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MGM Resorts International  (NYSE:MGM)
Q3 2018 Earnings Conference Call
Oct. 30, 2018, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, and welcome to the MGM Resorts International Third Quarter 2018 Earnings Conference Call. Joining the call from the Company today are Jim Murren, Chairman and Chief Executive Officer; Dan D'Arrigo, Executive Vice President and Chief Financial Officer; Corey Sanders Chief Operating Officer; and Grant Bowie, CEO and Executive Director of MGM China Holdings Limited. Participants are in listen-only mode. After the Company's remarks, there will be a question-and-answer session. (Operator Instructions) Please note this conference is being recorded.

Now I would like to turn the call over to Mr. Dan D'Arrigo. Please go ahead.

Dan D'Arrigo -- Executive Vice President and Chief Financial Officer

Thank you, Phil, and good afternoon and welcome, everyone to the MGM Resorts International third quarter 2018 earnings call. This call is being broadcast live on the internet at investors.mgmresorts.com and we have furnished our press release on Form 8-K to the SEC this afternoon. On this call, we will make forward-looking statements under the safe harbor provisions of the federal securities laws. Actual results may differ materially from those contemplated in these statements. Additional information concerning factors that could cause actual results to materially differ from these forward-looking statements is contained in today's press release and in our periodic filings with the SEC. Except as required by law, we undertake no obligation to update these statements as a result of new information, updates or otherwise.

During the call we will also discuss non-GAAP financial measures and talking about our performance. You can find the reconciliation to GAAP financial measures in our press release which is also available on our website. Finally this presentation is being recorded.

And with that I'll turn it over to Mr. Jim Murren.

James Murren -- Chairman and Chief Executive Officer

Well, thank you, Dan and good afternoon, everyone. We're pleased to announce that our third quarter results came in ahead of expectations with solid overall performance despite, of course, the year-over-year challenging comparisons that we faced here in Las Vegas. The Company continues to generate strong cash flows and we're focused on appropriately allocating the capital as it aligns with our overall strategic objectives. In the third quarter, we distributed $64 million in quarterly dividends and we repurchased $176 million of stock demonstrated in our commitment to returning capital to the shareholders. We remain focused on bringing our consolidated net leverage down to between three to four times by 2020 as we grow our cash flows including the benefit of all of our new properties and as well as we manage all of our debt levels.

We're well aware that the third quarter was challenging in Las Vegas given the strong comparisons in the prior year which of course benefited from two fights, strong table games volume, high hold and a favorable conventional calendar mix. In the third quarter this year there are 120,000 fewer large scale convention attendees citywide. This was opened in of course heavier reliance on leisure channels and the summer months ended up acting like the traditional summer months that we've seen historically. While our Las Vegas Strip REVPAR was down year-over-year, it was ahead of our guidance and we still achieved our second best third quarter REVPAR on record. By the way, our convention mix in the third quarter was also our third best.

Our regional properties continued the strong growth we've seen over the last three years. We delivered a 5% increase in EBITDA to $207 million. And in fact, our Mississippi properties, MGM Detroit and MGM National Harbor, all had record third quarters. Our regional strategy to operate the premier assets in key markets continues to prove successful and we're maximizing the value of these assets. We're also continuing to strengthen our position internationally. Over Macau we experienced revenue growth of 37% to over $600 million.

Adjusted property EBITDA increased over 7% to $130 million. MGM Cotai started out slowly, continues to ramp in the third quarter and the property though experienced a pretty low hold which impacted its adjusted EBITDA by about $16 million in the quarter. On August 24th, we successfully opened MGM Springfield, and the property is already off to a good start. We've received great feedback from our guests who enjoyed the unique environment and our fellow community members who have welcomed the fresh wave of energy in the local opportunity to the town of Springfield and Western Mass more broadly.

While it's still in its early days, we're encouraged that the resort is performing in line with our expectations on both the gaming and non-gaming side. Here at home in Las Vegas, we're reaching the final stages of the Park MGM transformation. Earlier this month in fact on October 12, we officially opened the NoMad on the top four floors of the building. MGM and the Sydell Group headed by Andrew Zobler, has truly created something special here, and it is a unique destination in Las Vegas.

Looking ahead in the coming weeks we'll open up a couple of new restaurants and a nightlife concept. We opened Eataly at the end of the year and our front entrance all of which it will be done in December. Looking ahead the current quarter is shaping up nicely as we're already seeing the benefits from the expected increase of over 800,000 large scale convention citywide attendees.

We expect this proving convention-base business to ease some of the competitive pressures that we've seen in the leisure channel and that we anticipate our Las Vegas trip REVPAR will be up 1% to 2% and overall revenues will be up slightly. We also expect our Las Vegas margins to be flat to up slightly as well.

We're maintaining our full year guidance of Las Vegas Strip revenue and EBITDAR declines in the low single digits and adjusted property EBITDA margins of around 29% or 30% excluding Park MGM. As we look ahead to next year in the group business we're pacing ahead of previous years. We expect MGM's room nights to be up again and we expect to gain market share driven by the expansion of MGM Grand's convention space and of course Park MGM. We're also already having success placing groups in shoulder periods which we believe will allow us to better yield the rest of our portfolio.

And by the way Las Vegas was recently selected the number 1 North American destination in 2019 by Carson Wagon Lit Travel up from number 10 a year ago. The reason cited in that survey is the strength of the US economy and the ability of Las Vegas as a market to provide high value experiences for the larger meeting planner specifically in the higher end corporate segment, which bodes well for us. And before we turn it over to Q&A, I want to reiterate some of our financial and operational priorities and our strategy to creating shareholder value.

