Shaun Kelley

Shaun Kelley inquired about MGM Resorts' margin outlook, specifically regarding run-rate operating expense growth and internal cost management initiatives, and asked for details on the MGM Grand room renovation's EBITDA disruption and the upcoming Aria renovation schedule.

Answer

CFO Jonathan Halkyard and COO Ayesha Molino stated that overall expense growth would be held to very low single digits, with wage growth largely offset by FTE management. The MGM Grand renovation caused approximately $65 million in EBITDA disruption last year but is now complete. The Aria renovation will begin mid-year, with most disruption expected in 2027, and is anticipated to be less disruptive than MGM Grand due to no bathroom remodels.

Shaun Kelley asked about MGM Resorts' expense growth trajectory, internal initiatives to manage costs, and the financial impact and cadence of room renovations, specifically the EBITDA disruption from the MGM Grand remodel in the past year and the expected disruption from the upcoming Aria project.

Answer

Jonathan Halkyard (CFO) and Ayesha Molino (COO) stated that overall expense growth is expected to be in the very low single digits, with wage growth largely offset by FTE management and technology improvements. Jonathan Halkyard quantified the MGM Grand renovation disruption at approximately $65 million in EBITDA for the past year, noting its completion. They clarified that the Aria renovation, starting midway through 2026, will have significantly less disruption due to fewer rooms being taken offline and no bathroom remodels, making it more of a 2027 discussion for significant impact.

Shaun Kelley of Bank of America inquired about MGM's perspective on the recently passed tax legislation, its impact on the gambling community, and the company's current share buyback strategy in light of its significant development pipeline.

Answer

CEO & President Bill Hornbuckle discussed lobbying efforts to address unfavorable aspects of the bill, such as the loss deduction limitation. CFO Jonathan Halkyard highlighted that bonus depreciation is a major benefit, shifting the company's tax outlook to a net refund for 2025. Regarding buybacks, Halkyard explained the pace slowed to prioritize development projects, though the company was aggressive in Q1 and April due to a compelling share price.

Shaun Kelley requested details on the Japan project's budget and MGM's strategy for its New York casino license bid. He also asked about the investment cadence for the MGM Digital business in Brazil.

Answer

CFO Jonathan Halkyard outlined the Japan project's JPY 428 billion equity commitment for a 43.5% stake, with contributions of $600-700 million annually for four years. CEO William Hornbuckle stated the New York submission is planned for June with no significant changes to their proposal. For Brazil, Halkyard explained the core marketing investment will occur over the next six months before tapering off.

Shaun Kelley inquired about the investment scale and near-term return outlook for the new MGM Digital segment, and followed up on any business interruption (BI) proceeds in Q4.

Answer

Executive Gary Fritz detailed the ~$1 billion in capital deployed for MGM Digital (LeoVegas, Push, TIPICO) and outlined a path to over $1 billion in revenue with healthy double-digit margins. Executive Jonathan Halkyard confirmed there were no meaningful BI proceeds in Q4 but they are expected in 2025.

Shaun Kelley of Bank of America inquired about BetMGM's medium-term strategy, particularly the resource allocation between OSB and iGaming, and how management is evaluating performance given market shifts. He also asked about profit targets and investment plans for Brazil.

Answer

CEO William Hornbuckle explained that 2024 remains an investment year for BetMGM, with new product enhancements driving a nearly 20% GGR increase and improved retention. He stated that while a pivot to profitability is possible, the company will continue investing to support top-line growth. He confirmed the second-half loss profile would be similar to the first and noted the Brazil launch would involve tens of millions in investment, partially offset by partner contributions.

Shaun Kelley followed up on operating expenses, asking about the timing of annual escalators and labor cost increases, and if the NBA activities in Q4 had a direct impact on margins.

Answer

Grant Chum, CEO and President of Sands China, confirmed higher event costs in Q4, with the NBA China Games Week being the largest event, which, despite its success for brand projection and stakeholder engagement, had a cost impact. He added that general wage adjustments typically occur in March.

Shaun Kelley inquired about the drivers behind the sequential GGR improvement in Macau, questioning its sustainability and the broader health of the market. He followed up by asking for guidance on a sustainable EBITDA run-rate for the Marina Bay Sands in Singapore, given its record-breaking quarterly performance.

Answer

Grant Chum, President & CEO of Sands China, attributed Macau's market acceleration to strong performance in the VIP segment, growth in non-rolling segments, improved customer density, and a robust calendar of events. Regarding Singapore, Chairman & CEO Robert Goldstein acknowledged the difficulty in predicting sustainability but stated the $2.5 billion annual EBITDA goal is realistic and achievable, though he cautioned against expecting over $750 million every quarter. He credited the success to Singapore's desirability, the property's quality, and a strong high-end market.

Shaun Kelley from Bank of America inquired about the expected ramp-up of the Londoner Macao, given the current margin drag from room renovations. He also asked if the omission of casino license revenue from the New York state budget implies a delay in the licensing process.

Answer

President and COO Patrick Dumont explained that with room inventory returning to full capacity by May, the Londoner's productivity and margins are expected to increase significantly. Sands China CEO Grant Chum provided specifics, noting over 1,000 keys are now available, with the full 2,405 operational by May. On New York, Chairman and CEO Robert Goldstein stated the timing is unclear and that he is waiting for more clarity from the state.

Shaun Kelley requested more details on the gaming expansion scope for the Marina Bay Sands IR2 project and asked for color on Macao's visitation patterns throughout the third quarter.

Answer

President and COO Patrick Dumont described the IR2 vision as a globally significant, high-end asset with casino and Sky Gaming, stating final details would be released in coming months. Sands China CEO Grant Chum explained that Macao's visitation recovered to 93% of 2019 levels, driven by day-trippers, but this did not translate into a proportional increase in base mass or retail spending.

