CityCenter write-down pushes MGM Mirage to 1Q loss
LAS VEGAS (AP) – MGM Mirage’s CEO said Thursday that, despite operating losses and a write-down on its CityCenter joint venture, the casino operator has solid plans to attract more customers to struggling Las Vegas.
“The whole goal here is to grow the market, because if we can do that, everyone will benefit but we can be the largest beneficiary, given our size,” CEO Jim Murren told The Associated Press.
The company’s plans have long centered around CityCenter, the $8.5 billion complex of resorts, restaurants, entertainment, retail shops and a casino it built with Dubai World, which opened in December. And state and local leaders have looked to CityCenter as a must-see attraction that will provide jobs and renewed motivation for visitors to come.
But the development’s centerpiece Aria Resort & Casino lost $66 million during its first full quarter.
MGM Mirage, which is based in Las Vegas and has stakes in 16 resorts in the United States and China, pegged its net loss at $96.7 million, or 22 cents per share, for the period that ended March 31. That’s compared with net income of $105.2 million, or 38 cents per share for 2009’s first quarter.
Revenue fell 3 percent to $1.46 billion. The results were in line with a preliminary earnings report MGM Mirage released in April.
Aria’s gambling revenue was strong at $75.9 million as it captured more than 8 percent of the Las Vegas gambling market, said Bobby Baldwin, president and CEO of CityCenter and MGM Mirage’s chief design and construction officer.
Aria’s hotel rooms were just 63 percent occupied in the first quarter at an average rate of $194 per night. By comparison, MGM Mirage’s Bellagio, almost next door, was 91 percent full at $199 per night. Both figures were lower than during last year’s first quarter.
Murren said CityCenter’s non-gambling revenue – which he told Nevada gambling regulators last year could end up being four times greater than its casino revenue – will take longer to grow.
“That side takes longer to build unless you just want to give away the store and be highly promotional and lower the room rates,” Murren said. “That would be, we believe, very damaging long term, and unnecessary.
“We fortunately have the luxury of time to allow Aria and CityCenter to build in a graceful, logical fashion,” he said. “We’re not in a crisis mode where we need a certain amount of money on a daily basis or a weekly basis because of some financial covenant.”
MGM Mirage reported total debt of $13 billion as of March 31, including $845 million in new notes due 2020 that were used to pay down debt due earlier.
Murren said Aria’s bookings are improving for the rest of the year for conferences, which generate higher room rates than leisure travel. He expects that to help occupancy.
“This (Las Vegas) market is healing,” Murren told investors on a conference call.
Baldwin said occupancy at Aria improved each month from January through March, and he expects the hotel to be about 80 percent full by May.
He said the hotel will turn a profit once it reaches 75 percent occupancy, and he expects CityCenter to at least break even in the current quarter.
Looking ahead, shareholders are to vote next month whether the company should be called MGM Resorts International. Executives plan to press forward with an initial public offering on the Hong Kong stock exchange in the second half of the year and the company is seeking buyers for its 50 percent stake in the Borgata casino-hotel in Atlantic City.
Shares of MGM Mirage fell $1.86, or 12.5 percent, to $13.08 in afternoon trading.