Number one we're going to continue to maximize the performance of our businesses across our entire domestic resorts portfolio. We expect moderate revenue growth to our continuous improvement efforts and an ongoing disciplined approach to both top line and cost control that we believe will drive margin improvement and organic profit growth. Secondly we're continuing investing in our business to maintain and grow our competitive advantages. And by ramping up our newly opened properties like MGM Cotai, MGM Springfield, Park MGM, we expect to accelerate cash flow and free cash flow.

We're continuing down our path to a more asset-like model. And with respect to MGP we intend to work on our target of reducing our economic ownership stake to below 50% over the next three years. We're singly focused on the goal of generating consolidated adjusted free cash flow of $3.50 per share in 2020 and ensuring a stringent and disciplined approach to capital allocation. This will include being very targeted in growth opportunities. And in Japan in particular, our sports initiatives and our interactive business and in digital, achieving and maintaining a fortified balance sheet and of course returning capital to our shareholders.

And so with that I'd like to turn it back over to the operator for Q&A.

Questions and Answers:

Operator

We will now begin the question-and-answer session. (Operator Instructions) The first question comes from Joe Greff with JP Morgan. Please go ahead.

Joe Greff -- JP Morgan -- Analyst

Hey, guys. I was going to say good morning, but (inaudible) that hard, good afternoon.

James Murren -- Chairman and Chief Executive Officer

Hi, Joe.

Joe Greff -- JP Morgan -- Analyst

Jim, hearing your comments and going through your earnings release and the slide deck tonight. I see and I hear the language on your capital allocation priorities and they're unchanged from a quarter ago. I just want to make sure that's the case, particularly with regard to maybe opportunistic large scale M&A, under what scenario or scenarios would larger scale M&A make sense for MGM, Jim?

James Murren -- Chairman and Chief Executive Officer

Sure. And Dan just told me, I said $800,000 instead of $80,000. So, $80,000 is pretty good, $800,000 would be off the rail. So, clarification there. So, and answer to your question, I would refer going back to our deck, I think at slides, look at it -- like 5, 6, 7. And that would guide, I think the thinking that you should have around M&A. Our focus here is to maximize profitability of our businesses and our cash flows. And we are going to be very prudent now and in the future on how we allocate capital around all of our growth strategies.

The Board feels this way and management does that it's incumbent upon us to consider any deployment of capital, whether it's new growth opportunities, M&A or otherwise through the lens of being acutely focused on weighing on whether or not we can return a very high return in excess of our cost to capital. Absent any clear strategic or financial rationale that would be through that lens, we're going to continue to return capital to our shareholders.

And some we like to hand that we're dealt right now. We liked our assets. We like the condition of our assets. We like the fact that we've moved out of a development phase into a harvesting of free cash phase. We like our management team fear running these properties. We like our opportunity of winning in Japan and doing well interactive and nationally here in sports and, that is the focus of the Board and the Company.

Joe Greff -- JP Morgan -- Analyst

Great. Thanks. And then my second question and this is likely for Corey. As it relates to the Las Vegas Strip and looking at next year, and I'm guessing your visibility on group and events is stronger in the first half than the second half. So, maybe you can answer it, what happened in 2H. Corey, can you share with us group room nights and rest on the books now versus you going -- I know, Jim you mentioned the pace was up? And then can you talk about the number of events that you've on the booked versus what you had a year ago? And then specifically, can you talk about Mandalay Bay 2019 group room night positions? And maybe to get a sense of that recovery, how that compares relative to this time two years ago? Thank you.

Corey Sanders -- Chief Operating Officer

Sure. On the group room nights for 2019, I think you're right Joe, I'm looking at it, in first half and second half. But as we look at the entire year, and as we look at also, what's out there from a citywide perspective, we expect to be up. What we have on the books right now is pacing extremely well and we believe that will gain some market share in the group room right area. And in particular, LVCVA, I think said that, they're going to be up 1.75%. We believe we will do much better than that on what we see on the books. And the comfort there is we have about 80% of what we think is going to be on the books, already on the books. And that's probably the highest we've been in the last, ever since we've really started our budgeting process.

From an event perspective, it's -- that's also really hard, because we know what hockey is on the books and what other sporting events are on the books. And there will be more events there but that is also looking pretty positive. With regards to Mandalay Bay, Mandalay Bay will up next year on convention, booked room nights. It's still not quite where we'd like to see them, but they definitely will have a nice increase compared to this year.

Joe Greff -- JP Morgan -- Analyst

Thank you, guys.

James Murren -- Chairman and Chief Executive Officer

Thanks, Joe.

Operator

The next question comes from Felicia Hendrix with Barclays. Please go ahead.

Felicia Hendrix -- Barclays -- Analyst

Hi. Good afternoon. Thank you. Jim, just wanted to talk about your fourth quarter REVPAR guidance for a second, the up 1% to 2%. I'm just wondering, are there lot kind of going on still, because you had calendar issues in October. You still have Park MGM and obviously Mandalay which is still ramping. So if you adjust for all of that, what would REVPAR guidance would look like?

James Murren -- Chairman and Chief Executive Officer

Well, I think what we're focused on, two things. One I would, I reread my transcript from last quarter. And I think everyone should reread it as well. We have factored everything into this. And we feel that this is appropriate guidance to give. There are gives and takes in every quarter. And we took all that into account. We like how this is setting up, I would say that, given all the factors that you just mentioned and given what we've seen early days at Park MGM and what we know about the Mandalay month to month to month calendar in the fourth quarter. But I think we're going to stick with very specific, but without too much color, REVPAR guidance.

Felicia Hendrix -- Barclays -- Analyst

Okay. I mean, you understand that I was asking kind of what impact those items had on your outlook, right?

