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LAS VEGAS, Nevada -- MGM Mirage announced Wednesday it will take its first stab at developing a luxury nongambling resort inside the Muslim world.
The Las Vegas-based casino operator said it would build a $3 billion hotel and entertainment complex on Abu Dhabi Island in the Persian Gulf in conjunction with the Mubadala Development Co., the investment arm of the Abu Dhabi government. MGM Mirage will develop and manage the project for a fee while Mubadala will own it. The property is expected to open in 2012.
The project, planned for 50 acres on a downtown waterfront site, will have an MGM Grand hotel and two other MGM branded hotels. The complex will total more than 1,200 rooms.
In addition, the development will include an entertainment arena, a retail complex, restaurants and convention facilities.
In a statement, MGM Mirage said the project will integrate luxury residential offerings, including waterfront residences with private yacht berths. The hotel, the company said, will have "unparalleled views of the city skyline" and "stunning panoramic views of the waterfront."
What the MGM Grand Abu Dhabi won't have is a casino. Gambling is illegal in Abu Dhabi, but the region is working to turn itself into a global tourism destination.
Gamal Aziz, president of MGM Mirage Hospitality, said Abu Dhabi is more interested in the entertainment, restaurants, nightclubs and retail offerings that MGM Mirage will bring to the Middle East. He thought some of the headliners who perform at MGM Mirage showrooms on the Strip might also be enticed to perform at the MGM Grand Abu Dhabi's planned 10,000- to 12,000-seat arena.
"There is a great demand for what we provide," Aziz said. "The evolution of Las Vegas has been nongaming centric, and I can tell you after spending the last several days here, this is an exciting and energetic place that is hungry for the nongaming model that we can offer."
Abu Dhabi is located in the United Arab Emirates, in between Saudi Arabia and Oman. The MGM Grand Abu Dhabi is the first joint venture project between MGM Mirage and Mubadala Development, which set up an agreement earlier this year to build nongaming luxury hotels throughout the world.
Aziz said all of the United Arab Emirates is seeking American-style high-end retail, similar to what is found inside some of the Strip's destination resorts.
"The Las Vegas nongaming model is drawing interest not just here, but around the world," Aziz said.
Gaming analysts thought the project would help MGM Mirage expand its reach to an untapped market, and help attract new customers who want to gamble to the company's 10 Strip casinos.
"Projects such as these not only extend the MGM Grand brand internationally, but allow MGM Mirage to maximize its brands and provide another stream of revenue," Deutsche Bank gaming analyst Bill Lerner said in a note to investors.
CIBC World Markets gaming analyst David Katz said he expects more nongaming ventures around the world to be part of the MGM Mirage picture.
"The company will continue to leverage its brands and expertise without deploying capital for non-gaming opportunities," Katz said.
Abu Dhabi is considered the richest of the oil-laden United Arab Emirates, and Aziz said that people from 76 different nationalities live in the region.
Abu Dhabi is 77 miles from Dubai, where MGM Mirage has a joint venture agreement with that Persian Gulf state's investment arm, Dubai World. Last month, Dubai World spent $2.7 billion to acquire half of MGM Mirage's $7.8 billion CityCenter development on the Strip. The investment arm also spent almost $1.2 billion to acquire more than 14 million share of MGM Mirage stock.
MGM Mirage has several other joint ventures, both gaming and nongaming. The company is developing a casino on the Strip's north end in conjunction with Dubai World and Kerzner International Holdings. Also, MGM Mirage has an agreement with the Diaoyutai State Guesthouse in Beijing to pursue nongaming business opportunities in the People's Republic of China.
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