travelers and growing the World of Hyatt base. For Hyatt Studios, the new agreement will primarily involve new builds, leveraging Home Inns' development capabilities. He clarified that Hyatt will earn fees directly from Hyatt Studios and has a 50% JV interest in UrCove, emphasizing that the deal has real commercial impact beyond just adding rooms.

David Katz asked for more details on the master agreement with Homeinns, including its economic intensity and its expected impact on net unit growth over time.

Answer

Mark Hoplamazian, President and CEO of Hyatt, explained the long-standing partnership with Homeinns, highlighting the success of UrCove by Hyatt and the strategic expansion with Hyatt Studios. He detailed the economic structures, including a 50% JV interest for UrCove and direct fees for Hyatt Studios. He emphasized the strategic benefits for network effect and attracting Chinese travelers, noting that while it won't massively impact net rooms growth, it has significant commercial impact.

David Katz asked about Hyatt's strategic plans for the non-Hyatt brands within the Playa Hotels & Resorts portfolio following the pending acquisition.

Answer

President and CEO Mark Hoplamazian stated he could not comment on the specifics of the pending transaction beyond public filings. He reiterated that Hyatt's focus is on the expanded management platform and distribution channels like ALG Vacations and UVC, which will enhance value for the properties, owners, and guests in Mexico and the Caribbean.

David Katz from Jefferies Financial Group asked for clarification on the 'asset-light' model, questioning if brand growth requires significant key money or other capital investments.

Answer

President and CEO Mark Hoplamazian confirmed that Hyatt selectively deploys key money and other capital, which is reflected in its reported CapEx figures. He strongly emphasized, however, that the company is 'allergic' to leases and avoids operating guarantees, thereby preventing any synthetic or hidden real estate exposure on its balance sheet.

David Katz of Jefferies asked for a deeper explanation of the key success drivers for the Spotlight Vegas business and how they compare to the drivers of the core affiliate marketing business.

Answer

Co-Founder and CEO Charles Gillespie explained that the key drivers are "digital fundamentals," including conversion rate optimization and marketing efficiency. He highlighted a key difference: with Spotlight, the company owns the entire customer journey, unlike the affiliate model where the user is handed off. This full control allows them to apply their optimization skills across the entire funnel.

David Katz sought Gambling.com Group's unique perspective on the current debate around the trajectory of U.S. sports betting handle growth. He also asked for an update on the iGaming legislative landscape, specifically mentioning recent news out of Ohio, and whether any new states might legalize this year.

Answer

CEO Charles Gillespie acknowledged confusing cross-currents but stated that, in aggregate, the market is clearly still growing, with Q1 OSB growth around 15%. He noted a shift toward higher-margin products like same-game parlays. On iGaming, he called the developments in Ohio positive, particularly the proposal for a single regulator. He also highlighted the growing legal clarity and potential for prediction markets, which operate with a 0% tax rate, to grow rapidly and keep state gaming regulators "honest" on tax policy.

David Katz asked if management views prediction markets as incremental to or cannibalistic of the total addressable market (TAM), and whether Gambling.com could play a role in assisting operators with responsible gaming initiatives, possibly using AI.

Answer

CEO Charles Gillespie asserted that prediction markets are 'net incremental' to the TAM, believing they will grow the overall market more than they will cut into existing state-regulated sports betting. On responsible gaming, he explained that while the company is willing to help, operators are better positioned to identify problem gambling due to their direct access to player data. However, he is open to sharing data from their ecosystem to aid operators' machine learning models.

David Katz requested a review of the company's growth model, particularly how it can continue to outgrow the North American market amidst a volatile U.S. sports betting environment. He also asked for the company's entry strategy and current thoughts on the Brazilian market.

Answer

CEO Charles Gillespie clarified that North American iGaming is performing well with significant market share gains. He acknowledged sports betting headwinds but expects a return to double-digit growth in North America after Q1 2025. Regarding Brazil, Gillespie explained the company is 'on the sidelines watching closely,' with only a small 'probe' in the market. He highlighted the disruptive nature of regulation and taxes in previously gray markets and noted recent legal challenges to Brazil's regulatory framework.

David Katz of Jefferies requested an updated perspective on the M&A landscape and Golden Entertainment's potential for acquisitions in the current environment.

Answer

President & CFO Charles Protell stated that while potential targets exist, M&A is a lower priority as the company focuses on stabilizing operations, particularly at its Strip property. He indicated that a more favorable environment for M&A would likely coincide with lower interest rates, which he anticipates by the end of the year, and stabilization of the business.