Shaun Kelley asked about the changing market dynamics between premium mass and base mass in Macao and sought clarification on the drivers behind the approximate 7% increase in Macao operating expenses.

Answer

Chairman and CEO Robert Goldstein acknowledged that the market is more competitive across all segments, but the fully opened Londoner provides new opportunities. CEO and President of Sands China Grant Chum added that visitation recovery has been skewed towards lower-spending day-trippers. Chum also confirmed the OpEx increase was driven by higher payroll costs from salary increases and new headcount for the reopened assets, which created negative operating leverage against lower non-rolling table revenue.

Shaun Kelley asked about quantifying the impact of the new advanced discount offering and Epic Friends Tickets, specifically how these initiatives are expected to balance price and volume, and the metrics used to measure their trade-off.

Answer

Rob Katz, CEO of Vail Resorts, explained that the new advanced discount offering aims to capture customers not ready for a pass by the December deadline, create time-sensitive purchasing incentives, and secure early advance commitments. He stated that the trade-off was considered worthwhile for driving vacation decisions and incremental skiing days. Regarding guidance, Mr. Katz noted that pass over-delivery was likely muted by challenging early season weather, but expressed satisfaction with the post-Labor Day revenue turnaround. Guidance assumes a normal Christmas experience, with early season sluggishness already factored in.

Shaun Kelley asked about the broad visitation backdrop for the upcoming season, including the expected impact of initiatives like Epic Friend Tickets and how this aligns with the financial guidance, particularly regarding potential declines in overall visits. He also inquired about the magnitude of strategic shifts planned for fiscal year 2027 and beyond, specifically regarding pass pricing, volume versus price balance, and potential add-ons for high-value resorts.

Answer

CEO Rob Katz confirmed an expected slight decline in total visitation for the year, primarily due to lower pass sales, which lift ticket sales are not projected to fully offset. He emphasized that new initiatives, including Epic Friend Tickets and paid media investments, are multi-year efforts with limited immediate impact on fiscal year 2026, with full effects anticipated in fiscal year 2027. Regarding future strategy, Mr. Katz explained a shift from broad pricing adjustments to a more granular, resort-by-resort or pass product-by-pass product approach, leveraging data and technology to optimize pricing and product offerings across their extensive portfolio, rather than a uniform price increase or decrease.

Shaun Kelley inquired about the visitation outlook for the upcoming season, specifically how new initiatives like Epic Friend Tickets and marketing efforts are expected to impact overall visits, contrasting this with the financial guidance's implication of potentially lower visits.

Answer

CEO Rob Katz confirmed an expected slight decline in total visitation for the year, primarily driven by lower pass sales, which lift ticket sales are not anticipated to fully offset. He noted that many new marketing initiatives, including Epic Friend Tickets, are multi-year efforts with full impact expected in fiscal 2027 and beyond. Kelley also asked about fundamental shifts in pricing strategy for fiscal 2027, such as potential pass price increases or add-ons for high-value resorts. Katz explained a move towards a more strategic, resort-by-resort or pass product-by-pass product approach, leveraging data and technology to optimize the extensive portfolio of pass and lift ticket products, rather than a broad, across-the-board change.

Shaun Kelley asked about the broad backdrop for visitation in the upcoming season, the expected impact of new initiatives like Epic Friend Tickets on visitation, and how these factors bridge into the financial guidance, specifically regarding the expectation of slightly lower total visits. He also inquired about the long-term strategy for fiscal 2027 and beyond, questioning if a fundamental shift in balancing pass price versus volume, potentially through raising pass prices or introducing add-ons for high-value resorts, is being considered.

Answer

CEO Rob Katz confirmed an expectation of slightly lower total visitation for the year, primarily due to a decline in pass sales, which lift ticket sales are not expected to fully offset. He emphasized that many new initiatives are multi-year efforts, with full impact expected in fiscal 2027 and beyond. Regarding the long-term strategy, Rob Katz explained that the company is moving away from a broad, across-the-board approach to pricing and product offerings, instead focusing on a more strategic, resort-by-resort or pass product-by-pass product approach, leveraging data and new technology to optimize individual moves across hundreds of pass products and thousands of lift ticket products.

Shaun Kelley with Bank of America inquired about the overall visitation outlook for the upcoming season, specifically how new initiatives like Epic Friend Tickets and marketing efforts are expected to influence visitation trends, contrasting this with the financial guidance implying a potential decline in visits due to lower pass units. He also asked about the long-term strategy for fiscal 2027 and beyond, questioning whether fundamental shifts in the price-to-volume balance, such as raising pass prices or introducing add-ons for premium resorts, are being considered.

Answer

CEO Rob Katz confirmed an expected slight decrease in total visitation for the current year, primarily due to lower pass sales, noting that lift ticket sales would partially offset but not fully overcome this decline. He emphasized that many strategic initiatives, including Epic Friend Tickets and paid media investments, are multi-year efforts with full impact expected in fiscal 2027 and beyond. Regarding the long-term strategy, Katz explained that the company is moving away from a broad, across-the-board approach to pricing and product offerings. Instead, they will adopt a more strategic, resort-by-resort and pass-product-by-pass-product approach, leveraging data and technology to optimize pricing and benefits across their extensive portfolio of pass and lift ticket products, rather than a singular focus on raising or lowering prices.

Shaun Kelley from Bank of America Merrill Lynch asked returning CEO Rob Katz about his key priorities, specifically improving customer experience and driving revenue growth. He also inquired about the evolution of the advance commitment strategy and potential adjustments to pricing or mix targets.

Answer

CEO & Chair Rob Katz explained that improving guest experience requires ensuring consistency across all resorts, while stronger revenue growth will be pursued through innovating marketing efforts. Katz reaffirmed that advance commitment remains central to the business model but sees opportunities to refine the product portfolio and innovate on lift ticket sales for off-peak periods without devaluing season passes.

