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Monday, March 8, 2010 | 2 a.m.
Aria opens its doors to the public
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CityCenter's Aria has opened its doors to the public. Fireworks exploded over the centerpiece of the $8.5 billion CityCenter project, and people eagerly awaited to be the first inside Aria, which is a partnership between MGM Mirage and Dubai World.
During MGM Mirage’s fourth-quarter earnings conference call last month, the company’s executives attempted to address questions that have dogged them since the recession began.
With tourism down, would CityCenter steal business from the company’s other Strip hotels rather than attract additional customers to Las Vegas? Would Aria have to use extremely low rates to keep rooms occupied?
Three months after CityCenter’s debut, however, the answers remain unclear, in part because of the complexities of room rate data.
MGM Mirage executives say rates at Aria are neck and neck with Bellagio, the company’s premier luxury property at the time of CityCenter’s development.
Although CityCenter is MGM Mirage’s new crown jewel and a unique attraction, some Las Vegas visitors still favor the Bellagio next door.
Although worldwide media coverage has spread the CityCenter name far and wide, its flagship hotel, Aria, doesn’t have the same familiar ring as Bellagio, which opened in 1998.
That could be the reason why an episode of the CBS show “Two and a Half Men” two weeks ago about a trip to Las Vegas had the lead character stay at the Bellagio, not Aria.
And although Aria is newer and touted as the most luxurious hotel on the Strip, its room rates have turned out to be surprisingly low.
Aria’s average daily rate in January was $202.91 and Bellagio’s was $201.27, the company reported after its earnings release. March and April forecasts are similar, with Aria’s rates in line with or slightly above Bellagio’s, executives said. In March, Aria is trending toward rates in the $170s midweek and $230s on weekends.
But MGM Mirage sometimes sells blocks of rooms to third parties that can further discount rates. Other customers may be paying full retail price for the room by calling the company directly.
Recent deals advertised by Southwest Airlines Vacations and American Airlines Vacations have packaged airfare with discounted stays at Aria that yield daily rates approaching $100 when “free” days are factored into the total.
Package deals and online hotel discounts are among the many ways hotels have unloaded rooms and boosted occupancy without sacrificing brand cachet that could suffer if customers were to perceive deluxe hotels with $100 rooms as “cheap.” MGM Mirage representatives caution that online rates aren’t a good gauge because they only represent a fraction of rooms sold. The company isn’t slashing rates above the competition to boost visitor traffic at CityCenter, executives said.
“We’re not buying the business. We’re earning it,” MGM Mirage CEO Jim Murren said during the call.
In fact, MGM Mirage boosted room rates at its Las Vegas megaresorts in the fourth quarter from the third quarter. Occupancy rates fell, however.
Bellagio’s average fourth-quarter rate was $206. Its third-quarter rate was $195. The occupancy rate was 92 percent in the fourth quarter. It had been 96 percent in the prior quarter.
Bellagio had the highest occupancy of any MGM property in the last quarter, also besting Wynn Las Vegas, Encore, Venetian and Palazzo.
Bellagio has been boosted by CityCenter’s debut, Murren said. More than 10,000 people are coming and going from the Bellagio stop on the tram that shuttles customers to that property, CityCenter and Monte Carlo, he said.
“The Bellagio does not buy business ... it doesn’t have to,” Murren said.
Mandalay Bay, meanwhile, which has been harder hit by the recession because it relies more on convention business, reported an average daily rate of $153 in the fourth quarter compared with $147 in the third quarter. Occupancy fell to 86 percent from 94 percent.
But the bottom line is hotels need leverage to raise room rates, and much of that can come from booking convention groups.
MGM Mirage reports that it is seeing more conventions being booked for this year and next, so as long as those events are held as planned, they will help fill hotels and allow the company to charge higher prices to last-minute visitors for the remaining rooms.
The company is booking convention groups — which generally get group discounts on rooms — at higher rates than tourists would pay for the same rooms. Conventions in the second half of the year are paying 2004 and 2005 prices for rooms, not far off from 2007’s peak prices, Murren said. Convention groups are expected to spend lots of money elsewhere during their stays — on expensive meals, shows and other amenities.
The upshot is MGM Mirage expects it will be able to charge more for its rooms in the coming year. But whether that means Aria will wind up being a lot more expensive than Bellagio remains to be seen.
"MGM Mirage representatives caution that online rates aren't a good gauge because they only represent a fraction of rooms sold."
According to the 2008 Visitor's Survey, 55% of people who book rooms goes to the Internet at all and out of that 60% make a purchase. So that "fraction" is over 25%.
Aria will do fine. Takes time. Even when times are good.
I stayed at the Aria - it is not a premier luxury property.
Maybe if the valet/taxi pickup wasn't a full city block away from the entrance - Maybe if their front desk picked up the phone without making you wait for 10 minutes - Maybe if they gave you soap in your room - Maybe if they sound proofed the door between hotel rooms so you don't hear everything from the strangers next door - then MAYBE it would be on the same level as the Bellagio. It just isn't. As soon as the dust settles and it is no longer the newest thing - I think this hotel is going to have some problems.
