INSIDE GAMING: Resort hype churns but can't quench concerns - Business

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Sep. 21, 2008
Copyright © Las Vegas Review-Journal

INSIDE GAMING: Resort hype churns but can't quench concerns

HOWARD STUTZ
INSIDE GAMING

The public relations machine for the $9.2 billion CityCenter was churning this week. Aria, the project's centerpiece, topped off. Restaurants and high-tech hotel room enhancements were unveiled.

Macquarie Capital gaming analyst Joel Simkins, however, was not impressed.

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Simkins downgraded shares of CityCenter's developer, MGM Mirage. He has questions about CityCenter's ultimate success. MGM Mirage is also affected by fears that Las Vegas' convention traffic is softening.

"While the Street is still holding out a glimmer of hope that the convention business will stabilize and CityCenter will come together relatively on budget, we think forward expectations are too high," Simkins told investors.

The Street was pleased that MGM Mirage sold half of CityCenter to Dubai World last year, but Simkins still has concerns about sales of the 2,653 residential units and the project's performance when it opens in late 2009.

"We think CityCenter will create excitement for Las Vegas in the long run," Simkins said. "It may end up cannibalizing the rest of the company's portfolio."

***

Deutsche Bank analyst Bill Lerner said the Lehman Bros. bankruptcy and the AIG bailout had little effect on the gaming industry.

Boyd Gaming Corp. said Lehman played a minor role in its credit facility. AIG provides some insurance to International Game Technology and Ameristar.

***

Recent Gulf Coast hurricanes took a toll on Pinnacle Entertainment's flagship L'Auberge du Lac resort in Lake Charles, La. The hotel-casino was closed twice in two weeks after the storms hit near the community 140 miles east of Houston.

"The effects on the feeder markets were detrimental," Morgan Joseph analyst Justin Sebastiano said. "Many would-be gamblers left their homes in anticipation of the storms.

"As residents filter back to assess the damage, we argue that taking a trip to a casino will not be at the top of their to-do list."

***

Here's a little known Strip fact: There are actually two volcanos at The Mirage.

When Steve Wynn built the resort's feature in 1988, designers constructed a smaller version to test the attraction's capabilities.

What started as a $150,000 quarter-scale mock-up grew to a cost of more than $1 million. Like the full-size version, the volcano erupted with fire, steam and water. Wynn never removed the miniature.

The smaller mountain still sits within a garden near The Mirage's walk-in entrance.

MGM Mirage is spending $25 million to turn the 20-year-old Mirage volcano into a choreographed fire-and-water-spewing spectacle set to a soundtrack.

Howard Stutz's Inside Gaming column appears Sundays. E-mail him at hstutz@reviewjournal.com or call 702-477-3871.

