weather icon Partly Cloudy

MGM Resorts has seemingly insatiable demand for convention space

MGM Resorts International operates more than 3 million square feet of convention and meeting space on the Strip.

And it’s not enough.

The company opened a 350,000-square-foot expansion to the Mandalay Bay complex last year and will add 200,000 square feet of meeting space to Aria by 2018.

It’s still not enough.

MGM Chairman and CEO Jim Murren said a master plan reviewing where convention facilities can be added or expanded at the company’s 10 Strip resorts is expected to be completed this spring. Bellagio, MGM Grand and Luxor, based on their footprints, figure to be targeted.

But it’s still not enough.

Murren, during an interview following MGM’s fourth-quarter and year-end earnings release last month, said Las Vegas needs to stay ahead of the game when it comes to developing convention and meeting facilities. Chicago, New York, Atlanta and Orlando, Florida, are building convention complexes that look to steal business from the Strip and MGM.

He repeated points made during a keynote address in January at the Las Vegas Metro Chamber of Commerce’s Preview event: The Las Vegas Convention Center needs to be expanded if the city hopes to retain the large-scale trade shows and events that fill many of the Strip’s hotel rooms annually.

Murren backs the Las Vegas Convention and Visitors Authority’s plan to convert the former Riviera site into a multibillion-dollar state-of-the-art convention and trade show complex.

“It’s a fantasy to believe these conventions won’t go someplace else unless we leverage our strengths here in Las Vegas,” Murren said.

Murren’s viewpoint is not shared by Las Vegas Sands Corp., which sees the Convention Center as a direct competitor to private enterprise and the use of room-tax revenue to build on the Riviera site as inappropriate.

Murren, however, said Strip casinos also need to grow their convention space. MGM, he said, is doing its part.

Last year, 18.5 percent of the total occupied room nights associated with MGM’s nearly 41,000 hotel rooms on the Strip were used by convention and meetings guests. A year earlier, the figure was 17 percent. Company officials hope to meet or exceed that mark this year. MGM has booked $500 million in new conventions and meetings for 2016 and 2017.

“Throughout the year, our sales and yield teams have done an outstanding job of maximizing our convention space to reach this all-time record high in convention room occupied nights,” MGM Chief Financial Officer Dan D’Arrigo said. “And I think they are just getting started.”

Mandalay Bay’s expansion gives the complex 2 million total square feet and 1.1 million square feet for exhibit space, improving its North American rankings from seventh to fifth in total square footage and from 11th to fifth in total exhibit space.

The facility is still third in size in Las Vegas behind the Las Vegas Convention Center and the Sands Expo and Convention Center.

Meanwhile, the planned Aria expansion will give CityCenter’s centerpiece property 500,000 total square feet of meeting space.

“We have solidified our position here in Las Vegas as the destination choice for large-scale meetings and conventions,” Murren said. “We saw that the convention business was coming back to Las Vegas. We wanted to keep ahead of demand, and we are very confident in our ability to fill and, in fact, outgrow that space over the next couple of years.”

Convention and meeting business has allowed MGM Resorts, and other Strip gaming companies, to increase average daily hotel room rates and grow revenue per available room, which is a nontraditional figure analysts use to track profitability.

As the recession slips further in the background, MGM Resorts is slowly creeping back to the peak levels of 2007. Murren said the company’s Strip resorts are 7 percent below the highest-ever average daily room rates and 10 percent beneath the revenue per available room totals.

“We clearly have room to grow,” he said.

The signs are pointing in a positive direction. Las Vegas welcomed a record 42.3 million visitors in 2015, and passenger counts at McCarran International Airport were the highest since 2008. Also, convention attendance in Las Vegas increased 13.4 percent even with a 3.6 percent drop in the number of shows and meetings hosted.

Wall Street is in agreement.

Macquarie Securities gaming analyst Chad Beynon said MGM Resorts “doesn’t expect a slowdown” in visitation, which gives the company an opportunity to “price up” its hotel rooms while growing both gaming and nongaming revenue.

Credit Suisse gaming analyst Joel Simkins said MGM was “well-positioned” to benefit from its continued investment on the Strip.

