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spk02: years. No change in our guidance there. We still anticipate that 20% to 25% of those savings would be permanent. We'd endeavor to make sure that they remain intact going forward with that inherent margin benefit starting to show through along with operating leverage going into next year as we continue to drive the business and drive incremental operating cash flow.
spk07: Thank you very much, guys. That's very good, Carlos. Thank you very much.
spk06: Thank you for the questions. One moment for the next question. Next question is from Joe Graff of JP Morgan. Please go ahead.
spk03: Hi, guys. Thanks for taking my questions. Lawrence, just going back to your comments about Golden Week and then the subsequent period in October and being close to 19, excluding the junket business, Does that imply EBITDA in October was at least on a hold-adjusted basis in excess of October 19 levels?
spk02: Yeah, I think we had provided some guidance in the past that we would need to see mass and slots and non-junket business return to something more in the 115% range to be at par. or parity with 2019 or pre-COVID EBITDA.
spk03: Okay. And then just a broader question. Can you just talk about either your levels or where you think the market is in terms of premium mass reinvestment levels? How does that compare to levels in 2019? Is that slightly elevated?
spk01: Maybe David can talk about that. Sure. So, Joe, I think what we've seen a little bit now is we've kind of come out of the, let's say, out of the COVID period, we've seen a lot more marketing going on, whether that be with some of the other concessionaires relative to their new, let's say, new hotel rooms or other new assets that they've got brought on, that have been brought online. Additionally, as we've kind of seen a shift in the business where right now it's very much a premium mass market driven economy, basically, what we're seeing is there's more comps related to that. So the reinvestment rates have climbed a bit. That doesn't mean that as we see more of that mass, mass kind of coming back and kind of a smoothing out of things as a lot of this new product comes online in the market, that we don't see a return back to, let's say, more of what we saw in the fourth quarter or throughout 2019. But for right now, it is a bit more elevated than we've seen in the past. I think, again, it's for the reasons I just mentioned.
spk03: Got it. And then, David, the mass market table game hold percentage at COD in the third quarter was was 32.1%. Do you look at that as sustainable, as normal, or do you think of that as sort of with the mix between premium mass and mass as something that's outside the range of a normal mass table games hold percentage?
spk01: No, I think we're within the normal range of a mass table game hold percentage. What we haven't seen yet is kind of that complete mass-mass coming back that kind of smooths things out a little bit. But I think we're within our normal range there. Might be a little bit higher sometimes, but again, we're probably in that, let's say that 31 to 33, like we talked about before, but we're right within that normal range.
spk06: Great. Thanks, guys. Thank you for the question. One moment for the next question. Next question comes from the line of Ricardo Chinchilla Pagas from Deutsche Bank. Please go ahead.
spk08: Hey, guys. Thank you so much for taking my question. I was just wondering if you could comment a little bit more on the promotional environment and how you guys are reacting. Do you guys think that the current reinvestment levels are sustainable or that this is a lot of, as you mentioned, your competitors trying clients to test some of their products before going back to City of Dreams? Or how do you guys envision the promotional environment and if there's a lot of you know, trying versus going back to what they like?
spk01: Yeah, so Ricardo, it's David. So look, I think you're spot on when you say it. I think there's a lot of people going out there being a little more promiscuous and going out and trying other properties, understanding what may be out there. So that's kind of contributed a little bit to that, let's say, rise in the promotional or reinvestment rates. Also with some of the new products and some of the other things out there, I think Again, that in order to get people into that new product a little bit to get people to try that product whether that's us or the other concessionaires, you also need to probably be a little bit more aggressive. What we've seen too is that we've had a lot of pent-up demand relative to a lot of our room product particularly at Studio City where now we have the opportunity that we didn't before because we had far fewer rooms so with the additional of approximately 900 rooms that's given us the opportunity to go deeper into our database and to go out and be a little bit more aggressive, which is also driving some of our reinvestment rates as well. But I think over time, that'll moderate, as I said, and we'll probably get back to those 2019 levels.
spk08: Got it. You guys provided great color on operating expenses for the Macau operation. I was wondering if you could detail us, you know, how much of that amount is related to Studio City just for our modeling? Like, why should we, out of you know, some of the costs that you are adding back? How much is specifically related to Studio City?
spk02: Well, maybe to highlight the delta on Studio City, we do anticipate that the incremental cost of having a full quarter of the W in the quarter should be roughly similar to the reduction in residency concert series expenses. So, that largely washes out at about 0.2 per day of expense.
spk08: Got it. Thank you so much for taking my questions.
spk06: Thank you for the questions. One moment for the next questions. Next questions we have live from John Decree from CBRE. Please go ahead.