Corey Sanders -- Chief Operating Officer

Yeah. I think Felicia, just to add to Jim's comment. I mean when you look at last year and obviously the events of 1 October impacted a lot of things, but it mostly impacted occupancy. And so when you look at rates, rates were pretty healthy. Convention room nights in the fourth quarter last year despite what happened in the city were up 30% plus in the quarter. So, but despite what happened there's still some positive things that occurred in the fourth quarter and a little bit of what, kind of transpired in the third quarter had to shake itself out and has done so here in October. So that's all been to Jim's point, kind of taken into consideration with respect to the guidance.

Felicia Hendrix -- Barclays -- Analyst

Okay. And I -- I think that probably gets to my next question which is asking it in a bit of it a different way. Because if you look at -- to your REVPAR stack in the third quarter, you were up slightly, right, like 30 basis points? And then the fourth quarter, implied to your stack is negative. So I think just looking at the fourth quarter last year which was bad in terms of REVPAR, I think that deceleration might be surprising to folks?

James Murren -- Chairman and Chief Executive Officer

Yeah. I think, and I'm going from memory and you're testing me, because I'm getting old. But in the fourth quarter '16, we had a few shows in there that actually rotated out and were very profitable shows for us particularly at the MGM Grand if I recall. So, again, I think we're looking at this on a micro level within our portfolio and taking all these factors into consideration.

Felicia Hendrix -- Barclays -- Analyst

Okay. But if we look at it on an absolute basis, I mean given everything that you said, it does not sound like you are seeing kind of slowing trends. It sounds like actually you guys are kind of, on the move forward and up and recovering, correct?

James Murren -- Chairman and Chief Executive Officer

Yes. And I mean I think we talked about this three months ago. What we thought we would see in the fourth quarter and what we said three months ago we're seeing.

Corey Sanders -- Chief Operating Officer

And the pace in all channels looked really good for the fourth quarter.

Felicia Hendrix -- Barclays -- Analyst

Okay. Great. Thank you.

Operator

The next question comes from Harry Curtis with Nomura Instinet. Please go ahead.

Harry Curtis -- Nomura Instinet -- Analyst

Hi. Good afternoon. I wanted to start with CapEx on the wind down of your bigger projects. It looks like there's roughly $300 million left to spend in China and about $80 million in Massachusetts. How long do you expect that to wind -- take to wind down?

James Murren -- Chairman and Chief Executive Officer

Typically, Harry those sometimes take longer, but typically it's about a six to nine month process. The pieces in Macau, little bit on the close out from the original construction but also include the completion of the VIP rooms as well as The Mansion and the President's Club. But I would say that typically it's a six to nine month process, post opening assuming everybody is working together.

Harry Curtis -- Nomura Instinet -- Analyst

All right. And is Grant on the call?

James Murren -- Chairman and Chief Executive Officer

Yes.

Harry Curtis -- Nomura Instinet -- Analyst

Grant, are you awake?

Grant Bowie -- Chief Executive Officer and Executive Director

Hello. I am. Good morning.

Harry Curtis -- Nomura Instinet -- Analyst

And good morning to you. Just testing, I was -- I wonder, if you could give us your perspective on the growth that you're seeing in the mass versus VIP. There is clearly concerns that the VIP is slowing. And do you get a sense that it's taking -- that the VIP is taking a breather? Or do you think that it's more likely, that there's some shrinkage in that business? And what does that mean? And if you would address that mass as well for the kind of ramp of the property over the next six months?

Grant Bowie -- Chief Executive Officer and Executive Director

Okay. So, the market conditions first. I think, it's been pretty consistent from all the people have come out and we're seeing the same thing that, yes, it seems like after what has been a relatively good period of growth of junkets, they have slowed. I think there is probably some impact from whole series of condition, they've been opening a lot of rooms. Clearly market conditions in China are little more volatile.

Critical point I'll make on the junket there is -- there's still things to be a lot of liquidity. And what this seems to be is much more of a controlled pools, rather than the effective running out of liquidity which as I think you understand is really critical in that segment.

So I think what we're all expecting is a little softness for a little while until we can get restabilized. For us, so, we're still pretty confident, because we're opening out other rooms and that's going to be a positive for us. Clearly we'd like more growth in the market, because that will help us increase our share. And that leaves us to the mass. Mass business continues to be more robust and more resilient than the VIP, simply because of the nature of the business and obviously it's much quarter based. Like always, the mass business is not one element, there is a series of components. And while the mid to lower mass is still very stronger, is similar to the VIP, a little bit of a slowdown in the growth and some sectors of the top end.

But, again, talking specifically on the property and the ramp up, once we get the President's Club done, The Mansion done and all of those construction gets out of the way, we're very positive that, that will allow us to build our base and we'll continue to see that. As you'll see in the quarter, Harry, we had a decent sort of luck affect, and some of that was actually a result of the ramping up. Because, you tend to get little bit more volatility, and that volatility is just part to that process. If you didn't get it, then you probably weren't going to get the business.

So, in summary, market growth, I think we're all consistent around that, high single, early double digit, probably flat for junket, going through and obviously with a better performance for mass, but it's going to be slightly different over the range of mass customers. For our property, positive signs, traffic improvement for Cotai. But I also just want to lay the point that we're also very focused on driving business in Macau. The cannibalization there is stabilized at the back of that 12%, 13%. And so we've got great opportunities to continue to grow and establish that. So we're getting through the difficult pace of ramp and now we want to see some momentum from that.

Harry Curtis -- Nomura Instinet -- Analyst

And just as a housekeeping Mansion and President's Club timing of completion, please?

Grant Bowie -- Chief Executive Officer and Executive Director

President's will be before the end of the year, December. And we're working really hard to get some of The Mansion that was available for Chinese New Year. And we have a good grasp. I think that's going to happen. So that's very positive for us.

Harry Curtis -- Nomura Instinet -- Analyst

Okay. Very good. Thanks, everyone.

Grant Bowie -- Chief Executive Officer and Executive Director

Thanks, Harry.

