Good afternoon, and thank you for standing by. Welcome to the Second Quarter 2023 Allegiant Travel Company Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Sherry Wilson, Managing Director of Investor Relations. Please go ahead.

Thank you, Michelle. Welcome to the Allegiant Travel Company's Second Quarter 2023 Earnings Call. On the call with me today are John Redmond, the company's Chief Executive Officer; Greg Anderson, President; Scott DeAngelo, our EVP and Chief Marketing Officer; Drew Wells, our SVP and Chief Revenue Officer; Robert Neal, SVP and Chief Financial Officer and a handful of others to help answer questions. We will start the call with commentary and then open it up to questions. We ask that you please limit yourself to one question and one follow-up. The company's comments today will contain forward-looking statements concerning our future performance and strategic plans. Various risk factors could cause the underlying assumptions of these statements and our actual results to differ materially from those expressed or implied by our forward-looking statements. These risk factors and others are more fully disclosed in our filings with the SEC. Any forward-looking statements are based on information available to us today. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise. The company cautions investors not to place undue reliance on forward-looking statements, which may be based on assumptions and events that do not materialize. To view this earnings release as well as the rebroadcast of the call, please feel free to visit the company's Investor Relations site at ir.allegiantair.com. And with that, I'll turn it over to John.

Thank you very much, Sherry, and good morning, everyone. I'm thrilled to report an 18% operating margin and 99.7% controllable completion for the second quarter, among the highest in the industry during the quarter, both operationally and financially. In the face of high demand and operational complexity, the team continues to deliver. It is their exceptional efforts that have allowed us to meet and exceed our customers' expectations. Over the last year, we have increased our NPS scores by an average of 10 points and are now at the highest scores since the pandemic. I could not be prouder of the work our team members do each and every day. Thank you very much for your continued passion and dedication. Our commitment to enhancing the travel experience remains a key driver of our success. Over the years, we have invested in our services and our brand, ensuring we not only meet the evolving needs of our customers but also create new opportunities for growth and expansion. One area that continues to pay dividends is our co-branded credit card. With over 600,000 credit cards issued, the program continues to surpass expectations. Cardholder spend has increased by 220% since 2019 and shows no signs of slowing. We believe the opening of Sunseeker Resort later this year will provide further value propositions for our cardholders and guests and help drive cardholder sign us well into the future. Last quarter, I spoke about the key strategic initiatives of this management team. I'd like to provide a quick update on our progress. First and foremost, finalizing our outstanding labor contracts remains our top priority. Greg will provide additional detail around our status, but it is of the utmost importance that we continue making progress and deliver contracts that our teams are proud to support. Secondly,…

John, thank you. Over the past year, the industry has faced a uniquely challenging operating environment. Despite these many obstacles, Team Allegiant is delivering exceptional results. In our business, everything begins and ends with operations, and here at Allegiant, we are only days away from having the heaviest flying periods of the year behind us, March and summer. Through July, we are running an impressive 99.8% controllable completion factor and that's year-to-date. In addition, during the month of June, we are amongst the industry leaders in on-time performance. The results we are seeing today represent a significant improvement over where we were a year ago. This improvement has driven our year-to-date irregular operation costs down by $80 million compared to the same period in 2022. Obviously, an unreliable operation is much more expensive to run. It also leads to unnecessary disruption and frustration for our guests and our frontline team members. Overly ambitious scheduling may lead to higher revenues, but when its results in excessive delays and cancellations, the juice isn't worth the squeeze. We are committed to maintaining a balanced scheduling approach. This approach is executed jointly by our planning and operational teams as together, they expertly manage a schedule to meet the leisure demand environment while maintaining operational integrity. Our unique ability in adjusting capacity is differentiated by our low fixed cost structure. One of the interesting themes you are hearing from other carriers has been around leisure traffic. Moreover, some carriers are reshaping their network and adjusting their schedules accordingly by lowering off-peak capacity. This leisure focus and focused flying on peak days has been our approach for over 20 years. We are ideally suited for this leisure peak flying approach, and you can see this in our results. And going forward, we believe this approach will…