What is the overall occupancy rate of all the MGM/M properties.Has there been any effect on the other MGM/M properties.
Consumers are spending less now and if the consumer is able to stay at a premier resort for the same rate they stayed at a less then premier resort.Of course they consumer is going to stay at a Premier Resort.Is MGM/M able to show NYNY Luxor,Excalaber,MGM.Monte Carlo and how they a fairing to Mirarge Belogio,Aria.
I look for MGM/M to start selling off other Resorts and focus on their Premier Properties
I still have not seen the long term marketing ability of City Center other than conventions.
How are they doing at the rest City Center.We have not heard anything about Manderine Oriental,Harmon,Vere How are the condo sales and room occupancy doing in those buildings.What is the overall efficiency of the whole City Center Developement.
When we come out next month,we'll do the typical senior walkthru over there.Dodder around and gawk, but unless they have some deals on food or incentves to join the slot club wont spend anything.
" Maybe if they sound proofed the door between hotel rooms so you don't hear everything from the strangers next door - then MAYBE it would be on the same level as the Bellagio. It just isn't. "
I was wondering about the quietness of the rooms,epecially the $400k condo's . I know if I spent that kind of coin and I heard noises from the neighbors up down or next door I would be mad.
I checked the deuces wild paytables and figured out that these machines have terrible paytables. 97.56 per cent at best, that's it. I don't take it this will convince many players to challenge their luck at this facility.
From Switzerland
Julian Serrano's is worth the trip!
I am writing from another state (Washington), which should give you a different perspective. I hope that MGM management will read this information......
My family and I were in Vegas twice in 2009, and will be planning to go back in August of 2010 for our youngest daughter's 21st birthday. Many of our friends and families from other states (Hawaii and California) were also there with us in 2009, and so will in August. Beyond the August trip, we will also plan to spend New Year's Eve 2010 there.
We all spent thousands of dollars in shopping, food, booze, shows, gambling, etc the two times we were there. HOWEVER, we depended on "lower" ONLINE RATES to get all of us to visit Las Vegas. Without it, we would not pay your hotel rack rates.
For MGM to say that online rates are insignificant, their management must be out of touch, especially in this bad recession. If we get the slightest hint that people like us are not good enough to visit your city, then we will find another destination. I can guarantee you that there are not too many "whales" out there.
Have a good day!
I agree with the poster blackniteowl.
My wife and I are going to Las Vegas in a couple of weeks. Although we always stay downtown and in fact had our flights and hotel already booked and paid for months ago, I thought last week as a treat we would also book a hotel room on the strip and stay there a night just as a change of pace. The posted rates seemed quite reasonable and I was just about to book a night at New York/New York, when further in the booking process a resort fee and an additional tax popped up. As a result, I did not book it.
Price is important to most tourists.
FromBellevilleCanada - I agree the resort fees in this town are straight-up false advertising. You cannot promote one price and then throw in mandatory extra costs.
One of the good things about the Aria is that they had no resort fee. The price I was advertised was the price I paid. But I think they charge you if you want to use some amenities like the gym.
aria is a 8.5 billion(and counting) DISASTER! You could buy 3 properties now for the cost of this one. This property should never have been built---but the condos are the biggest failure--how could you not see this coming in las vegas---the overbuilding was on historical proportions and now tens of thousands of condos around town are sitting empty and it was very obvious what was coming 2-3 years before they started building--just ego and arrogance drove this property to its mediocre opening. Imagine if we didn't have the 20k rooms that were added after the boom was obviously over---room rates would be much higher and each property would have more customers instead of spreading them all out at all these unneeded properties---really they're is enough customers still coming--the problem was really the enormous, stupid, greedy overbuilding at the end of the boom by overly aggressive out of control management.
mrlucky - you make some good points. Keep in mind the Citycenter also has a lot of shopping and dining that is also going to siphon business from other places on the strip.
This was too big of a project for such a small space. The Citycenter looks like downtown Tokyo.
There are way too many strip condos. The prices were too high and the monthly fees were way too high. The prices have come WAY down, but there are still many. Now that the Citycenter is done Vegas needs to stop issuing so many building permits and focus on making people finish the projects they started.
Las Vegas is overbuilt. Doesn't matter how fancy, how many good dining spots there are, how many nightclubs, We are plain OVERBUILT! Everyone in California is going to their own Indian casinos now, as well as other spots around the country. Las Vegas went "all in" and lost their/our bankroll..
Bellagio is a beautiful property with class and entertainment worth seeing (O, Fountains and atrium). Aria is set too far off The Strip, has a dark/depressing feel, over-priced everything, a weak (at best) show and zero outdoor dining. Bellagio is far superior on all levels. And, with the price tag paid (Um, I mean borrowed) for City Center, Bellagio wins by even more. A real neat looking property is wedged between both of these and appears to have a good chance of being what City Center wanted to be: different and attractive to the market that spends money. I'd put my money on the new property to open later this year.