Operator

The next question comes from Shaun Kelley with Bank of America Merrill Lynch. Please go ahead.

Shaun Kelley -- Bank of America Merrill Lynch -- Analyst

Hey, good afternoon, everyone. I was just wondering if you could go back to Las Vegas for a minute. Last quarter, it's like we were seeing some signs of promotional activity as it sort of acted over the summer and depot [ph]. And I think you guys mentioned, forced to kind of react to lighter convention business. As we move into Q4, are you seeing any signs of that, some of that, I guess deeply discounted, package tour and promotional activity has abated? And that was sort of just kind of a one-off necessary to bridge that week period? Or just how would you characterize the promotional environment in Vegas?

Corey Sanders -- Chief Operating Officer

Hey, Shaun, it's Corey. In general, I think whenever you have the base of convention and FIT, there is less promotional activity. So there is peaks and valleys almost every quarter. I think, obviously the fourth quarter, there will be a lot less of that with the Citywides coming in. But in general, it's pretty similar to the way, it's always been and probably got a little deeper in the third quarters, probably coming back to some normalcy in some periods to the fourth quarter. But there are still periods like right before the holidays where there is softness, just general softness that usually occurs that people are going to get the rooms filled.

Shaun Kelley -- Bank of America Merrill Lynch -- Analyst

Great. Thank you. And then just one sort of bigger picture strategic question. Jim, in some of your earlier comments, I think you've alluded to large scale M&A and how that might fit into your, kind of your strategic framework. I was sort of wondering, if you could address maybe some of the more smaller, tactical, regional strategy you have taken on? I mean, as you basically, now got the operations of both Empire City and Hard Rock Rocksino. How do those broadly speaking kind of fit into the portfolio? And is there appetite to do more tactical thing? Is it build out the regional network, even if maybe something larger scale didn't fit those guardrails? And how are you kind of -- how are you considering those types of opportunities out there?

James Murren -- Chairman and Chief Executive Officer

Sure. Well, I think that MGP is going to be very opportunistic and aggressive. And I'm sure James Stewart will speak to that on his call. And I would, just from our perspective at MGM Resorts, we see a lot of interesting M&A activity for the triple nets in general in the space which we're rooting on James there. As it relates to MGM Resorts, we viewed the Yonkers and the Ohio opportunities as unique and distinctive, and in exception to rule. We are very optimistic about the future of New York City as a broad based gaming market in the future. And we're incredibly impressed with the operational performance and the free cash flow generation of the Rocksino in Ohio. There -- those are very few and far between opportunities. I would view them both very opportunistically.

Our market access deal with Boyd really answers the question for us as to whether or not, we need to own a physical asset to maximize the opportunity in sports betting. And the answer is, we do not. We do not need to own or operate physical assets in order to maximize that opportunity. And so M&A -- any M&A, whether it's large or small would have to be scrutinized against those strategic objectives that I talked about earlier. And they have a big held decline, because we really like what we got. As I said, we really liked our assets. It's not lost on us that we have the most profitable assets in every regional market, in Mississippi, in Michigan, in New Jersey, and of course, we're the largest profit generator here in Nevada, and of course in Maryland as well.

And so it would be inconsistent with our strategy to look at opportunities that are second tier relative to what we already operate at a premier fashion. And it would have to fit the lens of those goals that I mentioned and the free cash flow of $3.50 a share in 2020. And the leverage target that I talked about of three to four times during that same period of time. And all of that would be measured against increasing the dividend in MGM Resorts and buying that stock at what we believe to be very attractive levels.

Shaun Kelley -- Bank of America Merrill Lynch -- Analyst

Great. Thanks very much.

James Murren -- Chairman and Chief Executive Officer

Thank you.

Operator

The next question comes from Thomas Allen with Morgan Stanley. Please go ahead.

Thomas Allen -- Morgan Stanley -- Analyst

Hey, good afternoon. Just to clarify something on the Las Vegas Strip. So you highlighted that third quarter performance exceeded your expectations. And then you reiterated your full year guidance. Should we imply that you're more cautious about the fourth quarter? Or is it you're giving broad based comments? Thanks.

Dan D'Arrigo -- Executive Vice President and Chief Financial Officer

Hey, Thomas. This is Dan. I think -- I don't think there's anything to imply there. I think, when you look at -- when you look at the guidance that we had given for the third quarter, obviously a pretty wide range. We have narrowed the range in the fourth quarter to compensate for that as well as the fact that we came in and did a little bit better. We said, we're going to be up in the fourth quarter and our guidance reflects that for Q4. And I think other than that, I think we beat this horse pretty well earlier in the call. So, I don't think there's anything to read into it other than, it all ties together from how we're thinking about and looking at the guidance vis-a-vis our prior comments.

Thomas Allen -- Morgan Stanley -- Analyst

Perfect. And then just talking about Park MGM, can you talk a little bit about the cadence of the ramp, if there is any changes to that? I saw that you signed up Brittany for another residency there. How should we think about the costs and then kind of the revenue ramp there? Thanks.

James Murren -- Chairman and Chief Executive Officer

Are you fishing for tickets there? Is that the discussion is actually. So, a few things on the ramp. And really, I hope you all get to see this soon. It's really quite remarkable in our view. And we've done a lot here. As I mentioned, the NoMad opened on the 12th of this month. The NoMad bar is open, the high limit area is open, the lobby is open now. And it's been really positively received. All the Park MGM rooms are done. And the rest of the NoMad rooms, because we opened up two floors, will be completed and operational by November 10th. The NoMad restaurant which is a stunner, it's in the old racing sports book. So, you can imagine the volume of the space. That opens on the 14th of November.

