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spk03: Good afternoon, and welcome to Red Rock Resort's third quarter 2023 conference call. All participants will be in a listen-only mode. Please note, this conference is being recorded. I would now like to turn the conference over to Stephen Coote, Executive Vice President, Chief Financial Officer, and Treasurer of Red Rock Resort. Please go ahead.
spk16: Thank you, Operator, and good afternoon, everyone. Thank you for joining us today on Red Rock Resort's third quarter 2023 earnings conference call. Joining me on the call today are Frank and Lorenzo Fertitta, Scott Krieger, and our executive management team. I'd like to remind everyone that our call today will include forward-looking statements under the safe harbor provisions of the United States federal securities laws. Developments and results may differ from those projected. During this call, we will also discuss non-GAAP financial measures. For definitions and a complete reconciliation of these figures to GAAP, please refer to the financial tables in our earnings press release, Form 8K and Investor Deck, which were filed this afternoon prior to the call. Also, please note that this call is being recorded. Before we get into any of the details, similar to our financial and operating results in the first half of the year, the third quarter represented another strong quarter for the company. The quarter represented our third best third quarter in the history of the company in terms of same store net revenue, adjusted EBITDA, and adjusted EBITDA margin, only surpassed by the unprecedented third quarters of 2021 and 2022. The team continued to validate our core strategy of reinvesting in our properties to deliver fresh and relevant amenities to our guests while remaining focused on best-in-class customer service. In executing this strategy, the team delivered another strong quarter across all business lines, this quarter marking the 13th consecutive quarter that the company delivered adjusted EBITDA margins in excess of 45%. And through the first nine months of the year, the company remains on pace to have the best financial year in the history of our company. Now let's take a look at our third quarter results. With respect to our Las Vegas operations, third quarter net revenue was $408 million, down $3.6 million from the prior year's third quarter. Adjusted EBITDA margin was $191.4 million, down $8.5 million year over year. Our adjusted EBITDA margin was 46.9%, a decrease of 69 basis points year over year. On a consolidated basis, the third quarter net revenue was $411.6 million, down $2.8 million from the prior year's third quarter. Adjusted EBITDA was $175.2 million, down $6.7 million year over year. Our adjusted EBITDA margin was 42.6% for the quarter, a decrease of 132 basis points year over year. In the quarter, we converted 53% of our adjusted EBITDA to operating free cash flow, generating $91.9 million, or $0.88 per share. When looking at our year-to-date cumulative free cash flow, we converted 53% of our adjusted EBITDA to operating free cash flow, generating $290.5 million, or $2.78 per share. This significant level of free cash flow was reinvested in our long-term growth strategy, including our Durango project or return to our stakeholders via debt pay down and dividends. Throughout the quarter, we remained operationally disciplined and focused on our core local guests as we continue to grow our regional and national segments. When comparing our results to last year's third quarter, we continue to see upside from strong visitation in our regional, national, and VIP segments. This strength coupled with strong spend per visit across the majority of our portfolio allowed us to enjoy near record third quarter revenue and adjusted EBITDA results across our gaming segments. Turning to the non-gaming segments, both hotel and food and beverage continue to grow year over year and deliver near record profitability in the third quarter. Our hotel division experiences highest third quarter revenue and profit in our company's history, driven by our team's success on continuing to drive higher occupancy in ADR across our hotel portfolio. Food and beverage experience near record third quarter revenue and profitability driven by higher average check across our food and beverage outlets and the continued strength of our catering business. Our catering revenue continues to remain strong as this quarter represented the ninth consecutive quarter of double digit year over year growth in this business segment. With regard to our group sales business, we continue to see positive momentum driven by the growth in room nights, ADR, and our catering revenue as our pipeline continues to grow into the rest of this year and into the beginning of 2024. As we begin the fourth quarter, we like what we see so far as our business across both our gaming and non-gaming segments remain stable and consistent to what we've seen throughout this year, though we will continue to face challenging year-over-year comparisons over the next several quarters. On the expense and labor side, we remain operation disciplined and continue to look for ways to become more efficient while providing best-in-class customer service to our guests, and continue to be the top employer of choice in Las Vegas Valley. Despite a tougher year-over-year comparable, the company was able to manage its expenses and generate near record financial performance and continue to