Thanks, Greg. Our second quarter saw continued strong domestic leisure travel demand and capture that remain near our historic highs in 2022. Thanks to improved operations, a testament to the strong leadership of our Chief Operating Officer, Keny Wilper, along with his expert leadership team and the great work by all in the Allegiant family, this year's controllable completion rate being far above last year's level, means we're keeping and recognizing a much greater portion of book revenue year-to-date. Looking forward, while there's no shortage of opinions with regards to macroeconomic conditions and their impact on consumer domestic leisure travel behavior, we spend less time trying to predict the future and more time ensuring we're prepared to succeed in it. It all starts with keeping our fingers on the pulse of customer sentiment and their leisure travel intention. Just as we did following the past 2 quarters, we surveyed a representative sample from both our most frequent flying repeat customers as well as those who flew us for the first time this past quarter. The results remain strong and unchanged from the past 2 quarters. Among both groups, about 50% said that economic conditions will have no impact on their flying behavior with Allegiant in the next 12 months and more than 30% said that economic considerations will actually make them more likely to fly with Allegiant in the next 12 months. The market is moving toward us. For our most frequent flying repeat customers, the rationale for their unchanged sentiment and intention stems from the fact that the vast majority of them are either flying to visit family or relatives more than 40% of the group or are flying between their primary residence and their vacation home, just under 40% of the group. These remain the most resilient forms…

Thank you, Scott, and thanks, everyone, for joining us this morning. I'm extremely pleased with the record second quarter performance of $684 million in total revenue, growth of nearly 9% on system ASM growth of 1.3%. This combination produced TRASM of which vested any previous second quarter by $0.005 and grew year-over-year by 7.5%. As Greg mentioned, we achieved remarkable operational results in the second quarter on top of financial results among the best in the industry. The current operating environment has proven challenging and we are not immune to this. Three months ago, we talked about trimming about 2.5 points of capacity from the summer schedule, and we believe it was absolutely worth it. I want to reiterate how impressed I am with the planning and operations teams coming together to do an incredible job aligning our schedule with available resources and anticipating risk areas to help mitigate potential issues, both controllable and uncontrollable alike. The buffer is added into our schedule enable better recovery options when faced with the regular operations, including ATC-related concerns, especially out of Florida. We've done the commercial piece as well or better than anyone else in the world as measured by margins and returns, but candidly, often at the expense of operational excellence. In first half of 2023, we showed that we could do the operational piece while maintaining that industry-leading financial position. Those 2 in harmony is an elite combination. We still have more work to do to continually improve, but this summer will serve as a great foundation going forward to ensure operational reliability in conjunction with the appropriate deployment of capacity. Diving into revenue a bit. The strength in the quarter was well balanced as yields and ancillary products each contributed roughly $5 incremental per passenger versus the second quarter…

Thanks, Drew, and thank you, everyone, for joining us on the call today. We're pleased to report another quarter of strong financial results. Allegiant produced $76.9 million of consolidated adjusted net income for the second quarter, resulting in adjusted EPS of $4.35, in line with 2019 earnings. We recognized record total operating revenue in the quarter of $684 million, up 8.6% over the prior year on 1.3% higher capacity. Our nonfuel unit cost increased 12.9% year-over-year with 4 points of that increase attributable to pilot payroll accruals and other frontline labor cost increases, which, as Greg noted, we announced in June that were effective beginning May 1. Similar to our last call, unit costs were pressured in comparison to the same period last year by lower productivity, which accounts for about 3 points of the increase. Improved operational performance drove a nice tailwind by reducing a regular operations expense in the quarter, that was largely offset by inflationary cost pressure in stations. Variable team member compensation related to improved financial performance drove roughly 2.5 points of the increase over the second quarter last year and 2 points of CASM increase in the quarter came from some onetime nonrecurring costs which included the cancellation fee related to the transition of our co-brand credit card for Mastercard to Visa, and the remainder of our ex-fuel unit cost increase was related to various other items. Fuel costs came in below our expectations at $2.69 per gallon, helping to drive an airline operating margin of 18.6%. Shifting to full year guidance. We are increasing our estimated airline earnings per share by $0.75 at the midpoint to $11.75. The increase in expected full year EPS is fully attributable to a $0.10 decrease in our full year estimated fuel cost per gallon from $3 to $2.90.…

[Operator Instructions]. The first question comes from Duane Pfennigwerth with Evercore.

