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Speaker 1: Two titans of travel, MGM and Marriott International, are teaming up.

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Speaker 1: The deal announced today allows Bonvoy members to use points

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Speaker 1: to stay at the Bollaggio and other MGM properties. MGM

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Speaker 1: Resorts International President and CEO Bill Hornbuckle and Marriott International

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Speaker 1: President and CEO Tony Kabuano join us now to discuss. So, Bill,

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Speaker 1: if we could just begin with you, how exactly does

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Speaker 1: this work? Do you get to pick where your points

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Speaker 1: go to which program?

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Speaker 2: Look? For us, it's unprecedented in scale.

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Speaker 3: When you think about Bonvoy and one hundred and eighty

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Speaker 3: million members, you think about eighty five hundred resorts and

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Speaker 3: the opportunity to marry our two companies. It's a spectacular

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Speaker 3: opportunity to think for both of us. I think Tony's

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Speaker 3: actually probably better suited to talk about Bonvoy and how

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Speaker 3: it marries up.

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Speaker 2: Yeah, so our members.

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Speaker 4: Bill's got about forty million members at MGM Rewards, We've

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Speaker 4: got about one hundred and eighty two million members, and

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Speaker 4: marry at Bonvoy.

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Speaker 2: The rewards members.

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Speaker 4: At MGM will have the ability to link their account

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Speaker 4: with Bonvoy. They'll be able to transfer points in both directions.

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Speaker 4: The Marriott Bonvoid members will be able to earn and

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Speaker 4: burn points at.

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Speaker 2: Bill's wonderful portfolio of resorts.

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Speaker 4: So it's going to create lots of opportunities for cross

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Speaker 4: pollination for members in both programs.

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Speaker 5: Gentleen, what does this do for both of your companies?

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Speaker 5: Just walkay through what you think the bottom line impact

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Speaker 5: of this is going to be. You've obviously thought through this.

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Speaker 5: I'm just wondering how it kind of feeds through ultimately

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Speaker 5: into the bottom line.

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Speaker 4: So maybe I'll start for us when we think about

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Speaker 4: growing our portfolio around the world, our strategy is relatively straightforward.

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Speaker 4: We want to make sure we have the right product

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Speaker 4: for our customers everywhere they want to go for every

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Speaker 4: trip purpose. Las Vegas is an extraordinarily important and compelling

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Speaker 4: destination for leisure, for business, certainly for group business, on

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Speaker 4: both the national and the global stage. We start or

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Speaker 4: did our relationship with MGM with the Cosmopolitan, and our

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Speaker 4: customers love it. And so now the opportunity to offer

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Speaker 4: to those one hundred and eighty two million members the

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Speaker 4: wealth of options that Bill's portfolio offers, not only the

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Speaker 4: twelve here in Las Vegas, but in five other destinations

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Speaker 4: across the country is extraordinarily compelling.

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Speaker 2: Then you add the loyalty component.

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Speaker 4: That we just discussed, and the loyal and the entertainment component.

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Speaker 4: The richness of the entertainment and culinary offerings that Bill's

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Speaker 4: company controls is something that our members are just going

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Speaker 4: to love and for us.

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Speaker 3: If you think about Bondboy and at scale, Argue believe

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Speaker 3: the world's largest and most important loyalty program and serve

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Speaker 3: us to connect into that engine, to connect into the

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Speaker 3: loyalty side and the consumer facing front, which we've clearly

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Speaker 3: seen at the Cosmopolitan, but also the diversity of product.

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Speaker 3: If you think about rich and Bolivio and the luxury collection,

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Speaker 3: you think about the m GM collection inside Bonvoy, where

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Speaker 3: every tier of customer, whether it's behind me at New York,

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Speaker 3: New York all the way back up again to Blagio,

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Speaker 3: can enjoy services and all that we have to offer here.

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Speaker 3: We think it's compelling the massive group business for both

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Speaker 3: of us.

