BiggerPockets

In anything, I think its time to short MGM. This development is wrapped up in legal trouble, quality issues, and lawsuits from their Middle Eastern investors who have their own money troubles.

MGM owns much more than the MGM grand. They own the entire west side of the strip from Luxor to Treasure Island. except Caesar's. That's Luxor, New York New York, Monte Carlo, Bellagio, Mirage, and Treasure Island, plus their namesake MGM Grand. They may own Mandalay Bay, too, I can't recall. I can't see these new rooms helping room rates. I'm not a high roller and don't get free rooms on the strip, but I've had e-mails in the last few days from numerous Vegas hotels with $30-40 weekday room rates.

FYI - City Center condos have had significant price reductions. That includes condos that were already under contract. The City Center project had been touted as the savior of Las Vegas for a couple of years until recently. Now the fear is that the project is just going to siphon tourists away from existing properties. The thing is that MGM owns a large portion of the strip hotels so they are, in effect, competing with themselves.

Another note: The media likes to make it sound like Vegas tourism has slowed to a trickle. Nothing could be further from the truth. It is down about 10% based on passenger count at McCarran airport. Instead of 36 million people coming in (3 million a month) it is down to about 32-33 million. That's still a huge number and the strip is still packed with tourists every weekend. The problem is that the strip properties have over-leveraged themselves to such a degree that they are losing money. They need to operate a maximum capacity and had raised prices to such a degree before the recession just to make a profit. Now they've been forced to lower prices and that is killing their bottom line. It wasn't that long ago that Vegas was one of the best travel bargains around. That started to change when the mega-resorts started popping up.

:cool:

FYI - City Center condos have had significant price reductions. That includes condos that were already under contract. The City Center project had been touted as the savior of Las Vegas for a couple of years until recently. Now the fear is that the project is just going to siphon tourists away from existing properties. The thing is that MGM owns a large portion of the strip hotels so they are, in effect, competing with themselves.

Another note: The media likes to make it sound like Vegas tourism has slowed to a trickle. Nothing could be further from the truth. It is down about 10% based on passenger count at McCarran airport. Instead of 36 million people coming in (3 million a month) it is down to about 32-33 million. That's still a huge number and the strip is still packed with tourists every weekend. The problem is that the strip properties have over-leveraged themselves to such a degree that they are losing money. They need to operate a maximum capacity and had raised prices to such a degree before the recession just to make a profit. Now they've been forced to lower prices and that is killing their bottom line. It wasn't that long ago that Vegas was one of the best travel bargains around. That started to change when the mega-resorts started popping up.

Couldn't agree more with Richard's analysis ... City Center will probably fare ok by taking business away from other properties since it's the newest and biggest thing in town. I've been to Vegas 3 times in the last six months ... always appears to be tons of people. Before the downfall, I think the casinos were in a constant race of building the biggest (and most expensive) place to attract new visitors and as a result became massively overleveraged so when things slowed down, they got caught. Now, they are fighting to stay afloat til the economy recovers by offering great deals to anyone willing to visit. I usually get a room for free ($39 at most) and I'm no high roller! :D

Originally posted by Jon Holdman

In anything, I think its time to short MGM. This development is wrapped up in legal trouble, quality issues, and lawsuits from their Middle Eastern investors who have their own money troubles.

MGM owns much more than the MGM grand. They own the entire west side of the strip from Luxor to Treasure Island. except Caesar's. That's Luxor, New York New York, Monte Carlo, Bellagio, Mirage, and Treasure Island, plus their namesake MGM Grand. They may own Mandalay Bay, too, I can't recall. I can't see these new rooms helping room rates. I'm not a high roller and don't get free rooms on the strip, but I've had e-mails in the last few days from numerous Vegas hotels with $30-40 weekday room rates.

MGM recently sold TI (FKA treasure island) to phil ruffin for about $750 million in cash. it's no longer owned by MGM. Mandalay Bay is however.

I am a huge fan of mgm (as they comp me nicely for my twice a year trips). i am not, however, a fan of their stock. the legal issues along with the $10 BILLION property they are erecting is going to get very sticky.

fwiw, i am with rich. vegas is not the ghost town the media would like u to think it is. i was out there last month and stayed at the mgm grand and it was at 97% capacitiy (i saw the internal only daily sheet on a desk). 97% capacitiy is pretty damn good for a 5000+ room resort! the casinos were packed and the strip was as well. i would say though that the more fancy restaurants were a bit easier to get into.

also, i received my vip package offer for the opening of aria (city center hotel) and unfortunately won't be able to make it next month. i am very happy to see that it will be opening though as the construction was such an eyesore! that place is HUUUGGE! i still can't believe they are having an elvis themed cirque du soleil show....ugh! no thank u!

"I would be up for a get together there if we can plan it out a little. Yours just came up too quick, Jon."

Sorry, I just piggy backed it onto an IT conference next week.

City Center should be open next month, so maybe that's the place to do the next one so we can see the latest and greatest development.