David Katz sought clarification on the potential geographic scope of M&A, asking if the company is considering markets outside Nevada and if that includes adjacent gaming sectors like historical racing.

Answer

President and CFO Charles Protell clarified that any out-of-state M&A would need to be a transformative, multi-property deal, while single-asset acquisitions would be limited to Nevada. He confirmed they would consider adjacent brick-and-mortar sectors with growing cash flow, but explicitly ruled out re-entering the Distributed Gaming business due to a non-compete agreement and any moves into the digital gaming space.

David Katz from Jefferies asked for clarity on the potential uses of proceeds from a sale-leaseback and whether the company's strategic review includes corporate mergers.

Answer

Charles Protell, President and CFO, clarified that the discussion around real estate value is to highlight the company's undervaluation, justifying the significant share buyback program, rather than to fund development. Blake Sartini, Founder, Chairman and CEO, confirmed that due to frustration with the current valuation, the company is actively considering all alternatives, including corporate mergers, to drive shareholder value.

David Katz questioned the impact of increased promotional activity from smaller private operators on the tavern business and asked for insights into broader consumer behavior trends observed from this hyperlocal segment.

Answer

President & CFO Charles Protell explained that while numerous smaller, less sophisticated operators are increasing promotions, this behavior is viewed as unsustainable. CEO Blake Sartini added that the company's disciplined approach is leading to sequential EBITDA growth in taverns. Sartini also noted that tavern customers, who are more sensitive to commodity prices than stock market volatility, have shown resilience, though they may be visiting as frequently but spending slightly less per visit.

David Katz of Jefferies asked if the updated US tax structure, which appears to favor investment in shorter-life assets like slot machines, is being discussed with operator customers and if it should be viewed as a potential tailwind for Light & Wonder.

Answer

CFO Oliver Chow confirmed that the new legislation, particularly provisions for bonus depreciation on equipment, is a topic of conversation with customers. He explained that it provides an immediate tax deduction for operators on their game purchases, which should support demand in the second half and beyond. Chow also noted the bill is expected to drive an annual cash tax savings of $40-$50 million for Light & Wonder itself, benefiting both the company and its customers.

David Katz from Jefferies requested an update on the company's previously discussed potential listing on the Australian stock exchange, given market developments since the last call.

Answer

CEO Matt Wilson stated that while stakeholder feedback on an accelerated Australian listing was supportive, the company is "taking the foot off the accelerator" on the initiative for now due to broader market uncertainty. He highlighted that the organic growth of Australian CDIs to 38.5% of the market cap validates the strategy, but no major change is imminent.

David Katz asked for color on the outlook for operating or free cash flow growth over the next one to two years, given the moving parts within the business.

Answer

CFO Oliver Chow emphasized that free cash flow remains a key focus. He noted that investments in success-based CapEx and working capital for customer financing deals are designed to drive long-term cash flow. He also highlighted that the pending Grover acquisition is a high-margin, high-cash-flow business that will drive incremental cash flow for reinvestment while allowing the company to stay within its leverage targets.

David Katz asked for details on the magnitude and timing of medium-term international outright sales opportunities, specifically referencing regulatory changes and expansions in Macau, the Philippines, and the UAE.

Answer

President and CEO Matthew Wilson identified the Philippines as a near-term opportunity ('24-'25) and Macau's regulatory churn as a multi-year driver. He positioned the UAE, Thailand, and Japan as longer-term catalysts, likely in the '27-'28 timeframe and beyond. He highlighted Light & Wonder's diverse global content portfolio as a key advantage for capitalizing on these expansions.

David Katz of Jefferies questioned the company's comfortable leverage range and its tolerance for executing additional share repurchases given the current stock valuation.

Answer

CEO Bryan Giglia stated that a 4-5x debt-to-EBITDA ratio is a comfortable range and that the company has ample capacity to increase leverage. He emphasized that capital recycling, such as selling an asset to fund buybacks, is a highly accretive strategy when the stock trades at a more attractive valuation than private market assets.

David Katz of Jefferies inquired about the Andaz Miami Beach, asking how its current underwriting trajectory and expected returns compare to the original projections made 12-24 months ago.

Answer

CEO Bryan Giglia explained that while the opening was delayed, he remains confident in the project's success. He noted that current market rates are still significantly higher than their initial underwriting. The hotel is positioned to capture the critical Q4 and Q1 booking window, which accounts for 60-70% of its annual EBITDA. Giglia projected $6-7 million in EBITDA for the current year, ramping to the high-teens to $20 million range in 2026, with a full three-year ramp-up period expected.