spk05: Hi, everyone. Thank you for taking my questions. I think you may have just started to touch on this, but wondering if you could provide a little bit more color on the ramp at the W and then even maybe back to an epic tower opening. Are you starting to be able to improve segmentation? How has customer reception been to the new hotel towers and pricing, et cetera, if you kind of think about using those to work through and yield up your mix?
spk04: Hey, John, it's Lawrence. You know, I think we're very excited about Studio City Phase 2. But at the same time, the reason we've opened it kind of piecemeal is we're gradually rolling more and more product into the market. And I think anybody who's been to Studio City right now knows there's a major retail renovation going on. And over the next two or three months, most of those retail tenants will be open. So we've been waiting for that. And I think in due course, probably sometime in the first quarter of next year or early second quarter, we'll try to do a major property relaunch, you know, phase two opening. But I think that is an area that we're continuing ramping up on. So I think maybe David can add more color or Kevin. Sure.
spk01: So, look, I think from when we opened up Epic back in April, it finally allowed us kind of a really nice product to go out and develop that premium mass and some more VIP business that, quite frankly, we really didn't have with the Star Tower at Studio City. So the opportunity to really start putting more of those premium players and shifting some of that business away from some of our competitors and bringing that into Studio City is something that's pretty exciting for us. And the team over there continues to do a good job as we build that business. In regards to the W, what we've seen from the start is we start off at about 70% occupancy during the month of September. We're now, in October, we probably got into about 80%. We're looking to try to build that back up until, let's say, the low 90s by the time we get to December. But it's kind of a mix there. It's a little bit different between what we'd have. Let's say it's probably about a 15% casino business, 85% cash, where we're really looking to try to rely on the Marriott Bombway system to bring in some different players or different customers for us. The W also skews to a much different demographic and is particularly popular with women. So we think, again, that this hopefully over time will allow us to continue to expand our database, allow us to continue to attract new customers that ultimately those customers will grow into that premium mass segment and become long-term customers for us. But, again, with both Epic and with W, we've seen a nice pickup within the our business, and we continue to see growth. And in fact, for the month of October, it was our biggest drop month ever for Studio City, as well as we had our biggest coin-in month as well in regards to slots. So again, we've seen a nice pickup. We're absorbing the product well, and we look forward as we go forward in December and beyond.
spk05: Awesome, Colin. Really appreciate that. Maybe I'll follow up on October. You guys give us a little bit of color, which is really helpful. Curious if you made any observations relative to 19 about seasonality or customer behavior before the holiday week, after the holiday week. Are things or customers kind of behaving the way you'd expect, or is it a little different now that we're 2023 and post-pandemic? Any thoughts on that would be helpful, and that's all for me. Thank you, Lawrence.
spk01: Yeah, so look, when we got into the Golden Week, you know, typically this year was a little bit early because it started on the 30th of September and kind of rolled into that, let's say those first five days of October. So a little bit different than we kind of normally see in terms of that, but it was pretty typical as we got towards the end of the Golden Week where you typically see a drop-off, and then about a few days after that it starts picking up again as you get into that next weekend. So it pretty much played like we thought it would. I think what's been nice, though, is, again, not so much of a surprise, but again, kind of a return to normal, where we saw that continued play and action going through the whole month and actually coming into the month of November as well now. So it dropped off a little bit like it used to and then picked right back up again, which is, again, very similar to what we would have seen in 2019.
spk04: I think October, our Studio City drop was the all-time highest in the history of the property. And Coin-In as well. And Coin-In as well. So I think we are seeing... the traction with the water park and the new hotels. And, you know, I think once the whole property is completed and hoarded, we're quite excited about it.
spk05: Great. Thanks so much, guys. Congratulations on the ramp. Good quarter.
spk06: Thank you for the questions. Next question comes from the line of Pravin Chowdhury from Morgan Stanley. Please go ahead.
spk09: Thanks so much. Hello, Lance, Jeff, David. Good to hear that Macau recovery is ongoing. Thank you for taking my question. I have three quick questions. The first one is simple. Did you give a timeline for House of Dancing Water opening? Is it first half 24 or Q2 24? That's the first one. The second question is about the spending per capita trend. We got two data points. Package tour numbers are coming up strongly after being very slow initially. And then someone said that in October second half, the overnight visitors dropped off. Hotels are easily available versus day trippers. So these are two suggesting grind might be doing a little bit better than premium. So love to hear your thoughts. And the last question is, again, Lawrence, what's going on in Thailand and how is it different from Japan from your perspective if you want to put new money there? Obviously, it's not. next year's question, but I'm sure you're working on it. Thank you.