John, what would you envision the segmentation mix for Sunseeker to be? I mean if you had to guess, how much would be group versus transient? And for the groups that you have contracted with, what do those rates look like relative to the transient rate that you cited?

Duane, good questions. I think when you look at that, you have to kind of look at it by year. So in '24, we'll start with the full year of '24, you're probably looking at something in the range of, I'd say, maybe 12 to -- it's going to be a wide range just because we'll be booking into the year, but probably in the range of like 12% to 18%, could get as high as 20%, but probably in that range of 12% to 18%. When you're looking at the out years starting with '25, you're probably looking at 20% to 25% would be more normal as we move forward. Just to give you some color on that, when you look at the roughly 40,000 group room nights that have already been booked, about 26,300 of those fall into '24. So that's roughly more than 10% -- slightly over 10% of the total room nights that we would have in a given year. So that kind of gives you a good barometer, and that's why I think that's where it's going to fall. But again, we're dealing with a brand and a property that hasn't existed to run these percentages as we are is incredibly impressive, but I think that's kind of like the 25% range would be where it starts to peak in '25.

And John, on the group rates, there are 250 to 300 or thereabouts.

Yes, they've been averaging around 290-ish when you look at all 40,000 room nights. And I would expect those to ramp up to as there's a greater awareness of the property and we're not selling into an unknown. So the rates we're selling into -- I mean, the rates we're getting are more than we expected, again, selling into an unknown property, but those will continue to ramp up in the out years as we get into '25, '26. It's just is another data point. So we have group room nights that have already been booked into '27.

Got it. Appreciate the thoughts. I know it's somewhat hypothetical at this point. And then just on the OpEx run rate, can you give us a little help in the quarter? I know you got some insurance reimbursement. So what was kind of the OpEx run rate for Sunseeker in 2Q? And how do you see that kind of ramping into 3Q and 4Q?

I think the 2Q number -- I think 3Q, we're talking about the $15 million, which was, of course, is all preopening as you're talking about. The 2Q number, I don't have off the top of my head what that was but obviously, it would be probably for sure, less than half that number.

Yes. I think we had...

Go ahead, B.J.

Like $5 million to $7 million, I want to say, between the first and second quarter, per quarter.

Yes.

And sorry, that $15 million when you're sort of up and running with the full fourth quarter, what does that look like?

Once we're up and operating, we haven't put out any financial data from an operating standpoint. We intend to do that probably, at the same time, provide guidance for the airline, which should be historically we do after Q4. So we would provide operating guidance for the resort at that same time. So right now, we are only providing the OpEx, a piece before opening. So adjust just preopening numbers. There is public numbers that we put out there a few years ago. Obviously, they're dated, and I would expect results to be significantly better because I think the ADR in those projections was something around the $250 range, $250 a night. And as you can see, we're running much better even when you blend group and transient.

[Operator Instructions]. The next question comes from Savi Syth with Raymond James.

Just if I could talk a little bit about the pilot bonus that you're offering and has that improved kind of the attrition rates that you're seeing there? And if you could talk a little bit about the retention and hiring capabilities today?

Savi, sure. It's Greg. Thanks for the question. And the bonus in general, as we came up and moving forward with it, and just to hit on was the right thing to do. Now we have so many of our pilots that want to be at Allegiant that we were talking to and providing us feedback to say, how is it difficult to want to stay here when the rates are so low. I mean we want to be here, but the rates are low compared to the industry. We felt overall, this was the right thing to do for our pilots because they do want to be here, and they understand the unique setup that Allegiant has in terms of that out and back quality of life. Don't get me wrong. This is one step. The contract is ultimately where we need to get, and we need to make a lot of improvements in certain areas, including quality of life, pay rates, retirement and so forth. In terms of staffing, maybe let's just -- I'll break it down to 2 pieces. Let's -- the schoolhouse being one, Savi, and then I'll talk about kind of the net pilots and the attrition that we've been seeing. But schoolhouse, as we've seen over the past couple of months, a terrific increase in the number of pilots coming through the physical house. I mean classes are full. I think beginning the last 3 or 4 classes have been full. So about 20 to 25 per class. Before that perspective in the first part of the year, we were seeing roughly 12 to 14 per class. So really encouraged by what we're seeing there. Our team, led by Tyler Hollingsworth has really kind of turned that around and focused on a lot of…