David Katz asked for a long-term outlook on Maui, questioning whether demand will fully recover to pre-fire levels and what the trajectory of that recovery might look like.

Answer

CEO Bryan Giglia expressed confidence in a full, albeit gradual, recovery for Maui over the next one to two years. He cited the island's status as a premier luxury destination, improving airlift, and a very strong group demand funnel as key factors that will drive its return to pre-fire performance levels.

David Katz of Jefferies focused on the long-term forecast provided at the recent analyst day, asking what had fundamentally changed to call it into question so soon. He also inquired if the performance issues were more concentrated in the legacy Six Flags parks, suggesting they might be a "different animal" than anticipated.

Answer

CEO Richard Zimmerman and CFO Brian Witherow asserted that the company's long-term profit potential remains unchanged and that the first-half challenges were transient. They plan to reassess the pacing of their long-term targets after the year ends. Zimmerman clarified that performance issues and opportunities exist across both legacy portfolios, citing strong results from parks on both sides where capital was invested, and denied that the issues were specific to legacy Six Flags parks.

David Katz sought to unpack the 'couple of hundred million' dollars in potential deal proceeds, asking what was included beyond the Maryland park. He also asked for an update on the progress of technology and analytics integration, questioning what inning the company is in.

Answer

CEO Richard Zimmerman and CFO Brian Witherow clarified that the potential for '$200 million or more' in proceeds referred to the combined value of the land in Richmond and the land under the D.C.-area park. Regarding technology, Zimmerman stated they are in the 'middle innings' of building out desired dashboards and analytics capabilities but are still in the 'early innings' of the underlying tech stack integration, which is necessary to move beyond more cumbersome, temporary data-pulling methods.

David Katz asked for an update on the company's progress with technology and data analytics. He also questioned whether the guidance should account for a 'new normal' of weather abnormalities rather than assuming a normal year.

Answer

CEO Richard Zimmerman stated that building out business intelligence was a post-merger priority and they are now using new KPIs like transactions per guest. CFO Brian Witherow clarified that the guidance midpoint assumes a 'normal' level of weather disruption, not zero, with the range accounting for significant positive or negative deviations. He also noted that advance sales like season passes act as a natural weather hedge.

David Katz questioned the organic growth rate of the Rest of World (ROW) business, noting it appeared lower than in previous quarters, and asked about the underlying drivers and any foreign exchange impacts.

Answer

CFO Craig Felenstein explained there is minimal currency impact on the ROW business. He attributed the slower growth in Q2 primarily to the timing of media advertising campaigns, noting that growth was stronger in Q1 and that on a six-month basis, the advertising business is up strongly. He expects choppiness but continued momentum for the full year.

David Katz asked whether technology or marketing is the main gating factor for in-play betting adoption in the U.S. and questioned if the U.S. market's potential for in-play could match or exceed Europe's 70-80% penetration rate.

Answer

CEO Carsten Koerl clarified that market adaptation, player education, and bookmaker marketing are the primary gating factors for U.S. in-play betting, not technology. He expressed confidence that the U.S. will eventually reach the 70-80% in-play penetration seen in international markets, emphasizing it will just take time.

David Katz asked about the valuation methodology for the IMG acquisition and its implications for the value of Sportradar's existing rights portfolio. He also requested more color on the company's plans to accelerate share repurchases.

Answer

CEO Carsten Koerl stated that the IMG portfolio was valued using their standard ROI-based approach for any rights acquisition, focusing on their ability to monetize the assets within their ecosystem. CFO Craig Felenstein confirmed that given their strong cash position and future cash generation, they plan to accelerate share repurchases under their program once the trading window reopens, balancing returns with strategic investments in the business.

David Katz asked about the company's aspirational target for cash conversion from EBITDA and how the capital allocation strategy between share repurchases and potential M&A might evolve.

Answer

CFO Craig Felenstein highlighted that free cash flow conversion has improved from around 30% in 2023 to over 50% in 2024 and is expected to continue growing, with more details to come at the next Investor Day. CEO Carsten Koerl reiterated that the top priority for capital is investing in organic growth, followed by complementary M&A and share buybacks, stating that these priorities have not changed.

David Katz from Jefferies asked for color on the mix of 'new to cruise' and 'new to brand' travelers within the recent strong booking trends. He also followed up on whether the industry's value proposition is successfully attracting a meaningful number of new cruisers.

