montereyherald.com
LAS VEGAS - Mark down 2004 as perhaps the most momentous year in the history of the gambling industry as investors embraced Las Vegas casino companies and tourists flocked to the city in record numbers to indulge in the whirlwind changes.
''It was an incredibly dynamic year,'' said Hal Rothman, a history professor at the University of Nevada at Las Vegas. ''It's the increasing normalization of the industry. It has come more and more to the center and its economic power has manifested. It's reach is growing every year.''
A slew of high-profile events helped shape the industry this year, raising awareness not only on Wall Street but in the very homes of people making the trek to Sin City.
Las Vegas has been omnipresent with its images that appear on various network and cable TV shows. A poker craze also has helped lured a sea of men and women here and a successful marketing pitch has ignited the city's appeal. Media outlets can't write enough about the place.
Those aspects have kept Las Vegas front and center in the world of tourism. If the numbers tell the story, Las Vegas hit the jackpot. The Las Vegas Convention & Visitors Authority is projecting the city will host approximately 37 million people in 2004, surpassing the previous record of 35.8 million in 2000.
Passenger traffic at McCarran International Airport has already broken its 2000 record of nearly 36.9 million passengers for the year, and is on pace to handle more than 40 million people.
For the average consumer visiting Las Vegas, the changes have been enormous. High-end retailers and celebrity chefs are bringing their wares and fare in droves to Las Vegas. Another expensive Cirque du Soleil production landed on the Strip and successful Broadway shows have lined up, ready to call the commodious casino theaters home.
''Las Vegas isn't about gambling anymore,'' Rothman said. ''If Las Vegas was only about gambling, it wouldn't be doing the business it's doing.''
To accommodate this robust growth, the Las Vegas Strip added about 1,100 hotel rooms to its inventory in 2004. Next year, another 3,665 rooms will come online, bringing the Strip's total to nearly 103,000 rooms.
''The diversity of the product of Las Vegas continues to expand,'' said Kevin Bagger, LVCVA's research director. ''There's more and more reason for people to come to Las Vegas.''
The strong demand has pushed average daily room rates up to record levels, but Bagger said people are still getting a lot for their money in Las Vegas.
''The value proposition still exists in as Vegas,'' he said. ''The scope and depth of their experience here is worth the increases. 2004 has proven to be a very strong year for Las Vegas.''
The success of Las Vegas has also driven gambling stocks to new heights.
Marc Falcone, a Deutsche Bank equity gambling analyst in New York, estimated that gambling stocks on average are up 130 percent over three years.
This year alone, the top players in the industry -- MGM Mirage, Harrah's Entertainment, Las Vegas Sands Corp., Boyd Gaming and Wynn Las Vegas -- have made some shareholders very wealthy and plenty more exceptionally happy about their investments.
Record profits and exploding land values on the Strip keep pushing the stocks skyward. Falcone said an acre on the Strip could fetch $15 million to $20 million.
But consolidation in the industry might have caused the biggest reverberations, helping trigger the soaring stocks and Las Vegas mania.
In February, Boyd Gaming signed a $1.3 billion deal with Coast Casinos that eventually created a company with a major Las Vegas presence and about $2 billion in revenues.
That set the pace for the rest of the year, with MGM Mirage agreeing in June to purchase Mandalay Resort Group for $4.8 billion in cash, $2.5 billion in debt and $600 million convertible debentures.
Harrah's Entertainment countered, bent on keeping its status as the world's largest gambling company, and completely shook up the industry's landscape. In July, Harrah's agreed to buy Caesars Entertainment for $1.8 billion in cash and exchange about $3.4 billion in Harrah's stock for all shares of its Las Vegas-based rival.
Harrah's also will assume about $4.2 billion in Caesars Entertainment debt.
That same month Harrah's completed its $1.45 billion acquisition of Horseshoe Gaming Holding Corp.
MGM Mirage and Harrah's await approval by federal and state regulators. Both deals are expected to be OK'd in 2005. The Financial Times reported that the MGM Mirage's buyout was the top U.S. deal of the year in terms of the acquiring company's stock market performance.