That's super helpful color. And if I might, on the MAX deliveries and just early thoughts on 2024 is, is 2024 going to be another year where capacity is somewhat constrained as you kind of make these investments to operate well and kind of the MAX uncertainty? Or how are you thinking about like what type of kind of capacity growth you could target in 2024, recognizing it's still very early?

Savi, it's Drew here. First and foremost, one of the biggest components will be timing of getting a CBA done with our flight crews above and beyond the MAX delivery. As we focus on the MAXs though and the constraints we have today, we'll still have training requirements that will drive through all of '24. So I would expect there to be a little bit of a ceiling relative to the fleet we're bringing on in terms of what we're able to produce ASM-wise until maybe the end of the year. I think we can start to get a lot closer to our historic run rate, but I might pull that back a little bit.

Yes. Savi, the only other thing I would mention there is that we haven't yet confirmed our retirement schedule on some of the A320s, we expect to take out of the fleet. And so that just gives us a little bit of flexibility. And so we haven't come out with the 2024 fleet plan specifically as we want to wait and gain some certainty around the MAX delivery schedule.

And Savi, I'm just going to -- this is Greg. I'm going to add one more quick comment. I mentioned in my remarks, over the next 5 years, we're planning to be 200-plus aircraft. So I just want to reorient around that, and that's what we're doing. We're building a strong foundation to support an airline of that size. We're strengthening that foundation. We're looking at long-term growth. We're investing in all the right things and most importantly in our people. And we believe we're going to -- we have a path to get there. It may not be at this -- we don't know the exact cadence, but that's what we're planning on. And so a lot of the moves we're seeing is us getting prepared for that. And we believe that we're able to continue to grow and grow profitably as we hit that 200-plus aircraft number in the next 5 years.

[Operator Instructions]. The next question comes from Andrew Didora with Bank of America.

Just a couple of questions on CASM. I think you had been targeting kind of low double-digit growth this year. Where the new -- were the pilot retention bonuses paid out in June, part of that number? And then I think you were including maybe about from the pilots in that outlook. Any change to that number given all the tentative agreements out there with others in the industry?

Andrew, it's B.J. I'll start, and Greg, if you want to jump in on the second part of that. But yes, no, we continue to think about it like around 1/3 of a cent. I will mention, in the second quarter, we only included 2 months of those accruals. And so moving throughout the rest of the year, you'll burden through each of the 3 months in the quarter. But yes, you're right, kind of low double-digit growth year-over-year on unit costs for the back half of the year.

And Andrew, just a couple of maybe clarifying points. It's not paid out in June. It is actually a retention bonus and it's paid out upon ratification of an agreement for those pilots that are still actively employed at that time. We've locked in the rates at that 35% for all pilots with the exceptions of the first year, first officers at . That's locked in over that period. But we'll continue to negotiate final rate through the mediation process, but this is a retention bonus.

Right. Understood. And look, I know there are a lot of moving parts between timing a pilot deal, training requirements for the MAXs. But you mentioned in response to Savi's question about maybe it's suboptimal, lower than historical growth in 2024 in that type of scenario? How should we think about kind of CASM growth next year? Any puts and takes you can provide around that would be helpful?

Yes. Andrew, I'm sorry, I don't have a lot in front of me, but I'll just say it's real early to give kind of CASM guidance on '24. Just there's a lot of moving parts, like you mentioned around the actual delivery schedule of the MAX, which will determine how many pilots are useful in producing ASM at each different period throughout the year? And then what are we doing on retirements of the 320s. I hope by the time of the next call, we've got a little bit more color to share with you. So apologies just a little early to give that kind of guidance.

Got it. And maybe I could sneak one more housekeeping one in. I saw in your guidance, interest expense came down a little bit. I think, in your prepared remarks, you said that you're going to take on a bit more debt through year-end as the MAXs were delivered. Just curious what was the driver of the lowest -- lower interest expense there?