Answer

CEO Harry Sommer explained that on an itinerary-adjusted basis, there has not been a significant shift in new-to-brand customers, as record-high repeat rates from satisfied guests tend to balance out the mix. He affirmed his belief in the long-term industry thesis that cruising's strong value proposition and limited supply growth will continue to attract new customers over time, even if it's not always visible in quarter-to-quarter trends.

David Katz from Jefferies requested management's perspective on the emerging prediction markets and asked about the company's strategies for adding scale to its operations.

Answer

CEO Richard Schwartz positioned RSI as a casino-first company, suggesting it faces less risk from prediction markets than sports-focused peers. He speculated that potential erosion of state sports betting tax revenue could accelerate iCasino legalization, a net positive for RSI. On scale, Schwartz emphasized RSI's focus on a differentiated, high-quality platform that generates industry-leading ARTMAU, citing its 7x revenue performance in Delaware as evidence of its platform's strength.

David Katz asked for RSI's perspective on the emerging prediction markets, including whether the company would consider participating and how it might impact the existing sports betting business.

Answer

CEO Richard Schwartz stated that RSI is closely monitoring and educating itself on the prediction market opportunity. He noted that while liquidity is currently limited, the company would consider participating if a legal, state-by-state licensed framework becomes available for operators like RSI.

David Katz asked for the company's perspective on the impact of unregulated sweepstakes casinos. He also requested an update on the sports betting product mix, particularly regarding in-play betting and other features that drive margins.

Answer

CEO Richard Schwartz characterized sweepstakes casinos as unregulated and untaxed products that circumvent gaming laws, arguing their existence is a strong catalyst for accelerating regulated iCasino legislation. On product mix, Schwartz highlighted RSI's investment in in-play betting for sports like soccer and tennis, the popularity of player props, and the staying power of same-game parlays. He emphasized that unique, in-house promotional tools are a key differentiator driving player loyalty.

David Katz from Jefferies Financial Group Inc. requested a qualitative outlook for 2025, asking about potential headwinds or pivot points given the current business acceleration, and sought details on the puts and takes for future growth in the Delaware market.

Answer

Executive Kyle Sauers outlined that for 2025, RSI expects continued growth, improving gross margins from structural cost improvements and favorable revenue mix, and leverage over marketing and G&A. The main headwind will be lapping the Delaware launch. CEO Richard Schwartz and Kyle Sauers added that Delaware's growth is driven by attracting high-quality customers and superior service. Sauers noted that based on comparisons to other iCasino markets adjusted for population, the Delaware market could potentially exceed $200 million in GGR long-term.

David Katz from Jefferies asked for an update on the omnichannel cross-benefits between MGM's digital and land-based operations, including loyalty program sign-ups, and inquired about the progress of the Marriott Bonvoy partnership.

Answer

Gary Fritz, President of MGM Interactive, detailed the omnichannel success, citing a 30% growth in Nevada monthly actives and a 4x increase in players who continue with BetMGM after leaving Las Vegas. CEO & President Bill Hornbuckle added that the Marriott partnership is on track to exceed 900,000 room nights for the year, with those customers spending nearly $150 more per night than average guests.

David Katz asked about the remaining cost variability for the Japan project now that contractor agreements are in place and inquired about the performance and potential expansion of the Marriott Bonvoy partnership.

Answer

CFO Jonathan Halkyard stated that while some input cost variability remains, it is factored into a contingency, and scope changes are not expected. He also noted that over half of the equity commitment is hedged. CEO William Hornbuckle confirmed the Marriott partnership has exceeded expectations and that discussions have occurred regarding potential international expansion. Halkyard added that the recent inclusion of group customers is a significant enhancement.

David Katz asked about the degree of operational alignment and content sharing between the wholly-owned MGM Digital segment and the BetMGM joint venture in the U.S.

Answer

Executive William Hornbuckle highlighted content development as a key synergy, with MGM's Push studio creating games for BetMGM. Executive Gary Fritz clarified that while they cooperate, MGM Digital and BetMGM are operated as two very distinct businesses due to the joint venture structure, particularly regarding sports betting platforms.

David Katz of Jefferies revisited the BetMGM joint venture, asking if management's previously stated desire to eventually own the entire entity still holds true and how this ambition is balanced against the company's share repurchase program.

Answer

CEO William Hornbuckle stated that the relationship with partner Entain continues to strengthen, citing productive management changes and positive product direction. He concluded his remarks by stating, 'for now, that's our position, and that's really all I'm going to say about it,' declining to elaborate further on future ownership.