Shaun Kelley inquired about the drivers for the expected performance improvement for the remainder of the ski season, questioning whether it would come from visitation or guest mix. He also asked about the company's broader strategy for managing its public narrative and re-engaging with key stakeholders.

Answer

CEO Kirsten Lynch explained that while February visitation contracted as expected against a tough prior-year comparison, the outlook for spring is positive, based on pre-committed pass holder data, lodging booking trends, and a historical shift of visits into spring. Lynch also affirmed the need to proactively share the company's narrative, acknowledging challenges like the Park City strike while highlighting strong guest satisfaction and employee engagement at other resorts.

Shaun Kelley of Bank of America inquired about early season guest behavior amid favorable weather conditions and the potential risk to guidance from lagging lodging bookings at Whistler Blackcomb.

Answer

CEO Kirsten Lynch noted that while early season conditions are encouraging and pass sales were strong, the company is monitoring a mix of indicators, including U.S. lodging bookings which are consistent with the prior year and Whistler Blackcomb bookings which are lagging but improving. She suggested delayed decision-making at Whistler could be a factor following last year's tough season and that the company is maintaining its guidance for now.

Shaun Kelley of Bank of America inquired about the behavior and feedback from less-tenured passholders who did not renew, and asked for clarification on the impact of "post-COVID normalization" versus weather-related challenges on visitation.

Answer

CEO Kirsten Lynch explained that lower-tenured passholders (first and second-year) showed lower renewal rates, possibly delaying their decision to the fall, a behavior seen in the past. She noted their guest experience scores remain strong. Lynch stated that both unfavorable weather and post-COVID normalization were material factors impacting the season. The decline in lift ticket guests, a primary source for new pass sales, was a key driver of the spring pass sales dip, which she attributed to this normalization.

Shaun Kelley requested more insight into Hyatt's cost program initiatives, including the catalyst for the decision, the 'why now' question, key building blocks, and how these initiatives will allow for more efficiency, particularly benefiting owners.

Answer

Mark Hoplamazian, President and CEO, Hyatt, stated the goal is to become an insight-led and brand-focused organization, breaking the business into five brand groups. He highlighted the concurrent elevation of agile ways of working and expanded use of AI/machine learning to drive performance, including optimizing hotel operations for owners. He noted that reorganization led to significant staffing efficiencies and reduced third-party costs through automation, expecting these to be a tailwind for years.

Shaun Kelley sought further insight into Hyatt's cost program and initiatives, including the catalyst for the decision, key building blocks, and how it benefits owners.

Answer

Mark Hoplamazian, President and CEO of Hyatt, stated the ultimate goal is an insight-led, brand-focused organization, achieved by breaking the business into five brand groups, elevating agile ways of working, and expanding AI/machine learning. He noted that reorganizing the company led to significant efficiencies in staffing and reduced third-party costs through automation, with direct, measurable impacts that optimize hotel performance for owners.

Shaun Kelley of Bank of America Merrill Lynch requested a breakdown of the key earnings "building blocks" for 2026, including the net impact of Playa management fees, the upcoming credit card deal, organic net unit growth, and owned and leased asset adjustments.

Answer

CFO Joan Bottarini clarified the Playa deal is expected to add $55M-$60M in incremental EBITDA for 2026 from $60M-$65M in gross fees. CEO Mark Hoplamazian expressed confidence in maintaining strong net rooms growth and highlighted robust group and luxury leisure pace as foundational strengths heading into 2026.

Shaun Kelley inquired about the expected performance of Hyatt's various business segments, including distribution, owned and leased properties, and incentive fees, within a more challenging macroeconomic environment, particularly as RevPAR growth is projected to be near zero for the remainder of the year.

Answer

Mark Hoplamazian, President and CEO, acknowledged the choppy environment but highlighted near-term strength in all-inclusive and group bookings for 2026. He noted leisure weakness in the U.S. but strength in luxury. CFO Joan Bottarini added that the owned portfolio is performing well due to its luxury concentration and that the distribution segment is managing costs effectively, expecting to be around flat for the rest of the year.

Shaun Kelley from Bank of America sought clarification on the 6% net rooms growth outlook for next year and asked if Hyatt would consider launching a dedicated conversion brand to capture hotels that no longer meet the standards of their current brand.

Answer

President and CEO Mark Hoplamazian clarified that the 6% outlook is for organic growth and excludes large portfolio deals, with the longer-term 6-7% net growth algorithm remaining intact. He and CFO Joan Bottarini acknowledged the opportunity for a conversion-focused brand but emphasized that maintaining brand integrity is the current priority, noting Hyatt's portfolio is generally younger than competitors'.

Shaun Kelley inquired about the parameters of the Marriott Bonvoy co-branded credit card program renewal, seeking details on its current size, potential renegotiation aspects, and expected timing for new deals.

Answer

President and CEO Tony Capuano stated that negotiations are active and fluid, highlighting the exponential growth in Bonvoy's value, membership (nearly 260 million), co-branded accounts, global spending (up 80% since 2017), and system size (up 50% since 2017). CFO Leeny Oberg explained the program's mechanics, noting that partners pay variable amounts based on cardholder spend, contributing over half of Bonvoy's funding, and confirmed 2024 credit card branding fees were $660 million, expected to grow 9% in 2025.

Shaun Kelley asked about the ongoing credit card program renewal discussions, seeking clarity on the current program size, potential renegotiation parameters compared to the 2017 deal, and an estimated timeline for new agreements.

Answer

Tony Capuano (President and CEO) and Leeny Oberg (CFO and EVP of Development) confirmed active negotiations, highlighting the exponential growth of Marriott Bonvoy (membership doubled to nearly 260 million, global spending up 80%, system size up 50% since 2017). Leeny explained the program's mechanics, emphasizing variable payments based on cardholder spend and its significant contribution to Bonvoy funding. They anticipate new deals next year, reflecting Bonvoy's increased relevance, with 2024 branding fees at $660 million, projected to grow 9% in 2025.