We open up the entire strip in early December. We open a noodle shop that Corey named La La Noodles on December 12th for some reason. Roy Choi opens a restaurant called Best Friend that opens on the 15th of December. Eataly, opens on the 27th of December. The Nightclub Venue opens on the 28th of December, that's the day Lady Gaga starts her extended shows at Park Theater, which you can imagine the response to that, particularly a poster great movie. Brittany starts in February, Aerosmith in April. We've never had a lineup of performers that we've had ever as it relates to Park MGM.

So the ramp should be nice going into the Western New Year's period. Certainly a hot spot during nights home games. And going into next year literally everything will be done. And so it's been painful. It's been a long arduous process, but it's worth the effort. And I think you'll see pretty rapid ramp up of cash flows as all those elements come into place for '19.

Corey Sanders -- Chief Operating Officer

Yeah. And what I would add is, so the first half of '19, even one of those events, I think it will be very positive. We still -- we'll still have some rooms that are coming in under the current trends. But by the second half we'll start seeing that priced to where we're closer to where we would like to be. I would say 2020 is more focusing on even making that mix even more productive and focusing on all margins. And then I think around 2021 is we should see the full ramp of the property.

James Murren -- Chairman and Chief Executive Officer

Yeah. I think that's fair Corey. This is a new property, basically, and so new brand, new property. It's going to -- we expect it to go through ramp up like MGM National Harbor did to where it's doing extraordinarily well now and the way MGM Springfield is right now, we expect that to ramp up from an absolute cash flow perspective in a determined fashion, we expect the same kind of focus at Park MGM.

Thomas Allen -- Morgan Stanley -- Analyst

All right. Thank you.

James Murren -- Chairman and Chief Executive Officer

Thanks, Thomas.

Operator

Okay. The next question comes from Carlo Santarelli with Deutsche Bank. Please go ahead.

Carlo Santarelli -- Deutsche Bank -- Analyst

Hey, everybody. Good afternoon. Thanks for taking my question. So, for starters, Corey, you talked a little bit earlier about the 2019 pace. And obviously having the base on the books has been something that obviously over time has shown a nice ability. You've shown a nice ability to kind of better yield manage or better price I should say some leisure rooms. When you think about having that better base for '19 as well as some of the competitive pressures that you've mentioned from peers on the leisure side, is part of the strategy there to maybe keep the group rate a little bit more enticing to get that business on the books, so that you are able to flex on the leisure and transient side in '19?

Corey Sanders -- Chief Operating Officer

So, the way we've always approached the convention is, we really do priced up market. And there are times and softer periods, won't adjust the rates. Obviously we much rather have a higher convention rate than a lower and leisure package rate. So yeah, we do that flexibility quite a bit. Another thing, we've learned especially in this third quarter and particular is flexing our database. And we think there is a -- still an opportunity there. We know our competitor, outmuscles us especially in Las Vegas and how they feel, in particular, some of their core rooms. So we think there is an opportunity, there are also to help, once again build that base to yield up to a higher level where we don't necessarily have that dependency on the OTA that we experienced in the third quarter.

Carlo Santarelli -- Deutsche Bank -- Analyst

Great. Thank you. And then just, if I could touch quickly on the 4Q REVPAR guidance as well as kind of the moving parts. You talked a little bit about strip net revenue being flat, up slightly. Is there anything in there on the gaming side that would kind of, if you just think about the three components, obviously with REVPAR up and you guys, obviously surpassed your expectation for this quarter. So, if we assume, the one, the two and the fourth quarter, on the gaming side, the comparison is fairly easy.

I think you guys last year had fairly normal hold, but obviously saw some of the impacts from the events of 10/1 on slot handle and some of the other gaming metrics. Is there anything in there that maybe you're being particularly conservative about? Or whether some one-off events later in the fourth quarter that might have been a little bit more additive?

James Murren -- Chairman and Chief Executive Officer

Well, I think -- Carlo, I think, we are relatively, and I'd say, our current normal range last year on the casino side in terms of table games hold, although, I think it was north of 25% last year. So, we typically forecast the kind of the mid-point and from that standpoint. So, there's a little bit on the casino side when you look at where the hold is coming into play there. And then it really comes down to -- December comes down to the last week of the month, and who shows up particularly on the casino side on the high end for Western New Years.

And so that's usually where fourth quarters are made or broken is really over that Western New Year's kind of last four, five days of the month kind of comes into play. So we're using the data we have to kind of run that -- run those counts and those forecasts. And I think that's kind of where we're landing out on those two fronts.

Carlo Santarelli -- Deutsche Bank -- Analyst

Great. And then just, Dan, since you mentioned that, just on that fourth -- sorry, somebody --

James Murren -- Chairman and Chief Executive Officer

So, I was just going to say that. I think, you've mentioned about the event calendars, there is really no change this year versus last year.

Corey Sanders -- Chief Operating Officer

We have some more hockey games on that.

James Murren -- Chairman and Chief Executive Officer

Yeah. But I mean in terms of tent-pole events, concerts, et cetera, we're performing a pretty similar quarter.

Carlo Santarelli -- Deutsche Bank -- Analyst

Okay. Great. And just around the holidays this year, is there anything with the way that especially December the New Years will fall and -- it looks like it could be slightly beneficial. Is that the way you guys are interpreting it?

James Murren -- Chairman and Chief Executive Officer

It could be, just the way the holidays are falling kind of early Monday, Tuesday kind of combo. So you could see kind of a double weekend effect so to speak with folks coming in Friday, Saturday leaving on Sunday. And the new groups coming in for the New Year's. But that's the traffic pattern that we've got to kind of wait and see how that starts to fill in November and December.

Carlo Santarelli -- Deutsche Bank -- Analyst

Great. Thanks a lot, guys. I appreciate it.

James Murren -- Chairman and Chief Executive Officer

Thanks, Carlo.

Operator

The next question comes from David Katz with Jefferies. Please go ahead.

