Thursday, June 17, 2004 | 10:48 a.m.
As the proposed merger of MGM MIRAGE and Mandalay Resort Group advances, industry watchers are beginning to wonder what the unified company could do to the big Las Vegas convention industry.
All of MGM MIRAGE's five large wholly-owned Las Vegas resorts have meeting space, topped by the 504,880-square-foot conference center at MGM Grand. The Mirage has another 171,959 square feet and Bellagio has 125,000 square feet.
A key acquisition in the merger will be the 1.5 million-square-foot Mandalay Bay convention center.
Deutsche Bank analyst Marc Falcone said the merger would give the combined company a 31 percent of the Las Vegas convention market.
"Generally, what we're looking at is that it seems that there will probably be some sort of shift in the competitive landscape," said Heidi Genoist, a Las Vegas editor for Tradeshow Week, an industry publication. "MGM-Mandalay suddenly controls a huge block of space."
That's a big piece of a lucrative pie, experts agreed.
For the second quarter of 2004, the Las Vegas Convention and Visitors Authority estimated that the city would host nearly 380,000 conventioneers, up 21 percent from the same 2003 period, from its 13 largest trade shows. The LVCVA expects that those 13 shows will generate more than $520 million in non-gaming economic impact.
None of those shows, however, were held at MGM or Mandalay properties.
In the first quarter of 2004 Las Vegas had 27 major conventions that drew more than 800,000 attendees and nearly $1.1 billion in non-gaming economic impact, the LVCVA reported.
Six of those shows were held at Mandalay Bay's convention center. MGM hosted none of those shows.
The biggest competition for the new MGM-Mandalay convention operation would come from the Las Vegas Convention Center, which touts nearly 2 million square feet of exhibit space and hundreds of thousands of square feet of meeting rooms. Also grabbing major shows is the 1.2 million-square-foot Sands Expo & Convention Center, which is connected to the Venetian hotel-casino.
Caesars Entertainment also is adding convention space with its new tower and renovation project at Caesars Palace. Once completed, that will push the property's exhibit space total from 160,000 square feet to more than 240,000.
Caesars also has enjoyed success in luring conventions to its connected Bally's and Paris hotel-casinos, which together have more than 300,000 square feet of convention space.
Additionally, Colony Capital, which outlined its plans for the Las Vegas Hilton this week, said it would aggressively work to capitalize on its proximity to the Las Vegas Convention Center and the attract additional convention market share. The property has 200,000 square feet of meeting and convention space.
While the new MGM-Mandalay company would be a formidable player, observers indicated that with so much competition, convention business will not likely be a solid reason for competitors to make regulatory challenges to the deal.
Observers, however, have speculated that the combination of so many hotel rooms, popular Strip shows and millions of square feet of exhibit halls space could allow the MGM-Mandalay entity to put together very competitive packages.
Genoist said that trade shows often look for special events away from the main exhibition hall. The new MGM can offer both a large exhibit hall as well as special events at hotels such as Bellagio and New York-New York.
Hughes said just as important as the event venues will be the broad range of rooms for conventioneers.
"They have everything from $29 a night rooms at a place like Circus Circus to rooms for $500 or $1,000 a night at Bellagio," he said. "That's probably the way they will market to planners. Unlimited options."
Marketing also stands to gain a boost with the merger. Gary Thompson, a spokesman for Harrah's Entertainment Inc., said the new company will be in a position to provide an added marketing boost to Mandalay's exhibit hall. That in turn, will lift other properties as Las Vegas further positions itself as a prime tourist destination.
"I won't comment specifically on any impact it may have on us," said Thompson, whose company has more than 92,000 square feet of convention space at The Rio. "Overall, it will probably enhance the attraction Las Vegas has as a convention destination as it did when the Mandalay convention center opened. Now, combined with the marketing strength of MGM, it becomes even stronger.
Falcone agreed, adding that even if MGM-Mandalay gets stronger in the deal, the local convention market is strong enough to support all the players.
"There's plenty for everyone," he said. "I think we're in the early innings of Las Vegas' life as a convention destination. It hasn't reached it's full potential yet."
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