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New Name For Monte Carlo, Excalibur Expansion, Crystals For Sale, REIT and More From MGM Resorts Earnings Call

Jim Murren, CEO MGM Resorts

Jim Murren

Earlier today I listened to the MGM Resorts quarterly earnings call. The company has so much going on that they’re easily the most fascinating of the Vegas casino companies to follow.

You can read press releases and listen to the MGM quarterly earnings call here for specifics. Below are my notes with lots of information.

  • Jim Murren said MGM would like to participate in DFS in the future. They’re waiting for clarity in the area. This was last question asked if you’d like specifics.
  • Excalibur is underperforming and Jim Murren discussed idea of mid-scale retail expansion on the Vegas Strip to draw people into property.
  • Murren restated that Monte Carlo will have a new name next year. Outlook is very optimistic for the property.
  • Small note given to the fact that customer booking windows are growing
  • Crystals still on the market by MGM Resorts. There’s plenty of interest. They’re sorting through investors. Murren says it’s worth over $1 billion.
  • Mandalay Bay now has the 5th largest convention center in the US after recent expansion. Details on the expansion here.
  • 2016 should be best year ever for conventions at MGM Resorts. Even with Mandalay Bay expansion they still don’t expect to have enough capacity.
  • Press release on MGM REIT
  • MGM Resorts keeping 2 most profitable properties in Las Vegas out of the REIT (Bellagio & MGM Grand).
  • MGM REIT will be called MGM Growth Properties and be a separate stock offering planned for Q1 2016.
  • MGM Arena not part of REIT because it’s a partnership with AEG. REIT doesn’t include any partnerships like City Center.
  • Non-luxury MGM Resorts properties growing faster than luxury. For example REVPAR for non-luxury up 14%, lux up 6%
  • Aria hotel EBITA up 23% Year over Year. Vdara 0ver 40% EBITA increase.
  • MGM Detroit EBITA only ranks behind Bellagio, MGM Grand & Mandalay Bay. Better than The Mirage, New York New York, etc.
  • MGM hotel rooms had a 96% occupancy rate last quarter. Up 1% from same period last year.
  • Average Daily Room rate for MGM hotels was $141 last quarter. That’s up $10 (8%) from same time last year.
  • Circus Circus is interesting opportunity for MGM seemingly because it’s 100 acres of land on the Vegas Strip.
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The Vegas Strip Of The Future Will Feel More Like A Strip Mall

Las Vegas Is Becoming A Strip Mall

Strip Mall!

I grew up in the Bronx, NY. We didn’t have malls. We had stores on streets and even had a few shopping centers. I had to drive 20-30 minutes to the nearest mall. It was like a whole other world. I wouldn’t say it was awesome but it was different and that was cool. It wasn’t until I was in my teens that I knew what a strip mall was.

Strip malls weren’t cool then, have never been cool and aren’t cool now. That doesn’t matter in Las Vegas. Vegas is the greatest place on earth but it’s never really been “cool”. That’s okay. Caesars Entertainment has been developing The Linq over the past year and that should be finished by the end of the year. Call it what you want but The Linq is essentially a glorified strip mall set between casinos.

Caesars Entertainment is also developing the Bally’s Grand Bazaar (details here and here) a little bit south on the strip from The Linq. Now Vegas Tripping is reporting that MGM Resorts will be creating The Park even further south on the Vegas strip in the area around Monte Carlo and New York New York.

We can confirm that the park will occupy Rue de Monte Carlo, including the CityCenter sales office and the entire parking lot behind and between New York New York and Monte Carlo.

Further, Vegas Tripping has details on the strip renovations planned for Monte Carlo. While The Linq will have a ferris wheel as the anchor of the shopping area The Park will have a brand spanking new arena that MGM Resorts is building in conjunction with AEG. A little north of Monte Carlo you’ll find Crystals mall next to Aria at the area formerly known as CityCenter.

My graphic skills are pretty bad but the future Vegas strip will look something like this:

Shopping > Casino > Shopping > Casino > Shopping > Casino > Shopping > Casino  

It sure seems like Vegas is remaking itself more towards being a family destination then it has since they started theming hotels in the late 80’s and early 90’s.

Great…more kids. I’m not the typical Vegas customer but that’s not what I want from Vegas.

Photo: Warren Temple Smith

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The Linq Announces Exciting Tenants

Caesars Entertainment announced some more tenants for The Linq and it’s as exciting as you’d imagine.

…the Yard House restaurant aims to slake the thirsts of beer fans, while the Asian-themed F.A.M.E.— for food, art, music and entertainment — market will offer sushi, dim sum, noodle bowls and robata grill foods to patrons in lounge seating and street art from urban Hong Kong, Tokyo, Singapore and Seoul.

Other tenants include Sprinkles, a Los Angeles-based cupcake and ice cream shop; Flower and Barley, a brick oven pizzeria; Koto, an oddities and gifts store with outlets in Miami and Aspen, Colo.; and Off the Strip, a bistro and bar.

Caesars customers tend to be your average consumer. People from the coasts might say that Caesars markets to middle America. These are the blandest of the bland consumers. Your average mall shopper.

This person is the polar opposite of who The Cosmopolitan is trying to reach. Caesars customers are not young, cool or looking for anything new and interesting. I like Yard House, but this is a perfect example of what Caesars customers want. They play classic rock and serve beer. What says middle America more than that?

