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The brand new Cosmopolitan Las Vegas hotel-casino has finally gained approval from the Nevada Gaming Commission to open December 15^th. The Deutsche Bank approved the $2 billion loan which eventually defaulted. The bank then took over the project and invested another $2 billion to complete it. However, the bank will not have influence on the day-to-day or gaming operations.

Lofty Goal

The Chairman of the Cosmopolitan is comfortable with his original revenue projections and considers them to be ‘lofty goals.’ He feels it may take awhile to repay the loan from the bank but it is an achievable goal. However, two commissioners stated the adjacent properties also had these high hopes of making money and fell much under their original estimates.

Others are stating the economy is back on the upswing and convention business is beginning to rebound. The CEO of the Cosmopolitan believes his hotel will bring new customers to Las Vegas: the curious class which consists of the artisans and creative people.

The Hotel-Casino

The Cosmopolitan hotel-casino will be aimed at the luxury market and will bring approximately 5,000 jobs to the Las Vegas area. The actual resort consists of 2,995 hotel rooms with 14 restaurants, 3 swimming pools, 1,479 slot machines and 83 table games on the property. The resort is planning to have their soft opening on December 15^th, 2010 with their grand opening New Year’s weekend.

Also, there are currently 216 condominium properties that remain under dispute but should be resolved within the next two months. This will contest the current lawsuits of those that agreed to purchase the condos. Also, the price of the condos has not and will not fluctuate.

Deutsche Bank

The President of the property has acquired assurance from the Deutsche Bank that they would not share any information with other companies in which they are involved. Deutsche Bank has multiple investments and properties in the Las Vegas area.

In these situations, it appears as if there is light at the end of the tunnel. The economy seems to be rebounding slightly. However, to bring new clientele to Las Vegas, prices must be reduced so the average Joe can afford the trip. The Cosmopolitan seems to have a solid plan but may fall short of their predictions like other properties in close proximity. Hopefully they will succeed and bring business back to the Las Vegas Strip.

The opening of CityCenter Las Vegas brought fun and excitement. Month’s later statistics are showing that there are more hotel rooms in Las Vegas than people to fill them. Evidence is appearing that indicates CityCenter is stealing business from other resorts.

Single-Property vs. Multi-Property Owners

This information is much more detrimental to single-property casinos such as, the Riviera and Tropicana which have more to lose than their competitors like MGM International who own multiple establishments on the Las Vegas strip. In the end, the single-properties are generating less money and have a smaller customer base to market too.

Also, visitors are staying at fancier, more expensive hotels because they have lowered their rates (which are aligned with budget hotels) due to the global recession. Many properties are back in the black, but aren’t making as much as they would if CityCenter wasn’t open.

The Numbers

From January through May of this year there was a 1.5 percent increase in visitation to Las Vegas. On the other hand, the number of overall hotel rooms jumped by 5.6 percent over the previous year. The occupancy rate throughout the city from January to May was 80 percent which is a 10 percent decrease from 2007 when Las Vegas tourism was at its greatest.

The total cost of CityCenter is $8.5 billion. The whole complex continues to struggle, not yet turning a profit. In the second quarter of 2010, an operating loss of $128 million dragged down MGM International’s earnings.  MGM believes that its competitors are losing even more money due to decreased gambling and room revenue.

MGM’s Aria consists of almost 30 percent gamblers. This is higher than any casino and resort in the Las Vegas area. This is due to marketing specifically to the gaming community who are expected to take the place of the traditional business. The gamblers are MGM loyalty program registrants that receive discounts.

Causes of a Decrease in Revenue

The global recession is the primary cause for the decline in the leisure and entertainment business. Also, with the opening of CityCenter, there has been a huge influx of competition in a tight market. Additionally, there is currently an overabundance of convention space but not enough conventioneers to fill it.

The combination of these things adds up and results in a major decrease in business. Casinos and resorts will need to look to new methods if they want to attract new guests and retain the loyal. Promotions and offers don’t seem to have the same effect as they once did. A new idea must be implemented for the gaming industry to jump back on its feet.