MGM Resorts is increasingly optimistic regarding the future of the Las Vegas Strip’s southern end. One of its top executives said this week that more developments in the area could be forthcoming.
MGM Resorts, the operator of the most casinos on the Strip, dominates the drag’s southern tip. The company runs Mandalay Bay, Luxor, Excalibur, New York-New York, Park MGM, and MGM Grand. The only casino resort on the Strip’s southern section that MGM doesn’t operate is the Tropicana.
MGM is expanding its dominance in the area by way of the Cosmopolitan. The company announced in September that it would pay the Blackstone Group $1.6 billion to acquire the operational rights of the luxury casino and hotel.
MGM might not be finished. Speaking this week at the Morgan Stanley Virtual Global Consumer & Retail Conference, MGM Chief Financial Officer Jonathan Halkyard explained that the company could theoretically build a new from-the-ground-up casino near Excalibur.
The CFO said that there are seven acres alone of Strip-facing land in front of the Excalibur, which is roughly the same footprint that the Cosmopolitan sits. Halkyard clarified that he isn’t suggesting MGM is going to soon build a 3,000-room hotel tower there. But it’s nonetheless an option.
Development Process
If MGM Resorts indeed wishes to build a new property near Excalibur, the casino operator would first need to come to some sort of deal with its landlord. MGM Growth Properties, the real estate investment trust (REIT) of MGM Resorts, owns the land and physical assets of each of the previously mentioned casinos MGM operates.
There have been rumblings in recent years that MGM is looking to divest Excalibur and/or Luxor, which comprises the casino company’s lower-end properties that cater to budget-conscious travelers.
MGM Resorts holds a majority ownership position in MGM Growth Properties.
The Strip’s southern section is indeed bustling. Along with Allegiant Stadium, home of the NFL Las Vegas Raiders, which is located just across I-15 from Mandalay Bay, reports surfaced this week that the MLB Oakland A’s are exploring building a ballpark near Tropicana.
Vegas Vigor
COVID-19 remains a great threat to world economies. The latest omicron variant is causing much uncertainty as 2021 nears its end. But assuming the mutation doesn’t result in the reimplementation of draconian lockdowns, MGM brass are optimistic about the future of Las Vegas.
There’s good reason for that cheeriness, as Nevada casinos have eclipsed $1 billion in monthly gross gaming revenue in each of the past eight months. Clark County, home to Las Vegas, has reported casino win of more than $1 billion in five of the six previous months.
Halkyard said the stout gaming revenue numbers are partially due to pent-up demand, but also more sustainable factors, such as increased spending from guests. The CFO added that, at least for now, omicron is not having a material impact on bookings.
One area of concern is that the age 65 and older demographic hasn’t returned to Southern Nevada and MGM’s regional casinos across the country. At least not in the same numbers as younger people. But Halkyard says when they do, it will only help MGM normalize its industry should some of the pandemic pent-up demand taper.
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