Published Thursday, Nov. 5, 2009 | 6:17 a.m.
Updated Thursday, Nov. 5, 2009 | 9:53 a.m.
MGM Mirage Financial Information
|3Q 2009||3Q 2008||% Change||2Q 2009|
|Revenue||$1.533 billion||$1.785 billion||-14%||$1.5 billion|
|Net income||($750.4 million)||$61.3 million||N/A||($212.6 million)|
|Net income per share||($1.70)||22 cents||N/A||(60 cents)|
Beyond the Sun
With its CityCenter resort set to open, MGM Mirage today reported a loss for the third quarter as revenue fell on the Las Vegas Strip -- but also said its results are improving in the fourth quarter.
"We continue to show sequential improvement in our operating results over the course of 2009,'' Chairman and Chief Executive Jim Murren said in a statement.
MGM Mirage lost $750.4 million, or $1.70 per share in the third quarter vs. a profit in the year-ago quarter of $61.3 million or 22 cents per share. Net revenue of $1.533 billion was down from $1.785 billion.
The results include previously announced noncash accounting charges against earnings of $1.17 billion. These include a $956 impairment charge for the company's investment in CityCenter and $203 million to write down the value of condominiums under development there.
With the recession reducing visitation to the U.S. gambling capital, MGM Mirage reported a 95 percent occupancy rate on the Las Vegas Strip, equal to last year. But it lowered rates to do so.
Daily revenue per available room on the Strip fell from $129 in the 2008 quarter to $100 in the 2009 quarter.
Third quarter Las Vegas Strip revenue per available room decreased 23 percent compared to the prior-year quarter -- an improvement from the 31 percent year-over-year decrease in the second quarter of 2009.
Overall revenue on the Strip fell from $1.45 billion to $1.22 billion. The company's resorts on the Strip include Mandalay Bay, Luxor, Excalibur, New York-New York, Monte Carlo, Bellagio, Mirage, Circus Circus and MGM Grand.
Some analysts fear CityCenter will steal business from other MGM Mirage properties, but Murren in today's report focused on the overall picture on the Strip.
"We continue to earn occupancy through our superior assets and focus on the customer, resulting in increased market share. We expect CityCenter to grow our business significantly and we are extremely excited to open this tremendous asset, with Vdara opening in less than a month on Dec. 1, followed by Crystals on Dec. 3, Mandarin Oriental on Dec. 4, and Aria Resort and Casino on Dec. 16."
Murren said MGM Mirage is seeing stronger convention bookings as U.S. corporations appear more willing to send employees to meetings and events. Las Vegas Sands Corp. earlier reported similar results in its convention-booking efforts. The MGM Mirage conventions mainly involve the company's big convention center at Mandalay Bay.
As convention and business travel improves, the company hopes for room rate recovery and feels that's achievable in the second half of 2010 and in 2011, Murren said.
"The corporations are starting to move out of their retrenchment mode and getting out in front of their customers," he said, adding MGM Mirage confirmed 550,000 such room nights in the third quarter -- a number approaching the pre-recession level.
In an apparent reference to Harrah's Entertainment Inc., Las Vegas Sands Corp. and Wynn Resorts Ltd., Murren said MGM Mirage remains focused on its core Las Vegas market while competitors seem preoccupied with financial deals and overseas expansion.
"We think our market share will increase next year, it is increasing right now," Murren said during a conference call with analysts.
He said MGM Mirage projects the $8.5 billion CityCenter will help drive an increase in citywide visitation to Las Vegas of 7 percent to 38.1 million people in 2010 -- while the city's room inventory will increase 5 percent.
With citywide occupancy projected at 80 percent, "We'll be north of 90 percent for 2010," he said.
Citywide table game and slot machine win should grow by double digits, he said.
"We believe MGM Mirage will get more than its share," Murren said, adding CityCenter will be used to cross-market the company's other products at low to high price points.
The third-quarter results -- break-even excluding the charges -- beat analysts’ estimates. Casino revenue declined just 1 percent based on strong results at high-end baccarat tables.
Twenty analysts surveyed by Bloomberg had projected an average 8-cent loss.
MGM Mirage stock advanced 4 percent to $9.69 on the news.
Today's results for MGM Mirage's Las Vegas Strip properties are in line with third-quarter trends reported earlier by competitors Harrah's, Las Vegas Sands and Wynn Resorts. They all reported weakness in the third quarter vs. last year's third quarter.
MGM Mirage will manage the operations of its 50-percent owned CityCenter for a fee. Aria is a 4,000-room casino resort; and CityCenter has two 400-room non-gaming boutique hotels, the Mandarin Oriental and the Harmon Hotel & Spa. Completion of the Harmon has been delayed.
CityCenter including its Crystals center will have about 425,000 square feet of retail shops, dining and entertainment venues; and about 2.1 million square feet of residential space in some 2,400 luxury condominium and condominium-hotel units in multiple towers including Vdara.