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Online Blackjack News - Is There Life After Blackjack? Ask MGM
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About two weeks ago, Mr. Murren, the president and chief financial officer of MGM Mirage, the $4 billion hotel and gambling behemoth, was holding forth in his office here at the Bellagio, surrounded by antique slot machines and talking about his latest bet the way a high-roller might recount the story of a big hand.
The future growth of his company, he proclaimed, has little to do with gambling. So instead of developing a new megahotel and casino, he is spending some $3 billion of the house's money on a major real estate play to transform 66 acres on the Las Vegas Strip into a mini-Manhattan. Think condominiums, boutiques, restaurants and movie theaters, all within walking distance.
"You won't see a Wal-Mart, but you will see Whole Foods," Mr. Murren said, briefly gazing into his hallway, where part of the movie "Ocean's Twelve" was filmed. "The days of building the Bellagios and the Wynns are over," he added, referring to Steve Wynn's newest hotel and casino, which does not even open until April.
Mr. Murren, whose company is about to complete its acquisition of Mandalay Resort Group and with it control of the city's most celebrated casinos, stands at the epicenter of the gambling universe. So why does he seem so determined to wager on virtually everything but gambling?
The answer reflects a new Las Vegas truism: The house may always win in blackjack, but the margins there aren't nearly as good as they are for $10 glasses of Grey Goose and tonic water or a $125 ticket to a Cirque du Soleil performance. Indeed, a quick look at MGM Mirage's revenue shows that the longtime economics of Las Vegas - give away the food and entertainment to get people gambling - have been turned on their head.
"If you were to look at our company - putting all the pieces of it together - 10 years ago about 65 percent or maybe more of our revenue would have been from gaming and 35 percent would have been everything else," Mr. Murren said. "Today, only about 44 percent is gaming. And I bet that if you give us less than 10 years, the whole thing will have completely reversed: 35 percent will be gaming and 65 percent will be nongaming."
That is not to say that gambling is a losing business proposition - in fact, revenue is up. It is just that nongambling revenue has risen a lot more. Consider that the average visitor to Las Vegas last year spent $193.92 on food and drink, $254.18 on accommodations, $83.53 shopping and $44.79 on shows for a total of $576.72 over about four days, according to the Las Vegas Convention and Visitors Authority.
By comparison, the average visitor who gambled - about 89 percent of visitors, but that number is steadily dropping - had a "gaming budget" of about $500, meaning the maximum amount they were willing to lose. And those figures encompass the entire Strip, not just the high-end properties that offer visitors plenty of other ways to spend their money.
Given the trend, Las Vegas may have to reinvent itself again. Part of the problem is that it may have simply run out of new gamblers. "I think there has been a realization that the market for gamblers coming in on Thursday and flying out on Sunday is finite," said David G. Schwartz, coordinator of the Gaming Studies Research Center at the University of Nevada Las Vegas and author of "Suburban Xanadu: The Casino Resort on the Las Vegas Strip and Beyond" (Routledge, 2003).
As Mr. Murren acknowledged, "No one says, 'Let's go see the next 300 slot machines at Monte Carlo.' "
IN one of the starkest acknowledgements of this new truth, Mandalay's newest property, called The Hotel, which resembles a giant version of a minimalist Ian Schrager boutique, does not even have a casino in the main building. (It's about a quarter-mile away, at the Mandalay Bay.) And blackjack tables and slot machines are conspicuously absent from the blueprint for Donald J. Trump's planned property in Las Vegas, Trump International. (During the finale of "The Apprentice," you will recall, the winner, Kelly Perdew, turned down the opportunity to help Mr. Trump develop that property in favor of working on his development on Manhattan's West Side.) |
Tuesday, 28 December 2004 |
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