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Fireworks explode over the Aria hotel-casino during the official opening Wednesday, Dec. 16, 2009.
Published Wednesday, April 14, 2010 | 2:20 p.m.
Updated Wednesday, April 14, 2010 | 3:02 p.m.
Special Coverage
MGM Mirage today said its first quarter revenue declined, even after the opening of its CityCenter resort complex, and that it expects to report a loss for the quarter.
In disclosing preliminary first quarter results, the Las Vegas-based gaming operator said net revenue is expected to total about $1.46 billion. Not counting certain reimbursements for the company’s management of CityCenter, net revenue is expected to be about $1.36 billion, a decline of 4 percent from the year-ago quarter.
Reflecting continued weakness in the Las Vegas tourism industry related to the recession and additional room capacity in the city, MGM Mirage said revenue per available room from its Las Vegas Strip properties decreased by 8 percent to $94 for the first quarter of 2010 compared to $103 in the first quarter of 2009.
Factoring out special items, MGM Mirage's loss for the quarter totaled 31 cents per share. Published analyst estimates had projected losses of between 21 cents and 22 cents per share -- indicating business for the company has not rebounded as quickly as hoped by the investment community.
Quarterly casino revenue is expected to be down about 5 percent.
The bottom line, MGM Mirage said, it that it expects a first quarter loss per share of approximately 22 cents compared to a profit of 38 cents per share in the prior-year first quarter.
The current-year results include a gain on extinguishment of debt of 21 cents per share and a non-cash charge of about $86 million, or 13 cents per share, representing MGM Mirage’s share of another writedown in the value of CityCenter’s residential inventory of condominiums and condo-hotel rooms.
The 2009 first quarter results included a gain of approximately 44 cents per share from the sale of Treasure Island hotel and casino on the Las Vegas Strip.
Operating loss for the first quarter of 2010 is expected to be about $11 million vs. an operating profit of $355 million in the 2009 quarter.
CityCenter is expected to report an operating loss of $255 million in the first quarter of 2010, which includes an approximately $171 million non-cash impairment charge related to its residential inventory, a non-cash depreciation expense of $69 million and preopening expenses of $6 million. CityCenter results benefited from revenue of $24 million related to forfeited residential deposits.
Aria reported an operating loss of $66 million, which included deprecation expense of $54 million. Occupancy percentage at Aria was 63 percent with an average daily rate of $194.
MGM Grand Macau operating income is expected to be $49 million in the first quarter of 2010, which included depreciation expense of $22 million, a significant improvement compared to an operating loss of $5 million in the 2009 first quarter, which included depreciation expense of $21 million.
Also today, MGM Mirage announced that it proposes to offer, subject to market and other conditions, up to $750 million in notes in a private placement and will use the cash from the debt offering to repay part of its existing debt.
Time to sell off another casino or two.
Its odd that their revenue is down since other casinos in town are seeing improved numbers over last year.
Although the figures are quite confusing, the statistic that struck me the most was that the occupancy at Aria for the quarter was only 63 percent. That seems shockingly low for a brand new state of the art hotel, even though the room rates are way above my budget.
Ohhhhh...not good news. MGM needs to dispose of some properties, if there is anyone out there that has the ability to buy. Maybe Mr. Wynn will take back the Mirage or the Bellagio.
I think we can finally admit that Las Vegas is OVERBUILT!!!
Not very good news at all, and I agree with Belleville that 63% occupancy is downright dreadful for a brand new, "showcase" LV property.
Already I hear of "rate wars" between CC and Bellagio, which indicates that one of our fears is coming to pass, and that is CC is "cannibalizing" their existing hotels. Kinda makes one understand why the latest debt issuance by MGMM was sold at discount; creditors run the very real risk of not getting repaid.
By the way, things don't get any easier since Cosmopolitan will be opening in December with the bulk of their 3,000 rooms plus casino and restaurants and on and on...
Godzilla has a good idea that may come to pass both for MGMM and Harrah's: Divestiture of underperforming properties to independent operators a la TI. Ruffin's got no appreciable debt on that place and can, maybe, give a little of the "old time Vegas" experience so many on these boards hanker for and take more market share in the "value" category.
Sorry-correction- it was Harrah's that issued debt recently at discount, not MGMM. (though it wouldn't surprise me if MGMM debt was trading at discount in the secondary markets)
In the short term vegas is obviously over built. But there is not way MGM will ever let go of Bellagio. I guearantee you it is making money. They would be better off letting go of something like the Excalibur, NYNY, Luxor, or Circus Circus.
