Friday, April 27, 2001 | 11:26 a.m.
Mandalay Resort Group moved to become a force in the huge Las Vegas convention industry Thursday, unveiling plans to build a 1.8 million square-foot convention center at its flagship property on the Strip.
Mandalay didn't reveal the cost of the project, but said it will be complete and ready for shows in summer 2002. That will give Mandalay Bay 2 million square feet of convention and exhibit space, vaulting it ahead of the Venetian and the Sands Expo Center for the title of Las Vegas' largest privately owned convention operation.
The three-floor center will be built just south of Mandalay Bay's existing convention area, on 16.5 acres at the south end of the property.
The convention center will give Mandalay 1 million square feet of exhibit space, allowing the property to attract huge trade shows that only the Las Vegas Convention Center and Sands Expo Center can now host. The center will also include a 100,000-square-foot "MegaBallroom," which Mandalay is calling the largest hotel ballroom in the nation.
"We found we were so in demand (as a convention location) that we were turning business away, business that desperately wanted to be here," said Danielle Babilino, vice president of hotel sales for Mandalay Bay. "With two sister hotels (the Luxor and Excalibur), in conjunction with Four Seasons (at Mandalay Bay) we have over 12,000 guest rooms to offer at various price points ... under one contract."
It will also provide a stream of business for Mandalay's properties during weekdays.
"It will increase our (average daily rate) by allowing us to increase our percentage of hotel occupancy by (convention) users, and our ability to flatten out (demand), rather than having peaks and valleys," said John Marz, vice president of marketing for Mandalay. "We'll be able to have a better flow of customers throughout our properties, seven days a week."
And that's something Mandalay has needed, analysts say.
"One of the issues facing the Mandalay properties at the south end of the Strip is softness in midweek (room revenues)," said Andrew Zarnett, gaming analyst with Deutsche Banc Alex. Brown. "This helps mitigate that softness by allowing them to use convention business to fill that gap. It brings in a better quality of customer than they've been able to attract during midweek.
"They have an award-winning property at the south end (Mandalay Bay). This gives people one more reason to be there."
Currently, the location of Mandalay Bay, Excalibur and Luxor has prevented them from grabbing large chunks of the convention business generated by the Las Vegas Convention Center and the Sands Expo Center, said Jason Ader, gaming analyst with Bear Stearns.
"Clearly, people who come to Las Vegas for conventions don't necessarily choose Mandalay as their first location, because it's so far away," Ader said. "Now if a major convention comes to town, and the epicenter is on Mandalay's property, then those rooms become a lot more desirable, allowing them to charge much higher prices. It's a very logical investment for them. I'd much rather see them deploy capital this way than build another 1,000-room hotel tower."
Mandalay's center will open about six months after the Las Vegas Convention Center's South Hall expansion, which will add 1 million square feet of additional meeting and convention space in January 2002. Once complete, the Las Vegas Convention Center will have 3.2 million square feet of convention, meeting and exhibition space.
The Venetian and Sands Expo Center will move down to No. 3 in terms of convention space. The Sands Expo Center has 1.15 million square feet of space, while the Venetian's Congress Center spans 500,000 square feet. No. 4 in Las Vegas will be the MGM Grand, with its 380,000-square-foot conference center.
Conventions have been a booming business in Las Vegas for the last several years and Las Vegas competes with Chicago and Orlando as the nation's convention and trade show leaders. But is there enough potential new demand to handle nearly 3 million square feet of new space? Ader believes there is.
"Vegas' future is very much dependent on the business travel customer," Ader said. "There's far more convention demand out there than Vegas is capturing, and as a city, so long as air service remains predictable and readily available to the American public, Vegas provides the best price value of any other U.S. city for conventioneers."
Marz made it clear the main goal isn't simply to redirect business from other Las Vegas properties.
"We're looking at the Chicagos, Dallases, Orlandos as competitors now," Marz said. "We will have a product that will take (conventions) from other areas and bring them to our city."
The decision to build the center will not affect Mandalay's long-discussed plans to build a 1.2 million-square-foot mall between Mandalay Bay and Luxor, Marz said, though he said a timeframe for its development has yet to be set. Enough land will be left for the development of Mandalay's long-discussed fourth resort south of Tropicana Avenue -- and a business generator will be created for such a property.
"We still have enough for another hotel, but we're not building it with that in mind," Marz said. "We're building it to fill up existing properties we have on the south end of the Strip."