“We felt that MGM was hitting on all cylinders from a lodging/nongaming perspective as the market benefits from consumer stability and strong corporate demand,” Simkins said.

Murren said Mandalay Bay will exceed its current capacity in a short time, which is one reason MGM Resorts is looking at expansion opportunities. He pointed to the company’s new 20,000-seat T-Mobile Arena, which opens in April, as another venue that will bring new business to Las Vegas.

“The real story is about strength in the nongaming side of the business,” Union Gaming Group analyst Christopher Jones said. “Between the Mandalay Bay refresh and convention expansion, the T-Mobile Arena and the Aria convention center expansion, MGM is essentially doubling down on this being the story for years to come.”

Las Vegas isn’t expected to see any new resorts or hotel capacity added at least through 2018 or 2019, which benefits MGM, Murren said.

“We have literally no new supply growth in the near-term, unlike many major markets here in the U.S.,” Murren said. “That, of course, helps the home team, and MGM is the home team.”

The Review-Journal is owned by a limited liability company owned by the family of Sands chairman and CEO Sheldon Adelson.

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

Don't miss the big stories. Like us on Facebook.
Business Videos
How much do Las Vegas casino CEOs make?
Las Vegas gaming CEOs made anywhere between $1 million and $24 million last year, according to company filings with the U.S. Securities and Exchange Commission. ((Las Vegas Review-Journal)
30-year-old Rio needs a little TLC
Nearly 30 years after the Rio opened, the red and blue jewel that helped catapult Las Vegas to a new level with its buffet and nightclub has lost its status along with its shine.
The latest on the Drew Las Vegas - VIDEO
Eli Segall recounts his tour of the Drew Las Vegas, formerly the Fontainebleau, on the Las Vegas Strip. (Michael Quine/Las Vegas Review-Journal)
Pinball Hall of Fame to move near south Strip
Operators of the Pinball Hall of Fame have been approved to build a new, larger arcade near the south edge of the Strip on Las Vegas Boulevard near Russel Road. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
National Hardware Show underway Las Vegas
The National Hardware Show kicked off Tuesday at the Las Vegas Convention Center (Mat Luschek / Review-Journal)
Caesars for sale?
Caesars Entertainment Corp. has been swept up in takeover speculation since the company’s share price tumbled last year amid disappointing earnings and concerns over a recession. Amid the decline, hedge funds scooped up shares. Billionaire activist investor Carl Icahn began buying shares of Caesars as early as January. Icahn acquired nearly 18 percent by mid-March. In February Icahn called on the Caesars board to study a sale as a way to boost shareholder value.
Las Vegas home prices
Las Vegas home prices grew fastest among major markets in February for the ninth straight month. But amid affordability concerns, the growth rate has slowed down. Southern Nevada prices in February were up 9.7% from a year earlier, according to the latest S&P CoreLogic Case-Shiller index. The last time Las Vegas' price growth fell below 10% was in September 2017, S&P Dow Jones Indices reported.
Free Parking Coming To Wynn
Free parking will come to the Wynn and Encore resorts on May 1, 2019. (Mat Luschek / Review-Journal)
Founding Venetian employees talk about 20 years at the Strip resort
The Venetian, which opened May 3, 1999, is celebrating 20 years on the Las Vegas Strip. Seven original employees talk about opening the luxury resort and working there for two decades. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Circa aiming for December 2020 opening
The 1.25-million-square-foot property will have 44-stories and 777-rooms. It will also have a separate nine-story, 1,201-space parking garage.
Boxabl official explains the building concept
Boxabl business development manager Galiano Tiramani shows off a room built by his company. (Blake Apgar/Las Vegas Review-Journal)
TI/Mirage Tram reopens
The tram that shuttles guests between TI and Mirage reopened this week after being closed for much of 2018.
Las Vegas Convention Center expansion taking shape
Renderings and actual footage show how the Las Vegas Convention Center is evolving.
Former Starbucks CEO Howard Schultz at Las Vegas convention
Former Starbucks CEO and potential presidential candidate Howard Schultz spoke at the Epicor Insights user conference at Mandalay Bay Convention Center Wednesday, April 17, 2019. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Drew Las Vegas to open in the second quarter of 2022