If they used more fireworks everything would have been fine.
From what I hear from Bellagio employees, there is no price war between the two properties. Aria offers deals, Bellagio does not. Aria is not competing with Bellagio whatsoever.
That 63% number is inflated. There is no way they were even at 63%. Aria is struggling. Not just the rooms, but the food and beverage outlets and the gaming portions of the property are hurting. Outlook looks grim. So they sell more notes??? Isn't that similar to Bugsy Seigel selling 400% of the Flamingo, originally?
@ chedski,
After analyzing the damage... more fireworks would have made it worse... that fireworks display did 6-9 million dollars in damage. What they need is more shops to open in crystals and even lower roomrates.
WOW-63%--HOLLY MACKEREL--not even my pessimistic view of this albatross was this bad--WOW--I can't believe it. Holly Sheepherders batman! I also liked the term "residential inventory"---aka---mega overpriced condos we can't get rid of at any discount to our inflated expectations! You can't give this crap away right now--thats why the lake las vegas people are so funny talking about condos "selling like hot cakes". Yeah right--sure they are real estate sales people--hurry and buy one--you may miss the boat! hahahahaha. I'd just like to add that these numbers should actually be worst except all the gaming companies in town have been beating the crap out of a couple HUGE whales who have dropped tons of money the last 3 months at all the big properties. After these couple big guys are done dumping their load--these numbers will be much worse the coming months because the domestic play is as bad as I've seen it since prior to the mirage opening years ago--very bad and a lot of weak, tight, small buy-in play. People are coming here for the cheap rooms and not spending squat, just walking around-PERIOD. Don't expect any rebound this year in the domestic situation. Lvs, and Wynn get big lift from asia--not mgm.
i will laugh until i cry when those union goon workers get laid off.
CityCenter results benefited from revenue of $24 million related to forfeited residential deposits.
Want to get more money from tourists? consider legalization before CA does it first. "Sin City" has nothing to offer that cannot be found withion 100 miles of anywhere else. Bring the SIN back to LV and we may get tourists again!
there was a rumor around town that the casino staff was going to a 4 day work week but I haven't talked to anyone at aria yet. Wow--scary start for such a big property. Fitting it is the 98th anniversary of the titanic sinking.
A 63% occupancy rate would stink for some of the
dives in this town.
It is hard to believe that the Aria is running that level.
This shouldn't be a problem. Simply have Senator Reid call the travel agents and tell them to fill up the MGM Mirage rooms. According to Senator Reid and the MGM Mirage, it worked when he called the banks to tell them to give MGM Mirage lots of money.
Their story was just as much BS then as it would sound about calling travel agents now.
Bellagio is just not the same these days. The attention to detail, service and entertainment is nothing as it was when Steve Wynn owned the property.
if they would have broken ground on city center just 1 year later, they probably would have mothballed it like echelon.
no matter how much they advertised and "spun" it...the basic law of supply and demand can never be beaten.
slow tourism + more inventory = failure. there's more rooms than tourists to fill them.
Just look at California - they are $20 BILLION dollars in the hole. That is where 1/4 or more of visitors to Las Vegas used to come from.
Of course, the rest of the country is in bad shape too. I heard a town in PA just went bankrupt. Unemployment is still at 10% according to the government, but I understand that it is really over 21%.
So the impending depression/bankruptcy of the United States goes on. Most of the country is trying to keep it together until something good happens to the economy. Small businesses can't get credit. Our AAA rating is about to go into the toilet. And Washington, DC - SEEMINGLY OBLIVIOUS TO ALL THIS - keeps on planning to spend more money in spite of the deficit. And, planning to increase our taxes to try and bring down the deficit. (It won't work.)
So I guess that is why a lot fewer people are showing up on vacation in Las Vegas these days. Aongst all of this clamity do you really expect to see Las Vegas running wild with tourists?
Just who is surprised by this????
I'm surprised they were even able to fill 63% of their rooms. The place is designed like an airport terminal, it's entirely too far back from the strip, and it's still getting negative reviews for things that should've been ironed out BEFORE they opened. Oh, and Bellagio IS sending out offers for heavily discounted room rates, I receive them almost every day.