Asked for a detailed timeline and process for the upcoming Italy Lotto license award, specifically what happens after the technical assessment results are known.

Answer

The technical evaluation is complete and results are expected by May 19. The economic bids will be publicly opened on May 19. Once both the technical scores and economic bids are public, the winner can be calculated, and a preliminary award from the commission is expected shortly thereafter.

Sought confirmation on the Italian Lotto partnership structure remaining the same post-renewal. Also asked about the outlook for large jackpot volatility in the U.S. market over the next few years.

Answer

The company confirmed they have a memorandum of understanding to continue the existing joint venture for the Italian Lotto. Regarding U.S. jackpots, they acknowledged the inherent volatility but noted it's a small part of total sales (under 10%). While hard to predict, game structure changes and the Mega Millions price increase are designed to create larger jackpots more frequently, though this can be offset by factors like interest rates.

Asked for confirmation on the Italian Lotto partnership structure and for a breakdown of the RemainCo LTM EBITDA, specifically regarding minority interest and corporate cost assumptions.

Answer

The company confirmed its intention to maintain the existing joint venture partnership for the Italian Lotto bid. The RemainCo EBITDA includes minority interest (around $200M annually) and will have about $20M in net stranded costs to be absorbed post-transaction.

David Katz inquired if the company's M&A philosophy has shifted recently and asked for commentary on the secondary ticketing market, the negative attention it attracts, and potential strategies to manage public perception.

Answer

President and CEO Michael Rapino stated that the M&A strategy remains unchanged, focusing on smaller, bolt-on acquisitions globally regardless of the regulatory climate. Regarding the secondary market, he noted the disparity in perception versus sports and expressed hope for better regulation around bots and speculative selling to protect consumers.

David Katz from Jefferies asked for the long-term vision for Bally's North American Interactive business and inquired about the timeline for finalizing development plans for the Tropicana site in Las Vegas.

Answer

CFO Marcus Glover explained that the North American Interactive strategy is focused on iGaming, using online sports betting (OSB) as a funnel, with a prudent approach to reinvestment. CEO Robeson Reeves added that the North American market requires less human overhead than the U.K., making scale less critical. Regarding the Tropicana, Executive Charlie Diao stated there is 'no urgency' to finalize plans, as the option value of the land increases closer to the A's stadium completion in 2028, and delaying maximizes that value.

David Katz inquired about the long-term (2-3 year) vision for the North American Interactive business and asked for a potential timetable for finalizing development plans for the Tropicana site in Las Vegas.

Answer

CFO Marcus Glover and CEO Robeson Reeves explained the North America strategy is focused on iGaming, using online sports betting as a customer funnel with a prudent cost model. They reiterated the negative $30 million adjusted EBITDA guidance for 2024 but offered no timeline beyond that. Executive Charlie Diao addressed the Tropicana, stating there is no urgency to finalize plans as the company's option value increases as the A's stadium development progresses toward 2028.

Asked about the company's philosophy on market share versus other financial metrics, and what actions are being considered to improve the company's stock valuation and market recognition.

Answer

The company does not obsess over quarterly ship share, focusing instead on game performance, which they believe will naturally lead to long-term share gains. They noted their share should be viewed relative to the specific markets they compete in. Regarding valuation, the recent $15 million debt paydown was highlighted as a strategic move to signal confidence and was well-received by investors. They believe continued deleveraging, particularly crossing below the 3.0x leverage barrier, is the key path to gaining more recognition and attracting a wider investor base.

David Katz from Jefferies asked about the company's strategic path to achieving its 10% Return on Invested Capital (ROIC) target and requested any shareable metrics that demonstrate the productivity of the increased advertising spend.

Answer

CEO Josh Weinstein identified revenue growth as the primary driver for returning to double-digit ROIC. Regarding advertising, he noted that while specific metrics are tracked internally (awareness, conversion), they are not shared publicly for competitive reasons. CFO David Bernstein added that since increasing ad spend, they have seen an 8-percentage-point improvement in new-to-brand guests for 2023 bookings.

David Katz asked about the strategy for driving price within the company's value proposition and sought clarity on the possibility of any further capital raising activities.

Answer

CEO Josh Weinstein explained that driving price involves optimizing the entire commercial cycle, from brand marketing to revenue management, and sees significant internal opportunities. CFO David Bernstein stated that the company remains opportunistic regarding capital markets, having already refinanced most 2023 maturities, and will continue to evaluate all options to ensure a solid financial position.