The 67-story Drew Las Vegas is slated to open in the second quarter of 2022 at the north end of the Las Vegas Strip. (Michael Quine/Las Vegas Review-Journal)
NAB Day 1 (Time Lapse)
NAB kicked off at the Las Vegas Convention Center on Monday, April 8, 2019. (Mat Luschek / Review-Journal)
National Association of Broadcasters Show shows 1mm thick 8K TV with 22.2 channel digital sound
Japan’s NHK Science & Technology Research Laboratories booth featured a 1mm thick 8K TV system used in conjunction with a 22.2 channel digital sound system at the National Association of Broadcasters Show at the Las Vegas Convention Center. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Nevada shoppers react to Smith’s no longer accepting Visa credit cards
On March 1, Smith’s announced that it would no longer be accepting Visa credit cards at any of its 142 supermarkets, including the 45 in Nevada.
Massachusetts Gaming Commission asks how long Wynn executives knew about misconduct
Business reporter Rick Velotta gives an update on the adjudicatory hearing on the suitability of Wynn Resorts to retain its gaming license in Massachusetts.
Henderson app developer part of Startup in Residence
Henderson based developers of the app On Point Barricade are taking part in Startup in Residence, a North America program dedicated to pairing tech companies with governments. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Sam's Town employees and customers talk of their love for the iconic casino
Longtime Sam's Town employees and customers love each other and love their casino. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Las Vegas apartments rents
Las Vegas’ apartment market has accelerated in recent years. Developers are packing the suburbs with projects, landlords are on a buying spree, and tenants have filled buildings.
William Boyd talks about the birth of Sam's Town
On the eve of the 40th anniversary of Sam's Town, William Boyd, executive chairman of Boyd Gaming and son of hotel namesake Sam Boyd, talks about how the casino became one of the first local properties in Las Vegas. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
High Roller observation wheel turns five
The world’s tallest observation wheel celebrates it’s fifth year on Sunday, March 31, 2019. (Michael Quine/Las Vegas Review-Journal) @Vegas88s
Escape Room Industry Growing In Las Vegas
Escapology employees discuss the growing escape room industry in the U.S. and Las Vegas. (Bailey Schulz/Las Vegas Review-Journal)
Impact of parking fees on visiting the Las Vegas Strip
There are no data showing a relationship between Strip resort and parking fees and the number of out-of-state visitors to Las Vegas. But there are data showing a relationship between Strip parking fees and the number of local visitors to the the Strip. ‘’As a local, I find myself picking hotels I visit for dinner or entertainment, based on whether they charge for parking or not,”’ said David Perisset, the owner of Exotics Racing. ‘’It is not a matter of money, more of principle.’’ A 2018 survey by the Las Vegas Global Economic Alliance found 36.9 percent of Clark County residents reported avoiding parking at Strip casinos that charge for parking. 29.1 percent reported avoiding using any services from a Strip casino that charges for parking.
MGM's sports betting deals
MGM Resorts International signed a sports betting sponsorship agreement with the NBA in July It was the first professional sports league to have official ties with a legal sports betting house. The deal came just two months after the U.S. Supreme Court overturned a law prohibiting sports betting in most states. In October, MGM became the first gaming company to sign a sports betting partnership with the NHL. In November, MGM became the first gaming company to sign a sports betting partnership with the MLB. Financial terms of Tuesday’s deal and earlier partnerships have not been announced.
Faraday puts Las Vegas land on the market
Nearly two years after Faraday Future bailed on its North Las Vegas auto factory, the company has put its land up for sale. (Michael Quine/Las Vegas Review-Journal)
El Cortez owner Kenny Epstein on running the iconic property
Kenny Epstein, owner of the El Cortez Hotel in downtown Las Vegas, talks about Jackie Gaughan mentorship and answers rumors about bodies in the basement at the mob-era casino. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
LVCVA recommends construction of underground people mover
The Las Vegas Convention and Visitors Authority announced the recommendation for an underground people mover for the convention center. The system would have the potential to expand and connect Downtown and the resort corridor all the way to McCarran. (Michael Quine/ Las Vegas Review-Journal)