These are last year's occupancy rates
Circus Circus 83.20%
Excalibur 87.40%
Mandalay Bay 89.10%
Luxor 89.80%
Monte Carlo 90.00%
New York 93.20%
The Mirage 93.60%
Bellagio 94.20%
MGM Grand 94.20%
--------------------------
I don't buy it. How could it be 63%? That's like a Motel 6.
The numbers are posted on their web site. Bellagio did just as well as last year. Excalibur and NY/NY are doing very well, and MGM Grand and Mirage are OK.
Mandalay Bay, Luxor, Monte Carlo, and Circus Circus tanked.
Monte Carlo -98%
Mandalay Bay -90%
Luxor -83%
The Mirage -25%
Excalibur -23%
New York-NY -17%
MGM Grand -9%
Bellagio -4%
Circus Circus has been losing over $1m a month for the last 6 months.
The above numbers are change in operating income, not in revenue.
So they want to take on some new debt ( in a $750 million dollar note sale ) to pay off some of their existing debt .... 'ya gotta love it !!
7000 people at a job fair today at the Rio?! For 500, mostly temporary jobs? If you're reading this and thinking about moving here, I hope you won't need a job when you get here! The layoffs are continuing, to a point of overcorrection. God help us when gas goes over $3.00 a gallon soon, those SoCal visitors will stop coming again, like they did 2 years ago.
Do people really still use moth balls?
Good luck to MGMM in findng takers for its $750 million debt offer for cash. Borrowing to pay off debt is like a hungry dog chasing its tail.
Can you see all this current drama as it might be explained in the history books of tomorrow.
"After a steady rise in poplularity over the previous 40 years, the Las Vegas gambling craze peaked in the middle of the first decade of the 21st Centruy. Nevadan coporate megaresorts MGM Mirage and Harrah's had unwisely bet their futures on a predicted upward spiralling of profits from an increasing flow of gamblers to the desert's Mecca of Chance.
Their over-confdence and, to a large degree, their arrogance blinded Nevada-based gaming companies to an inconvenient realty: the cripplindg impact of Indian Casinos and hotels spreading across America. Indian games of chance now were available everywhere. No longer did Las Vegas casinos hold the power of exclusive right.
Some would blame the fall of the once great gambling capital on the loss of significant individual disposable income caused by the mortgage melt-down and subsequent decade of debt problems. Others would point to the failure of the corporate gaming giants to understand the impportance of providing value and generous gambling pay-outs to the average Joes who in the past had frequented Las Vegas from all over the country.
While the latter factors indeed added to the problem, the inevitablity of long-term failure resuled from abundant supply of gaming in most states.
Hey MGM Mirage: Note to self. You want people in your hotels? You want people dropping money on table games and machines? I have the solution:
1. Get rid of all 6/5 blackjack sucker games immediately. Get rid of all unfair rules also, like no double after split, etc.
2. Remove all those continuous shufflers.
3. Reduce limits on all table games. Who the hell is going to play $50 min a hand on a DD blackjack game? Come on now.
I was at Aria about a month ago. Saturday afternoon. Every double deck BJ game was $50 a hand. 3/2 Shoes were $25 min a hand. 6/5 shoes were min $15 a hand. The place was deserted. Dealers standing around, pit bosses bored. I wonder why?
One more thing. In Aria there is a "snack bar" next to the poker room. An average deli sandwich and a bottled water will cost you $20.00. Are you kidding me? This is a snack bar -- not a sit down place, not a fancy restaurant. $20 plus toke at a "snack bar"?
Wake up MGM, there are only so many suckers on this planet who will fall for your rip off games and high limits....
Operating loss of a whopping $11m against net revenue of $1.36b, and the sky is falling? Yeah, right.
This board is inhabited by folks who want to see corporate giants in pain, not by sensible fair people who can see and admit that MGM Mirage WILL weather the storm until the Vegas economy returns to more profiable levels.
Btw word is, enterprise business (convention business for the company) has indications of returning to previous levels beginning in 2011. They are booking for 2011 now, so sans cancellations, it's a reliable indicator.
I wonder what the figures were for all the other comparable resorts when they first opened for the same period of time? I guess The Wynn and Encore could be included since those opened in a not so strong economy. Granted, the economy was not in the toilet at those times the other older resorts opened, but it would be interesting to compare with consideration being given to today's economy. My guess is nothing was as low as 63%.
In2wishin - brilliant!!
Hey Jimmyhoofa:
Excellent posting. Excellent. That says it all.