return capital to our shareholders. These results demonstrate the resilience of our business model, the sustainability of our operating margin, the ability of our management team to execute on a long-term growth strategy and take a balanced approach to returning capital to our shareholders. During the quarter, we remained committed to strategically investing in our core strategy, which includes expanding our footprint in Las Vegas and offering new amenities to our guests at our existing locations. Over the past several months, we successfully opened Stoney's North 40 Bar, a new poker room and a new high-limit slot room at our Santa Fe Station property, as well as Game On Sports Bar at our Boulder Station property. We are pleased with the early results from all the amenities we've opened up in 2023 and expect to continue to invest in additional amenities which will include our new high limit slot and table room at our Green Valley Ranch properties opening later this year. Now let's cover a few balance sheet and capital items. The company's cash and cash equivalents at the end of the third quarter were $122.8 million, and the total principal amount of debt outstanding was $3.3 billion, resulting in net debt of $3.2 billion. As of the end of the third quarter, the company's net debt to EBITDA and interest coverage ratios was 4.37 times and 4.5 times respectively. As we stated on previous earnings calls, our leverage will continue to tick upwards as we complete the construction of our Durango project. And upon the completion of Durango, we will expect to deliver towards our long-term net leverage target of three times net leverage. Capital spent in the third quarter was $135.4 million, which includes approximately $119.4 million in investment capital inclusive of Durango, as well as $16 million in maintenance capital. For the full year 2023, we now expect to spend between 70 and 90 million in maintenance capital and a total of 550 to 600 million in growth capital inclusive of Durango. Now let's provide an update on our development pipeline. We continue to prepare for the scheduled opening of our Durango Resort, which we have now moved to December 5th in order to ensure a first-class opening of the resort. As we mentioned before, we are extremely excited about the addition of this resort to the Red Rock family. which is situated on a 50-acre site ideally located off the 215 Expressway and Durango Drive in the southwest Las Vegas Valley. The resort is located in the fastest-growing area in the Las Vegas Valley with a very favorable demographic profile and no unrestricted gaming competitors within the five-mile radius. As we look to open Durango, we expect some movement in the budget, but we do not expect the budget to be materially different than the $780 million we disclosed in our prior earnings call. The company still anticipates a return profile for Durango to be consistent with our prior greenfield developments. Turning now to North Fork, as we noted in our last quarter, after favorably resolving all of its other litigation, the tribe has a single remaining case in the California courts. We do not believe the case will interfere with the right or ability of North Fork to conduct gaming on its federal trust land, and we continue to work with the tribe to progress our efforts with respect to this project, including working toward the approval of a management agreement, continuing our work on the development and design and having preliminary talks with prospective lending partners. We are making good progress on these fronts and will continue to provide updates on our quarterly earnings calls. On the real estate front, as noted on our last earnings call, we have made significant progress with respect to the sale of our former Texas station and Fiesta Rancho properties. While we cannot disclose the terms, we anticipate the closing of these two real estate parcels later this quarter. These potential transactions represent a continued execution of our long-term real estate development strategy as we look to reposition and upgrade our real estate portfolio for the next chapter of growth at Station Casinos. Lastly, on November 6, the company's Board of Directors declared a cash dividend of $0.25 per Class A common share, payable on December 29 to Class A shareholders of record as of December 15. With our best-in-class assets and locations coupled with our development pipeline of seven owned development sites located in the most desirable locations in the Las Vegas Valley, we have an unparalleled glow story that will allow us to double the size of the portfolio and capitalize on the very favorable long-term demographic trends and high barriers to entry that characterize the Las Vegas locals market. We would like to recognize and extend our thanks to all of our team members for their hard work. Our success starts with them, and they continue to be the primary reason why our guests return time after time. We'd like to thank them for voting us the top casino employer in the Las Vegas Valley for the third consecutive year. We are also very proud to share that Forbes selected our Red Rock Casino Resort and Spa as the top overall casino resort hotel in Las Vegas, which we consider a tremendous recognition of our efforts and those of our team members. Finally, we would like to thank our guests for their loyal support each of the last six decades. Operator, this concludes our prepared remarks today, and we are now ready to take questions.
