MGM Mirage planed to market their Aria hotel property at a premium to their neighboring Bellagio hotel-casino. Aria’s room rates have been dropping, over some dates in February, as much as 41 percent lower than Bellagio. A recent quote shows a king bed room at Aria for one night on Valentine’s Day weekend at $259.00 and a comparable room at the Bellagio, $459.00. (Room rates are dynamic, and subject to change at any time.)
Obviously CityCenter is immensely important to MGM Mirage. However, the company receives 100% of the revenue from the wholly owned Bellagio, but due to their partnership with Dubai World, only 50% of the revenue from Aria. Certainly they want both properties to be successful, but profits drive the very important stock price.
Foot traffic and occupancy at Bellagio are holding up. Many believe that the sweeping design of the Bellagio, its corner location, beautiful fountains and dual entrances, is much more inviting than City Center.
In A Vegas Double on CityCenter, excellent Las Vegas writer Steve Friess looks at the differing opinions of two financial analysts concerning MGM Mirage and CityCenter. A grid in the article provides a rate comparison between Aria and Bellagio. The rate analysis includes only rates available to the public, and does not include group and wholesale rates.
Bill Lerner of the Union Gaming Group: “2010 Off To Good Start in Vegas, MGM Most Leveraged to Recovery.”
Robert LaFleur of Susquehanna International Group: “Is MGM Having Trouble Filling Rooms at CityCenter?”
Excerpt
The grid shows Aria’s room rates keep dropping and are, at some points in February, as much as 41 percent lower than that of neighboring Bellagio, also owned by MGM Mirage. Wrote Robert LaFleur of Susquehanna International Group: “It has been a little over a month since Aria opened, and it appears Bellagio still has the upper hand in premium pricing in the MGM portfolio. … This may not be good for CityCenter.”Whom to believe? Well, at the moment the edge must go to LaFleur because he has actual data that he adds to weekly and Lerner says their analysis is based on, essentially, eyeballing the scene. So MGM Mirage has come out of the best weekend in their HISTORY, per Lerner, only to cut room rates two weeks in a row? Lerner also hasn’t returned to a discussion of how CityCenter has been doing since then except to acknowledge the harsh real estate condo market it faces.
Meanwhile, LaFleur showed numbers that are damning. Aria dropped its rates twice – by a total of $100 — for the pivotal Feb. 13-14 weekend, which should be a bonanza for Vegas with its confluence of Valentine’s Day weekend, Chinese New Year and the President’s Day holiday. The place has only been open a month; surely if there’s as much excitement about it as Lerner believes, Aria would be able to stay at least even with her own older sister?
