MGM first quarter 2010 preliminary results
Circus Circus is the same as 4th QTR 2009, it is still losing a little more than a $million per month.
Mandalay Bay continues to plummet to some pretty low operating income. Mandalay made about the same as MGM Grand last year. The corporation blames it on the convention business. I think Luxor sort of goes with Mandalay Bay.
Of course ARIA lost $255m in the first quarter (50% split with Dubai) so that loss completely wipes out the income from the other properties leaving the corporation with a loss for the quarter.
Excalbur and NY-NY are very profitable! I thought that ARIA would pull up Monte Carlo since the rooms are half the price and just a short stroll away.
Revenues were not posted. It is possible that Bellagio still out-earned Aria and they don't want to reveal that information just yet.
Table is of operating income (or loss) in $,000
| Casino | 2010 | 2009 | Change |
|---|---|---|---|
| Bellagio | $37,564 | $39,138 | -4% |
| MGM Grand Las | $18,383 | $20,159 | -9% |
| New York-NY | $11,013 | $13,318 | -17% |
| Excalibur | $8,238 | $10,748 | -23% |
| The Mirage | $9,819 | $13,054 | -25% |
| Luxor | $1,437 | $8,477 | -83% |
| Mandalay Bay | $1,867 | $18,646 | -90% |
| Monte Carlo | $456 | $23,302 | -98% |
| Circus Circus | -$3,646 | $411 | |
| TOTAL | $85,131 | $147,253 | -42% |
Luxor and Monte Carlo have about the same room rates, and Monte Carlo is closer to the new stuff. With the convention business drifting away at Mandalay Bay, Luxor also gets hurt.
Tropicana Las Vegas has been extensively remodeled. It was getting to be a real dump. But I was surprised at how much the room rates went up. Part of the reason Excalibur is so profitable, is that the cost of operating and maintaining it is as low as Circus Circus, but people will pay more money for its convenient location. It is still the cheapest MGM hotel (other than Circus Circus).
Quote: MalaruMakes me wonder if I wanted a chance to get the best bang for my buck do I want to go to a hotel who needs the money- ie: monte carlo or luxor or do I want to go to a hotel who can on an individual basis anyway 'afford' to give me extras like mgm or bellagio
Good question. In my opinion the struggling casinos tend to be more generous, especially if you're a proven valuable player.
ARIA is the biggest money loser in the stable, but they don't seem to want to cut rates. The paper is reporting a 63% occupancy rate (which is shockingly low by Vegas standards).
Now, if I was the CFO of MGM Mirage, I would set the rates so as to maximize profits across the chain, especially in Las Vegas. I would also take advantage of operating efficiencies by laying off housekeeping personnel and staff by purposefully directing traffic and offering promotions towards other properties.
For example, in my opinion, the reason why Circus Circus is doing so poorly is because the rates at Excalibur are so much lower than they were and were comparable to what the Cirque du MGM was charging a year ago. Monte Carlo
If I was managing a chain of hotels I would set the rates so to maximize profit as a conglomerate. I would not treat each hotel as a separate entity and let them compete against each other. But because the hotels are themed differently enough and there is loyalty, I think you see direct competition between Luxor, Mandalay Bay, MGM Grand, Monte Carlo, and NYNY that wasn't there before. When times were good, you could differentiate rates with Bellagio at the top, MGM Grand, Mandalay Bay in the upper middle, Monte Carlo slightly beneath that, NYNY and Luxor beneath that, Excalibur beneath that, and finally Circus Circus at the bottom. What's happened is that shifting of rates due to the economy have pushed all of the rates down. People who used to stay at Circus Circus are now at Excalibur. People staying at Luxor and NYNY are now at the MGM and Mandalay Bay (Mandalay Bay has suffered from convention losses). Folks at MGM and and Mandalay Bay are now in the Bellagio. So you have to manage that effectively, keep your loyalty, while working under the enormous strain of opening Aria and building out Citycenter. I don't envy the job.
Quote: boymimboI did not like the Aria nor its casino when I walked through it as it probably seems to be the darkest casino I've ever walked in. The hotel is set back far from the strip as well and in my opinion, it's a complete miss for MGM. But we'll see how it does once the economy picks up and CityCenter is completed.
Now, if I was the CFO of MGM Mirage, I would set the rates so as to maximize profits across the chain, especially in Las Vegas. I would also take advantage of operating efficiencies by laying off housekeeping personnel and staff by purposefully directing traffic and offering promotions towards other properties.
