Is CityCenter Las Vegas Savior?

Five years ago when the CityCenter concept was conceived in Las Vegas, it seemed like an inspired idea. Last week, when I attended the opening where MGM Mirage executives put on brave faces, it was all too clear how much had changed in five years. I really want to see this project succeed and help Vegas rebound as a lot of blood, sweat and tears went into this labor of love. Right now, however, based on market conditions no one could have predicted five years ago, I think CityCenter is going to have to deal with serious growing pains and the MGM Mirage leadership team will have to fight tooth and nail to drive the bottom line.

Too many condos remain unsold and forecasts about how this project will induce demand seem unrealistic to me. As much as I hate to say it and as much as I rooting for MGM Mirage to make a huge success of CityCenter, I am more inclined to think in the near term that it will cannibalize business from other MGM Mirage projects on The Strip and further erode rate up and down Las Vegas Boulevard.

Realistically, until the economy hits its stride again (can you tell me when that might happen?), Las Vegas and CityCenter will struggle. Right now, what this city really doesn’t need is 6,000 more hotel rooms-but here they are. The project is well done, but not what I would call outwardly revolutionary. The Mandarin Oriental is stunning on the inside, as expected; understated Vdara offers a nice boutique-style escape; the mega-resort and casino Aria has a lot to offer, but honestly little I haven’t seen before; and the half-empty Crystals retail hub smacks of pre-great recession opulence. I am just not sure how well that is going to play right now.

CityCenter has a nice “green” story, great restaurants similar to those found elsewhere in Vegas these days, another cool fountain, a fantastic fine arts collection that will more likely go underappreciated by the Vegas crowd and a kitschy Elvis-themed Cirque de Soleil show. Yes, the initial buzz will cause Vegas-goers to try the experience and it is likely to develop a loyal following.

But, will CityCenter induce additional demand and drive the world to Vegas because they have to see it? Unfortunately, mostly because of the timing, I think not. Will Vegas witness a 3% to 7% increase in revenue in 2010 as predicted by the CBRE Global Gaming Group? I am not quite sure I see how this will happen as the additional room inventory will more than likely only serve to create greater competition and further discounting.

The good news is that approximately 12,000 people are newly employed and CityCenter has now turned from a development company to an operating company. I only hope there is more good news to come about business travel, group business and the economy, in general, because this is what CityCenter and Las Vegas truly needs in the worst way. Until then, I hope I am dead wrong with my current assessment of the situation as I am a fan of all Vegas has to offer. As always, I am anxious to hear your point of view.