CityCenter, the US$8.5 billion (Dh31.22bn) Las Vegas hotel and casino resort, will open this week despite concerns surrounding Dubai World, the venture partner with MGM Mirage. The project was "unaffected" by Dubai World's request for a six-month reprieve from its debt obligations, MGM Mirage said. The development on the Las Vegas Strip is one of Dubai World's single largest cash investments.
Dubai World has a 50 per cent interest in the project through its subsidiary Infinity World, as well as a 9.5 per cent stake in MGM Mirage. "CityCenter is fully funded, on schedule and ready to begin welcoming guests, starting [this] week," said Yvette Monet, a spokeswoman for MGM Mirage. The 27-hectare resort's phased opening will begin with the launch of the luxury Vdara Hotel and Spa on Tuesday, followed by the opening of the Crystals retail and entertainment district and Las Vegas's first Mandarin Oriental hotel.
The grand opening is due to take place on December 16, when the Aria Resort and Casino opens for business. "Dubai World continues to be a good partner, both as a major stakeholder in MGM Mirage and as a joint venture partner in CityCenter," Ms Monet said. The relationship between the two companies and the fate of the project appeared uncertain when Dubai World this year sued MGM Mirage, citing breach of contract and mismanagement of costs after MGM warned in its annual report that it could default on its debt and be forced to seek bankruptcy protection. But the companies resolved the dispute in May.
MGM Mirage this month reported a $750.4 million loss for the third quarter as revenue on the Las Vegas Strip fell, and it announced an impairment charge of $956m related to the company's investment in CityCenter, as well as a write-down of $203m on CityCenter's residential developments. Last month, MGM Mirage announced that a 30 per cent price reduction would be offered to existing buyers of CityCenter's luxury residential offerings.
But analysts note that the opening of the resort is quite an achievement, given the current economic environment. "CityCenter is by far the biggest project in Las Vegas right now, and the only new properties still under development - Fontainebleau and Cosmopolitan - are troubled," said Brent Pirosch, the director of gaming consulting services at CB Richard Ellis. "Both of those properties have run into financing issues and could probably not open until at least late 2010."
Las Vegas resorts have been hit hard by a decline in room rates, while gaming revenues have fallen 14.9 per cent in the 12 months to September compared with the previous year. It is hoped that CityCenter will boost visitor numbers to Las Vegas, with Bobby Baldwin, the president and chief executive of CityCenter, describing it "as a beacon of hope for a future of renewed economic vitality in Las Vegas".
There are some concerns that as CityCenter adds thousands of rooms and even more entertainment to Las Vegas, other properties will suffer. CB Richard Ellis's Global Gaming Group predicts that between 70 and 90 per cent of CityCenter's revenues will be gained at the expense of other properties. @Email:rbundhun@thenational.ae