For example, in my opinion, the reason why Circus Circus is doing so poorly is because the rates at Excalibur are so much lower than they were and were comparable to what the Cirque du MGM was charging a year ago. Monte Carlo
If I was managing a chain of hotels I would set the rates so to maximize profit as a conglomerate. I would not treat each hotel as a separate entity and let them compete against each other. But because the hotels are themed differently enough and there is loyalty, I think you see direct competition between Luxor, Mandalay Bay, MGM Grand, Monte Carlo, and NYNY that wasn't there before. When times were good, you could differentiate rates with Bellagio at the top, MGM Grand, Mandalay Bay in the upper middle, Monte Carlo slightly beneath that, NYNY and Luxor beneath that, Excalibur beneath that, and finally Circus Circus at the bottom. What's happened is that shifting of rates due to the economy have pushed all of the rates down. People who used to stay at Circus Circus are now at Excalibur. People staying at Luxor and NYNY are now at the MGM and Mandalay Bay (Mandalay Bay has suffered from convention losses). Folks at MGM and and Mandalay Bay are now in the Bellagio. So you have to manage that effectively, keep your loyalty, while working under the enormous strain of opening Aria and building out Citycenter. I don't envy the job.
Well said indeed. I have not been to Vegas since the opening of CC, but as I said on another site, I'd never stay there. I'd rather stay somewhere that has some Vegas flavor to it (i.e. theme) rather than some office building that reminds me of home.
Quote: boymimboWhat's happened is that shifting of rates due to the economy have pushed all of the rates down. People who used to stay at Circus Circus are now at Excalibur. People staying at Luxor and NYNY are now at the MGM and Mandalay Bay (Mandalay Bay has suffered from convention losses). Folks at MGM and and Mandalay Bay are now in the Bellagio. So you have to manage that effectively, keep your loyalty, while working under the enormous strain of opening Aria and building out Citycenter. I don't envy the job.
Seems pretty accurate except that Monte Carlo never seems to actually do very well.
Using average daily rates
Circus Circus was $64 in 2008,
now Excalibur is $61 in 2009;
Excalibur was $90 in 2008,
now Luxor is $80 and Monte Carlo is $85 in 2009;
Luxor was $116 and Monte Carlo was $113 in 2008,
now MGM Grand is $113 in 2009;
Mandalay Bay was $214 in 2008,
now Bellagio is $204 in 2009.
======================
I talked with the cable car company that built the two trams that MGM-MIRAGE built (one in City Center is 650 meters and one from Excalibur to Mandalay Bay, 870 meters). They say that their technology has advanced to the point where they can build a tram 9000 meters long. In comparison the LV monorail is 6200 meters.
I think you could build a TRAM from the opposite side of the Excalibur walkway to Tropicana to the Bellagio convention center up Industrial Rd. You would have to cross Tropicana Ave. It would be about 1700 meters long and would probably cost over $100 million. But it would make the southern properties more integrated with Bellagio. With the casinos more integrated by a tram, you could offer an incentive program to someone who gambles in all 8 of the southern MGM-MIRAGE casinos (except for Mirage and Circus Circus). You'll keep more people in the complex.
Revenue is dropping severely at Mandalay Bay and Luxor. The company says it is because there is less convention business. But I think that it is a difficult walk for many people. If you could take a tram from MB to Excalibur, then walk over to another nearby station and take a tram to Bellagio it wouldn't feel so isolated.
MB is going from one of the most profitable to one of the least profitable MGM casinos and it is dragging down Luxor with it.
It's not clear what you could do. If you close Circus Circus since it is losing money there may not be much effect since CC does not participate in the MGM MIRAGE loyalty program. The customers may not migrate to the Excalibur, but just scatter to other low priced properties like the Sahara or Stratosphere. You may just help the competition. On the other hand at least you would stop some of the red ink.
But the losses at City Center are larger than the operating income at the other nine properties combined. And it is still the honeymoon. Closing Circus Circus may be just re-arranging deck chairs on the Titanic.
As I said before Circus circus has been losing money for over 1/2 year now. Roughly a $million per month.
They seem to want to keep the ARIA room rate high, but they had 63% occupancy this quarter. Some of the strip comedians (in Harrah's hotels) are working it into their act by asking guests how they like having a hotel to themselves.
AAA FOUR DIAMOND AWARDS TO MGM MIRAGE RESORTS FOR 2009
The Mirage, 19 years
Mandalay Bay Resort & Casino, 9 years
THEhotel at Mandalay Bay, 5 years
MGM Grand Hotel & Casino, 3 years
The Signature at MGM Grand, 2 years
Monte Carlo Resort & Casino, 3 years
Bellagio is a five diamond resort.
Andre's Rochat was the original international class chef in Las Vegas long before Wolfgang Puck arrived in the early 1990's. He closed his restaurant in downtown Las Vegas last year, and operates on the strip. The Monte Carlo restaurant earned a Michelin star. It is probably the most affordable meal you will ever have in a Michelin starred restaurant. Some of them in Paris are over $100 for lunch before you even buy the wine. Unfortunately Andre's doesn't serve lunch. Of course like all French dining the 12,000-bottle wine cellar is where you have to watch your pocketbook.