The driver of the lower interest expense this year, yes. So a little bit of it is we prepaid $60 million -- $61 million in some aircraft secured debt at the end of the second quarter, which gives us a bit of relief in the final 2 quarters of this year. And then my comment on opening remarks that just year-end leverage was -- I just wanted to set expectations, we still will add a little bit of debt as we continue making PDP payments in the final 2 quarters of the year. And then there's still 1 MAX delivery at the end of the year.

And Andrew, I'm just going to add just piggyback on that. The equity value in those 737 aircraft day 1 it's meaningful, and it gives B.J. and the team the opportunity to put an effective and efficient financing. We're very comfortable being able to go out and finance those aircraft. But something else that I just want to remind our investors in our Street is the opportunistic nature of the 737 deal and the timing and particularly around the tax law and bonus appreciation -- depreciation, excuse me, that we received. I mean, in essence, we're going to receive -- we estimate roughly $250 million in interest free rate loan from the government by moving forward with this deal. So that will offset cash taxes in the future.

[Operator Instructions]. The next question comes from Ravi Shanker with Morgan Stanley.

This is Katherine Kallergis on for Ravi. I wanted to follow up on a previous comment, in which you said airlines have started to favor peak periods, and that Allegiant has done this for some time. But I was curious if you could provide some color around the competitive dynamics during these periods. And if what you consider peak might be different than industry peers? Also just curious if these dynamics might be different in Florida market specifically.

Yes. I mean, Drew here. When we refer to peak, we're exclusively talking about domestic leisure peak, which is traditionally around school holidays, right? So your spring break, summer and holiday time frame, I think most would describe leisure peak as the same. And I think as -- and I'm speculating a bit here, carriers are having a bit more leisure exposure. They're kind of coming around to how those dynamics are working. One of the great things about peak -- so if there is an excess of demand generally. And even in periods thinking pre-pandemic when capacity was quite elevated, particularly in the offpeak capacity -- sorry, peak capacity could soak up that demand pretty well. I don't anticipate competitive dynamics to change meaningfully. The peaks are a peak for a reason. And so in general, I believe it's a good thing, but the demand patterns fit the Allegiant model just exceedingly well and something like we mentioned that we've cater to for 20-plus years. So we're built for exactly this kind of dynamic.

And just as a quick follow-up. Your stat about how 50% of those surveyed stated economic conditions will have no impact on flying was interesting. Just curious what inelastic do you think demand really is? And maybe how you've seen the -- you all see it perform in past recessionary environments?

No, thanks for that question. For those frequent flyers, the answer is it is pretty inelastic because they're traveling to and from family where they're staying and/or doing from their second and vacation homes. So in many of those instances, right, high interest rates, inflation, it's not as meaningful as say, a family vacation to an Orlando theme park or a Las Vegas casino. So amongst our core customers, it's fairly inelastic because they're flying to and from family and/or a second home.

Yes. But more broadly, the customer that we serve is generally still a very price-sensitive customer. Less so in summer peaks or peaks in general, when we have a thicker demand pool to choose from. And certainly, in the off-peaks, you still see that. Just by way of example, we're already pricing higher, closer in, taking advantage of relative inelasticity if you will, the ability to pass through more was a bit muted, right, especially in the face of $70 plus ancillary per passenger that we're trying to balance as we build load. So there's a pretty heavy mix on our aircraft that can be tricky to revenue manage. And I think it's a place where a product like Allegiant Extra can really help differentiate between the customer segments that we have and find that right balance of Allegiant type premium experience versus the main cabin, that's right for all of our customers.

[Operator Instructions]. The next question comes from Helane Becker with TD Cowen.

This is [indiscernible] on for Helane. Would you mind providing any color on what you're seeing in Las Vegas, just given some of the runway challenges that have been happening there? And then just any -- any of the drivers of the operational performance just beyond having more of a buffer, some learnings that you're taking with you for next year, that would be great?

