Turns out Sin City is far from recession-proof. Citigroup Global Markets analyst Anil Daswani has doubts that MGM Mirage’s latest offering on the Las Vegas Strip, the gargantuan $8.5 billion CityCenter, planned for official opening and much fanfare on Dec. 16, will have tourists racing to plunk down what little cash they have left.
“With CityCenter to open within a month … we do not believe that CityCenter will successfully drive visitation without incentives,” Daswani said in a note. “In our view, 5,000+ new rooms will be hard to absorb.”
CityCenter is the largest privately financed development in the U.S.
However, noting visits to Las Vegas are trending down 7% in 2009 while unemployment levels have now hit double digits, having some of the highest unemployment figures in the U.S., Mr. Daswani is concerned the new building will cannibalize demand from MGM’s existing properties while adding pressure to room rates.
Citi has a “sell” rating for MGM Mirage.