David Katz -- Jefferies -- Analyst

Hi. Afternoon, everyone. I wanted to ask two questions. One is, I know you indicated previously that MGP is a stake that you would sell down over the next three years. I wonder if you could shed some light or provide some color around why three years? Why not one, two or five? Or how did we arrive at that pace?

James Murren -- Chairman and Chief Executive Officer

Sure. Maybe I'll tackle, then Dan, you could go ahead. My expectation is that MGM Resorts' economic interest in MGP will decline. I don't know whether we'll sell any shares. I expect that MGP is going to grow. Grow, I think as rapidly as it has grown since it has gone public, and grow with other operators. And in doing so, our economic interest will go down. It's a target of ours that we think is a reasonable target when we articulated last quarter. We have expectations that MGP is going to continue to grow rapidly, and in the meantime we're rooting them on.

David Katz -- Jefferies -- Analyst

Understood. And if I can ask a second question. Just I know you've given some data points and some insight around 2019. But given that we've spent -- we have talked quite a bit about guidance and the structure of guidance this year. Are there any thoughts that you can share about what the structure of next year's guidance might look like?

Dan D'Arrigo -- Executive Vice President and Chief Financial Officer

Yeah. Sure, David. This is Dan. I'll take that one. We've been obviously talking to a lot of you all on this call both from sell side and buy side and we've been working through this quite a bit. So, as we get into 2019 our approach is we're not going to eliminate guidance. We're going to modify it and speak to kind of one quarter out both in terms of our overall net revenues here in Las Vegas as well as a subset of that being continue to give you one quarter out guidance around REVPAR and EBITDA margins from that standpoint. And help you model out both on the sales side and the buy side each one quarter out from that perspective. We think that's more prudent and more useful to the investment community.

David Katz -- Jefferies -- Analyst

Perfect. Thank you very much. Thanks for taking my questions.

James Murren -- Chairman and Chief Executive Officer

Thank you, David.

Operator

Okay. The next question comes from Robin Farley with UBS. Please go ahead.

Robin Farley -- UBS -- Analyst

Thanks. I actually -- obviously had a different question, but then just a follow-up on a comment you made and answer to kind of talking about getting, making sure that you get your fair share more of group nights next year. Can you give us a little bit of color around, if group rate is down slightly and I understand that's probably still significant percentage higher than those rooms going to the -- toward travel distribution. So, maybe -- if you could just kind of talk a little bid about what the -- sort of rate, group rate down, still gives you what advantage over the leisure package mix?

Corey Sanders -- Chief Operating Officer

Yeah. I'll answer that Robin. If group rates are down a little, It's going to have not much of an impact at all on this. It's a lower percent of our room mix than any other segment we have. What allows us to do is yield up the other segments and pick and choose some of the segments that we want to focus on and on. So more importantly, then the rate, it's the base that it provides us to be able to drive out the additional yield out of our rooms.

Unidentified Speaker --

Yeah. Robin, if I can add to that a little bit, sometimes there's a little more nuance in that as well, it's not just a mix, it's a placement within the calendar throughout the year. So, sometimes if we can change groups and typically shoulder period after Labor Day, things like that, after holiday period. That certainly helps the overall portfolio and helps us the portfolio as a whole.

Robin Farley -- UBS -- Analyst

Okay. Great. Thanks. And on your 2020 goals, maybe if you could just -- you mentioned that you are happy with your assets and things like that. Then necessarily need to do a large scale transaction. Does your 2020 goal include potentially those M&A activity or is that a 2020 goal without any additional M&A smaller or large?

James Murren -- Chairman and Chief Executive Officer

Yeah. Robin that's just what we've known at the time which was essentially MGP's acquisition of Rocksino and nothing more than that. We didn't bake in future deals on the acquisition front into that goal. Status quo new development projects that obviously come online and MGP's purchase of Rocksino.

Robin Farley -- UBS -- Analyst

Okay. Great. Thank you. I don't know if you would take one last one, which is actually switching back to Macau. Just given the concession exploration in 2020. And I guess the language of the contract says that a new concession would have to be in place six months ahead of time, which would be September of next year. So now kind of less than 12 months away. I wonder if you could tell us about how you're thinking about approaching? Kind of what your approach is over these next 10 months? And whether you're expecting to have to make commitment to financial -- commitment to infrastructure build? Or what tyes of things you are kind of doing in preparation for these next few months?

James Murren -- Chairman and Chief Executive Officer

Grant, could we give you that one or do you want me to tackle it?

Grant Bowie -- Chief Executive Officer and Executive Director

Thank you. Robin, maybe reverse to it, and I think Robin, what we've always said is we continue to be in dialogue with the government and we are obviously, specifically working through. And we're quietly confident, probably more than that, that we'll be in position to do that. And we obviously do expect that there maybe some expectations that we need to work through, but those discussions are still ongoing with government and it's really going to be up to the government to make that final decision. Anything more to Jim in that?

James Murren -- Chairman and Chief Executive Officer

Yeah. The only thing I'd add Grant is, I don't think the government has any expectations that are going to go right up until the last moment here. The discussions are ongoing and prompt and timely.

Robin Farley -- UBS -- Analyst

Thanks. And just, so that free cash flow goal for 2020 includes anything over and above what you would have to do as part of that process. Is that fair to assume?

James Murren -- Chairman and Chief Executive Officer

In terms of what? In terms of additional capital or expenditures? Or --

Robin Farley -- UBS -- Analyst

Exactly. Like in other words, your free cash flow, over and above, any additional capital commitments that you would be making for that process?

James Murren -- Chairman and Chief Executive Officer

That's right. Yeah. We would measure it in terms of us achieving that and looking at whatever investment we would consider. It would have to significantly enhance that otherwise it just, as Jim said earlier sticking to our strategy and what we have in our plate right now and staying focused on that and returning capital to shareholders if that's the best use of that capital.