spk04: Hey Praveen, maybe I'll take the, my memory sucks, so I'll take the last question first. You know, I think Thailand, we've been looking at it for many, many years, but after the Japan experience and pretty unpleasant experience, I think we're going to be very conservative and we'll see. Thailand, they've re-established another gaming committee to look at it. We'll continue to analyze it and see what we can do. But certainly, I think at this stage, we're not going to be spending too much resources and definitely no money whatsoever on that. But if it does open up, it's the... other than Japan, is probably the most exciting market out there. Because at the end of the day for us, after the three years of COVID, our main focus is going to be on delevering and reducing debt. That's our number one objective. And number two objective is returning money back to shareholders, whether it's through dividend or buyback. At these levels, it's becoming very attractive, but we are very disciplined in the goal of reducing debt. at this current stage. I think on the first and second question, maybe I'll hand it off to David.
spk01: Great. So right now, Previn, we're looking to open up House of Dancing Water for the relaunch probably late in fourth quarter of 2024. We're just now going through the process of the remount. We've been doing a lot of work on the House of Dancing Water Theater to get it up and ready. We just have started doing Our first show is there. We're doing a production right now with Zhejiang TV where we're doing some musical things in there right now on a weekly basis. And towards the middle of November, we'll get back out of that and get started back on the remount for the House of Dancing Water. To kind of maybe go through your other question regarding room rates and room availability, I think a lot of inventory is coming to the market, whether that be with what we brought in with Epic or what we brought in with W, or now we've seen a new product coming in with the Galaxy guys, with Andaz. and with uh again the um escaping me right now the name of the hotel but with the new product coming in as well as i think there's an opportunity uh for these other hotels to kind of go through and to poach customers from some of the other hotels so where you may be seeing some availability maybe in some of the older hotels let's say the lack of five-star hotels out there so i think again we've not seen that problem we've been able to backfill our hotels with the existing and as i said We've gotten to have 80% occupancy now with the W. We expect that to get into the low 90s as we get to the end of the year. We've had no trouble filling EPIC. Our hotels continue to be very strong, and we continue to maintain very high occupancy percentages.
spk09: Thank you so much. This is very detailed, very helpful. I appreciate it.
spk06: Thank you for the questions. One moment for the next questions. Our next question comes from the line of Antonio Luis Gomez from 91. Please go ahead.
spk07: Hi there. Thank you for your time. I just wanted to understand on the GGR for Macau figure, it seems like from a quarter-on-quarter basis, it was pretty similar to the previous quarter. From my understanding, looking at your presentation, it seems like it came from City of Dreams VIP GGR. But I just kind of wanted to understand, you know, what the barriers are to the growth and what's led to, you know, below average industry GGR levels relative to 2019 levels?
spk01: So I think from the barrier standpoint, as we're going through here a little bit, I think, look, we're kind of in a strange world here a little bit where because we've seen there's fewer players now in the sense of for the VIP business. So that's created a lot more volatility. We have a tendency to have much larger players in our property. So that does create more volatility. So if we get one-sided on that, that does have an impact on us sometimes from quarter to quarter where years ago when we had the junkets, that would offset that and basically allow us to not see those impacts quite as much as we see a little bit more now. So I think that will continue for a long time here. I don't think that's going to change because I think the VIP market has fundamentally changed now without the junkets to smooth those things out. But long term, I think you'll see us get back to beyond where we were in 2019, at least from a premium direct standpoint from the VIP business.
spk07: Okay, so going forward, you know, the next couple of quarters, you expect it to kind of normalize relative to industry averages, maybe beat that. Is that kind of the expectation?
spk01: One of the expectations, we'll return back to our historical averages, which, again, is right around that 3% level. But, again, the volatility will remain sometimes. So the next quarter could be a bit higher. It could be, again, a bit lower. But I think over the long-term view, we will get back to that 3%.
spk07: Okay, and then everything else seems to be ticking along regardless from your perspective.
spk01: Yeah, I think everything is moving forward. Again, as we get, again, as the growth of the database, as we get more customers in, as McHale continues to recover and we get more air left in the transportation corridor, it gets a little bit better, all these things will contribute to the market just getting stronger and stronger. But I think we're well on our way and we'll just continue. We think there's a lot more juice left in this thing to keep going. well beyond where we are today and into the next year and beyond.
spk07: Okay. Great. Thank you.
spk06: Thank you for the questions. We have no more for the question at this time. I'd like to hand the call back to Ms. Jeannie Kim for closing remarks.
spk00: Thank you for participating in our call today. We look forward to speaking with you again next quarter. Thank you.
spk06: Ladies and gentlemen, that does conclude today's conference call. Thank you for your participation. You may now disconnect your line.
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