Cosmopolitan Las Vegas could push hotel rates down

* 2,000 new Cosmopolitan hotel rooms opening in December

* Could trim MGM Resorts 2011 EBITDA by 5.5 pct

* Earnings at other operators could fall 1.2-1.7 pct

LOS ANGELES, Aug 13 (BestGrowthStock) – Casino hotels on the Las
Vegas Strip, already struggling to attract customers without
further discounting, will face new pressure with the December
opening of 2,000 hotel rooms at the $3.9 billion Cosmopolitan
of Las Vegas.

The competition could trim as much as 5.5 percent, or $74.1
million, from next year’s earnings before interest, taxes,
depreciation and amortization (EBITDA) at rival casino operator
MGM Resorts International (MGM.N: ), according to a report on
Friday from Union Gaming.

Under such a worst-case scenario for other Strip casinos,
the research firm found that 2011 operating cashflow could fall
1.7 percent at Wynn Resorts Ltd (WYNN.O: ), 1.4 percent at Las
Vegas Sands Corp (LVS.N: ) and 1.2 percent at Harrah’s
Entertainment Inc [HAMLEH.UL].

Union Gaming arrived at its findings by quantifying the
impact of daily room reservation rates through March 2011 at
the Cosmopolitan on its peer group of high-end luxury hotel
rooms.

The research firm, which assumed that current visitation
and occupancy trends remain stable, estimated that the
Cosmopolitan could attract just over 1 percent of total
visitors to Las Vegas, dropping occupancy rates at existing
high-end resorts from 82.1 percent to 76.5 percent.

The Cosmopolitan, acquired in a foreclosure by Deutsche
Bank AG (DBKGn.DE: ) in 2008, is scheduled to open about
two-thirds of its 3,000 luxury rooms in mid-December.

The two 50-story Cosmopolitan towers are wedged between two
MGM-run resorts — the multi-tower CityCenter and the Bellagio
— on the west side of the Strip.

Las Vegas — hit hard by the recession and the consequent
downturn in consumer and business spending — has struggled to
keep hotel rooms full at the same time new capacity enters the
market.

CityCenter’s December 2009 debut added 6,000 high-end rooms to
the Strip. Other projects, like the partially built Fontainebleau
on the northern portion of the Strip, are expected to remain on
hold, maybe for years, until the market recovers.

The number of hotel rooms in Las Vegas was up 5.3 percent
from a year earlier to 148,524 at the end of June, according to
the Las Vegas Convention and Visitors Authority.

Average daily room rates were nearly flat year-over-year in
the first six months of this year at $95.83, but were down more
than 27 percent when compared with 2007’s average of $132.09,
according to the city’s travel bureau.

(Reporting by Deena Beasley; Editing by Phil Berlowitz)

Cosmopolitan Las Vegas could push hotel rates down