Lets face it they overbuilt on the strip. Why did they have to build that monster City Center. Is anybody suprised on whats happening to Las Vegas. Who in the hell is going to spend over a $150.00 a night to stay at the City Center. My best guess is to get some of the mob guys from Chicago to come out here and run the casinos like they were run in the 70's and 80's and get rid of these corporation run casinos. Las Vegas has big problems ahead of them.
These comments only reflect everything we said months ago,,nothing new here
The deli shop comment above is nothing.How many tourists pay 600.00 for some denim jeans with creme stitching
just a lipsticked pig like we all have said since day 1
these statistics dont jive with me,I am on the strip 4 days a week,and that floor of the casino is always dead,crystals retail has people,but they are window shopping and nothing else,and ,well never mind i could go on and on
Good Luck CC!
peace out
Hey Jimmy...you are correct sir...that is what has happens when all these over-educated bean-counters took over Vegas...the corporate generation who know nothing of the REAL WORLD..I'm an old-timer who first started coming to Vegas when IT WAS VEGAS AND RUN BY THE "BOYS"..now those were the days...they knew how to price the gambling, liquor and food and the comps were fantastic even for the normal working stiff...but those days are long gone. I still like to hit town now and then...but it is not the same...I can't stand these corporate clowns who know dick-all...they are running the place into the ground, like everything else in this country...but because they have their fancy diplomas on their fancy office walls they think they know all...they know jack-crap!!!
so what do we do with all the ninny-nanny naysayers when the economy starts to pick up and Ma and Pa American want to live vicariously in Vegas for a 4 day weekend again and they can't even book the Motel 6 for less than $99 a night. I can see why Las Vegas is not a desireable place to live anymore, just visit... with so many negative ninnies around, why bother trying to share a neighborhood with them...??
JimmyHoofa,
First of all, Aria does not have any 6/5 BJ games. They are all 3/2.
Secondly, MGM properties do not have any such rules of not allowing you to double down after splitting.
All MGM properties also allow you to split cards (even aces) up to four times on their shoe and shuffle machine games.
I do agree with your opinion of the food prices. They are pretty ridiculous.
Anyhow, Its obvious you and many others have personal grudges against the company. In fact, I wouldn't be surprised if some of you actually have worked for the company and have had a bad experience or even tried to get a job at the Aria yourself.
interesting tidbit from the article:
CityCenter results benefited from revenue of $24 million related to forfeited residential deposits...
thats just straight profit! X4 and thats 100M almost attributable to the bottom line.
- Mark Szczygiel
Whether the place is too big, too far off the Strip, too expensive, too "cold" or too what have you, there is one thing that keeps people away or not returning: There is nothing exciting or new or interesting in City Center, period. It's a bore and an expensive, hard to get in and out of bore at that. Las Vegas is "exciting" and City Center is not. -He Swings and He Misses.
I was told to drop my car at the "free valet" of the shopping center when I visited the Aria Casino. There was a security guy checking the cars, asking me whether I was checking in ...or visiting. Visitors had no chance but had to drop the car in the valet, the free+1dollar valet.
I only wasted 1 hour or so at the Aria and was also shocked by the prices of that Deli right next to the poker room. Even if they offer "double comp points" in the poker room, this is still quite worthless if you compare these comps with the comps you get at the Hard Rock Poker Room or the M resort, or take the Orleans, or Binions, or whatever off-Strip Casino you like.
The conditions on the Strip are only good for the real big player, willing to take 20,000 and more at risk, in one single day. These players get all the high quality food for free and the rooms probably on top of it. The only question is: Are there enough of such "big players" in this economy? I have serious doubt.
From Switzerland
MGM Mirage has no leadership, no visionary to pull the company out of the doldrums, no motivators to change the business model. They all run the joints like it is 2005 and everything is hunky dorey. Get out your 1995 finanacial statement and reduce prices, staffing and wages to those levels and you might get rid of some of the red ink.
MGM Mirage to me stands as a company for mass casino operations. MGM Mirage and this new Aria casino are too big. It's no longer fun to go gambling there. These casinos are factories. They can call themselves lucky for owning the best of the best, Bellagio. This place is classy and definetely profitable. It will take a miracle for MGM Mirage to be profitable again in Nevada. They may be doing ok thanks to Macau operations for the next years, but I have serious doubt that they could make it without the Far East gamblers.