Shaun Kelley from Bank of America Merrill Lynch asked about the potential impact of recent tax legislation on the lodging industry, specifically whether it could stimulate renovation capital, new development, and affect Marriott's corporate finances.

Answer

President & CEO Anthony Capuano responded that the bill's passage reduces uncertainty, which is a net positive, though owner decisions remain yield-driven. He noted continued strong traction in conversions. CFO Leeny Oberg added that the resulting economic stability could help open up the transaction market, allowing Marriott to recycle capital from renovated assets more effectively.

Shaun Kelley from Bank of America asked for an update on the development pipeline, focusing on full-service hotel conversations in the U.S. and developer sentiment amid economic uncertainty. He also inquired about Marriott's positioning and strategy for its U.S. brands operating in China given trade tensions.

Answer

CEO Tony Capuano highlighted record Q1 signings as proof of long-term owner confidence, despite financing challenges. CFO Leeny Oberg added that signings grew over 30% year-over-year. Regarding China, Mr. Capuano expressed confidence, explaining that the portfolio is viewed as a 'Chinese business' due to local ownership, staffing, and a focus on domestic demand, which insulates it from geopolitical tensions.

Shaun Kelley of Bank of America inquired about Marriott's cost transformation and efficiency program, asking about key learnings and the response from the ownership community. He also questioned the higher-than-guided investment spending for 2025, particularly the timeline for recouping technology-related expenditures.

Answer

CEO Tony Capuano responded that the efficiency program is streamlining decision-making and has been received with enthusiasm internally and by franchisees. CFO Leeny Oberg explained the higher investment spend is driven by specific, non-recurring renovations in the owned and leased portfolio, like the Barbados properties. She noted that the tech investment payback will occur over several years through reimbursed depreciation charges to owners.

Shaun Kelley from Bank of America asked for a breakdown of the fee algorithm, questioning the gap between RevPAR plus net unit growth and the actual gross fee growth, and sought clarification on the G&A base for 2025 calculations.

Answer

CFO and EVP, Development Leeny Oberg acknowledged that the fee algorithm can be lumpy quarter-to-quarter due to factors like IMF in Greater China, renovation impacts, and FX, but affirmed it works over time. Regarding G&A, she confirmed that while the $31 million in one-time reserves should be excluded philosophically, it's too early for specific 2025 guidance, and the $80-90 million in savings comes off the current year's run rate.

Shaun Kelley asked about the seasonality of the Digital segment in Q4 and expected trends, as well as the customer acquisition strategy for 2026, particularly with the universal digital wallet.

Answer

Tom Reeg, CEO, explained that Q4 has the highest volumes due to football but also higher fixed costs from partnerships, making hold outcomes more impactful. Eric Hession, President of Caesars Sports and Online, expects marketing spend to return to normal Q4 levels. He sees an opportunity for more 'top-of-tunnel' advertising next year, given improved app retention and the shared wallet, viewing it as a shift in spend rather than a major incremental increase. Tom Reeg added that the improved app and shared wallet provide a reason for customers to re-engage.

Shaun Kelley inquired about the seasonality of the digital segment, particularly Q4's peak sports season and outcome headwinds, and Eric Hession's outlook on customer acquisition for next year, especially with the universal digital wallet.

Answer

CEO Tom Reeg explained Q4's higher volumes and fixed costs make it more susceptible to sports hold volatility. President of Caesars Sports and Online Eric Hession expects Q4 marketing spend to normalize, with next year's acquisition strategy focusing on a shift to top-of-tunnel advertising rather than incremental spend, leveraging the improved app and shared wallet.

Shaun Kelley from Bank of America Merrill Lynch asked if Las Vegas EBITDAR could be up year-over-year in Q4 2025. He also asked a broader strategic question about whether Caesars might ramp up capital investment in its regional portfolio in 2026 and beyond.

Answer

CEO Tom Reeg directly confirmed that 'Q4 can be up year over year for Caesars' in Las Vegas. Regarding regional capital, Reeg stated that there is not another big capital cycle on the horizon, as the company's largest regional cash flow producers have already received nine-figure investments since the merger. He noted future projects would likely be smaller, high-return conversions or hotel additions, often with third-party developer partnerships.

Shaun Kelley asked for observations on the overall handle growth in the online sports betting (OSB) market and whether a broader slowdown in core trends is occurring.

Answer

President of Caesars Sports Eric Hession explained that Caesars' own handle decline is a result of a deliberate reduction in reinvestment for unprofitable low-end and high-end customers, while the core recreational business remains solid. CEO Tom Reeg added that moderating handle growth is an expected and healthy industry-wide trend as markets mature, new state openings slow, and operators focus on profitability over aggressive promotion, which ultimately benefits the business.

Shaun Kelley asked for the 2025 outlook for the regional gaming segment, questioning whether it would grow or decline given the mix of competitive headwinds and new tailwinds. He also inquired about the company's current stance on the legislative expansion of Online Sports Betting (OSB), particularly in markets like Missouri, and how it weighs OSB versus iGaming.

Answer

CEO Tom Reeg projected the regional segment would be 'down slightly to flat' in 2025, as headwinds from new competition still outweigh tailwinds from New Orleans and Virginia. He stated the company's ability to effectively compete in impacted markets will be the key swing factor. On legislation, Reeg affirmed that Caesars supports OSB and iGaming expansion in every jurisdiction, emphasizing the importance of licensing through established operators who have invested heavily in the states.

Shaun Kelley asked about Churchill Downs' emerging thoughts on the landscape of prediction markets, their potential implications for the Kentucky Derby, and whether any operators have approached the company for sponsorships or other collaborations.

