Gamers optimistic about future

Gary Thompson

Wednesday, June 4, 1997 | 10:33 a.m.

If you're seeking signs of gaming industry stagnation, stay away from the MGM Grand this week.

New resorts and infrastructure improvements will account for billions of dollars in investments in Southern Nevada over the next few years, gaming and civic leaders predicted.

The gaming executives also outlined aggressive global growth strategies to investors and analysts at Tuesday's opening sessions of Oppenheimer & Co.'s three-day conference on the gaming and lodging industries.

MGM, host resort for the conference, unveiled an upgraded expansion program for its Strip resort and described more than $2 billion in capital spending planned for Atlantic City, Detroit and South Africa, all designed to result in free cash flow of $1.5 billion to $2 billion annually by the year 2001.

Fellow hotel-casino operators such as Mirage Resorts Inc., Circus Circus Enterprises Inc. and Primadonna Resorts Inc. detailed their plans for ensuring high growth rates and double-digit profit margins continue.

International Game Technology Inc., the world's largest slot machine maker, talked about overseas expansion opportunities, the thriving domestic slot replacement market and its bullish stock repurchase program, while Silicon Gaming Inc. described casino operators' enthusiastic response toward its new, high-tech video-gaming device, Odyssey.

Southern Nevada civic leaders said they're working to make certain the area's rapid population growth and healthy business climate won't be damped by water shortages, traffic gridlock or other infrastructure-related problems.

County Commissioner Lorraine Hunt, citing Southern Nevada's historic ability to "redefine itself" in the face of changing social and economic conditions, said the "key to continued success is in the kinds of attractions we're now building.

"We are adding some of the most innovative and exciting attractions in the world" to the Las Vegas area, she said. "Our biggest challenges are pricing them properly and providing the necessary infrastructure."

Bob Broadbent, who just retired as Clark County's director of aviation, predicted McCarran International would soon pass New York's JFK in airline passengers processed each year because the addition of new gates and more efficient use of existing ones will lead to a sharp increase in the number of flights.

Nevada Development Authority President Somer Hollingsworth described attempts to expand the nongaming business community, saying economic diversification will help Southern Nevada through temporary slowdowns in the tourism industry.

Some gaming executives complained that Wall Street still doesn't afford gaming the same respect other industries get. Top casino operators can achieve higher returns on billion-dollar investments than other industries, they noted.

MGM Grand Inc. President Alex Yemenidjian hinted at one possible response.

"If the stock market doesn't reward our shareholders, we'll do it ourselves," he said, implying some of the $2 billion in annual cash flow the company expects to generate within five years could be used for dividends rather than capital spending.

Mirage Chief Financial Officer Dan Lee said the company's new Strip resort, the $1.4 billion Bellagio (the price excludes a $100 million art collection) will expand the high-end travel market, opening with a $185-per-night room rate in September 1998.

Lee said that when Mirage's Beau Rivage resort opens in Biloxi, Miss., a few months later, it will draw from more than 40 million people living within 500 miles -- "the least penetrated gaming market in the country."

Circus President Glenn Schaeffer said the company hopes to announce a joint venture partner within a few months for the Strip property south of Project Paradise, the $800 million resort Circus is building next to Luxor.

He said the new "Project Z" would include "at least one nongaming, high-end, boutique-type hotel" similar to a Four Seasons or Ritz Carlton.

Primadonna Chief Financial Officer Craig Sullivan said the company isn't resting on the laurels of the successful opening of New York-New York, its joint venture with MGM.

Plans to promote the company's three Primm properties as destination resorts include construction of an upscale retail fashion center and a golf instructional academy headed by physiologist Dr. Ralph Mann.