Las Vegas Casino Industry Continues To Decline Despite MGM's CityCenterMay 10, 2010 8:41 am
The $8.5 billion gamble undertaken by MGM Mirage and Dubai World when they built a massive urban complex on the Las Vegas Strip in order to help rejuvenate the city, would seem yet to have a positive impact.
After four years, the CityCenter project was opened on December 16, 2009 and it was hoped the 76 acre hotel, restaurant, shops and casino complex would bear fruit as it counteracted the sharp fall in visitors and revenue caused by the global recession.
However, six months on MGM have released their first quarter figures for 2010 showing a loss of $96.7 million, compared to a positive $105.2 million in revenue generated in the same period a year earlier.
MGM have no doubts that the enormous CityCenter project is largely responsible for much of the worrying results, and that so far they have been largely unsuccessful in reclaiming many visitors lost to the competition.
In recent times, Las Vegas has seen its visitor figures dive as more US states continue to relax their gaming laws in order to help with their badly battered domestic budgets. The emergence of Macau in China as the world’s most popular gaming resort has also heaped further water on the beleaguered project’s fire.
As Sanford C. Bernstein Analyst Janet Brashear comments; “CityCenter is a worry. MGM obviously has high hopes and we know the market is going to receive, but the casino world is fickle.”
So far, CityCenter has been unable to sell many of their condos, and the development’s flagship hotel Aria recently reported a $66 million operating cost with an occupancy percentage of 63% far below the company’s average.
As the troubling figures continue to cause alarm to investors, MGM have been keen to strike a positive note on the development’s potential and emphasise that they expect things to turn around in the near future. Commenting on the situation, Chief Executive Officer of MGM Mirage Jim Murren said:
“We see signs of improvement in the Las Vegas market and expect those to accelerate in the second half of the year and into 2011. Our forward bookings continue to improve as our convention bookings continue to gain traction.”