spk03: We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. In the interest of time, please limit yourself to one question and one follow-up.
spk02: At this time, we will pause momentarily to assemble our roster.
spk03: The first question today comes from Joe Breff with JP Morgan. Please go ahead.
spk08: Good afternoon, everybody. Just on Durango, not that it's a big deal, but the movement to December 5th, can you talk about that? why um and it's only a couple of weeks and then steve you mentioned there might be some movement in the budget of 780 million but it wouldn't be material do you define material as being within you know five percent of of of as a variance to that budget and then i have a follow-up i'll go with the last one first and then i'll turn to lorenzo for the first one your answer is yeah you're correct in that five percent movement yeah that's accurate
spk14: This is Lorenzo, Joe. Relative to moving back to date, the reality is as we've, you know, you try to predict when a lot of these areas are going to be handed over. And as of right now, when we start to look at the calendar, certain areas that are critical to the opening just were not turned over in the time that we had originally anticipated, which in turn we didn't feel like gave us enough time to properly train our staff and our team members in venue. to be able to have the appropriate load-in days and then play days. Our operations are a little bit different from the Strip in the sense that we're primarily a locals property and we're gonna obviously have a lot of repeat customers. This isn't where you're just gonna see a new face every day. And for me and Frank, the most important thing is that the level of service on the day that we open is at the highest quality that it can be. So we think it's obviously the right thing to do to make sure that when the doors open... For a long-term investment. ...we're fully ready. And, you know, we're going to own this asset for a very long time. And the first impression is very important. And quite honestly, we just have very high standards that we want to make sure that we nail the opening.
spk08: Fair enough. And then my follow-up question, and whoever wants to answer, go ahead. Can you talk about... Just following Boyd's report, any potential on-the-come operating expense pressures, particularly touching on labor, wages? And if we're sort of looking at revenues consistent with past seasonality on a same-store basis, would you expect operating expenses to move similarly?
spk01: Yeah, hi, Joe. This is Scott Krieger. We are really comfortable with our expense structures right now. We think our expenses are in line. Our teams out at the properties are doing a great job to create efficiency. When we break down some of the major categories, let's start with labor first. As we've said in past calls, we really think between our wage, our benefits, and our company culture, we're an employer of choice. And that's evidenced by the strong outcome we had with our hiring campaign at Durango. So while you have to stay competitive in the market, and the market has to be monitored, we feel like we're in the right spot when it comes to salaries and wages. And we're able to hire quality talent. We were able to get Durango hired very quickly with top quality candidates. We don't see that changing materially into the future. When we talk about cost of sales, we're actually down year over year in cost of sales. So the teams have been able to manage cost of sales, whether that's through creative menu pricing or composition or other factors, we've been able to stay pretty consistent there. And as we've talked about in the past, acquisition cost remains rational and stable within the market. There are a couple of things that do weigh us down a bit that are less in our control one of those is energy it still remains high specifically and electricity. And we believe in keeping our properties fresh, and we spend quite a good amount of money on repairs and maintenance, making sure we have a first-class experience. But those spends are within our control. We think we have spent a good amount of repairs and maintenance, and we think our properties are in good hands. top shape, and we can control the repairs and maintenance costs going forward if we feel the need to ratchet that down a bit.
spk18: Thank you.
spk02: The next question comes from Carlos Santorelli with Deutsche Bank.
spk03: Please go ahead.
spk10: Hey, everybody. Good afternoon. Steve, just trying to kind of think from a modeling perspective and thinking about, you know, kind of the seasonality in Vegas, specifically the fourth quarter and how, generally speaking, historically, you know, 1Q and 4Q were your best quarters. So putting that kind of within the framework and then thinking about how, you know, we should contemplate the impact that Durango will have over the 26 days any call-outs for pre-opening type of expenses or things like that that maybe will be excluded from EBITDA and, you know, anything else you could share on that front?