Answer

CEO Bill Carstanjen clarified that horse racing wagering in the U.S. is governed by the federal Interstate Horse Racing Act, distinct from state-by-state sports wagering. He stated the company plans to educate prediction markets on this legal construct, emphasizing compliance, and confirmed no current deals or discussions with them.

Shaun Kelley from Bank of America Merrill Lynch asked for more insight into the Kentucky Derby's sponsorship relationships, including their duration and the company's ability to elevate them as the event's global and luxury profile grows.

Answer

CEO William Carstanjen detailed that the company's sponsorship strategy has evolved to be highly intentional, focusing on 'curating' and building win-win partnerships with sponsors that are a strong brand fit. He emphasized this sophisticated approach over simply filling categories and noted that they are seeing encouraging growth in international interest, which they are carefully cultivating.

Shaun Kelley asked for more detail on potential strategic changes for next year's Kentucky Derby based on current customer trends, questioning if adjustments would involve pricing, product tiering, or capital allocation.

Answer

CEO William C. Carstanjen emphasized that they do not make major changes without extensive data analysis, which occurs annually post-Derby. He does not foresee a 'material sea change' in customer desires but noted they have already been responding to demand for higher-end experiences with projects like The Mansion renovation. He said the team will carefully evaluate this year's data to distinguish between short-term macro effects and long-term trends before making any significant adjustments.

Shaun Kelley asked about the financial implications of the expanding horse racing calendar in Virginia and the potential for future opportunities stemming from the partnership with the state.

Answer

CEO William C. Carstanjen clarified that revitalizing horse racing was a primary goal for the Virginia legislature in approving HRMs. While the increased race days are critical to the state partnership and provide positive, though smaller, contributions via on-track and simulcast wagering, their direct financial impact is not as material as the 5,000 HRMs. He stressed it's a key part of the ecosystem and their promise to the Commonwealth.

Shaun Kelley asked about the timeline for top-line improvement in the operating environment for 2026 and beyond, and Hilton's ability to maintain bottom-line execution and operating leverage through cost discipline if RevPAR growth remains soft.

Answer

Chris Nassetta, President and CEO, expressed optimism for 2026 and 2027, citing structural positives in the U.S. economy (lower interest rates, favorable regulatory environment, tax policy certainty, significant investment cycle from infrastructure, CHIPS Act, AI), easier year-over-year comps, event-driven benefits (midterm elections, America's 250, World Cup), and limited industry supply growth. He emphasized Hilton's consistent cost discipline, leveraging AI for process efficiencies in G&A and system operations, and noted a first-of-its-kind system fee reduction for owners to drive profitability and encourage asset investment.

Shaun Kelley of Bank of America Merrill Lynch inquired about recent demand "green shoots" across leisure, business, and group travel, and the organic drivers needed for stronger performance in Q4 2025.

Answer

President and CEO Christopher Nassetta detailed how holiday shifts impacted Q2 and Q3 segment performance but expressed optimism for Q4. He cited easier year-over-year comparisons, a thawing in corporate and group booking behavior, and strong group positions for 2026 and 2027 as key drivers. Nassetta also highlighted a positive intermediate-term outlook based on expected economic growth, key industry investments, and low hotel supply growth.

Shaun Kelley asked about the current development environment, specifically how macroeconomic uncertainty and issues like trade tariffs are impacting developers' decisions and whether there is any risk to Hilton's Net Unit Growth (NUG) forecast.

Answer

President and CEO Christopher Nassetta affirmed high confidence in the 6% to 7% NUG guidance for 2025, based on granular analysis. He noted that Q1 development metrics like signings, starts, and deliveries were all up year-over-year. While acknowledging that owners are taking a cautious 'wait-and-see' approach, he stated there has been no tangible impact on projects yet. He also highlighted that in more challenging times, conversion activity tends to increase, providing a natural counterbalance.

Shaun Kelley asked for an expansion on management's increased confidence in the macro environment following the U.S. election, inquiring about conversations with business leaders and the potential impact on lodging segments.

Answer

Christopher Nassetta, President and CEO, explained that the election's conclusion has reduced uncertainty around regulatory, tax, and immigration policies. He noted a broad belief among business leaders that the new environment will be more favorable for economic growth, which should positively impact business and group travel demand. While acknowledging short-term noise, the general sentiment is that a lighter regulatory environment and favorable tax policy will spur economic activity.

Shaun Kelley inquired about the underlying assumptions for the 6% to 7% net unit growth (NUG) forecast for the next year and the potential factors that could drive results to the high or low end of that range.

Answer

President and CEO Christopher Nassetta explained that the 6-7% NUG forecast is organic and implies that approximately one-third of the growth will come from conversions, similar to the current year's organic rate. He noted that since most new-build projects for next year are already under construction, the primary variable that will determine where results fall within the range is the volume of 'unidentified' conversions secured during the year.

Shaun Kelley from Bank of America Merrill Lynch questioned if the 2026 profitability target for the interactive business is still on track and whether the ESPN-NFL deal opens new strategic options for Penn.

Answer

CEO Jay Snowden affirmed that achieving profitability in the interactive segment in 2026 remains a primary focus, contingent on hitting performance targets for the remainder of 2025. Regarding the ESPN-NFL deal, Snowden noted that while Penn learned of it publicly, any move that strengthens the ESPN ecosystem is beneficial for ESPN Bet. CTO Aaron LaBerge added that more football content directly enhances their integrated fantasy and betting products.

Shaun Kelley asked about the digital promotional landscape, specifically for the new stand-alone iCasino app, and how Q1 promotional levels compared to Q4. He also questioned what is required on the land-based side to achieve cost leverage and the current operating expense pressures.

Answer

CEO Jay Snowden responded that digital promotions were in line with expectations, with the initial iGaming push focused on organic cross-sell rather than heavy marketing spend. On the land-based side, Snowden identified labor as the main cost pressure, though it is moderating. Head of Operations Todd George added that a Q1 revenue mix shift to higher-tax jurisdictions temporarily impacted margins, which should normalize. Snowden also noted a $5 million prior-year accounting benefit that affected year-over-year comparisons.

