It was a busy week for Las Vegas in the headlines as three of their casinos made news. One casino sold, one made cutbacks and one could soon be up for sale. Here’s what you missed:
Dragon Hotel And Casino Sells To Construction Company
Snow Covered Capital has cut its losses with the Dragon Hotel and Casino in Las Vegas. The Asian-themed casino was sold to construction mogul Don Ahem, who picked it up for just $36 million.
Opened only three years ago in 2016, the Lucky Dragon Hotel and Casino was the first new casino in Las Vegas since Aria, which was opened all the way back in 2010. At the time that it was built, Lucky Dragon Hotel and Casino was a $139 million project that was built up just north of the main strip in Las Vegas. However, the casino failed to meet expectations and in September in 2017 ownership received a default notice on its $90 million loan. It just wasn’t located in a hip spot, and with minimal foot traffic, the casino started to suffer.
It wasn’t long after that when the Lucky Dragon Hotel and Casino entered into Chapter 11 bankruptcy, which is when Snow Covered Capital – the casino’s main lender – decided to start getting some of its money back. The opening bid for the property was $35 million at a foreclosure auction last October.
At less than half of the price that the original builders paid to raise the Lucky Dragon Hotel and Casino in the first place, this deal looks like an absolute steal for Ahem. The question is can he get customers to that part of the strip?
MGM Cuts Costs Via Layoffs
While one casino sold in Las Vegas this month, another casino company took steps to cut costs. MGM made the unpopular announcement of 254 layoffs this week, unveiling the first phase of its cost-cutting operational shift designed to boost earnings. The layoffs will end up cutting labour costs by $100 million, according to the Las Vegas Review-Journal.
MGM Resorts announced in January that the current plan they have in place is expected to boost earnings by $200 million by next year. They currently have around 77,000 employees, which makes it the largest employer in Nevada. But anytime there are cutbacks, there is going to be a push and pull. Local governments will not be happy to hear this type of tightening but investors will be pleased. MGM Resorts shares closed at $27.75 this week, which is down 14 cents.
Cosmopolitan Soon To Be Sold?
Could one of Vegas’ hot spots be up for sale? That’s the word around town as reporting suggests the Cosmopolitan could soon be sold. The private equity firm Blackstone Group LP has reportedly retained the services of PJT Partners Incorporated in order to explore the possibility of selling the casino. The Wall Street Journal reported that a plethora of potential buyers are interested in purchasing the casino.
Of course, MGM Resorts are at the front of the pack but Wynn Resorts Limited and Genting Malaysia Berhad are interested as well.
The Cosmopolitan currently commands the highest average daily room rates in Nevada at more than $330 per night. The successfully run casino has seen its annual earnings before taxes top $300 million since 2014. The sale of The Cosmopolitan should therefore spark bidding wars with some of the top companies on The Strip.