P.R. efforts low-key even as opening of CityCenter nears

By Liz Benston

Monday, Oct. 5, 2009 | 2 a.m.

In normal times, a casino company within months of opening a major resort would use every opportunity to tout its virtues.

But until recently, MGM Mirage has been distracted by a steady grind of negative news surrounding CityCenter, its $8.5 billion complex that opens in December.

CityCenter was announced in 2004 with pitched excitement, the most ambitious commercial project in the country, a head-turning vision with six high rises and 7,000 rooms. But in time, various factors created a negative buzz.

• Early in the project’s history, critics said CityCenter would have too many hotel rooms and condominiums and too few gambling and other amenities to make a profit.

• CityCenter’s budget ballooned from $5 billion in 2005 to more than $9 billion in 2008, settling at $8.5 billion in early 2009.

• Twelve workers had died in 18 months, including six at CityCenter, with workers walking off the job in 2008 to demand safety improvements. But after the improvements, the deaths stopped. No workers have died since June 2008. (The Sun won the Pulitzer Prize for Public Service for investigating the deaths, uncovering cozy relationships between safety regulators, builders and local labor unions and pushing for improved safety standards.)

• CityCenter scaled back its Harmon hotel tower in February from 49 floors to 28 after revelations that reinforcing steel had been incorrectly installed. A subsequent county investigation revealed numerous false reports filed by county-appointed private inspectors who signed off on the work.

• CityCenter co-owner Dubai World sued MGM Mirage in March over the project, criticizing CityCenter’s budget and halting its share of construction payments. (Dubai World dropped the suit the following month after helping to negotiate a final budget and a financing guarantee.)

• The economy’s hairpin turn forced MGM Mirage to rescue itself from financial collapse this year by raising $2.6 billion in debt and equity, mortgaging some of it casinos, paying off more than $1 billion in debt and negotiating a reprieve from some of its loan requirements.

“It’s been a huge journey to get us from inception to where we are right now and it’s been rocky,” MGM Mirage CEO Jim Murren said during the company’s first quarter conference call in May.

A few news releases have described upcoming attractions at CityCenter, but media have yet to be invited to tour the site to feed excitement for the grand opening. In fact, the groups that have toured the site so far are “largely people we’ve been begging money from,” Murren said in May. They were “blown away by the quality and scale of what we’re trying to accomplish here,” he added.

During the company’s first quarter earnings call, CityCenter CEO Bobby Baldwin said the upside to all the bad news was that “there’s not anyone on the planet who doesn’t know what CityCenter is.”

Over the past couple of months, MGM Mirage has changed the conversation, hosting media to discuss the award-winning, environmentally conscious designs of CityCenter buildings Aria and Vdara and touting the filling of 12,000 jobs.

The company also says convention bookings are up for its resorts next year and that rooms in CityCenter’s casino resort, Aria, are booking at higher-than-market prices and at a faster clip than Bellagio’s rooms in the months prior to that hotel’s 1998 opening.

Murren has said he believes CityCenter will be largely responsible for an expected increase in Las Vegas visitation next year, benefiting MGM Mirage properties and competitors.

“It is the Mirage and Bellagio of its time,” he said during the company’s second quarter conference call in August.

After 15 years of no new construction on the Strip, the Mirage’s opening in 1989 reinvigorated Las Vegas tourism and launched a new run of resort construction.

Bellagio similarly raised the bar, its blowout profits inspiring a second wave of high-end resorts that, until the recession, successively boosted tourism.

That boom period now ends with CityCenter. The other multi-billion-dollar projects in town, Echelon and Fontainebleau, remain unfinished — Echelon mothballed to await better times and Fontainebleau frozen in bankruptcy.

Some analysts say CityCenter’s best-case scenario involves stealing business from competitors without significantly cannibalizing company-owned properties — hardly the surge in demand created by previous resort openings.

It’s against this backdrop that MGM Mirage will stage a grand opening that will be more subdued than what the occasion would have called for in headier times. But at least it will be open, and the company can exhale.

CORRECTION: This story was changed to correct the number of construction deaths at CityCenter. | (October 5, 2009)