Rounding out the list was Penn National Gaming, which inked a deal in November to acquire Argosy Gaming for $1.4 billion cash.
''Karl Marx wasn't right about much but he was right that capitalism would continue to merge until it became one,'' Rothman said. ''We saw a a lot of evidence pushing us in that direction.''
But the industry would make louder noise with the emergence of Macau and the astonishing money the Las Vegas Sands reported making after opening a casino in the Chinese territory west of Hong Kong.
The excitement surrounding Macau and Las Vegas fueled the success of the Las Vegas Sands public offering in December. If there is an appropriate gambling analogy, the company doubled down on Las Vegas and Macau and hit blackjack on both hands.
The Sands ranked as the best performing first-day gainer for a U.S.-based company IPO this year, and best first-day showing for a U.S-based IPO since Jet Blue gained 67 percent in May 2002.
Wall Street and the public, Falcone said, are ''beginning to embrace gaming stocks as legitimate investment vehicles. Investors are starting to look at gaming stocks as more main stream. Gaming companies are no longer considered just gaming companies.''
Other smaller transactions have had their effects on the industry. Caesars and Harrah's have sold casino assets to smooth the merger process. Colony Capital, a private investment firm based in Los Angeles, agreed to buy four properties from both gambling entities for a total of $1.24 billion.
The sale of the four properties is expected to be approved next year and would bring the number of Colony casinos to six in the U.S, including the Las Vegas Hilton and Resorts International in Atlantic City.
But barring a terrorist attack or a drastic correction in the booming real estate market, don't look for the Las Vegas to slow down in 2005. The city appears to hold all the right cards.
Caesars Palace is slated to open its new 949-room tower in the summer, and casino developer Steve Wynn is opening the $2.7 billion Wynn Las Vegas in April. Wynn should generate at least a million new visitors in 2005, lifting the city's financial prospects.
Several older Strip properties are also rumored to be for sale, their locations making them prime for redevelopment. And the city is awash in high-rise condominium projects.
''Without question, 2004 was probably one of the most exciting years for a gaming investor,'' Falcone said. ''I envision 2005 as going to be equally as exciting.''
LAS VEGAS - Mark down 2004 as perhaps the most momentous year in the history of the gambling industry as investors embraced Las Vegas casino companies and tourists flocked to the city in record numbers to indulge in the whirlwind changes.
''It was an incredibly dynamic year,'' said Hal Rothman, a history professor at the University of Nevada at Las Vegas. ''It's the increasing normalization of the industry. It has come more and more to the center and its economic power has manifested. It's reach is growing every year.''
A slew of high-profile events helped shape the industry this year, raising awareness not only on Wall Street but in the very homes of people making the trek to Sin City.
Las Vegas has been omnipresent with its images that appear on various network and cable TV shows. A poker craze also has helped lured a sea of men and women here and a successful marketing pitch has ignited the city's appeal. Media outlets can't write enough about the place.
Those aspects have kept Las Vegas front and center in the world of tourism. If the numbers tell the story, Las Vegas hit the jackpot. The Las Vegas Convention & Visitors Authority is projecting the city will host approximately 37 million people in 2004, surpassing the previous record of 35.8 million in 2000.
Passenger traffic at McCarran International Airport has already broken its 2000 record of nearly 36.9 million passengers for the year, and is on pace to handle more than 40 million people.
For the average consumer visiting Las Vegas, the changes have been enormous. High-end retailers and celebrity chefs are bringing their wares and fare in droves to Las Vegas. Another expensive Cirque du Soleil production landed on the Strip and successful Broadway shows have lined up, ready to call the commodious casino theaters home.
''Las Vegas isn't about gambling anymore,'' Rothman said. ''If Las Vegas was only about gambling, it wouldn't be doing the business it's doing.''
To accommodate this robust growth, the Las Vegas Strip added about 1,100 hotel rooms to its inventory in 2004. Next year, another 3,665 rooms will come online, bringing the Strip's total to nearly 103,000 rooms.
''The diversity of the product of Las Vegas continues to expand,'' said Kevin Bagger, LVCVA's research director. ''There's more and more reason for people to come to Las Vegas.''