Shaun Kelley of Bank of America sought more detail on the market share assumptions for ESPN BET and the Hollywood iGaming app, and asked if the cost structure with ESPN could be proactively restructured before the three-year mark.

Answer

CEO Jay Snowden noted early iGaming share gains in PA and MI and expects iGaming growth to outpace sports betting, targeting over 5% OSB share by year-end. He reiterated that they have levers to adjust the cost structure if they don't trend towards scale. CTO Aaron LaBerge added that they are optimizing the ESPN partnership, citing growth in linked accounts and upcoming integrations with Tournament Challenge as key drivers.

Shaun Kelley of Bank of America asked for details on the 2025 online casino relaunch, including plans for marketing support and the cross-sell strategy between retail, OSB, and the new iCasino app.

Answer

CEO Jay Snowden explained the relaunch of the standalone Hollywood Casino app will leverage the strong brand connection to Penn's land-based properties, a significant cross-sell opportunity. CTO Aaron LaBerge added it will attract iGamers who don't use sportsbooks. Head of Operations Todd George mentioned plans for unique slot content and live dealer studios inside properties to support the launch.

Shaun Kelley of Bank of America Merrill Lynch inquired about the potential of prediction markets, asking for DraftKings' view on the total addressable market, the importance of owning the tech stack, and the advantages or disadvantages of being a first mover.

Answer

Co-Founder & CEO Jason Robins responded that sizing the total addressable market (TAM) is difficult at this nascent stage but existing online sportsbook states offer a benchmark. He noted it's too early to comment on the tech stack's importance and stated that while being an early mover can be important, being the literal first mover has downsides. Robins emphasized that DraftKings is taking a measured approach, considering all stakeholders.

Shaun Kelley of Bank of America inquired about the emerging prediction markets, asking for DraftKings' perspective on the potential market size, the importance of owning proprietary technology, and the advantages or disadvantages of being a first mover.

Answer

Co-Founder & CEO Jason Robins explained that while it's early to size the total addressable market (TAM), existing online sportsbook states offer a useful benchmark. He stated it was too early to comment on technology strategy but noted that while being an early mover is important, being the literal first has downsides, prompting a measured approach that considers all stakeholders.

Shaun Kelley asked about the drivers of handle growth, questioning if there was a deceleration in Q1 and into April, and what might drive a reacceleration. He also asked about iGaming performance, which seemed to lag state-reported figures, and the strategy to improve its growth.

Answer

CEO Jason Robins confirmed a slight slowdown in April handle growth relative to Q1 but noted it was largely due to sports seasonality and that overall trends remain strong, with MLB handle up significantly. For iGaming, Robins acknowledged the Q1 rate but pointed to accelerated growth of 26% in April, attributing the improvement to recent product, marketing, and operational enhancements.

Shaun Kelley from Bank of America asked about the slowdown in industry handle growth during the fourth quarter, what could drive a reacceleration in 2025, and DraftKings' initial perspective on the emerging prediction markets.

Answer

CEO Jason Robins attributed the Q4 handle growth moderation to temporary factors like one less NFL week and distraction from the U.S. election, noting that growth has already reaccelerated into the new year. Regarding prediction markets, he stated that DraftKings is actively monitoring the space and awaiting further regulatory clarity from the CFTC.

Shaun Kelley of BofA Securities inquired about the rationale behind the 2025 adjusted EBITDA flow-through guidance of 39%, which is below the long-term 50% target, and its relationship with revenue and customer acquisition trends.

Answer

CEO Jason Robins explained that the more conservative flow-through rate reflects caution around unexpectedly strong customer acquisition, which increases short-term promotional spending. He stated that while this is positive for long-term growth, the company wants to avoid underestimating costs. Robins reiterated that 50% remains the long-term goal and noted that if customer acquisition slows, there could be upside to the 2025 flow-through rate.

Shaun Kelley from Bank of America Merrill Lynch requested a review of the transient business performance across the portfolio, excluding Nashville, with a focus on Sunbelt markets like Orlando and Texas.

Answer

EVP & COO Patrick Chaffin provided a property-by-property overview. He noted strength at Gaylord Palms (Orlando) and Gaylord Rockies, which are benefiting from recent investments. He mentioned that Gaylord Texan faces new competition but is well-positioned long-term, while JW Marriott Hill Country saw a short-term weather impact. The overall theme for the transient business outside Nashville was described as 'steady as she goes'.

Shaun Kelley of Bank of America asked about the portfolio's exposure to government business, specifically at the Gaylord National, and questioned how the company's strategy for managing cancellations might differ from the approach taken during the COVID-19 pandemic.

Answer

Executive Patrick Chaffin clarified that government exposure is not massive and that the company's guidance can withstand a scenario where all remaining government groups for the year cancel. Executive Colin Reed and Chaffin both affirmed that the Gaylord National has a very healthy book of business. Regarding cancellations, Executive Mark Fioravanti stated that unlike the rebooking focus during COVID, the current approach will be to more aggressively collect cancellation fees, while still working with key customers on business solutions.

Shaun Kelley of Bank of America asked for clarification on what specifically changed in the leisure outlook to prompt a guidance revision and inquired about the operating cost outlook for next year, particularly concerning labor inflation.

Answer

President & CFO Mark Fioravanti and CEO Colin Reed explained the minor guidance change was driven equally by three factors: leisure softness, incremental construction disruption, and hurricane impacts. Regarding costs, EVP & COO Patrick Chaffin detailed a new union agreement with a ~6% CAGR and expects more moderate non-union wage growth. Management emphasized that despite wage pressures, they have successfully expanded margins through efficiencies and are targeting a sustainable 35% margin.