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Speaker 5: Okay, But the interesting thing Bill. The interesting thing here though,

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Speaker 5: is that what we've seen thus far, and I'm curious

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Speaker 5: as to who this is targeted at, business travelers come

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Speaker 5: back much more slowly, and I'm really interested to see

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Speaker 5: what's going to happen over the winter as maybe as

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Speaker 5: maybe the consumer side of things fades out. Is this

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Speaker 5: kind of is this targeted the business traveler? Is this

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Speaker 5: targeted a business? Is this targeted the consumer? Who is

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Speaker 5: who is going to be the kind of beneficiary of this?

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Speaker 5: And what does that tell us about the states of

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Speaker 5: what is happening the states of the travel industry at

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Speaker 5: the moment.

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Speaker 2: Well, the principally the leisure traveler.

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Speaker 3: I mean, as Tony was going on, if you think

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Speaker 3: about Las Vegas as a destination, experiential destination, there's none

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Speaker 3: like it anywhere in the world. Twenty percent of our

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Speaker 3: mix is convention business travel, not in a traditional sense

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Speaker 3: of independent business travel, but convention travel, while important, what

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Speaker 3: drives this community, what drives Las Vegas is leisure And

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Speaker 3: if you look at the past six and seven quarters,

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Speaker 3: Las Vegas is on fire. We continue to do well,

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Speaker 3: we continue to extend ourselves and if you think even

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Speaker 3: about most recently what's going on, particularly in the luxury segment,

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Speaker 3: we're doing amazingly good.

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Speaker 4: And yeah, and guy, I would remind you of two

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Speaker 4: other demand trends. Even prior to the pandemic, the leisure

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Speaker 4: segment was by a wide margin the most rapidly growing segment,

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Speaker 4: So expanding our footprint in this critical destination makes all

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Speaker 4: the sense in the world. Secondly, when you look at

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Speaker 4: the way demand has been recovering post pandemic, the most

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Speaker 4: compelling and encouraging trend we've seen is the velocity with

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Speaker 4: which group demand has recovered. And you could argue that

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Speaker 4: Las Vegas is the most interesting group destination in the US.

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Speaker 4: And when you look at not only the quality of

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Speaker 4: the resorts, but I think you have more than four

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Speaker 4: million square feet of meeting space within your portfolio here

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Speaker 4: in about a million mile and a half space, it's

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Speaker 4: really going to be a tremendous opportunity for our group customers.

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Speaker 1: Well, Tony, as you talk about the idea that demand

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Speaker 1: recovered post pandemic, and did so in quite dramatic fashion,

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Speaker 1: have you seen signs yet of that ebbing? Because we

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Speaker 1: as we emerge, you had the revenge travel dynamic. People

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Speaker 1: had built up their savings. Now inflation has eaten a

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Speaker 1: way at a lot of the savings that at least

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Speaker 1: consumers here in the US has So are you seeing

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Speaker 1: more price sensitivity and demand coming down at this point?

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Speaker 4: So we've got earnings The first week of August, and

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Speaker 4: we'll go much more granular to answer some of the

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Speaker 4: questions that you ask.

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Speaker 2: Here's what I can tell you.

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Speaker 4: In the first quarter, we set all time earnings records

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Speaker 4: for the company in its ninety six year history, and

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Speaker 4: the momentum we saw in that first quarter continued into April.

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Speaker 4: We saw RevPAR growth globally of sixteen percent in April,

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Speaker 4: and in our international markets that RevPAR growth was over

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Speaker 4: fifty percent.

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Speaker 2: And as we looked into the summer, we.

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Speaker 4: Saw pretty compelling and strong demand patterns in most of

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Speaker 4: our leisure destinations. So we look forward to sharing more

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Speaker 4: of that detail in August. But we're quite encouraged by

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Speaker 4: the trends that we're seeing.

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Speaker 3: And I would simply add in Las Vegas, the dynamic

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Speaker 3: has changed.

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Speaker 2: Two things have changed.

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Speaker 3: Obviously, where experiential economy comes to enjoy itself is here,

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Speaker 3: and so we continue to benefit from that. I think

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Speaker 3: you'll see that as we project forward the balance of

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Speaker 3: the year and then the programming. The best booking day

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Speaker 3: of the year we've ever had is the day that

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Speaker 3: Raiders announced our schedule this year. It's just systematic and

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Speaker 3: representative of where this destination has come from and where.