spk16: I think on the pre-opened, Carlo, as we've been ramping up the project over the past year, you've been gradually seeing an increase in those expenses, and they just happen to be in the write-offs and other line items. below the line. And so we do see that ramping up as we can go right up to the opening of Durango when we start to spend those expenses flip to operational.
spk10: Okay, got it. And then just in terms of as you look out to next year, obviously you guys talked a little bit about the cost headwinds that are present in the market. But from a demand standpoint, from a health of Las Vegas standpoint, Is there optimism that you could see top line flattish to slight growth in 2024 on a same-store basis?
spk01: Yeah, this is Scott. Yeah, for sure. You know, it's our thesis, and we believe in Las Vegas. There's no one more bullish than us about the Las Vegas market. We're bringing on new product. We're entering markets that are under-penetrated. We're adding high-limit rooms across our brand that have met with strong success already at Red Rock. So we're optimistic about going into 2024.
spk11: And I think the population migration into Nevada remains totally intact. I mean, that's kind of our long-term thesis is net inflow of growing population here. And the fact is the people who are moving here have higher annual income than they've ever had in the past. So we remain bullish on the Las Vegas story.
spk16: And it's not just people, it's businesses. So not only are the people who are moving here, to Frank's point, getting wealthier, but the economy is getting more diverse, which all bodes well for our business.
spk10: Great. Thank you all very much.
spk03: The next question comes from Sean Kelly with Bank of America. Please go ahead.
spk04: Hi, good afternoon, everyone. Thanks for taking my question. Two for me. First off, just wanted to, you already gave us the answer, I believe, on the labor and cost environment. So I think we know the answer, but I kind of wanted the particulars around. Just any thoughts on the union progress and how that may impact prevailing wages? More broadly around the Valley, again, it seems like you all are pretty insulated and very comfortable with where you sit, but I'm just kind of curious on your observations more broadly as those discussions sort of kick into high gear here in the next couple weeks.
spk01: Yeah, Sean, this is Scott. I'll kind of take it from two angles. One, no one's really sure what the outcome will be on the negotiations. Certainly, it does have a knock-on effect to us. We don't mark ourselves to strip wage, but we certainly want to stay competitive in the market. So to the degree we have to look at those positions and adjust, we're prepared to do that. But the flip side on the positive is Any raises that the culinary workers on the strip receive, keep in mind that those are our customers when they come home at night. So there's a knock-on benefit in our business model for higher discretionary income for Las Vegas residents.
spk04: A great point. Thank you for pointing that out. And then my other question would just be sort of behavior kind of behind the scenes as you dig into what you saw in Q3. I think what we heard was Broadly speaking around, you know, the casino, you know, the casino landscape has been, you know, up in rated play. And I think you called out a couple of segments that were that were strong for you down still a little bit as you see some normalization and unrated. Is that a fair characterization? We just sort of decompose your casino revenues. I think we're down, you know, roughly three percent year on year. If we just look at that casino line, that's still kind of the broad prevailing behavior. Any nuance to that?
spk01: Yeah, I think you nailed it. We see relative consistency in the trends. We did have some disruption impact at GVR. We have a new slot and a new table games high limit room coming online. So we kind of had to move those customers to temporary locales within the property while we are bringing on those new products. So it did have a bit of impact. We think we outperformed the market in the quarter. And, you know, as we kind of take a peek into the fourth quarter, we like the trends so far.
spk18: Thank you very much.
spk03: The next question comes from Jordan Bender with JMC Securities. Please go ahead.
spk07: Great. Thanks for taking my question. Nice acceleration hotel revenue during the quarter. You know, just kind of looking to the first half of the year, occupancy trending near pre-pandemic levels. I assume it kind of ticked up year over year as well here. But as we look forward, is there anything telling us that occupancy will grow off of this base or should we expect this to be more rate driven into 24? Thank you.