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Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background. Report abuse Ex-Vegan wrote on September 26, 2008 11:56 AM: For the first time in, perhaps, the history of Las Vegas, the economy has taken a major hit in Vegas, and cannot recover. The city's tourism rebounded much quicker than the rest of the country after 9/11, and the fat cats were able to financially ride the slump by laying-off workers. This time, they can't, and Vegas has been hit harder by this new economy than it ever has. Empty houses, unfinished hotel projects, expanding homeless population, ever-growing unemployment rates...The best thing I ever did was leave Las Vegas! Report abuse jon wrote on September 21, 2008 11:19 PM: Remember Vegas World? City Center will be the same.... completed in many many many years...maybe! Report abuse K2 wrote on September 21, 2008 05:52 PM: I agree with "TimeRanger" and "Dave." Well said. For those that don't know what has been going on the last few years in Vegas value I'll give an example. If you are gambling at a table game and ask for a certain brand of beer and the waitress says they are out, well they are not really out. It means the days allowance of that particular brand is exhausted from that bar and they cannot start giving it away again until midnight when the next days allowance starts. Vegas is shooting itself in the foot over its penny pinching. People are losing money in the casinos and want something in return. If they don't get it they will go elsewhere. The rooms where I work rarely are 100% filled anymore. I wonder what their plan is to fill City Center??? Spend thousands on the tables but cannot get free courvoisier or jagermeister or even a red bull or whatever the bean counters decide is too expensive to "give away." I'm just waiting to see how far they are going to push things. Steve had a good idea with the airlines. Some hotels are doing stuff where they reimburse the airfare but are not publicising it hoping they don't have to do it on a larger scale.. I think soon enough they will have no choice... Report abuse Tom Best wrote on September 21, 2008 05:08 PM: Speaking of traffic, what about those useless large trailers cruising down LV Blvd with advertising signs? Filling up traffic for stupid ads. I guarantee you that somebody in Clark County or Metro or Paradise is being paid off. These dumb traffic blockers are banned in many major cities, like NY. But we are all stupid Rednecks here, bitching and moaning, but doing nothing about it. So shut up about the Strip traffic-somebody needs to make extra income..... Report abuse HR-Unemployed wrote on September 21, 2008 04:28 PM: RE: WestFlamingo Park I am a ex Mandalay Bay Emplyee and can tell you your acusations about hiring of only Naturalized Citisens is spot on. I actuallyover heard a Philipino manager once say out loud in the office, " I wouldnt hire a white girl, they do nothing but bitch." This was laughed about by the Philipino staff he said it to while they acted as if they are above any discrimination laws. I found about a month after I complained I was laid off. It is a shame but we got so many complaints from the customers and other employees about this type of behavior and it was always shuffeld around and nothing done. The Union are nothing but puppets and do very littel if the membership complain to them, and actually the representatives they would send would laugh about the complaing of their own member and snicker when they hadnt arived yet, etc. It isn't just one rae but basically any rqace that isnt white is allowed to reverse discriminate. Report abuse west flamingo park wrote on September 21, 2008 04:18 PM: I can't imagine what it will be like if this unemployment gets any worse. I live across from west flamingo park and it is like mexico. they literyaly have vagrants sleeping on the slides, one hollared at me the other day when i tried to take my son on the slide to early " get out of here,Im sleeping man. " , in his spanish accent. I have seen them drink all night , have sex in the park, puke, throw around their garbage, and then sleep all over the park, and there is nothing we can do. I called metroo to be told by the 311 operator that is out of our juridiction, and the park police wont be available untill 6am. I am appauled that a vgrant hollaring at a small shild to get off his slide is something metro wouldnt respond to. I can only guess it is becuase the hotels have stopped hirinng the illegals like they were and they dont have any home or place to go. They ofcourse have not been known to hire any Americans and a quick walk throgh any of them will show you that most that work there are either illegal, or the ones that have to get gaming cards are not born here. Why I dont know, but this may have something to do with the fall off in people as well , as most have had it with this anit American sentiment from the iimigrant population. Report abuse Goodbye Las Vegas wrote on September 21, 2008 03:52 PM: City Center, as well as Boyd's halted project will turn out to be the biggest mistakes in LV history. There is too much high end property comming on line while Las Vegas loses more and more of it's high end traffic to other locations outside the US. Report abuse TimeRanger wrote on September 21, 2008 01:40 PM: "....by fears that Las Vegas' convention traffic is softening." Maybe because the hotels continue to rape the conventioneers by jacking up the rates even though the demand for rooms is down? Maybe because even the shortest cab ride can set you back 20 bucks? Maybe because "Customer Service" is no longer part of the "Vegas Experience"? Maybe because affordable food and entertainment have been pushed aside by corporate greed and the practice of "4-Walling"? Maybe because a gambler has trouble getting any value for his gaming dollar? Report abuse Dave wrote on September 21, 2008 11:31 AM: No mention has been made on the impact of travel to City Center will have. It is already a nightmare driving down the Strip. How will City Centers' employees and customers alike get to City Center without a helicoptor pad? Report abuse steve wrote on September 21, 2008 10:01 AM: Ahhhhh... Let's take a walk down memory lane wayyyy back to 2004 when we thought the world's obsession with Las Vegas would never end. Well, it did. It's a fact that visitor volume is down. So that means there's probably some unused rooms every weekend. The resorts need to get smart and partner up with an airline and offer a total package discount. Like you get a flight from the midwest and a room for the weekend + buffet for like $300.00 or something. Read All Comments