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Casino Stocks Continue Decline

LAS VEGAS, Nevada – September 19, 2001 -- Shares of Strip casino giant Mandalay Resort Group were off 12 percent to $16.79 Tuesday on the New York Stock Exchange, with the owner of Mandalay Bay and Luxor sustaining the day's largest decline among major Las Vegas-based casino companies.

MGM Mirage shares were down 5 percent to $20.88, while Park Place Entertainment fell 1.2 percent to $7.85, as casino stocks continued their two-day drop, with investors apparently fearing the travel impact from last week's terrorist attacks in New York City and Washington, D.C.

The three stocks recorded 52-week lows during the day's trading.

"Vegas I'm sure is going to be hit like other major markets, and maybe more so," said Duane Vinson, a research analyst for Smith Travel Research. "As that uncertainty creeps in people are going to want to hold on to their expendable income, and when they look at Vegas and spending their money, people are going to give it a second thought."

The Dow closed down 17.30 at 8,903.40, one day after the index of 30 blue-chip companies fell 684.81, recording its largest one-day decline. The broader market also retreated from earlier advances Tuesday. The Nasdaq composite index fell 24.47 to 1,555.08 and the Standard & Poor's 500 index declined 6.03 to 1,032.74.

Mandalay, MGM Mirage and Park Place control nearly two thirds of the estimated 75,000 hotel rooms along the Strip, with Mandalay having about 15,000 rooms.

A top Mandalay executive said late Monday the company will lay off some workers in response to declining leisure and business travel to Las Vegas. But Mandalay Senior Vice President John Marz could not say when and how many workers will be let go.

MGM Mirage has reduced the work week for thousands of employees and is asking that they take unpaid vacation, but company spokesman Alan Feldman said MGM Mirage has no immediate plans for layoffs.

Park Place Entertainment executives have declined to discuss potential personnel actions, although the company announced Monday that it is postponing construction of a $475 million, 900-suite tower addition to Caesars Palace.

"I think for the short term you're going to see business way down," said Richard Copland, president and chief executive officer of the American Society of Travel Agents. "The American public is just starting to come out of its shell."

Shares of riverboat operator Harrah's Entertainment, which has 25 U.S. casinos, but just two in Las Vegas, were down 5 percent to $23.25, up slightly from its 52-week low of $22.36 recorded earlier in the day's trading.

Casino industry analysts believe Harrah's may be somewhat insulated from a decline in air travel because it is dependent upon drive-in visitors at many of its casinos scattered throughout the United States.

Locals casino operator Station Casinos, which relies on Southern Nevada residents for its customer base, saw its share value fall about 2 percent to $10.75 after recording its 52-week low of $10.61 earlier in the day.

Harrah's shares were down 14 percent Monday, while Station stock experienced a 10 percent value decline.

Airline stocks fared better Tuesday, one day after shares of America West, the No. 2 carrier into McCarran, declined 65 percent in value.

The company's stock was up 10 percent to $3.30 amid assurances by Transportation Secretary Norman Mineta, who said the Bush administration is preparing an aid package for the industry, which is losing as much as $300 million a day. Before the terror attacks, U.S. airlines expected to lose as much as $3 billion during through the end of the year because of a softening economy. But last week's airport shutdowns and a dramatic decline in customer demand is expected to multiply that figure by several fold.

Shares of Southwest Airlines, the No. 1 carrier into McCarran International Airport, were down 1 cent to $12.99. Southwest stock was down 24 percent Monday. Both airlines recorded 52-week lows on Monday.

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