Grant Bowie -- Chief Executive Officer and Executive Director

And I think, what Robin is asking is, did we -- are we anticipating whatever it is, we might have to do, is it within that free cash flow per share? And we are comfortable with that free cash flow per share target of $3.50. Given everything that we know including our hope and expectation our license is extended in Macau.

Robin Farley -- UBS -- Analyst

Thank you. Thanks very much.

James Murren -- Chairman and Chief Executive Officer

Thank you.

Operator

The next question comes from John DeCree with Union Gaming. Please go ahead.

John DeCree -- Union Gaming -- Analyst

Good afternoon, everyone and thank you for taking my questions. I've got now a few questions over the last couple of weeks for investors about, outbound Chinese visitation to the US and any potential impact that we might see in Las Vegas. I think I remember some prior estimates, that business is kind of a low single digit composition of your Las Vegas business. So I was wondering, if you could kind of put some parameters on that and if you had any comments about what you were seeing in your business perhaps from Chinese visitors to your properties in the US or maybe just more broadly international trends that you are seeing in Las Vegas?

Corey Sanders -- Chief Operating Officer

Sure. John, it's Corey. On the high end side, it's actually -- the business has been pretty good and pretty strong still. We've seen very little impact at all on the ultra high end customers and that level. On the lower end of the -- just the normal consumer, it is a very small percentage. And many of them come in tour buses and tour groups and -- are mainly at the lower rate. So there has been maybe a slight impact, but not enough material to impact our business. It's just not big enough piece of our business.

John DeCree -- Union Gaming -- Analyst

Okay. That's fair enough. Thanks, Corey. And I had one separate question, follow up perhaps, Jim, not sure we got to an hour here without talking about sports betting at much detail. Recent partnership with the NHL, I think there was a new CEO appointed to your JV with GVC. And I was wondering, if you could spend a minute or two kind of high level updating us on the progress of the JV at GVC? And I guess your thoughts on some of the early days of sports betting we have seen in New Jersey and Mississippi so far?

James Murren -- Chairman and Chief Executive Officer

Sure. Yes. I was with Commissioner Bettman yesterday, making the NHL deal which we're very proud of. And to add to that one, the NBA deal we did about three months ago. And of course the JV with GVC, first let me start with the JV. Board has met several times. We have hired a terrific CEO that has deep experience came from GVC. The infrastructure has been put into place in terms of the governance, hiring is under way, office sites are being scouted as we speak. Partnerships for the JV and other forms of technology, sports content, et cetera is under way.

We have a -- we know we picked the right Company in GVC, they are relentless, they are aggressive, they are smart, they feel the way we do about the opportunity in the United States. Not only in sports betting but in their whole interactive platform. We -- they're routing us on as it relates to our league relationships that we're forming and between the two of us we have been reaching out in a targeted way to a variety of sports teams not only within the four major sports, but more broadly, globally in other sports as well.

As it relates to early days, we're already doing as much as business in Borgata as any of our luxury properties do out here from almost a standing start. And we're doing equally well in Mississippi. I think our playMGM app is finally now into the Apple Store.

Corey Sanders -- Chief Operating Officer

In New Jersey.

James Murren -- Chairman and Chief Executive Officer

In New Jersey which is a big positive development. And we're working literally on a state-by-state basis with the appropriate state agencies to help those states craft the best legislation for the respective states. I can't overemphasize how exciting we think this is going to be over time for the bricks and mortar business of MGM Resorts as we develop global partnerships global relationships with customers and cross market to our existing resorts. And I can say that the early days are -- given us great confidence of that both in terms of New Jersey, of course, but here in Las Vegas. And we expect the states to rule out in kind of a predictable fashion over the next few years. And we expect to have a very large percentage of the total interactive market here.

Corey Sanders -- Chief Operating Officer

And what I would add also is, we have heard comments like it's going to ruin Las Vegas business. Our Las Vegas because is actually, tremendously. We mainly look at the major sport of football pro and college is up over 50%. Our mobile is up over 60%. So I think the whole thing is beginning to take off with the legalization of it.

James Murren -- Chairman and Chief Executive Officer

I think also, last point I'd make on -- the approach that, I've very much admired the approach that leagues are taking which is an evolving philosophy as it relates to sports betting here in The United States. And the aligned values that we have with the leagues and the teams in terms of the integrity of the product, the importance of data getting the greatest in game betting experiences. It's going to be a very competitive marketplace. There are a lot of fine companies globally that are already participating in sports betting and interactive in general. And we just intend to be the leader in it. That's all.

John DeCree -- Union Gaming -- Analyst

Thanks, Jim. I appreciate the update.

Operator

Okay. The next question comes from Stephen Grambling with Goldman Sachs. Please go ahead.

Stephen Grambling -- Goldman Sachs -- Analyst

Hey, thanks for sneaking me in. Two quick questions. I guess, first as you execute along the path to asset light, how does your thinking about leverage levels change? And then second, looks like MGM Grand was a bit of an outlier in the quarter with solid growth year-over-year. And I think, even outperforming Bellagio for really the first time, and it looks like almost a decade. Were there any specific benefits in the quarter that we should think about as we model that going forward. Thanks.

James Murren -- Chairman and Chief Executive Officer

Sure, Stephen. I'll try to tackle those. Corey, will probably chime in the Grand. The Grand has its best third quarter ever, and it benefited on the casino side and that's the great thing about the portfolio we have. They benefit on the casino side which obviously, positively impacted their results to the detriment of some of our other properties that they can hold as well. But that's the power of the portfolio. As far as the leverage and the asset light model, we still have our goal of three to four times leverage by 2020. And I don't see us changing from that perspective whether be current state or whether it be more asset light going forward. It's probably just on a good use of -- I believe, not a good use of our capital to be anywhere lower in terms that leverage.

