Venetian weighs options, Mandalay center delayed

David Strow

Monday, Sept. 24, 2001 | 10:42 a.m.

Feeling the pressure from a slowdown in tourism, Mandalay Resort Group announced Friday it is delaying the opening of a 1.8 million-square-foot convention center at Mandalay Bay.

This pressure is being felt by companies all along the Strip. In a statement Friday, the Venetian said it will "evaluate its options" on the construction of a 1,000-room hotel tower at the north Strip resort. And MGM MIRAGE, the largest operator of casino resorts on the Las Vegas Strip, said the sluggish environment may force it to lay off thousands by week's end.

"I would not be surprised if it's a couple of thousand (of layoffs) before the end of (this) week," said MGM MIRAGE spokesman Alan Feldman. "Could it turn around? Of course it could. Do we envision it will turn around that quickly? No. We're probably looking at ... a two or three-month window where our occupancy is down."

The Las Vegas Convention and Visitors Authority was projecting 73 percent occupancy this past weekend. That is up from 65 percent the weekend before, but still well below the 90 percent-plus occupancy typically recorded on September weekends.

Visitation to Las Vegas has been down considerably since the Sept. 11 terrorist attacks. This is generally attributed to big cutbacks in flights by the nation's airlines, and unease among many travelers about taking back to the air.

"With the far-away markets, it all depends on when those people feel comfortable flying again," said John Marz, senior vice president of marketing at Mandalay Resort Group. "When that happens is anybody's guess."

Drive-in business from markets like Southern California and Arizona appears to be recovering. Marz said "free-and-independent" bookings -- primarily made by drive-in visitors -- are starting to pick up at Mandalay's properties, Marz said. And Feldman said MGM MIRAGE's three casinos in Primm -- which are almost 100 percent dependent on drive-in visitors from Southern California -- were expected to sell out this past weekend.

But drive-in traffic isn't enough for Las Vegas, as one-half of the city's visitors come by air.

Because of the uncertain situation -- and because large conventions reserve space years in advance -- Mandalay decided to hold off on opening its $235 million convention center until sometime in 2003.

The Venetian could be on the verge of a similar delay. On Friday, the company said it had delayed $75.5 million in debt payments until 2003 and extended the term of a $40 million credit line, "giv(ing) the company time to evaluate its options regarding its proposed Phase 1A development project."

This project is a $175 million to $200 million, 1,000-room hotel tower under construction on top of the main parking garage that had been scheduled to open at the Venetian next fall. The project also included a new parking garage and 150,000 square feet of convention space.

Venetian officials have declined to discuss whether the citywide slowdown would stop the project or trigger layoffs at the 3,000-room resort. There are no plans, however, to stop the opening of the Guggenheim and Hermitage museums at the Venetian Oct. 7, said Venetian spokesman Kurt Ouchida.

The slowdown also will not stop construction of the city's other convention-related expansion -- a $150 million, 1.3 million-square-foot expansion at the Las Vegas Convention Center. The new space is set to open in January.

"Absolutely, we're moving forward," said Rob Powers, spokesman for the LVCVA. "Nothing has changed in terms of a timeframe in terms of construction. Interest in booking our building through next year and beyond remains unchanged."

Nor will Coast Resorts, a major operator of locals casinos, delay expansion projects at its three locals oriented properties -- Orleans, Gold Coast and Suncoast. The largest expansion project is at the Orleans, where the company is adding 620 hotel rooms, 40,000 square feet of casino space and a 9,500-seat arena.

"We have not laid off anybody, we don't intend to for the time being, and are actually hiring some at the Gold Coast for our buffet expansion," said Coast President Harlan Braaten.

But layoffs have numbered in the thousands on the Strip. Mandalay, Park Place Entertainment Corp. and MGM MIRAGE have each laid off "hundreds" on the Strip so far; the Aladdin laid off 500; Boyd Gaming Corp. said it cut 150 jobs at the Stardust and has reduced hours at its six other off-Strip properties; the Riviera and Sahara each said they have reduced the number of housekeepers called in on a day-by-day basis, the Riviera may close one of its gourmet restaurants; and the Tropicana said it is reducing worker hours.