|By Richard N. Velotta, Las Vegas
SunMcClatchy-Tribune Regional News
Feb. 20, 2013--Executives at MGM Resorts International say that despite fourth-quarter losses reported today, the company has positioned itself to take advantage of a brightening economy this year and in 2014.
"We're off to a very solid start in 2013," MGM CEO Jim Murren said in a conference call with investors this morning. "The Super Bowl was a great event for us in Las Vegas, and we're still seeing people here celebrating Chinese New Year. The Year of the Snake appears to be a really good one for us."
Murren and his management team listed a series of projects and events in the months ahead in Las Vegas and Macau that the company expects will move it from recovery to growth.
One-time expenses in the fourth quarter paved the way for an improved outlook but made earnings results appear worse than they were.
Losses widened for MGM in the quarter as revenue gains at its Macau property failed to counter weaker increases in Las Vegas.
The largest operator of hotels and casinos on the Strip also had one-time land impairment and tax write-off charges associated with refinancing debt that dragged its financial performance for the quarter down. But even without those special charges, MGM would have shown losses.
The company showed a loss of $1.22 billion, $2.50 a share, on revenue of $2.29 billion for the quarter that ended Dec. 31. That compares with a loss of $113.7 million, 23 cents a share, on revenue of $2.3 billion for the same quarter a year ago.
In Las Vegas, occupancy rates dipped slightly while the average daily room rate and revenue per available room showed a slight increase. Slot machine revenue increased by 2 percent over the fourth quarter of 2011, but the table-game hold percentage fell from 22.8 percent in the fourth quarter of 2011 to 21.9 percent in the same period for 2012.
The company's MGM China unit showed a 2 percent increase in revenue for the quarter, driven by higher table game and slot machine volume.
The company announced today that it will pay a $500 million dividend to MGM China shareholders, payable March 18. Last month, a land concession contract for a resort on Macau's Cotai Strip became effective, and land preparation for construction has begun. An official groundbreaking is scheduled Feb. 27, and the property is expected to open in mid-2016.
Strategies that have resulted in additional traffic to some properties in 2012 will be redeployed at others this year.
Murren said room remodel projects at the MGM Grand and Bellagio have improved occupancy there, and that's what's ahead in the fall at The Hotel at Mandalay Bay, which will be rebranded as the Delano.
Bobby Baldwin, president of MGM's CityCenter development, said an 88 percent occupancy rate for Aria's Cirque du Soleil show "Zarkana" has driven additional restaurant and casino floor traffic at the property, and the new Javier's restaurant has posted good results. The additional traffic led to Aria's highest slot machine handle in the fourth quarter.
The company is expecting similar results when the new Cirque du Soleil Michael Jackson show opens in May at Mandalay Bay.
MGM Executive Vice President Dan D'Arrigo said the remodeling of the theater that once held "The Lion King" will be turned over to Cirque du Soleil within weeks in preparation of the new show.
The Light Group, meanwhile, will open three new restaurants at Mandalay Bay, and the company also expects to profit from the opening of a new day club pool concept at the property.
Other earnings and conference call highlights:
--Murren said boxer Floyd Mayweather Jr.'s recently announced fight with Robert Guerrero on May 4 will be at the MGM Grand Garden. It's the first of six fights Mayweather has committed to at MGM properties, and a second fight will occur in September.
--Work is continuing on a new marquee on the Strip in front of CityCenter to promote events at Aria. At 260 feet, it will be the tallest marquee sign on the Strip.
--Murren hinted that MGM may consider selling the Crystals retail mall in the future. He said that while there were no formal negotiations for a sale under way, it's something the company would consider. Las Vegas Sands did the same thing with its Canal Shoppes at the Venetian. "It's clear that this asset is Grade A, gold-plated retail, which is not our core business, so selling it in the future is an option," D'Arrigo said in an interview.
--The company is on target to submit a proposal in May to build a resort on the National Harbor in Maryland. The company also intends to respond to a request for proposals to build a resort in Springfield, Mass., and is exploring opportunities in Toronto.
The company also announced last week that it is looking to re-enter the Atlantic City market as a partner in the Borgata. The company withdrew from the market when New Jersey regulators said its partner in Macau, Pansy Ho, was unsuitable for licensing because of alleged ties to organized crime. MGM has steadfastly defended its relationship with Ho in China.
--The company closed on the sale of 427 of the remaining 438 units in the Veer towers at CityCenter in December for $119 million. It was one of the largest real estate deals of the year in Southern Nevada.
--The occupancy rate at Circus Circus fell from 75 percent in the fourth quarter of 2011 to 68.6 percent in the fourth quarter of 2012. The highest occupancy rate among MGM's Strip properties for the quarter was 92 percent at New York-New York.
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