everal hotels - primarily in the Middle East and Asia - will carry the names of the company's famous Bellagio and MGM Grand casinos in Las Vegas. The moves are a first for the biggest operator on the Las Vegas strip, partly controlled by billionaire investor Kirk Kerkorian.
They may be the company's only option for expansion as it continues to struggle with massive debt, which it reported at us$ 12.36 billion as of June 30.
Major casino companies have typically grown by buying or building properties they also operate, like the us$ 8.5 billion CityCenter project MGM Mirage is building in Las Vegas that it plans to manage. The 27.1 hectare project, co-owned by Dubai World, is set to open in December.
MGM Mirage is betting its franchised resorts will attract visitors even without gambling, which now produces more than one-third of revenue. But that isn't guaranteed. "If they're hoping to compete with Four Seasons, that's a high bar," said Randy Fine, a former Harrah's Entertainment Inc. vice president who started and runs the Las Vegas casino marketing and consulting firm Fine Point Group.
Even if MGM Mirage leads all companies in franchising and managing casinos, it will face tough competition from non-gambling hotel firms, said Fine, who helped manage four casinos for billionaire Carl Icahn before they were sold. "It's not a bad idea - it's just not a big idea," Fine said.