Yes. Yes, great question. And we called out 3 months ago that Vegas had kind of an outsized portion of that 2.5%. April and May still had pockets of struggles as there were some concentrated days and periods of impact. But that materially turned around in June and July and I think Vegas went exceedingly well -- performed exceedingly well through the summer. So outside some heat-related concerns but there's not a lot anybody can do there extremely happy with how Vegas panned out. Thinking more broadly, as we think about the schedule moving forward, reviewing things from firebreaks and adding some slack into the schedule that provides that recoverability, especially if you think about Florida and pretty routine thunder storms coming through at 3:30 every afternoon. We were better balanced about viewing that in its entirety, thinking about how a firebreak relates to extended churn times and where those minutes actually matter. But perhaps, at least to me, one of the most impactful things, think about the overnight touch time for our mechanics and crews in getting that plane to the gate on time every morning so we could start the airline correctly and give ourselves a chance to succeed. So both starting on time and think about how we could recover through the day when things start to go awry. I think we got close to the right answer this year, but there's a lot more work for us to do to continue to refine and maintain our place towards the top of the industry.

Yes. And Drew, I just want to add just a quick comment here, too. And that's where we sit today, we feel really confident about the second half of the year and moving on from the commentary that we talked about, the coordination between planning and ops and the , Keny Wilper heading up. But staffing levels are very solid. In fact, with the exception of pilot that's the best we've seen since 2019. So we're encouraged by that. As we get out of the -- as we exit the gauntlet of the summer peak flying, the teams all come together and do a postmortem around a summer debrief and they look for process efficiencies and ways to get better, and that will be -- that will be around the corner, and we'll continue to step up our game in any way we can.

If I could just squeeze one more in. Just you mentioned a little bit on the outlook for revenue in the rest of the year. I was just wondering if you can unpack that and any color on the cadence for base fares and ancillaries for what you can see from right now.

Yes. I'll probably disappoint you a little bit as we get into kind of cadence related, the 2 things I'll point out. One, I would look towards last year's comp set and kind of ASM cadence to help guide how you think about the third and fourth order. And the second, I'll point out and maybe not one that I communicated well or maybe even appreciated enough as we talked about the last 9 months previously was the second quarter of '22 cadence. And I think there was still a fair amount of recovery from the variant that we experienced in the first half of that quarter. Not to disparage the 2Q they probably helped bolster the relative TRASM year-over-year there a little bit. So I kind of think of those 2 pieces in concurrent as you think about the last 9 months in totality.

[Operator Instructions]. The next question comes from Michael Linenberg with Deutsche Bank.

Just a few quick ones here. John, just in response to Duane's question on you talking about Sunseeker where the numbers were better, and you were referring to the rates. How should we think about it just from with all the cost inflation there if we kind of go back to the original plan, I think the guide was EBITDA margins sort of in that 30% range. Is that still a reasonable sort of ballpark profit margin?

Michael, I do. I think those EBITDA margins are still doable. It's kind of like when you see even happen on the air side, right, with the CapEx -- or CASM-X increasing. Well, revenue is outpacing the CASM-X growth. So you're seeing the same thing happen on the -- in the resort world, where the cost increases are way more than offset by the room rate increases in that market. So very encouraging. And Florida, in particular, it's just been extremely strong. Obviously, the hotel industry throughout the U.S. has been, but Florida, it's a shining star when it comes to what's going on. So I think EBITDA margins that we were looking at early on and we're out there under projections, I think there's a potential for those to be even much stronger.

Very good. And then just a second one for you, John, and probably Greg as well and maybe the team. We've seen an announcement by Frontier to take up some of the assets of the JetBlue Spirit proposed merger assets that they would potentially divest at this point. It looks like it's still slots. Obviously, there's a lot more that they've already indicated that they would be willing to divest, maybe its runway timings at Newark, Gates in Fort Lauderdale, space in Boston. Is any of that of interest to Allegiant.

Michael, it's Greg. Good to chat with you. As the team continue -- Drew and his team continue to look at all opportunities in airports and certainly aware of the situation. But I think where we sit today, there's nothing really to report on that front.

