Transcript Fundraising
~ 1946 The Las Vegas Strip Begins Humble Beginnings • Strip only 3.8 miles long • Consisted of only 2 resorts – El Rancho Hotel – Flamingo Hotel • Now consists of 20 plus ~ 1960’s The Rat Pack Era Unforgettable Times • Las Vegas picks up momentum and growth • Individual private owners – Fueled by a cast of characters like: • Benny Binion • Howard Hughes • Meyer Lansky • Entertainment started to Grow – Rat Pack – Elvis ~ Late 80’s Early 90’s ~ Evolution of the Strip Evolution of The Strip • Beginning of the Mega Resort – Steve Wynn Era • Financed by Wall Street – Through junk bonds and Michael Milken – At a cost of $630 million in 1989 – Had to generate $1 million daily to cover expenses ~ 1995-2005 ~ Consolidation Consolidation • MGM purchases Mirage Resorts for $6.4b – At the time, largest merger in gaming history – Included Mirage, Bellagio, Treasure Island, and Golden Nugget – After acquisition, MGM controls 26% of Strip’s hotel rooms and 50% of Las Vegas High Roller market • Throughout the past 15 years Harrah’s has aquired multiple properties including Caesars Entertainment for $9.4b in 2005. – After acquisitions Harrah’s became the worlds largest casino operator. Controlling 31% of strips hotel rooms ~ 2006-2010 ~ City Center City Center • Largest private construction project ever undertaken • Original budget $4.5b • Final price tag $8.5b • Added an additional 5,895 rooms to the local market ~ 2010 - ? Current • MGM Mirage sells assets while building City Center • TI Purchased for $775M by Ruffin Acquisitions – $500M paid in cash which helped MGMM’s cash flow • Icahn purchased Fountainebleau for $156M in cash – $1- $1.5b to finish project. This adds 4,000 rooms to the Las Vegas Strip • Echlon Place construction on hold until 2012 • Rate war for Occupancy (Industry) • Visitors paying 50% less in rate than last year and spending less money Las Vegas Gaming and Resort Industry •Industry Overview •Evolution and Reinvention •Revenue Streams •Q&A Industry Overview • Gaming Control Board (GCB) Regulation – Collects Gaming taxes – which funds 33% of state’s budget – Gaming tax rate 6.75% – Compliance • All Nevada Casinos must comply with the “Minimum Internal Control Standards” (MICS) enforced by the GCB • 2 years audits conducted by the GCB – Enforcement • Resolves customer disputes • Allows customers to disputes either W/L of $500 or more with a GCB agent Industry Overview • • Uniqueness to Industry Complimentary Income (Phantom Revenue) – Revenue/Expense – % of cash to comps Comp 10% Cash 90% Industry Overview • Promotions and Special Events – Designed to drive Business in casino and hotel • Players Club (Loyalty Program) – • Table Games Tournaments – • • – Earn Freeplay Win Promotional Chips Slot Tournaments and Giveaways Major Sporting and Holiday Event Parties Customer incentives to high end players • • As high as 20% discount Gifts Evolution and Reinvention • Capital Investment – Consistently putting cash flow back into property • Evolution creates synergies and competition • Competition drives properties to continually evolve – Nightclubs – Tattoo shops – High end dinning – Retail – Entertainment attractions • Competition in this industry is good for guests – Keeps Vegas fresh and unique – Constantly on the cutting edge Evolution and Reinvention Revenue Streams • Gaming generates 44% of total revenue • Non Gaming generates 56% of total revenue Revenue Streams • Casino Revenue – Table Games – Slots – Other (Race & Sports, Poker, and Keno) Tables 28% Slots 69% Other 3% Revenue Streams • Non Gaming Revenue – Hotel – Food and Beverage – Retail – Other (Spa & Salon, Wedding Chapel, Etc.) – Entertainment Hotel 41% F&B 29% Retail 6% Entertainment 20% Other 4% Q&A