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Speaker 2: It's going.

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Speaker 5: Bill, what a higher interest rates mean for this industry?

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Speaker 5: Are we starting to see the effects of that coming through?

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Speaker 5: Kelly and I spent a lot of our time at

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Speaker 5: the moment talking about what is happening with the property

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Speaker 5: sect this industry. Your industry is close the ally to

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Speaker 5: what is happening there. Interest rates have gone up and

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Speaker 5: gone up fiercely. When do we start to see the

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Speaker 5: effects of that coming through? What are you seeing in

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Speaker 5: terms of the impact on your business right now?

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Speaker 3: Yeah, in terms of go back to my earlier comment,

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Speaker 3: luxury segment continues to remain strong, and obviously when you

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Speaker 3: think about business, you think about interest rates and who

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Speaker 3: it might impact the most in the context of immediate

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Speaker 3: travel or potentially could be that group. We haven't seen

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Speaker 3: it as you go down the spectrum and if you

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Speaker 3: get into some of our regional properties. Yeah, there are

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Speaker 3: concerns generally speaking about where the economy may go.

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Speaker 2: I will tell you though, as it rates to.

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Speaker 3: Nineteen or where that plateau was across the company, across

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Speaker 3: the board, we continue to elevate and escalate and we're

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Speaker 3: pretty excited by it.

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Speaker 1: An Tony, as we talk about the impact of higher rates,

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Speaker 1: and we've all been keeping a close eye on the

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Speaker 1: commercial real estate market. How is that impacting hotel owners

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Speaker 1: and ultimately potentially Marryott.

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Speaker 4: So, you know, most of our investors, our owners, and

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Speaker 4: our franchisees are long term investors in the sector. They

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Speaker 4: tend to understand that interest rates EBB and flow. I

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Speaker 4: think the bigger impediment for our investors right now is

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Speaker 4: simply the availability of construction financing, particularly for new builds,

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Speaker 4: and it's one of the reasons we've talked the last

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Speaker 4: couple quarters about how important conversion activity is as part

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Speaker 4: of our net unit growth story, and it's part of

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Speaker 4: the reason that creative agreements like the one we're announcing

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Speaker 4: today are such an important part of our growth story.

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Speaker 5: Tony, what's happening with labor? Are you starting to see

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Speaker 5: it easing up? We're seeing strikes with seeing labor action

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Speaker 5: now becoming a pass of the narrative and a number

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Speaker 5: of different industries including yours, including your business. What impact

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Speaker 5: is that going to have? Do you think that the

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Speaker 5: labor story is going to ease up at the moments

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Speaker 5: the labor market continues tocill look pretty tight.

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Speaker 2: Yeah, So I'd answer it a few ways.

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Speaker 4: I think if you looked at our US business, which

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Speaker 4: is our largest business pre pandemic, at any given time,

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Speaker 4: we might have had five or six thousand open positions

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Speaker 4: across our portfolio at the end of the first quarter.

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Speaker 4: That's about exactly where we were. Those openings may have

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Speaker 4: been a little more heavily concentrated in some of the

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Speaker 4: leisure destinations where demand.

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Speaker 2: Had recovered most quickly.

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Speaker 4: One of the dynamics we've seen, though, is while our

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Speaker 4: application volume is up, we're seeing a much higher concentration

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Speaker 4: of applicants who have not worked in the service industries before.

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Speaker 4: So that's created a bit more challenge in terms of

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Speaker 4: training burden and ramp up period for those new associates.

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Speaker 4: Your second part of your question was around organized labor.

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Speaker 4: We operate lots of union hotels and many markets across

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Speaker 4: the country, and we think we'll continue to work through

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Speaker 4: some of those labor situations and ultimately negotiate acceptable labor

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Speaker 4: agreements in each and every one of those markets.

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Speaker 5: Fellas, really appreciate your time, good luck with a new venture.

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Speaker 5: We really appreciate you joining us today. Sounds really interesting.

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Speaker 5: Bill Holmbuckle of MGM Resource International Tony Capuana of Marriott International. Gentlemen,

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Speaker 5: thank you. This is Bloomberg