Very good. And then just if I could squeeze in one quick last one for Scott. We have heard other carriers talk about this traffic patterns where people are spending a lot more time this summer going to Europe rather than flying domestically and Scott, you do a lot of different surveys and other carriers have said that they've surveyed their own customer base and some percentage are electing to go to Europe. What are you seeing amongst your customer base, which I know you're very close to? Are you seeing something similar where you're just losing a lot of flow because they're going maybe outside of the United States? Any color on that would be great.

Absolutely. And thank you, Michael, because the last several weeks, we have asked exactly that. So I'm prepared to tell you. First, we ask our customer base to make sure they had the ability to travel internationally. Turns out that about 80% of Allegiant customers have a passport. But we're seeing some very different than what Frontier and others have reported. When asked, do you plan to travel internationally in the next 6 months or have you traveled both internationally in the last 6 months? The answer is the same between like 16% and 19% say, yes. That means the vast majority of our customers, 80% have no plans and have not traveled internationally in 2023.

And I think maybe, Scott, it's worth elaborating on to the 16% to 19% you're talking about hasn't changed year-over-year.

That's right. It hasn't been a zero-sum as much as now it's open, and they've taken an additional trip.

Yes. Great point. For us, it's not a displacement argument at all. The percentages are consistent year in and year out.

The next question comes from Conor Cunningham with Melius Research.

On the doubling of the Allways credit card contribution, just trying to understand the cadence there. I assume that's both card growth and spend. But in your prepared remarks, you mentioned the potential of Sunseeker contributing. Just curious about the ramp there going forward.

Absolutely. So the comment that in the next 3 years will, in effect, double from roughly where we ended last year at $97 million, going to post over $100 million. It's largely based without Sunseeker assumed in it. So it is from the key things you mentioned. Increased cardholder growth, compounded cardholder spend right as that portfolio grows and we achieve at or above the same spend per cardholder. So I think John's comments in the beginning represent upside that could even make it faster. My comments were not based on any additional goodness, which we'll absolutely get from Sunseeker opening.

Yes. I think -- this is John. I think when you look at the -- I think, a huge data point that Scott has pointed out is the channels that were in the past with a MasterCard program not available to a cardholder that are now or will be available to a cardholder, most notably Costco is significant. So that type of increase then doesn't require necessarily an increase in the number of although we are planning on that. But just the channels of use are going to expand significantly with moving to Visa.

Okay. That's helpful. And then on Sunseeker, great commentary on ADRs and bookings. But the question that I get, and maybe this is kind of the Mike's point as well is, just around the inflection point on profitability, like I realize that you're working towards opening. I'm just trying to get some color on your path to profitability there. When we could expect a potential contribution over? Again, I realized that it's still early days, but just any thoughts there would be helpful.

When you talk about a cash contribution or contribution of -- you said turn, now you're talking about EBITDA, we don't intend to ever be negative on a quarterly basis, I mean there's no time, we forecast any period that we would have a negative EBITDA. So I think from a cash standpoint, they're going to be positive throughout the year with the added upside in the out years. So we purposely priced the product that you see out there for '23 and '24 below market. So even when you see these rates, believe it or not, we're below market because we're putting a new brand and a new property into that market. So when you look at after we've been open for a period of time, and I'm not talking years, I'm talking a month. You're going to start to see that rate -- that -- those rates accelerate up. So we purposely have underpriced. And even with that purposeful underpricing, those ADRs are impressive, but you will see those ramp up significantly for sure, the 25.5%.

I would like to turn the call back to John Redmond for closing remarks.

Well, I appreciate everyone's time. We're very proud of our team and the management here and what we've been able to accomplish year-to-date. And we're very excited about the balance of this year. An incredible amount of time and resources have gone into systems over last couple of years. You're starting to see the rollout of all that time and effort will started to happen this year, which really sets the backbone for this company going forward. So we will have no restrictions, limitations what have you from a system standpoint as we move into the 20 aircraft -- or 200 aircraft environment, I should say that Greg referred to, everything is allowing us to do everything we need to and want to do going forward. So absolutely, no restrictions. And our focus now is just finishing up the last labor agreements. We're very encouraged by where we are today and where we're going to end up tomorrow with those agreements. So again, very bullish about the out years for this company. Very exciting times ahead, and stay tuned. Thank you very much.

This concludes today's conference call. Thank you for participating. You may now disconnect.