Right. And not a good use of my sleeping hours to be any higher. So, we like the zone, it's a fortress balance sheet, we have certainly we have a lot of opportunities within our control to become asset light over time. And we intend to evaluate all those. But the Board and Management talks a lot about that leverage zone that's been a goal of ours since 2009. And we're approaching that, and we intend to stay in that zone. And we turn anything to shareholders in excess of our free cash as long as we're staying in that zone. Corey, did you have something on the Grand versus Bellagio.

Corey Sanders -- Chief Operating Officer

Yeah. It did hold extremely well.

James Murren -- Chairman and Chief Executive Officer

Yeah, quite a bit. Yeah.

Stephen Grambling -- Goldman Sachs -- Analyst

Thanks. Maybe -- can I say one quick follow-up to John's last on sports betting. How do you generally evaluate of partnering with national leagues versus the individual teams?

James Murren -- Chairman and Chief Executive Officer

We felt -- we're not mutually exclusive and I think you'll find us being strategic on individual teams as well. It starts, I think with the shared philosophy which we have, and have shared trust and familiarity in a common purpose. We just can't afford to have anything go right here in sports betting. And I think what has attracted the league that we transacted with two MGM is our single-minded focus on the proprietary of the product. And so I think we felt it was important to establish a couple temples which we expect to continue to evolve over time. As it relates to individual teams, we're in a vast number of discussions with teams across the country. And in fact around the world. And I think it becomes down to the same core principles I just mentioned and with that leagues.

Do you have shared a vision of what sports betting and the interactive experience could mean to the players of those teams, the team's values themselves, the fan experience and engagement within the venue, the broader fan engagement outside of the venue. And some teams have the more a constructive view on this than others. And I think it's just going to be a matter of going through all that. The key to all of this, and why GVC is so important, but why the league relationships are so important, is the technology, the product and the data that we can utilize. And I think that's a why, we looked at the interactive business in a holistic way. We know we have great brands, but so do our competitors are some of them, not many, but some. We needed to have a good technology. We have found that in a great partner. We're a very strong government relationships which are strength here.

We're noted as a company in problem gaming and a responsible gaming, and from an interactive perspective which bodes well and talking to teams and to leagues. And of course we have established a vast advantage in sports by our history of whether it's the MGM Resorts summer league year with the NBA or the Las Vegas Aces or helping house the Vegas Golden Knights of course helping bring the soon to be Las Vegas raters to Las Vegas. It's a matter of making sure that we utilize these in a holistic way and using the leagues and their content to help our properties which is why we're hosting multiple events, let's say Mandalay Bay, multiple venues here at Bellagio, Aria, et cetera.

Stephen Grambling -- Goldman Sachs -- Analyst

Thanks. That's all. Super helpful color.

Unidentified Speaker --

Very last quick question, please.

Operator

Okay. The next question comes from Cameron McKnight with Credit Suisse.

Cameron McKnight -- Credit Suisse -- Analyst

Hi, good afternoon. Thanks very much. A question for Corey or Jim, what percentage of room nights in the quarter were allocated to your casino block and how does that compare to the ordinary mix of casino room nights?

Corey Sanders -- Chief Operating Officer

Yeah. It's something we usually don't share, that we were definitely up in that area and we use that as a strategic component. But in general, it's usually bigger than the convention block, but smaller than our FIT block. And we think there is opportunities to really move that up a few percent.

Cameron McKnight -- Credit Suisse -- Analyst

Okay. Got it. Thanks. And then a question for Jim. I mean, there has been -- there has been a lot -- there's been a lot, that's been spoken and written about resort fees, paid parking and other initiatives that have been taken over the last couple of years, are you seeing any pushback from customers on the strip?

James Murren -- Chairman and Chief Executive Officer

No, we -- I think one of the data points I just pointed to, in that large scale convention booker is the value proposition that Las Vegas represents, the US economy, as it has grown has made Las Vegas on a relative basis, even a more attractive destination from a price perspective. And we monitor this against all of our major competitive cities around the country and in fact around the world. So it has been something that we always have a focus on, we don't think it has been an issue, we always evaluate these market conditions. And we look at not only the data, we have, but the data that LVCVA puts out. And we know that from an ADR perspective we're still much lower than cities like Orlando or Chicago or Hawaii, but we continue to tweak it and we always will.

Cameron McKnight -- Credit Suisse -- Analyst

Perfect. Thanks very much.

James Murren -- Chairman and Chief Executive Officer

Thank you. And I guess, I just want to thank you everyone for joining -- I know we ran a couple of minutes over, but I appreciate your interest today. Obviously, we had a challenging quarter, but a little better than we expected. We're setting up nicely here in the fourth quarter, next year. And we're absolutely, utterly focused on delivering on our strategic objectives which we reiterated in the investor deck including that $3.50 a share of free cash flow in 2020.

And with that, thank you very much.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Duration: 63 minutes

Call participants:

Dan D'Arrigo -- Executive Vice President and Chief Financial Officer

James Murren -- Chairman and Chief Executive Officer

Joe Greff -- JP Morgan -- Analyst

Corey Sanders -- Chief Operating Officer

Felicia Hendrix -- Barclays -- Analyst

Harry Curtis -- Nomura Instinet -- Analyst

Grant Bowie -- Chief Executive Officer and Executive Director

Shaun Kelley -- Bank of America Merrill Lynch -- Analyst

Thomas Allen -- Morgan Stanley -- Analyst

Carlo Santarelli -- Deutsche Bank -- Analyst

David Katz -- Jefferies -- Analyst

Robin Farley -- UBS -- Analyst

Unidentified Speaker --

John DeCree -- Union Gaming -- Analyst

Stephen Grambling -- Goldman Sachs -- Analyst

Cameron McKnight -- Credit Suisse -- Analyst

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