It’s cool, we’re not all the same and that’s cool.

Caesars has filled 12 of 18 spots in The Linq shopping and eating area with a year or so to go before opening. This seems very similar to the rate MGM acquired tenants for Crystals at City Center. That’s not bad.

I’m not going to predict success or failure until The Linq is open (if it opens), but the initial tenants show me that Caesars knows who their customer is.

There are still 6 spots left at The Linq and I’m hoping for Speaker City to be one of them.

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BOOM! There Goes The Largest Billboard In Vegas

I could swear I wrote or read about the Harmon in Las Vegas being structurally unsound last year, but maybe that was just rumor and my mind playing tricks on me.  Well, now multiple reports have been published about the Harmon’s instability and the fact that it may come down in event of an earthquake.

The unfinished Harmon hotel tower at CityCenter on the Las Vegas Strip would likely collapse in a strong earthquake, a structural engineer told casino operator MGM Resorts International on Monday.

The report sent to the casino company by Weidlinger Associates of Marina del Rey, Calif., says it would take at least one year to figure out what kind of repairs would be required to save the tower.

“In a code-level earthquake, using either the permitted or current code specified loads, it is likely that critical structural members in the tower will fail and become incapable of supporting gravity loads, leading to a partial or complete collapse of the tower,” said Chukwuma G. Ekwueme, an associated principal of Weidlinger.

OK, nothing new here.  So the Harmon is no longer going to be a huge billboard because it’s probably less expensive to tear it down than to fix.  So what will go in its place?  There’s nothing that really makes sense to go there at the moment.  Maybe a park until the economy gets better?  A park will probably stop people from walking into the Cosmopolitan and shouldn’t slow down foot traffic into Crystals since that’s almost non-existent anyway.

This whole scenario reminds me about Brad Pitt walking into Al Pacino‘s office at The Bank in Oceans 13 warning him about a potential earthquake.  In fact, that movie is probably on TV somewhere right now.  I’d rather be watching that than most things.

Oceans 13

Oceans 13

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Thoughts on CityCenter

CityCenter are the huge hunks of steel in the middle of the Las Vegas strip and owned by MGM-Mirage that has been under construction for the past few years.  There are multiple buildings as part of the city and there were multiple grand openings for these properties.  The final building to open was Aria, the casino and hotel, which opened while I was in Vegas.

I waited for everything to have their grand openings before exploring CityCenter.  I walked over from the Bellagio where I had a wonderful cigar and Grey Goose and soda at the Petrossian Lounge.  I was treated to some Christmas songs on piano while enjoying a Sunday night.  This is one of my favorite spots at Bellagio.

I hate crowds and I didn’t need to worry about that when I headed over to CityCenter.  After walking through the construction I finally landed in Crystals mall.  This is a beautiful building, but the lack of opened stores was kind of depressing.  If it wasn’t brand new it would have felt like a mall on its last legs and about to close.

I hope this isn’t an omen for Crystals.  It could just be the bad economy.  Right now, I don’t think the market needs more high end shopping.  Of course, this wasn’t the case when CityCenter was being planned.  Similarly, The Shoppes at Palazzo had a similar feeling but at least there are restaurants to bring people in.

From Crystals I headed into Aria.  One of the cool things about both Crystals and Aria was the modern style and clean lines with interesting shapes and certainly not boring.  Modern style only remains modern for so long and it will be interesting to see how Aria develops in the future.  From the monorail station I felt as if I was looking at a building from the movie Tron.  Below is a sweet water wall outside the main entrance.

The interior of the casino was very dark and the ceilings felt low, even though they weren’t.  My iPhone couldn’t grab any interesting pictures due to the darkness.  This is in contrast to how bright everything was on the outside.

Everything inside the casino was new.  All new versions of my favorite slot machines – including a version of Top Dollar which I’ve never seen before that paid me $200.  All of the slot machines were very bright and showed well in the dark setting.

There was one odd finding at Aria.  There was a lack of ticket cashing machines.  I walked around for a few minutes before I could find one.  I only saw one in the entire casino.  I’m sure there were more, but there was poor signage throughout CityCenter and this was just another example.

There were not many people playing table games.  If I recall correctly all blackjack games under $25 use a Continuous Shuffle Machine (CMS).  I don’t like CMS, but it’s better than 6/5.

After my tour I searched around and around for the monorail to go back to Bellagio.  Since signage was poor it took a few minutes, but I found my way.  The monorail let me off in an area of Bellagio that I’ve never seen.  If I didn’t know what I was looking for there was no way I’d ever wander from Bellagio to CityCenter.

Overall, I have mixed first impressions on CityCenter.  Everything looked very cool and very clean with some innovation that we’ll see in future casinos.  I like the modern feel to everything, but that feeling was subdued by how cold and empty Crystals and Aria felt.  I have the feeling that would have been even deeper if I’d gone into the other buildings.

CityCenter is still so new that I have to reserve judgement.  After all, I hated Wynn after one trip and my December trip changed my mind.  I’m curious to see how the property develops this year.  I’m looking forward to seeing the difference when I visit later this year.

Copyright © 2017 Marc Meltzer & EDGe Vegas