The multibillion dollar CityCenter entertainment resort in Las Vegas, half-owned by Dubai World, has narrowed its losses as business in the city continues its recovery from depressed conditions.
Dubai World encouraged as CityCenter fortunes improve
Losses at CityCenter fell to US$10.2 million (Dh37.6m) in the fourth quarter of last year compared with $38.4m in the same quarter of the previous year, MGM Resorts International reported.
The resort is jointly owned by the Dubai World subsidiary Infinity World and MGM Resorts.
MGM Resorts last Friday announced it had issued $240m of senior secured notes, with money raised from the offering along with cash from its balance sheet to be used to repay $300m of its outstanding borrowings under a $375m credit facility.
"CityCenter is a deleveraging enterprise," MGM Resorts said. "Its goal is to return value to its shareholders - Infinity World and MGM Resorts.
"Through the residential inventory that we own and through the rising cash flows, we think CityCenter will be deleveraging and will be a source of cash to the partners."
CityCenter, which cost $8.5 billion to build, opened in December 2009 in a severely depressed and challenging market. But conditions are improving.
"Las Vegas has clearly regained its position as the place to be and looking at this year just alone, to give a sense of it, we had records or new records in almost every event that we've had already this year," said Jim Murren, the chief executive of MGM Resorts.
The CityCenter complex's main attraction is the 4,004-room Aria gaming resort.
It also has luxury non-gaming hotels including the first Mandarin Oriental in Las Vegas, as well as a 46,450 square metre retail and entertainment district.
Analysts agree that conditions and the outlook have notably improved in Las Vegas.
"Las Vegas has continued its rebound that began in 2010," said Shannon Okada, an associate director at HVS, a hospitality consultancy.
"Room occupancy and average daily rates were also up from the depressed levels of recent years. With increasing revenues, profit margins for casino-resorts are expected to benefit from the efficiencies implemented during the downturn.
With the national and local economies recovering and discretionary spending slowly rising, the outlook for the Las Vegas market for this year is positive, followed by stronger results next year.
With no major developments opening in the near-term the market will have time to absorb all the new high-quality supply."