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Casino Hotels - International - April 2009

This report reviews recent developments in the casino hotel sector and offers insights into future trends for the industry. Following an overview of some macroeconomic trends (including the outlook for spending on travel and tourism), the report proceeds to review developments in the major casino destinations, including Atlantic City, Las Vegas and Macao. The following section deals with some of the specific characteristics of casino hotels, as compared to other types of lodging properties. In particular, casino hotel revenue management is explored. The next section consists of a review of the profiles and latest developments of the major US casino hotel operators, such as Harrah’s, Sands (Las Vegas Sands Corp), MGM Mirage, Wynn Resorts and some smaller European-based operators, including Lucien Barrière and the Société des Bains de Mer of Monaco. The final section summarises the outlook for the future of the sector.

While the scope of this report is international, it does not pretend to be comprehensive. Coverage is limited to major dedicated gaming hotels, for the most part, operated by the principal chains specialising in the gaming segment of the hospitality industry.

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Table of contents

  1. Introduction

      • Key findings
      • Data Sources

        • Overview

            • Growth outlook
              • Figure 1: Forecasted GDP growth rate by region and major country, 28 January 2009
            • Outlook for growth in spending on travel and tourism
              • Figure 2: Travel and tourism expenditure worldwide, 2008-18
            • Trends in wealth accumulation
            • Major Gaming Destinations

                • Atlantic City
                  • Casino hotel performance
                    • Figure 3: Performance of Atlantic City casino hotels, 2006-08
                  • Las Vegas
                    • Stagnating visitation
                      • Figure 4: Trend in visitor frequentation and hotel performance in Las Vegas, 2000-08
                    • Macao
                      • Mainland Chinese the dominant source market
                        • Market liberalised in 2002
                          • Sociedade de Jogos de Macao
                            • Joint venture with MGM
                              • Recent casino developments
                                • Hotel capacity and performance
                                  • The Macao gaming market
                                    • Figure 5: Net gaming revenue market share in Macao, first half of 2008
                                  • Outlook dims for Macao
                                    • Speculation surrounding the restrictions
                                    • Specific Characteristics of Casino Hotels

                                        • Revenue management
                                          • Comparison with conventional hotels
                                            • Casino hotel guest segmentation
                                              • Room rates are treated as a residual
                                                • Optimising profits – not only maximising revenues
                                                  • Rainmaker
                                                  • Profiles of the Major Casino Hotel Operators

                                                      • Boyd Gaming Corporation
                                                        • Figure 6: Boyd Gaming’s property details, 31 December 2007
                                                      • Boyd may acquire Station assets
                                                        • Station plans to file for Chapter 11
                                                          • A bondholder is suing
                                                            • Three possible outcomes
                                                              • Station targets the ‘locals’ market
                                                                • Valuation and financing
                                                                  • Harrah’s Entertainment
                                                                    • Bought out by private equity
                                                                      • Harrah’s properties
                                                                        • Figure 7: Harrah’s property details, 31 December 2007
                                                                      • Harrah’s Indian casinos
                                                                        • Harrah’s warns of debt squeeze
                                                                          • Financial pressures could impact customer experience
                                                                            • Weak capital structure due to a highly leveraged buyout
                                                                              • Las Vegas Sands Corp
                                                                                • The Venetian Resort-Hotel-Casino
                                                                                  • Recent hotel performance
                                                                                    • Figure 8: Las Vegas Venetian Q4 hotel performance data, 2008 versus 2007
                                                                                  • The Palazzo Resort-Hotel-Casino
                                                                                    • Recent hotel performance
                                                                                      • Figure 9: Las Vegas Palazzo hotel performance, Q4/2008
                                                                                    • Sands Macao
                                                                                      • Recent hotel performance
                                                                                        • Figure 10: Sands Macao Q4 hotel performance data, 2008 versus 2007
                                                                                      • The Venetian Macao-Resort-Hotel
                                                                                        • Recent hotel performance
                                                                                          • Figure 11: Venetian Macao Q4 hotel performance data, 2008 versus 2007
                                                                                        • Four Seasons Macao
                                                                                          • Fourth-quarter operating results
                                                                                            • Development projects
                                                                                              • Figure 12: Sands’ revised development plan, January 2009
                                                                                            • Lucien Barrière
                                                                                              • A one-third market share in gaming
                                                                                                • 15 hotels
                                                                                                  • Figure 13: Lucien Barrière’s hotels, 2008
                                                                                                  • Figure 14: Revenue breakdown*, 2008
                                                                                                • Infiniment Barrière
                                                                                                  • MGM Mirage
                                                                                                    • Nevada properties outside Vegas impacted by Indian reservation casinos
                                                                                                      • Casino properties outside Vegas draw on regional markets
                                                                                                        • Figure 15: MGM’s casino hotel portfolio at end 2007
                                                                                                      • MGM looking to sell more assets to relieve debt load
                                                                                                        • Treasure Island sold
                                                                                                          • Morgan Stanley has been hired
                                                                                                            • Société des Bains de Mer
                                                                                                              • Soaring profits through early 2008
                                                                                                                • Trump Entertainment
                                                                                                                  • Figure 16: Trump’s casino properties at 31 December 2007
                                                                                                                • Heading back into bankruptcy
                                                                                                                  • Missed payments
                                                                                                                    • Wynn Resorts
                                                                                                                      • What can Wynn do for an Encore?
                                                                                                                        • Leisure facilities
                                                                                                                          • A more intimate gaming atmosphere
                                                                                                                            • Upmarket retailing and meeting space
                                                                                                                              • Badly timed market entry
                                                                                                                                • Wynn Macau
                                                                                                                                  • Wynn implements efficiency initiatives in Las Vegas
                                                                                                                                    • A sharp drop in fourth-quarter results
                                                                                                                                      • Weakness in Vegas
                                                                                                                                        • Fourth-quarter EBITDA down by two thirds
                                                                                                                                          • Casino revenue down sharply
                                                                                                                                            • Food and beverage revenues down
                                                                                                                                              • Wynn Macau 2008 operating results
                                                                                                                                                • ADR and RevPAR up for the year 2008
                                                                                                                                                  • Wynn Macau fourth-quarter results
                                                                                                                                                    • ADR up, but RevPAR flat in Q4/2008
                                                                                                                                                      • Equity raised
                                                                                                                                                      • What Next?

                                                                                                                                                          • A sharp drop-off in the US in Q4/2008
                                                                                                                                                            • Figure 17: US monthly casino hotel performance, year on year, September-December 2008
                                                                                                                                                          • The US consumer is strapped
                                                                                                                                                            • Cutbacks on MICE expenditure
                                                                                                                                                              • Europe faring far better so far
                                                                                                                                                                • Figure 18: European monthly casino hotel performance, year on year, September-December 2008
                                                                                                                                                              • Casino hotels – a more broad-based clientele
                                                                                                                                                                • Singapore to compete with Macao?
                                                                                                                                                                  • Marina Bay Sands
                                                                                                                                                                    • Doubts about the project’s financing
                                                                                                                                                                      • Tiger Airways link
                                                                                                                                                                        • Less capacity in Vegas – the silver lining?
                                                                                                                                                                          • Near-term pipeline cut by 10,000 rooms

                                                                                                                                                                          Companies Covered

                                                                                                                                                                          To learn more about the companies covered in this report please contact us.

                                                                                                                                                                          Casino Hotels - International - April 2009

                                                                                                                                                                          £295.00 (Excl.Tax)