The strong demand has pushed average daily room rates up to record levels, but Bagger said people are still getting a lot for their money in Las Vegas.
''The value proposition still exists in as Vegas,'' he said. ''The scope and depth of their experience here is worth the increases. 2004 has proven to be a very strong year for Las Vegas.''
The success of Las Vegas has also driven gambling stocks to new heights.
Marc Falcone, a Deutsche Bank equity gambling analyst in New York, estimated that gambling stocks on average are up 130 percent over three years.
This year alone, the top players in the industry -- MGM Mirage, Harrah's Entertainment, Las Vegas Sands Corp., Boyd Gaming and Wynn Las Vegas -- have made some shareholders very wealthy and plenty more exceptionally happy about their investments.
Record profits and exploding land values on the Strip keep pushing the stocks skyward. Falcone said an acre on the Strip could fetch $15 million to $20 million.
But consolidation in the industry might have caused the biggest reverberations, helping trigger the soaring stocks and Las Vegas mania.
In February, Boyd Gaming signed a $1.3 billion deal with Coast Casinos that eventually created a company with a major Las Vegas presence and about $2 billion in revenues.
That set the pace for the rest of the year, with MGM Mirage agreeing in June to purchase Mandalay Resort Group for $4.8 billion in cash, $2.5 billion in debt and $600 million convertible debentures.
Harrah's Entertainment countered, bent on keeping its status as the world's largest gambling company, and completely shook up the industry's landscape. In July, Harrah's agreed to buy Caesars Entertainment for $1.8 billion in cash and exchange about $3.4 billion in Harrah's stock for all shares of its Las Vegas-based rival.
Harrah's also will assume about $4.2 billion in Caesars Entertainment debt.
That same month Harrah's completed its $1.45 billion acquisition of Horseshoe Gaming Holding Corp.
MGM Mirage and Harrah's await approval by federal and state regulators. Both deals are expected to be OK'd in 2005. The Financial Times reported that the MGM Mirage's buyout was the top U.S. deal of the year in terms of the acquiring company's stock market performance.
Rounding out the list was Penn National Gaming, which inked a deal in November to acquire Argosy Gaming for $1.4 billion cash.
''Karl Marx wasn't right about much but he was right that capitalism would continue to merge until it became one,'' Rothman said. ''We saw a a lot of evidence pushing us in that direction.''
But the industry would make louder noise with the emergence of Macau and the astonishing money the Las Vegas Sands reported making after opening a casino in the Chinese territory west of Hong Kong.
The excitement surrounding Macau and Las Vegas fueled the success of the Las Vegas Sands public offering in December. If there is an appropriate gambling analogy, the company doubled down on Las Vegas and Macau and hit blackjack on both hands.
The Sands ranked as the best performing first-day gainer for a U.S.-based company IPO this year, and best first-day showing for a U.S-based IPO since Jet Blue gained 67 percent in May 2002.
Wall Street and the public, Falcone said, are ''beginning to embrace gaming stocks as legitimate investment vehicles. Investors are starting to look at gaming stocks as more main stream. Gaming companies are no longer considered just gaming companies.''
Other smaller transactions have had their effects on the industry. Caesars and Harrah's have sold casino assets to smooth the merger process. Colony Capital, a private investment firm based in Los Angeles, agreed to buy four properties from both gambling entities for a total of $1.24 billion.
The sale of the four properties is expected to be approved next year and would bring the number of Colony casinos to six in the U.S, including the Las Vegas Hilton and Resorts International in Atlantic City.
But barring a terrorist attack or a drastic correction in the booming real estate market, don't look for the Las Vegas to slow down in 2005. The city appears to hold all the right cards.
Caesars Palace is slated to open its new 949-room tower in the summer, and casino developer Steve Wynn is opening the $2.7 billion Wynn Las Vegas in April. Wynn should generate at least a million new visitors in 2005, lifting the city's financial prospects.
Several older Strip properties are also rumored to be for sale, their locations making them prime for redevelopment. And the city is awash in high-rise condominium projects.
''Without question, 2004 was probably one of the most exciting years for a gaming investor,'' Falcone said. ''I envision 2005 as going to be equally as exciting.''
