Episode 560: VICI Properties CEO Ed Pitoniak on Casinos, Golf, and the Business of Experience

Ed Pitoniak (0:00)

You haven't really probed its ramifications and its weak points. And the next thing you know, with your head down coming through center ice, you are flat on your back, yet leveled, looking up into the raptors, and little birdies are flying around your vision screen.

Lance (0:17)

Ed, thanks so much for joining us. Happy to have you here.

Ed Pitoniak (0:20)

Lance, happy to be here as well.

Lance (0:21)

So, let's start with the experiential real estate, and it's evolved, obviously, over the last decade, as really everything has, and it has certainly evolved since VICI went public in 2017

You've led the company over its near decade long journey as an NYSE listed enterprise, and have obviously seen its transformation from the head of the table. But for the greater industry, let's start there, not necessarily on VICI. How have you watched the experiential real estate category grow, transform, evolve, through everything going on around us in the world?

Ed Pitoniak (0:54)

Yeah, well, for me, it's a journey, Lance, it really began more than 30 years ago, when I actually used to work in the ski resort business. And it was really around the late 90s that you actually began to hear the term the experiential economy. And there was actually a book published in the late 90s by two guys at a Harvard, Pine and Gilmore around the whole concept of the experiential economy. And what you've seen over these last 25 years or more is really a continuing consumer preference to spend their time and their money on experiences versus things. And if you look at the relative growth rates of spending on experiences versus things, while the experience trajectory may not be absolutely hockey stick, it is very much steadily and up and to the right, whereas the goods purchasing behavior is more or less flatlined.

And it is all, I think, part and parcel of the fact that people realize they have enough stuff, right?

And I think, too, especially in the last 10 years or so, what experiences provide in so many cases is an opportunity to gather. And by providing an opportunity to gather, they provide a way to overcome what is somewhat the atomization that's happened because of our phones and other devices, right?

The digital world hasn't necessarily brought people together, and in many cases, it's isolated them from each other. And so what we find across the experiential spectrum is that out of home, gathered experiences seem to continue to be growing in power. And you see it manifests itself in so many different ways. Like watch parties. When you think about watch parties, you go, wait, these people probably all have TVs in home, right? But they're choosing not to watch this sporting event in the comfort of their home. They want to be together, right? And we saw it certainly with the NICs last spring, but we saw it with the World Cup this summer. It is all part and parcel of the desire to gather and share an experience. And we at VICI just couldn't be more excited, not only by what we've done, but what we have the opportunity to do in the next 10, 20 years to continue to capitalize on this.

Lance (3:10)

And how does the consumer economy and its strengths or weaknesses at any given time, how does that impact the experiential markets ultimately and the experiences, you're not all the time, but a lot of the time spending money. And obviously, you're talking casinos, golf courses, restaurants, so be it. Is this category tied to those broader ups and downs of just how the economy is doing overall?

Ed Pitoniak (3:33)

It's tied, but it is generally less cyclical than consumer discretionary at large, right? And again, when we see economic downturns or time of stress, what we tend to see is that the consumer will allocate their dollars in greater proportion to experiences than to things, because if nothing else, it's the experiences that are the consolation during periods of either economic or political or cultural stress. So we evaluate every category we look at through five key factors. But the first factor of all is lower than average cyclicality versus consumer discretionary at large.

Lance (4:15)

And yeah, I think you make a good point, right? People during times of negativity, volatility, whatever you want to name it, raise those experiences rather than the things that act as stress relievers, so to speak. So I could see why there is a tie to it, but not as cyclical as you were saying, as consumer discretionary spending. I want to look at VICI and obviously, VICI Triple Net Lease Real Estate Investment Trust. But for those just not necessarily engulfed in what REITs do and what REITs are, can you just explain this Triple Net Lease model and how VICI uses it to be as successful as you are today?