spk16: Yeah, I can take this one. I mean, right now, I think we're right around 86 percent or 86.2 percent. It's still below our historical highs because we're still looking to get our group and sales business back.
spk07: Okay. And then just on the follow-up, I know there was quite a bit of weather, fires, winds, hurricanes in the valley during the quarter. Was any operations impacted from those weather events? Thank you.
spk18: No, no. We operated as normal. Thank you very much.
spk02: The next question comes from Steve Wyfinski with Cycle.
spk03: Please go ahead.
spk12: Hey, guys. Good afternoon. So, Steve, just want to be clear here. I think you said this, but there were no operating expenses related to Durango that hit the income statement in the third quarter, meaning those essentially were all in that write-down line. Just trying to make sure that margins here are on a like-for-like basis and there's nothing we really need to strip out. And then somewhat unrelated, Steve, just wondering what drove the corporate expense line down about 10% year-over-year?
spk16: Yeah, I think you actually, you kind of led me to question. So the one expense we recognized that was, it probably shouldn't have been where it was, was in corporate. So there was some pre-opened expense that we classified from corporate this quarter into the Durango project, and that caused the reduction into corporate. But to your point, no other expense related to the Durango opening has bled into the operations.
spk12: Okay, gotcha, thanks. And second question, Steve, in your prepared remarks, you talked about group sales. You mentioned those, you were kind of pleased with how those were trending right now heading into next year, but they were pretty high level remarks. Just wondering maybe if you could provide a little bit more detail about those group sales heading into next year.
spk01: Yeah, this is Scott. Let's take this year and the remainder of this year. If we snap the line and compare it to the same time last year, room nights are up roughly 20%, revenues are up nearly 40%, catering is up over 50%. In the quarter, you see similar performance. One thing to note, so that's super strong. We're really happy with the results across the board as it relates to hotel and hotel sales and catering. One note, as you go into 24 and compare year over year, we're up against tough comp because we had latent bookings that were booked during the COVID period that burned off in the first part of the year. So While we like the pace of where we're going, when you start to look at next year on a year-over-year comp basis, it's going to be a pretty high comp.
spk12: Gotcha. Thanks, Scott. Appreciate it.
spk03: The next question comes from Barry Jones with Truist Securities. Please go ahead.
spk09: Hey, guys. Appreciate the positive commentary for Q4. Just curious how trends are looking specifically for F1 and maybe for Super Bowl into Q1 as well. Thanks.
spk14: So, Lorenzo, I mean, we're not quite as tied to, you know, F1 as some of the properties on the strip, so they can probably give a lot better color. Just what we're seeing in the marketplace, looking at room rates and whatnot, it seems as though that there has been some steam come out of the – People's expectations for maybe what they thought that event would be maybe a year ago. With that said, we do think it's still going to be a great weekend and a positive event, at least for us. I mean, we're not leading the charge there from an F1 standpoint, but we are getting the benefit of all the people coming into town and whatnot. But, you know, rumors certainly have come down from where people's expectations were. even as recent as maybe three or four.
spk11: And I think the super bowl, we would expect to have very strong demand. Yeah. Yeah.
spk14: Yeah. We're super bullish on the super bowl. We're seeing very strong bookings there. That should be a pretty, you know, an outlier from a weekend to the positive, I think for everybody in town.
spk09: Got it. And then just as a follow-up, you know, you guys have a number of great options, but any updated thoughts on what's next in the development pipeline and I guess timing, uh, you know, specifically for Vegas post-Durango. Thanks.
spk14: Well, I think, you know, as we said before, we're going to want to get Durango open and get it stabilized. We've got a number of development opportunities waiting for us, about six opportunities. I would say that from a design standpoint, as far as starting, we're probably furthest along with either Durango Phase 2 or the Inspirata project. And then after that, you know, Sky Canyon is probably right behind that. We've been actively working on all those developments. But, you know, we just want to get Durango open and stabilized before we make a decision on what's next.
