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Best of Howard Stutz

Gaming Guru

Howard Stutz

MGM Resorts says Las Vegas properties are recovering

4 November 2011

LAS VEGAS, Nevada -- MGM Resorts International said Thursday its 10 Strip casinos are showing signs of recovery.

As part of the company’s third quarter earnings announcement Thursday, MGM Resorts said revenue per available room grew 13 percent in the quarter at the company’s 10 Strip resorts, including Bellagio, MGM Grand Las Vegas and the CityCenter complex. Revenue per available room is nontraditional figure that analysts consider a key gauge of a resort company’s profitability.

The company’s Strip resorts’ casino revenue grew 6 percent.

“Despite a few more complex elements than usual for MGM, we remain focused on the strength in the quarter in Las Vegas, which clearly demonstrates a (revenue per available room) recovery, and in Macau, where performance was also very solid,” Jefferies & Co. gaming analyst David Katz said.

MGM Resorts Chairman Jim Murren said the company has embarked on an effort to upgrade the company’s Strip hotel rooms. A $70 million renovation at Bellagio was completed in the third quarter and a $160 million redevelopment of 4,300 rooms at the MGM Grand is expected to begin this quarter.

At Bellagio, remodeled rooms are bringing in a higher nightly rate.

Meanwhile, CityCenter Aria Resort & Casino ’s overall revenues fell from $413.5 million a year ago to $260 million in the current quarter, due largely to the residential operations. Net revenues from resort operations increased to $255 million compared with $248 million a year ago.

At Aria, CityCenter’s centerpiece 4,004-room hotel-casino, revenue per available room grew 22 percent.

MGM Resorts recorded an impairment charge of 11 cents per share in the quarter, a much smaller figure compared with an impairment charge of 51 cents per share recorded a year ago. A major portion of the impairment charge was $80 million related to the Circus Circus Reno.
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