Shaun Kelley sought to understand the key drivers of the quarter's outperformance, specifically the contribution from revenue backfill versus strength in unrated play, and asked about the impact of Strip hotel rate compression on Red Rock's portfolio.

Answer

Lorenzo Fertitta, Vice Chairman, credited the strong results primarily to exceptional VIP play in slots and tables, driven by past investments in high-limit amenities. Scott Kreeger, President, added that the core six properties are now driving market share growth. Regarding hotel rates, Kreeger acknowledged the competitive environment but noted that hotel revenue is only about 10% of their business, providing insulation from Strip pricing pressures.

Shaun Kelley asked for an assessment of the current construction environment, particularly regarding cost uncertainty from tariffs, and how that might affect the development pipeline. He also followed up on how Guaranteed Maximum Price (GMP) contracts protect against such cost overruns.

Answer

Executive Lorenzo Fertitta acknowledged tariff challenges on certain imported materials but stated the impact on current projects is expected to be minimal, around 4-6% of project cost, and manageable within existing contingencies. He explained that while future contracts will address tariffs more directly, the company is actively managing procurement and does not anticipate material impacts on announced projects.

Shaun Kelley from Bank of America asked for an update on the state of the consumer, particularly regarding any acceleration in spending post-election and the general sentiment heading into Q1.

Answer

Executive Scott Kreeger described consistent positive trends across the customer database, led by high-end, regional, and national segments, and noted Durango has added 85,000 new members. Executive Lorenzo Fertitta confirmed a typical post-election acceleration in business activity.

Shaun Kelley inquired about the corporate-level impact of the recent tax bill on free cash flow and asked about the long-term strategic importance of maintaining an online gaming presence.

Answer

EVP and CFO Josh Hirsberg stated that the largest benefit from the tax bill will be 100% bonus depreciation, but he was not ready to provide a specific number. CEO Keith Smith affirmed the strategic importance of a complementary online casino product, highlighting its integration with their land-based rewards program, and noted they will begin running their own sportsbooks outside Nevada next year.

Shaun Kelley requested details on the scope and expected financial contribution of the temporary Norfolk casino and asked about Treasure Chest's performance amid new competition in New Orleans.

Answer

President and CEO Keith Smith stated the temporary Norfolk facility is part of the overall $750M project budget and should be considered breakeven financially, as it's a transitional step. He noted that Treasure Chest's Q4 revenue performance was actually stronger than Q3, indicating resilience against new competition.

Shaun Kelley asked for clarification on the Midwest and South segment's performance baseline, considering last year's expense adjustments versus the new contributions from Treasure Chest, and inquired about the scope, scale, and expected ROI for the new $750 million Virginia development project.

Answer

EVP and CFO Josh Hirsberg confirmed that the growth from the Treasure Chest casino is expected to largely offset the absence of favorable year-end expense adjustments seen in the prior year's Q4. President and CEO Keith Smith stated that the Virginia project was designed for the market's needs, targeting a 15% to 20% return, and that the company is confident in achieving this target based on the underserved nature of the 1.8 million-resident market.

Shaun Kelley inquired about the rationale for the large Q1 share buyback, the criteria for future repurchases, and how the company is mitigating tariff risks on its capital projects like Norfolk.

Answer

Executive Keith Smith described the Q1 buyback as an opportunistic move based on an attractive stock price and business confidence. He stated that going forward, the company will be more conservative, balancing its $100 million quarterly commitment with maintaining a strong balance sheet. Executive Josh Hirsberg detailed the tariff mitigation strategy, which includes evaluating project deferrals, adjusting procurement, and sourcing domestically where possible, such as steel for the Norfolk project. They are confident that any cost increases can be managed within existing budgets.

Shaun Kelley inquired about the macroeconomic outlook, specifically why lower-end travel has seen softness and when Choice Hotels might see a 'trade down' benefit. He also asked for clarification on organic net unit growth expectations for the remainder of the year.

Answer

CEO Patrick Pacious explained that Choice is gaining market share rather than seeing 'trade down,' driven by a more resilient, higher-income consumer base and a growing business travel segment (40% of the mix). He highlighted outperformance in the economy and extended-stay segments. Regarding unit growth, Pacious expressed confidence in the 1% guidance, citing strong international growth and an accelerating velocity of hotel conversions. CFO Scott Oaksmith added that Q1 typically has higher termination rates, which should lessen through the year.

Shaun Kelley inquired about the significant acceleration in net reimbursable revenues, asking for clarity on the sustainable run rate and the reclassification schedule as the Radisson acquisition is lapped.

Answer

CFO Scott Oaksmith explained the Q3 increase to approximately $15 million was due to seasonality and high guest traffic. He clarified the typical quarterly run rate for incremental EBITDA from these programs is $10-$15 million. Oaksmith confirmed that these revenues will be reclassified out of the reimbursable line item starting in Q1 2025 for full-year comparability.

Shaun Kelley asked for an update on Wynn Las Vegas's exposure to international inbound travelers, particularly from Asia, and inquired about the forward-looking rate picture and booking activity for the upcoming summer season.

Answer

CEO Craig Billings explained that post-COVID, international visitation accounts for only 9% of Las Vegas room nights and can be easily backfilled, with no significant impact seen at the very high end. Regarding summer demand, Billings noted that while the booking window is short, recent activity has been strong and looks fine. Executive Brian Gullbrants added that group pacing for 2026 is better than expected, and the team continues to optimize rates.

Shaun Kelley of Bank of America asked for insights into Macau customer behavior during Chinese New Year, particularly regarding spend per visit and segment performance, and questioned the broader strategy behind the unique London acquisition.

Answer

CEO Craig Billings explained that during Chinese New Year, the higher-end premium customer segment outperformed the base mass segment, a trend that aligns well with Wynn's customer base. He clarified that the London acquisition is a unique, strategic move to establish a presence in a key gateway city that will support and report up to the Wynn Al Marjan Island project, serving a vast and wealthy region.

