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MGM: Renovation of The Hotel at Mandalay Bay being delayed

MGM Resorts International has announced that the renovation of The Hotel at Mandalay Bay into the Delano Las Vegas has been pushed back several months because the design phase has taken longer than originally anticipated.

Mandalay Bay President Chuck Bowling said Monday construction would begin in March with an opening sometime after September 2014. He said hotel bookings at the 1,100-room property have increased for the last three months of this year and the first three months of 2014.

“We don’t want to disrupt the experience for the customers who have booked with us for that window,” Bowling said. “The introduction of Delano Las Vegas is a very important project for MGM Resorts and a great fit for the Las Vegas market.”

Bowling said MGM Resorts has been working closely with Morgans Hotel Group, owners of the Delano brand, on the redesign. MGM Resorts and Morgans announced plans to convert The Hotel into the Delano Las Vegas more than a year ago through a room upgrade and a renovation of the public space. MGM and Morgans also planned to change out bars, lounges, a restaurant and the spa into Delano-branded amenities.

Sterne Agee gaming analyst David Bain told investors in a recent research note that delaying the renovation of The Hotel should not be viewed as a negative toward MGM.

“A potential delay in taking rooms out of service at the end of this year demonstrates MGM’s high-visibility and confidence in calendar year 2014 group booking trends, in our view,” Bain said.

MGM Resorts has been reinvesting in its 10 Strip properties, remodeling rooms at several hotels and adding attractions. The company’s most ambitious upgrade is the outdoor $100 million retail, dining and entertainment district being created on the Strip between New York-New York and Monte Carlo. MGM Resorts is also developing a $350 million, 20,000-seat sports and entertainment arena with national arena developer AEG to be built behind the two resorts.

JP Morgan gaming analyst Joe Greff told investors Monday that MGM Resorts has several short- and long-term upsides to its overall value.

“While MGM shares have outperformed its peers and the S&P 500 year to date, we continue to see a path of favorable fundamental and growth catalysts that should push the shares higher over the next six to 12 months,” Greff said.

Greff said the visitation and gaming activities surrounding the weekend’s championship fight between Floyd Mayweather Jr. and Saul “Canelo” Alvarez at the MGM Grand would help all of the company’s 10 Strip resorts. He said the company’s room rates are up 9 percent this year.

“Looking out to 2014, we believe that the outlook is favorable for both convention attendance and room rates,” Greff said. “The expected 2014 strength should benefit not only the high-end properties, but also MGM’s core properties as well.”

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.

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