MGM Resorts International has teamed up with London-based hospitality lifestyle developer Hakkasan Group to kick start its non-gaming hotel business.
MGM Hakkasan Hospitality will focus on the design, development and management of luxury non-gaming hotels, resorts and residential offerings under the Bellagio, Hakkasan, MGM Grand and Skylofts brands in key international gateway cities and prime resort destinations across the globe.
All of the hotel and resort projects currently under development by each group will be contributed to the joint venture, including MGM projects in the Americas, the Middle East, and Asia; and Hakkasan projects in Abu Dhabi and Dubai. Each group can further develop together, independently or with other development partners, but all projects will be managed by the JV.
HOTELS recently spoke to new MGM Hakkasan Hospitality CEO Neil Moffitt about the joint venture’s opportunities.
HOTELS: MGM has only opened one non-gaming property since its 2007-2008 division launch and has maybe 10 more in various stages of development. Why has it been so slow in developing?
Neil Moffitt: With limited resources and out of the gate, I think MGM would be the first to admit that this was something that whilst they dipped their toe in the water, they definitely didn’t get soaking wet. This company was formed when we all took a little bit of a step back from huge capital investments. Not only did capital dry up for casino operators, it also dried up for developers across the world, quite frankly. So, I think timing was a contributing factor to them not necessarily getting the traction that they wanted as quick as they got it.
HOTELS: What does Hakkasan have under development on the hotel side?
Moffitt: We have announced a resort in Dubai. We believe that that will set a new benchmark for resort hotels. Obviously, Hakkasan is owned from the region (Tasameem Real Estate, an Abu Dhabi-based investment company), so there won’t be any doubt that our goal will be to supersede everything that’s gone before. And we believe that Hakkasan adds something different to MGM and Bellagio, both from a food and beverage standpoint and also from a hotel and nightlife standpoint.
We have something that can be used in a city location, such as New York in a 200-room hotel 300-room hotel, maximum. But we can also use Hakkasan as a resort property, albeit it to compete with people such as maybe One&Only, as an example. It has very many forms that it can take, similar to our restaurant offerings and our company, in general.
HOTELS: What else does Hakkasan add to MGM?
Moffitt: Having Hakkasan as a partner gives MGM something which they didn’t have before necessarily, which is a company that is committed both from an expansion standpoint and a capital standpoint to make sure that we make far more inroads into the hotel market than necessarily was made in the past.
HOTELS: How aggressive will the JV develop?
Moffitt: We can only be as aggressive as the sites that we want to choose. We have another phenomenal site in Abu Dhabi that we’re looking at. I think that we have to be relatively cautious in certain markets such as London because we have a great operation there and we wouldn’t want to affect it by choosing an off-beat site that doesn’t necessarily fit with our brand.
I would like to double the numbers on the board by the end of 2015, as far as commitment. I would like us at 20. If we find the right development partner who has a great site and is well capitalized and actually can translate the brands correctly, we’re very open to working with other developers.
HOTELS: How will the brand mix of the JV play out?
Moffitt: Hakkasan as a brand is a little bit behind Bellagio and MGM. But I think that we have a huge amount of interest in Hakkasan currently, and I don’t think it will take too long for us to all catch up. Currently, it’s probably 50/50 between MGM and Bellagio. If you were to ask me that question in a couple years’ time, I think it would be very evenly distributed across the brands.
HOTELS: What is the essence of MGM Hakkasan Hospitality?
Moffitt: It is a very unique proposition. Clearly, we have a very successful hotelier in Las Vegas who is primarily focused on hotel rooms and gaming, and we have a very successful food and beverage operator who has primarily focused on that part of the business coming together to form a unique proposition because I feel very passionately about the hotel business being a little bit in need in reinvention.
Customers have come out of ’08 and ’09, and they’re demanding far more for their money. No longer are people willing to accept several hundred dollars a night for a bed. And that’s really what’s out there currently, a bed. And I believe that this new joint venture, like everything else we’ve ever done, will set a new benchmark where a hotel becomes an experience that obviously includes a fantastic room product, but also includes the add-ons that guests expect.
I believe what makes us unique is that we can grab the hotel reservation, and we can also service customers and keep them in our hotel. And that in itself is better than any loyalty program on the planet because if I can convince a business traveler or a resort destination traveler not to leave my hotel you’re achieving something that nobody else seems to be able to achieve. And I believe we have a better chance than anybody else of achieving that.