spk09: Great. Thanks for answering my questions.
spk03: The next question comes from Dan Pulitzer with Wells Fargo. Please go ahead.
spk05: Thanks for taking my questions. I just wanted to follow up on the Formula One topic. As you think about it, there's a lot of disruption as it relates to roads and construction in Las Vegas. Is there a scenario where you actually could be a net beneficiary just to the extent that there's less traffic into the Strip and maybe to the peripheral areas where your casinos are located?
spk01: Yeah, Dan, it's Scott. I think we would characterize the first year of F1 as a learning experience. None of us really know. We can make assumptions of things. We thought that there would potentially be a benefit, both from locals and also from out-of-town folks that maybe aren't as interested in the, you know, all of the energy around Formula One and want something that's a little bit more of a relaxed resort experience and may choose us as an option. So that's yet to be seen. So we'll learn from that. But we think there could be a positive effect.
spk16: Dan, this is just another step in the evolution of Vegas, right? It's just another large weekend in the scheme of large weekends, which seem to be now 52 weeks a year. There's going to be a lot of people visiting the town. That means there's going to be a lot of tips. And those tipped employees on the strip are generally our customers. So Scott touched on it earlier, but there's kind of a two-pronged benefit there.
spk05: Got it. And then just for my follow-up, I know you guys have, you know, a well-documented set of opportunities within Las Vegas. But I guess as you think about the company as a whole, are there other opportunities that you've looked at or would consider outside of Nevada or even outside of the U.S.?
spk11: Yeah, I mean, we're always looking at all opportunities that are out there, but for any opportunity, we really have a high, high benchmark of what it would have to be in terms of the opportunity and the risk-reward profile. Lorenzo?
spk14: No, that's fair. I mean, it would have to be an exceptional opportunity, given the fact that we do have pipeline in Las Vegas.
spk05: Understood. Thanks.
spk03: The next question comes from Chad Baynon with Macquarie. Please go ahead.
spk13: Good afternoon. Thanks for taking my question. Wanted to ask about the Durango EBITDA ramp and also how we should think about margins maybe compared to some of your other bigger resort properties in the market as it pertains to the mix of gaming versus non-gaming. Thanks.
spk17: I'll start.
spk16: I'm sure Scott will flip in, but I think we've been pretty consistent in terms of the ramp. When we take a look at this property, there are no real loss leaders here. You have slots, you have tables, you have a little bit over 200 rooms. We're operating two restaurants, but system-wide we tend to operate very profitably in terms of the oyster bar and the steak. And the rest of the restaurants are leased, so it's 100% profit margin. So we think the property would profit right out of the gate. It will reach kind of what we view as kind of stability, though it will never be, it will never reach, it will keep growing, probably in year three.
spk11: I mean, RedRock is still ramping after opening up in 2006, so we would expect the same thing for Durango moving forward.
spk16: And then we think, to answer your second question, at Stability, we think this will most likely be one of our highest, if not our highest, margin properties in the system.
spk01: And I think on the early side of it, we just want to make sure that the customer experience is as good as it can be. So while efficiency is important, out of the gates, we want to make sure that the customer experience is the best it can be. And then as we level out, we can slowly bring efficiency into the business as we go forward.
spk13: Perfect. Thank you. And then as it pertains to the cash that you'll be bringing in from Texas Station and Fiesta Rancho, How should we think about the use of that capital? Is that kind of earmarked for 24 CapEx, or should we think about, you know, that being used potentially for additional dividends or share repurchases?
spk16: Thanks. I think, Lewis, while, you know, right now the balance sheet has flexibility to do anything, the first priority is to pay down the revolver.
spk13: Great. Thank you very much, guys. Best of luck on the opening.
spk03: The next question comes from Joe Stoff with Susquehanna. Please go ahead.
spk15: Thank you. Scott, you had mentioned kind of the second derivative, call it benefit, from a union negotiation. I was wondering, is there any history you could share with us or possibly frame the size of that consumer group for you guys? And then the second question was, You know, maybe in the quarter or current trends, if you see any difference, you know, maybe in customer behavior, say, within your six larger properties. Thank you.
