MGM, Marriott drop plans

Monday, March 22, 1999 | 11:20 a.m.

MGM said the decision was due to concerns over the number of hotel rooms being added to the Las Vegas inventory. The company said it will focus on investing in other areas, such as Detroit, but may build more hotel rooms here when demand warrants it.

The MGM-Marriott move followed a similar action by Harvey's Casino Resorts, which let a purchase option for 34 acres in Las Vegas lapse last week. Harvey's had planned a 2,500-room resort, but said it wants to let the Las Vegas market absorb its current round of resort construction before building here.

PricewaterhouseCoopers Securities analyst Kevin Jacobs said MGM made a prudent decision.

"Our hat is off to them," Jacobs said. "There were 13,000 new rooms planned for Las Vegas in 1999, and that is simply too many, even with recent improvements in visitorship, gaming revenues and air service to Las Vegas."

The MGM decision also follows comments by its chairman, Terry Lanni, urging a moratorium on room additions here.

MGM said its hotel is experiencing record first-quarter occupancy of 96.5 percent, up from 90.6 percent in the 1998 period. It said average daily rates are up 8 percent from a year ago.

Occupancy at the company's New York-New York hotel-casino is running at a 97.8 percent rate, compared with 88.9 percent in the year-ago period, MGM said.