That was one of the bombshells dropped this morning at Global Gaming Expo. According to a member of a "state of the industry" panel of G2E's Casino Design track, Harrah's Entertainment has several unprofitable properties that were for sale. "Now I believe any of [Harrah's casinos] are on the block," he said, adding that similar things could be said of MGM Mirage.
Architect Joel Bergman revealed that he'd laid off 29% of his staff last week: "Work has simply dried up." Perini Building's Dick Rizzo added that Kerzner International is still "bullish" on City Center II, at the north end of the Strip and its centerpiece will be an exact reproduction of the company's Atlantis Dubai resort (plus casino, presumably).
Dubai and Abu Dhabi were identified by Rizzo as two of the main growth pipelines that continue to flow. So does the California tribal-casino market, along emergent casino markets in New York State and Pennsylvania. He's also working with the Seminole Tribe in Florida, where two Hard Rock-branded casinos will double in size, starting next spring.?
As for job cutbacks in the tribal market, Rizzo doesn't think those are economy-driven but "an excuse to get leaner." He defended MGM Foxwoods as a victim of poor timing, saying it can't be judged on current performance. He pointed out that the soft debut of MGM Foxwoods prompted the mothballing of a similar expansion at nearby Mohegan Sun.
Rizzo shrugged off the implications of server-based gambling: "The public sees the casino the same way." And while he saw no prospect of non-gaming Strip resorts, off-Strip ones are conceivable. Given the current condo glut, Trump International and others are looking to convert those properties to pure hotel plays, at least until the market takes a more propitious turn.
Recently, MGM Mirage spokesman Alan Feldman took up President Jim Murren's contention that we may not see new construction on the Strip for a decade (does that make it a "meme"?). Panelist John Restrepo interprets that as a way of saying, "We don't know" where the world is going and "a bit of an overstatement," reflecting what Donald Rumsfeld infamously called "known unknowns."
Per S&G prediction, we're seeing a market correction in the prices paid for land on the Strip. Restrepo says the value per acre has readjusted -25% to -30% and even more so elsewhere in Las Vegas, including the corridor south of Mandalay Bay. Still, lenders are now requiring as much as 50% equity before they'll commit to a project, Restrepo notes
Restrepo also doubts the viability of the "If we build it they will come" paradigm that has so long served Las Vegas. Besides, it still remains to be seen whether Joe the Player is tapped out … and Restrepo hears that a wave of car repossessions is imminent.
That being said, his company is performing feasibility studies for new projects, even if those developments are going to have be put on ice until a few years hence.
