Bill Lerner
Catching Up To Las Vegas
Although tourists might not be booking shopping trips soon, experts say the Sands' Venetian Macau, the $2.4 billion replica of its Las Vegas resort that opened last month, already is accelerating Macau's Vegas-like transformation by growing that market. That growth has big implications for Las Vegas, where the Venetian and competitor Wynn Las Vegas are using Las Vegas attractions together with their Macau operations to cultivate a new crop of Asian high rollers.
With 3,000 rooms, a 550,000-square-foot casino floor, 1 million square feet of retail and a 1.2 million - square-foot convention center, the Venetian Macau is the second - largest building in the world and boasts the world's largest casino. The Venetian Macau's convention center is about as big as the Las Vegas version (excluding the company's adjacent Sands Expo Center) but has a mall that's more than twice as large - in a region with little convention or retail space.
Venetian Macau drew more than 500,000 people in its first week, with daily foot traffic surpassing that of the largest and most profitable resorts on the Strip. "This property completely changes the market," said Bill Lerner, a stock analyst with Deutsche Bank.
Las Vegas Hilton Posh, Polished and Poised
The hotel, which is owned and operated separately from the Hilton hotel chain by Colony Resorts, plans to continue the hotel room renovations in 2008. Bill Lerner, a gaming analyst for Deutsche Bank, said the remodeling has made the resort's public areas in the entrance brighter and more comfortable. "That's a critical public face to have focused on," Lerner said. "Working on the entrance and the hotel reception and lobby are important things to have focused on. Keeping it fresh is critical, and I think they have done a good job." Lerner said the demographic for the hotel, which is on 59 acres on Paradise Road north of the Las Vegas Convention Center, are midweek conventioneers and value customers.
DEVELOPMENT: The Next Wave
Gaming analysts speculate that Ruffin's condo-hotel partner, New York billionaire developer Donald Trump might eventually have some involvement in the New Frontier's plans. Trump is building the Trump International on land behind the New Frontier. Deutsche Bank gaming analyst Bill Lerner called the New Frontier's center Strip site across from Wynn Las Vegas an "enviable location." But he doesn't believe the project will be completed in the manner that has been announced.
Wynn Orders Macao Delays
Deutsche Bank gaming analyst Bill Lerner said Macau's gaming revenue trends are still strong, with casinos up 40 percent in April compared with a year ago. They were up 60 percent unofficially in May. He thought visa restrictions were having minimal impact.
"We would expect the new restrictions would impact the lowest end of the mass market and would be less likely to hamper premium customers," Lerner said. "The official motives behind the restrictions remain uncertain, as well as how long they could last." In addition to the Macau events, Wynn Resorts announced it would repurchase up to $1.2 billion worth of the company's stock through open market purchases and negotiated transactions.
Takeover Talk Sends Shares of IGT Upward
The biggest hurdle facing any private equity group looking to buy IGT would be regulatory approvals. Susquehanna Financial Group gaming analyst Robert LaFleur was unsure a deal was in the offing. He said securing government licenses in multiple states and countries could take more than a year. "They only need licenses in eight or nine states for Harrah's," LaFleur said. "IGT has something like 300 licenses."
Deutsche Bank gaming analyst Bill Lerner gave little credence to the transaction taking place. "It's an attractive company and it's an advantageous time, but there are a lot of pitfalls to this deal," Lerner said.
Gaming Stocks Continue Rally
Deutsche Bank gaming analyst Bill Lerner said Wednesday a media outlet in Macau reported that gaming revenue in the Chinese enclave increased 54 percent in October and its up 50 percent over 2006. Lerner said visitation to Macau, where Wynn Resorts operates the Wynn Macau and MGM Mirage is opening the $1.25 billion MGM Grand Macau in December, is up almost 30 percent. "Historically, the initial gaming revenue numbers have been close to actual results reported by the government, usually released about a month later," Lerner said in a note to investors. "September represented the first full month of Venetian Macau, which generated a reported 2.5 million visitors since opening through mid-October."
MGM Mirage Shares Surge Again In Aftermath of Kerkorian Interest
The structure of any deal in which Kerkorian would acquire the Bellagio, considered one the Strip's most luxurious resorts, or the $7.4 billion CityCenter, a massive urban development with hotels, a casino, residential and dining and entertainment on 76 Strip acres, is still a question. Several analysts predicted that MGM Mirage would be given a management contract to operate both businesses if a deal were reached.
"This could have positive implications for the space, and compel the market to rethink gaming valuations," Deutsche Bank gaming analyst Bill Lerner said in a note investors. "Historically, casino operators have traded at a discount to traditional lodging companies. However, this type of initiative, along with the increasingly global secular nature of the sector, could work to close the gap." Lerner said Wall Street was also anticipating more information on the deal's proposed makeup.