CityCenter Raises the Stakes in Vegas
“Aria is a beautiful property, under good management, but I don’t see it differentiated enough so it becomes a destination product,” says Mike Leven, president and COO of Las Vegas Sands, which owns and operates the Venetian, Palazzo and the Sands Expo and Convention Center. “It doesn’t step enough ahead to make you want to come to Las Vegas to just see that.”
David G. Schwartz, the director of gaming research at the University of Nevada, Las Vegas, takes it a step further: “Pretty much anyone on Planet Earth who wants to gamble knows what Las Vegas is and it’s very unlikely anyone on Planet Earth who has the means and wants to gamble hasn’t come already.”
McBeath believes CityCenter’s offerings are differentiated enough to draw new visitors, but not from the company’s other high-end offerings like Bellagio and The Mansion at MGM Grand. “We’ll grow market, but at first there will be a shifting of business—I think at the expense of our primary competition, but not our sister properties. Bellagio has taken on all comers and remained the market leader. CityCenter was created to complement (those properties).”
During Aria’s opening press conference, Murren cited the genius of art and architecture, the high-end shopping, dining and hotel offerings and their sustainable approach as reasons people would come. “I think the opportunity is with people who don’t gamble or do the traditional Strip stuff,” Schwartz says. “If not, they’re going to have to get people in from somewhere.”
Leven believes CityCenter may draw some incentive or meeting groups that wouldn’t have considered Las Vegas before, but with just 300,000 square feet of meeting space at Aria, it would take a lot of small meetings to dent the overall roomnights added by CityCenter. He says that is the biggest change in his approach since the opening of Aria: “We are now competing more ferociously on the group side.” His properties have a combined 2.5 million square feet of meeting space.
Pricing has been ground zero in the Las Vegas downturn and the battle for market share. Visitor volume was only off 3.4 percent year to date through November (year-end results haven’t been announced yet), but a three-percent growth in supply helped add up to a 4.8 percent drop in occupancy and a whopping 23.1 percent plunge in average daily rate. Gaming revenue was down 10.7 percent on the Strip.
What happens now that CityCenter’s 6,000 rooms are in the mix? “I think it all depends on what Aria does on pricing,” Leven says. “If they hold up to Venetian, Wynn and Bellagio pricing, it will siphon off from those hotels. If they lower pricing, they’ll take from underneath them.” Schwartz says it will be a domino effect all the way down to the lower-end properties on the Strip.
The good news is Las Vegas did see some positive trends toward the end of 2009. Visitation, after being down every month from January through August, saw modest gains through the end of the year. Leven says massive cost reductions prepared Sands to take advantage of the slight uptick in business and he was optimistic going forward. McBeath said the first 16 days for Aria were “phenomenal” and business volume exceeded expectations at CityCenter, but not at the expense of its sister properties. The LVCVA reports attendance was up six percent at the International Consumer Electronic Show in January and Leven says group business on the whole has returned to 2008 levels, but rate has yet to follow.
Gaming Control Board Tax and License Division Chief Frank Streshley cautions that even the early 2010 results won’t be an accurate gauge of CityCenter’s initial impact because of major events like New Year’s, the Chinese New Year and the Super Bowl: “We won’t know until we get out to one of these months when gaming win and room rates are generated by typical travelers,” he says.
The 18-million-sqare-foot mixed-use development is a joint venture between MGM Mirage and Infinity World Development, a subsidiary of Dubai World. It features approximately 2,400 residences and 6,000 hotel rooms and each component has earned LEED Gold certification from the U.S. Green Building Council.
Aria Resort & Casino: Opened Dec. 16 with 4,004 high-tech guestrooms and suites; 16 restaurants; a new Viva ELVIS Cirque du Soleil show; featured art from Maya Lin, Jenny Holzer, Tony Cragg and Antony Gormley; a two-level 80,000-square-foot spa; 10 bars and lounges; 300,000 square feet of meeting space; and 150,000 square feet of gaming space.
Vdara Hotel & Spa: The non-smoking, non-gaming hotel opened Dec. 1 with 1,495 suites and additional condo-hotel units and penthouse residences.
Mandarin Oriental, Las Vegas: The 47-story non-gaming hotel and residences opened Dec. 4 with 392 rooms and 225 luxury condominiums.
Crystals retail and entertainment district: Opened Dec. 3 with 500,000 square feet of high-end dining, shopping and entertainment venues.
Veer Towers: Two 37-story glass towers inclined at five-degree angles with 335 condo residences in each set to open later this year.
Harmon Hotel: Boutique hotel with 400 rooms scheduled to open late this year.
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