Gaming stocks expected to weather war with Iraq

By Liz Benston (contact)

Thursday, March 20, 2003 | 11:21 a.m.

Visitor volume and consumer spending in Las Vegas are expected to slow in the near term as people stay tuned to Iraq war news and watch their wallets.

But some properties said today they haven't yet seen any downturn in business as a result of the war.

"We're not seeing any discernible impact on room reservations. People aren't cancelling rooms. The same goes for conventions," said Yvette Monet, a spokeswoman for MGM MIRAGE.

"There's been no changes in business or cancellations" at any properties nationwide, added Gary Thompson, a spokesman for Harrah's Entertainment Inc.

MGM MIRAGE owns the most resorts on the Strip and Harrah's is the country's most geographically diverse casino company.

Park Place Entertainment Corp. -- considered the nation's largest gaming company in terms of revenues -- says it has seen a slight uptick in room cancellations across its Las Vegas properties.

Still, spokesman Robert Stewart said the impact wasn't significant.

"We are still running more reservations than cancellations," he said.

A room survey for this weekend -- expected to be busy for the first round of the NCAA basketball tournament -- revealed "mixed messages" of some cancellations ahead of a war with Iraq and reports of "few, if any cancellations outside of the normal realm," Deutsche Bank Securities gaming analyst Marc Falcone said in a research note to investors today.

"While it appears there have been some cancellations for this upcoming weekend, we think people are likely sitting on their hands at this point and not making a decision either way ahead of the war."

Other properties off the tourism-dependent Strip say they will be watching different trends play out.

"Our role is also a place where people congregate," said Gregory Lee, president of the privately owned Eureka Casino on Sahara Avenue in Las Vegas and a sister property in Mesquite.

The Las Vegas property depends on business from casino workers who gather after their shifts. Mesquite benefits from retired customers seeking social interaction.

"We will have our ups and downs (as) people have less disposable income," Lee said. But for certain neighborhoods, "the casinos will continue to provide some sense of place, some notion of regularity -- (a place where) it's O.K. to get together and laugh."

At Station Casinos Inc. -- the region's dominant locals' casino operator -- it was "business as usual" today, spokesman Lesley Pittman said.

Major Las Vegas gaming companies could see some dip in high-end customers and that will depend on the duration of the war.

"Companies should generally meet first quarter expectations, however, high-end international travel remains the wild card given the situation in Iraq," Merrill Lynch gaming analyst David Anders wrote in a report Wednesday.

But their stocks may still hold up as investors look ahead to a resolution to the conflict, industry experts say.

The broader stock market witnessed a small rally Tuesday, a day after President George W. Bush delivered his 48-hour ultimatum to Saddam Hussein to flee Iraq or face war. The first bombs fell Wednesday night, and by this morning Wall Street retreated slightly with the Dow Jones industrial average down 27.18, or 0.3 percent.

The Las Vegas Sun Casino Stock Index -- which consists of Las Vegas companies including Harrah's Entertainment Inc., Mandalay Resort Group, MGM MIRAGE, Park Place Entertainment Corp. and Boyd Gaming Corp. -- rose 3 percent Monday to 931.45 from 904.37 Friday. The index fell slightly on Tuesday, to 921.74, but rose 1 percent Wednesday to 932.02.

Major casino stocks were fairly flat in morning trading today, with MGM MIRAGE up about 0.1 percent to $29.03, Mandalay Resort Group flat at $27.27 and Park Place up about 0.1 percent to $7.21.