Vegas Sucks now. I am have been 8 times since turning 21 3 years ago and nothing has changed besides the prices going up, the payouts getting smaller and the people aka foreigners getting more rude. Harrahs treats their customers like dirt and only care about the moolah.
Well the Bellagio is a class property because Steve Wynn built it,not MGM.
All I'm going to say is this: If you believe what MGM is telling you, then buy MGM stock.
Just remember there are casinos everywhere in the United States, there are casinos around the world, and there's this little thing called the internet where you can gamble as well.
So, the "casinos" competitive edge of being the only place to gamble is loooooooong gone. And this company in particular has just spent $10 billion on an unfinished product.
Not to mention, a majority of MGM's resorts are pricey from rooms, to meals, to beverages, to bottles of water and bags of chips, and that's before you get your butt handed to you on the casino floor.
Americans are finding value at local casinos in their own states. Global travelers will come to Vegas and see it, but they go to Yellowstone park to do the same thing: See it, not spend much while they're there.
If you really believe in MGM's long term success, then buy their stock.
I see the Empire cracking and selling off a few pieces in the next 10-years, but that's just me guessing. If they could part with MGM-Detroit, they'd do it in a heartbeat. I can see the Mandalay Bay/Luxor/Excalibur trifecta being sold as well. But just like T.I., somebody will get a dollar for 50-cents.
Go look at their financial statements and find out how leveraged they are before you believe anything they're telling us.
And then... Pray they're not cooking the books... SEC or not... Enron & Arthur Andersen were "trustworthy" right?
I wish them the best, but they've made some decisions before the recession hit to go to a high-end market and even in good times it would be very hard to keep CityCenter full.
Anyway, good luck MGM, you're gonna need it.
I visited City Center last month when I stayed at Bellagio. City Center is depressing and mostly empty high rise buildings. Aria is dark and negative. I would hate to gamble there, to lose your money in such a depressing place is double bad. They should do like Detroit plans in their city and bull doze it over and turn it into farm land.
By the weight of the response gauge (number of posted responses generated)I would have to say that there is more than a fair amount of envy regarding Mr.Murren, MGM and the bold visionary concept of his City Center.No mater how you cut the cards it's design inception and fruition have been a welcome boon to our struggling industry. Supporting hospitality, gaming and construction not to mention advances and job creation in the IT field. Comparatively Bellagio is an established brand worldwide conveying the essence of elegance and romance. City Center is a reflection of its creators visualizing what can be inspiring the future possibilities of growth for our city adding not detracting from an infrastructure greatly in need of diversification.Just as Mr.Wynn and Jay Sarno revolutionized the landscape in prior incarnations. So to does Mr.Murren setting his star firmly in place.
Nobody can compare with the class of Steve Wynn. Bellagio still my favorite spot for beauty. Yeah, he does not own it anymore. But, it has his aura.
i agreee FromBellevilleCanada, price is important. We stay where we can get the best deals. We've stayed at Palazzo when it opened for 100 dollars a night. We recently stayed at MGM Grand in a west wing room for 20 dollars a night and these are prices we got on weekends. We stayed at Excalibur in a widescreen room for new years 2009/ 2010 for 90 a night. i dont see spending 200 to 300 dollars a night or a room! We are drinking and gambling 80 pecent of the time we are there.
Of course MGM says Bellagio and CityCenter is a perfect match. They can't admit that today they would never ever build such a monster construction a 2nd time. Behind the curtain, what do you think they're saying about it?
I would venture to guess that they think they are the dumbest gamblers of all...because before MGM built City Center they were the Kings of Las Vegas. Now they are the bums of Las Vegas.
At the risk of being obvious, this kind of investment requires staying power. Not just the fact that it is doing OK while the honeymoon is still going on.
The Mirage is making almost double the average of these four other resorts belonging to MGM MIRAGE. It is older and has less rooms than several of them. But it is quality. And even adjusting for 20 years of inflation, the $650 million construction cost seems like a bargain
Luxor
Excalibur
Monte Carlo
New York
I have talked to a lot of customers of Aria and have not heard a single complaint. They love the rooms and the people treat them with great customer service. The economy plays a role in what is happening in Vegas. I am a resident and I would say that CityCenter has helped a lot of other businesses in the area. Instead of slamming it because many have their own agenda's for doing so, why not get behind it and support it. I heard a guy the other day that stayed at Aria and said he had a great nights sleep and that the beds were awesome. He loved his stay and would be back. The place is only going to get better as the condo's sell
CityCenter is here to stay, What ever happened to those people that said the place would close the doors in 6 months after opening, or they would sell many of their other properties. I guess they still have 2 months, but I don't see it happening. Many just love the place. Yes, you get some who loose too much money and blame other things to make them feel better but they are few.