MGM Mirage opens flagship casino
Las Vegas, December 17, 2009
With fireworks and fanfare, MGM Mirage late Wednesday opened Aria, the flagship casino-hotel of its $8.5 billion CityCenter development, adding thousands of high-end rooms to the hotel glut on the Las Vegas Strip.
MGM and partner Dubai World are banking that CityCenter - with its clean, modern lines - will attract visitors willing and able to pay for those state-of-the-art rooms, as well as extras like spa services, meals at celebrity-chef restaurants and shopping sprees at Tiffany and Gucci.
However, the glittering complex, designed by 'starchitects' like Cesar Pelli and Daniel Libeskind, comes as Las Vegas casino operators have lowered hotel room prices and offered discounted package deals in order to attract business in a weak economy.
MGM executives say they are confident of the project's long-term success. 'We believe that Las Vegas is a better place today and a different place today,' Chief Executive Jim Murren said at a press conference celebrating the opening.
Bobby Baldwin, CityCenter president and CEO, told reporters he doesn't mind opening the massive property during a recession, since it gives the company time to work out the inevitable kinks in operations.
The spectre of a price war caused by CityCenter's more than 6,000 hotel rooms, however, has some Wall Street analysts worried.
'New properties had been viewed as more of an opportunity to expand the customer base of Las Vegas,' said Majestic Research analyst Matt Jacob. 'But unfortunately we are still seeing declines in the markets ahead of CityCenter opening.'
Aria has 4,004 hotel rooms, more than 150,000 sq ft of casino space and surfaces covered with natural stone, wood and metal. It houses 10 bars and nightclubs, 16 restaurants and a new Cirque du Soleil show, called 'Viva Elvis,' featuring interpretations of the King's life and music - from gospel-tinged numbers to Elvis as a superhero acrobat.
Two 'boutique' hotels opened at CityCenter earlier this month: a 47-story Mandarin Oriental and the 1,500-room, non-smoking Vdara. The Crystals mall of shops and restaurants also has been open for a couple of weeks.
The Veer condominium towers will open early next year and the Harmon hotel is scheduled to open later in 2010.
'I think it's wonderful,' Monique Gin, a visitor from San Francisco, said of the multi-angled Crystals. 'It's like walking through a modern art museum.'
Aria and the surrounding complex of high-rise hotels and condominiums -- the brainchild of Murren -- is quite different from the typical themed Las Vegas of glitz, faux pyramids, volcanoes and gondola rides.
'It's just not my cup of tea,' Chris Thompson said of the unique design of CityCenter's shopping area. She and her husband, visiting from Toronto, usually stay at Harrah's Entertainment's Paris Las Vegas, but were booked at Wynn Resorts' namesake property because 'it was such a good deal you couldn't afford not to come.'
Pelli, whose firm designed Aria, said CityCenter's main strength is that it is not tied down by a theme. 'In the beginning, a theme appears to energize the project, but it is actually a millstone. It limits the things you can do,' he said in an interview.
Some analysts question whether the 67-acre CityCenter's high rises - covered in glass and studded with sculptures and fountains - will attract enough new visitors to the Strip.
'I think CityCenter is going to be a challenge for MGM and the market,' Majestic Research's Jacob said. 'It could be quite a while before we see those premium (hotel) rates that were a big driver of Las Vegas growth earlier this decade.'
Lower-tier properties are already feeling the pinch. The Strip's 57-year-old Sahara on Tuesday said it would close two of its three towers until the market improves. Binion's Gambling Hall & Hotel in downtown Las Vegas on Monday closed all of its 365 hotel rooms, citing weak demand.
Highly-leveraged MGM came close to default earlier this year, while Dubai World, an investment company for the Persian Gulf emirate, asked creditors last month for a standstill on $26 billion of debt. Fellow emirate Abu Dhabi stepped in on Monday with a $10 billion injection.
Dubai World's woes are not expected to affect CityCenter, for which funding is already in place, and a source familiar with the matter said on Wednesday that the Mideast-based investment company has no plans to sell either its 50 percent stake in CityCenter or its MGM holdings.
William Grounds, president and chief operating officer of Dubai World's property group, said CityCenter 'changes the landscape of Las Vegas' and 'is destined to join the pantheon of great urban icons.'
Because the project is a 50-50 joint venture, business siphoned to CityCenter could cannibalize profit at MGM's nine wholly-owned Las Vegas Strip resorts - such as the Bellagio, Mandalay Bay or MGM Grand.
'The good thing for the stock is that expectations are reasonably low,' Sterne Agee analyst David Bain said of MGM.
MGM shares ended the day unchanged at $10.35 on the New York Stock Exchange. The stock has fallen about 24 per cent this year.-Reuters