spk01: Yeah, the first one I think I'm going to answer you appropriately with the information we have. I think that the size and scale or the quantum of culinary workers is somewhere around 60,000 culinary workers. Now, how that monetizes within the company, we couldn't measure that. That's more anecdotal. And then I think you had asked in your second question just if there's any changes in the Core 6 properties from a financial perspective.
spk15: Yeah, just in customer behavior and trends.
spk01: Yeah, look, I think it's been pretty consistent with what we've said in the past. The higher end of our database is doing better than the lowest end of our database. Some of that may be macroeconomic pressures, which we've been living with for a while. And part of it is by design within our operating strategy to focus on higher profit customers and bring on amenities that are catered to a higher profit customer base or higher spend per visit. But I don't think there's anything in the database right now that would give us any cause for alarm or would say is off-trend from where we've been.
spk18: Thanks.
spk02: The next question comes from John Decree with CBRE.
spk03: Please go ahead.
spk06: Hi, everyone. Maybe just one question related to North Fork and some comments in the prepared remarks. But with one case left, would that preclude you and your partner from going full speed ahead? And if not, any thoughts on timing or how we should think about getting started or pick up the pace on the North Fork project?
spk16: I don't think the court case, as we said in the prepared remarks, has any bearing on timing and when we start or finance this project.
spk06: Okay, so we should assume, you know, getting started, construction is kind of a priority at this point?
spk16: We're waiting on the management agreement. We're waiting on the management agreement. That's the linchpin, John. So as soon as we get that, we are out raising money and then starting construction.
spk14: Yeah, as soon as the management agreement gets approval from NICC.
spk06: Okay, and I guess, you know, any guess as to when that's done is probably – A tough one to handicap, but I don't know if you guys have a... No, listen, we feel like we're close.
spk16: It's tough to handicap, but, you know, we did make a couple changes to those Northwork remarks, so we're making good progress.
spk18: Sounds good. I appreciate it, guys. Thanks again.
spk03: As a reminder, if you wish to ask a question, please press star then 1 to be joined into the question queue. The next question comes from David Katz with Jefferies. Please go ahead.
spk00: All right, afternoon. Apologies if we're over discussing the F1 issue, but you commented earlier that, you know, room rates had come down a little bit. You know, first, did you, is that, you know, specific to your own portfolio or did you intend that that might be more of a broader market comment? And then, you know, how instructive is, you know, this F1 in terms of, You said Super Bowl is going great or looking great, but this one has backed off a little bit. How can that help us in the future figure out which events are good versus great for you?
spk14: I think that was more of a broader market commentary. It's as simple as just looking at rates on Expedia or what hotels are being booked for now versus maybe where rates were published going back.
spk01: up around six months to a year ago.
spk14: It's all public data.
spk01: I think the other one is, Lorenzo, you said it, so I don't want to speak for you, but I think we kind of know that sports works in the town. Vegas is starting to become a sports town. And whether that's the NFL or hockey or any other professional sports that are coming to town, we're seeing that it's got great success. It's probably a little less complex than the equation of F1. We haven't seen F1 come into the city or what the impact is.
spk14: Our expectations is that the F1 weekend will still be fantastic. I think it's going to be great for the guys on the strip. I think it's going to be a huge success. It was just a matter of, you know, on a relative basis to maybe where, you know, expectations and where people were hanging rates in the early days, you know. But that happens. That's happened before in Las Vegas. It happens, you know, all the time.
spk16: And Scott said, Dave, this is going to be a learning experience. For the Super Bowl, you have 55 years of Super Bowl history where it's always good in Vegas, and now it happens to be here.
spk18: Perfect. Thank you very much.
spk03: This concludes our question and answer session. I would like to turn the conference back over to Stephen Cootie for any closing remarks.
spk16: Well, thank you, everyone, for joining the call, and we look forward to talking to you in about 90 days. Take care.
spk03: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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