MGM: Riding out the storm

As Golden Week nears in Macao, hotel rooms are sold out at all Wynn Macau properties. MGM Grand Paradise has one night open while struggling MGM Cotai has three nights of vacancies (and this without its full complement of rooms). Having saturated the market with hotel rooms, Sands China has seven nights’ worth of vacancies at Venetian Macao, Cotai Central and new show horse Parisian. In related news, companies promoting sustainability (like MGM Resorts International) will have a harder time of it now that China has decided to stop accepting recyclables from the U.S., another casualty of the current trade war.

MGM could simply beat investors’ expectations if it meets its guidance, particularly on the Las Vegas Strip. That’s the view of JP Morgan analyst Joseph Greff, who says the soft 3Q18 is a one-off and better times lurk in the fourth quarter. Recent “softness is a temporary, event-driven blip,” he writes, adding that “room rates compressed higher as the booking window shortened (along with CZR and WYNN, as well), which we view as sign that maybe things are not quite as bad as feared.” The picture in Las Vegas is positively roseate compared to MGM Cotai, which — even allowing for a recent typhoon — did a measly $39 million in cash flow. To put that in perspective, veteran MGM Grand Paradise had cash flow of $111 million. CEO Jim Murren is paying the price for opening MGM Cotai before it was ready.

In a more puzzling remark, J-Mur’s peeps told Greff they would realize “synergies” at newly acquired Hard Rock Rocksino, while Hard Rock International CEO Jim Allen tells me Hard Rock management isn’t going anywhere. So if MGM is paying Hard Rock to run the joint, where’s the synergy?

* Remember Bongzilla? Well you can now get up-close and friendly with the giraffe-sized bong, the Cannibation Cannibas Museum has opened in downtown Las Vegas. It is joined by Hunter S. Thompson‘s Chevrolet Caprice, the “Red Shark.” As for the purpose of the exhibitions, founder J.J. Walker says, “Cannabition is not about just serving people that like marijuana, it’s about serving the masses that want to learn about cannabis and or just have fun and go do a cool art experience.” If you’ve ever wondered about the all-important distinction between indica and sativa cannabis, this is the place for you.

* You’d think that a Native American tribe wanting to come into your city and replace some truly awful urban blight with a 20,000-square-foot casino would be welcomed with open arms. But you’re not Enid, Oklahoma, where the city council has myriad niggling objections. Gambling is forbidden within the city limits, so the United Keetoowah Band of Cherokee Indians would like the council’s blessing before approaching the governor’s office for permission to appeal to the Bureau of Indian Affairs to have the land taken into trust (a potentially multi-year process). Even though the tribe is offering $12 million over seven years *plus* a PILOT (payment in lieu of taxes) representing a percentage of their gaming win, not everyone is on board.

Tribal attorney Klint A. Cowan has cautioned city leaders that they risk getting nothing if they rejects the payments and the BIA ultimately approves a casino (which would be essentially an independent fiefdom within Enid). Grumpy Ward 3 Commissioner Ben Ezzell scoffed at the tribe’s offer, asking what would happen when the 10 years of the PILOT program expired. “They’re not going to have their own police department, firefighters, hospitals around the casino. They’re going to be dependent on the city of Enid for that, and they’re going to want to make sure that you all are happy with the situation so that that’s not interrupted,” Cowan replied.

The deal looks like a good one for Enid — the tribe paid for new stoplights in Tahlequah — but city fathers seem bent on looking at the hole, not the doughnut. “I don’t think the benefits you provide to my community, even at $12 million over seven years, are remotely close to what you will cost my community. It’s a fairly black-and-white issue to me, you don’t bring net positives,” grumbled Ezzell. Let’s hope his colleagues turn him a deaf ear.

* Raving Consulting President Deana Scott was booking a casino-resort stay for her 28th wedding anniversary (congratulations) and got the guest-service experience from Hell. Read about it and, if you’ve been through the same gauntlet, share your story with us.

* Kudos to Caesars Entertainment for eliminating plastic straws. It’s a big step in the right direction. While we’re on the subject, we’ve noticed that the Las Vegas Review-Journal has belatedly gone to a tiered-subscription model (the Las Vegas Sun got their first). This was a concept that the disgraced Sherman Frederick regime could never wrap its Luddite noggins around, with old Sherm preferring to yell, ‘You Internet kids get off my lawn!’