Shaun Kelley sought to reconcile the strong reported performance in Washington, D.C. with commentary about a slowdown in government demand. He also asked if the softer outlook for May and June, following a strong April, was due to underlying trend changes or calendar shifts like Easter.

Answer

CEO Jon Bortz explained that the D.C. market is benefiting from several positive crosscurrents that offset the government travel freeze, including a new presidential administration, an active legislative calendar, and more congressional days. Regarding the monthly outlook, he clarified that the variation is due to the timing of major conventions, not a change in underlying demand trends, citing a large San Francisco conference that moved from May last year to April this year as an example.

Shaun Kelley asked about the consumer environment, specifically whether strong booking trends for peak holidays were also consistent during off-peak periods.

Answer

EVP and CFO Sourav Ghosh responded that booking trends have been pretty consistent, with no meaningful change observed between weekday/weekend or peak/off-peak periods. He highlighted that the total group revenue pace for the year remains positive at 3.3%, leisure demand is holding strong, and business transient trends are stable, with higher rates offsetting lower volumes.

Asked for a timeline on the strategic review process and about post-election travel booking trends.

Answer

The company declined to comment on the strategic review. However, they confirmed a recent uptick in business and noted that Q1 bedroom bookings are looking very strong, suggesting positive momentum into 2025.

Shaun Kelley asked for details regarding the strategic review process, including timelines and the identity of the third-party consortium, and also inquired about post-election travel booking trends.

Answer

CFO Thomas Allen declined to comment on the specifics of the strategic offer. However, CEO Andrew Carnie confirmed a positive shift in business trends, noting a recent uptick and particularly 'very strong' bedroom bookings for Q1 2025, which he sees as a great sign of positivity heading into the new year.

Shaun Kelley inquired about the strategic alternatives process, asking for details on the timeline, future milestones, and the identity of the third-party consortium. He also asked if the company has seen a post-election uptick in travel demand and bookings for December and Q1, similar to trends seen elsewhere in the travel industry.

Answer

CFO Thomas Allen declined to comment on the offer or the strategic review process. Regarding booking trends, CEO Andrew Carnie confirmed that excluding one-off impacts, the company has seen a recent uptick. He specifically highlighted that Q1 bedroom bookings look 'very strong,' indicating positive momentum heading into 2025.

Asked about trends in cross-border travel, the performance of specific houses like Downtown L.A. and Hong Kong, and clarification on the $4 million EBITDA drag from new openings.

Answer

The company is seeing strong cross-border travel, especially in Europe. They highlighted successful turnarounds and growth in both the Hong Kong and Downtown L.A. houses. The $4 million drag from new openings was primarily a Q2 impact, and this is expected to become a tailwind in the second half of the year.

Shaun Kelley from Bank of America inquired about current cross-border travel patterns and the performance of specific ramping houses like Downtown L.A. and Hong Kong. He also sought clarification on the timing and future impact of the $4 million EBITDA drag from new openings.

Answer

CEO Andrew Carnie reported a good season in Europe with strong cross-border travel, noting occupancy was slightly up. He highlighted a complete turnaround in Hong Kong and strong programming in Downtown L.A. as drivers of their growth. CFO Thomas Allen explained the $4 million drag was a Q2 impact, which should flip to a tailwind in the second half of the year due to the timing of openings versus last year.

Shaun Kelley asked for more detail on consumer behavior, questioning the mixed signals in the market and seeking to understand the drivers behind footfall versus spending trends, the impact of 'dry January', and any notable geographic differences between European and American members.

Answer

CEO Andrew Carnie acknowledged the cautious consumer spending environment but highlighted that strong member footfall persists due to the club model. He noted that spending trends improved sequentially through March and April and confirmed that these behavioral patterns were consistent across all geographic regions, with no significant differences observed.

Shaun Kelley asked for more detail on consumer behavior, seeking to reconcile mixed market signals with Soho House's performance, specifically regarding footfall versus spending, the impact of 'dry January', and any notable geographic differences in member trends.

Answer

CEO Andrew Carnie confirmed that while member footfall remains strong due to the club model, per-visit spending was more cautious, especially in January. He noted a positive sequential improvement in spending through March and April and stated that these trends were consistent across all geographic regions, with no single market showing significant deviation.

Inquired about consumer spending trends, particularly the divergence between in-house revenue and membership growth, and requested details for a cash flow bridge, including G&A, cash interest, cash rent, and working capital expectations for 2024.

Answer

Executives noted that while member visitation was up in Q4, F&B spend per visit was slightly lower. Year-to-date trends have softened but are improving sequentially. For cash flow, they expect operating leverage on G&A, a slight increase in cash interest and rent (due to CPI), and believe working capital will not be as significant a drag in 2024 as it was in 2023, with the potential to be a tailwind.

Requested a detailed bridge for 2025 performance considering various headwinds and tailwinds, and asked about the impact of new hotel supply in Jamaica.

Answer

The 2025 bridge will be affected by several factors: the Pacific region should be up YoY despite a weak Q1; Jamaica will face a tough Q1 comp due to the travel advisory; the company will lap the $6-8M impact from Hurricane Beryl; and FX could be a tailwind. The new supply in Jamaica is not considered direct competition as it's at a lower price point and in a different location, but it can have a minor impact in a soft market.

Shaun Kelley of Bank of America sought to confirm if the reduced contract sales guidance was primarily due to a higher mix of first-time buyers and lower VPG, and asked for a more detailed mechanical explanation of how inventory buybacks lower product costs so quickly.

Answer

CEO John Geller confirmed the guidance change reflects the slow start to the year and the ongoing mix shift toward first-time buyers, while noting initiatives are in place to drive higher VPGs. CFO Jason Marino reiterated that the product cost benefit is twofold: paying owners less for inventory through repurchase programs and actively shifting the mix of what is being sold to lower-cost options.