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LAS VEGAS, Nov. 9, 1998 - Numerous investors have
inquired about the early results of Bellagio, which opened to the public
at approximately 11:30 p.m. on October 15. The public reception has been
exceptional and Bellagio is expected to be a financial success as it has
already proven to be an aesthetic success.
Bellagio is intended to have a life of 100 years or more, similar to other hospitality icons such as The Ritz hotel in Paris or The Plaza hotel in New York. Hence, the first 20 days are not particularly meaningful. Furthermore, the financial results of the first few weeks of any new major resort contain numerous distortions. In the case of Bellagio, large numbers of sightseers distort certain revenue categories, while expenses are also high, with significant overtime and similar expenses being incurred to allow the new staff to provide a positive guest experience. The best indication of Bellagio's progress is the overwhelming positive response of its guests. Management estimates that nearly one million people have visited the facility since its opening and customer comments have been extremely complimentary. Prior to Bellagio, the most successful resort in Nevada history by many measures was the Company's Mirage hotel-casino, which opened on November 22, 1989. In its first 20 days of operation, the table games play of $125 million at Bellagio was 40% above what was achieved in the first 20 days of operation at The Mirage. Likewise, room, food and beverage revenues have been more than double the comparable initial results at The Mirage. The retail sales of the Company - owned and leased shops at Bellagio after only 20 days are nearly $9 million -- a remarkable result of over $5 per square foot per day. Slot revenues of over $12.7 million exceeded in only 20 days the best month that The Mirage has ever had, even as The Mirage itself had an $11.2 million slot win in October -- a 4% increase over the prior-year period. Like The Mirage, Bellagio has been profitable from its first day of operation. Recognize, however, that these numbers reflect a very short period of time and business activity levels at Bellagio are expected to normalize at lower, but still high, levels over the next few months. Room rates at Bellagio vary widely, from several thousand dollars per night for certain suites during holiday periods to only $99 per night for some standard guestrooms during certain mid-week periods. Prices vary according to availability and the number of guests in the room and are often higher when large conventions or holidays boost guestroom demand. The average rate for rooms and suites occupied at Bellagio during its first 20 days has been $188 per night. Finally, the word-of-mouth regarding this spectacular new resort has resulted in unprecedented requests for reservations since opening day. The Bellagio reservation center received 140,000 calls in the resort's first 20 days and confirmed approximately 28,000 new reservations. The average anticipated stay of such reservations is approximately three nights. Management expects well over half of Bellagio's available guestrooms to be occupied by conventions, tour groups and casino customers -- customer groups that do not book through the reservation center. While Bellagio still has room availability during many periods, the pace of reservation requests is testament to the high level of customer satisfaction with the product and to the likely long-term success of this new resort. Third Quarter Earnings Mirage Resorts (NYSE: MIR) reported third quarter earnings of $0.16 per share, versus $0.28 per share in the prior-year period. The difference was attributable to a decline in baccarat activity (affecting earnings by approximately $0.03 per share), a normal table games win percentage versus an exceptional win percentage ($0.06 per share) and higher than normal corporate expenses. The prior-year period benefited from high levels of baccarat play and the highest Company-wide table games win percentage in any quarter since The Mirage opened in 1989. The level of baccarat play in the recent quarter was consistent with the levels of the first and second quarters of 1998, reflecting the shift in economic conditions in certain Asian economies that occurred primarily in the second half of 1997 and began affecting that component of the Company's revenues in the first quarter of 1998. Apart from the swing in baccarat activity, the Company's level of business remained excellent. The Company-wide table games drop excluding baccarat increased 4% over the prior-year period, while the Company-wide slot win increased by 5%. Non-casino revenues, at $178 million, were approximately equal with the prior-year period and represented 49% of total revenues. The operating expenses of the Company's hotel-casinos were likewise approximately equal to the prior-year period, despite additional staffing that was necessary to prepare for the October opening of Bellagio. Corporate expense rose significantly over the prior-year period, reflecting certain political contributions and legal expenses, the growth in the size of the Company and expanded activities in pursuit of entertainment attractions for the Company's resorts. Political contributions are not deductible for tax purposes, resulting in a higher than normal tax rate in the quarter. Interest cost rose significantly in the quarter, but most of such cost
was capitalized as the increased debt levels related to projects under
construction during the quarter. As noted, Bellagio opened on October 15.
Construction is continuing apace on the Company's Beau Rivage resort in
Biloxi, Mississippi, which is expected to open in March 1999.
MIRAGE RESORTS, INCORPORATED
Three Months
Nine Months
Gross revenues
$372,174 $400,631 $1,104,263 $1,168,787
Income before income
Income per share before
Weighted-average common
MIRAGE RESORTS, INCORPORATED
Three Months
Nine Months
Gross revenues
Operating income
Monte Carlo operating
Other information
(a) Earnings before depreciation, interest and taxes. (b) Cash rate (i.e., excluding complimentary accommodations)
at the
Forward-Looking Statements This press release contains forward-looking statements which are subject to change. Actual results may differ materially from those described in any forward-looking statement. Additional information concerning potential factors that could affect the Company's future financial results is included in the Company's Annual Report on Form 10-K for the year ended December 31, 1997. |
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