Not anymore! I've been watching two analysts in particular who seem to routinely come up with dramatically different takes and today's email puts it in very, very high relief. Here are the headlines from emails Monday:
Bill Lerner of the Union Gaming Group: "2010 Off To Good Start in Vegas, MGM Most Leveraged to Recovery."
Robert LaFleur of Susquehanna International Group: "Is MGM Having Trouble Filling Rooms at CityCenter?"
Those are two rather different sides of that story, aren't they now?
Lerner has been a persistent cheerleader for MGM Mirage and CityCenter, so his daily "Heard On The Strip" e-blast fit that trend. He suggested that New Year's "may have been the strongest in MGM MIRAGE history" and that "CityCenter and Bellagio foot traffic have been quite strong based on our observations (across a significant number of days and day-parts)." He also wrote that MGM Mirage's 95% occupancy in its 3rd quarter of 2009 after laying off 12 percent of its staff suggests they're doing more with less. That would be good for the balance sheets, assuming those guests are enjoying the diminished service enough to return.
LaFleur, meanwhile, has spoken quite negatively about what CityCenter and Aria are, contradicting much of MGM Mirage CEO Jim Murren's loftiest rhetoric. In my big L.A. Weekly piece on CityCenter, for instance, he said: "At the end of the day, the product is the gaming experience broadly defined. There’s nothing unique in the product offering. People don’t go to hotels because of the architecture of a hotel on a recurring basis. You go to a hotel because you like the hotel, you like the service, you like the ambiance."
On Monday, LaFleur reported on his firm's findings of "a notable reduction in asking rates at the Aria, the main hotel at CityCenter." Susquehanna every week catalogs Aria room rates for Saturdays and Wednesdays over the coming three months. Click on this graphic below to enlarge it and see what's been happening:
Wrote LaFleur: "After seeing in last week’s survey that MGM reduced asking rates by $20 a night for weekend nights in January, we saw MGM again reduce asking rates on these January weekend nights by another $30 in this week’s survey. In addition, we saw more sizable reductions in both weekday and weekend asking rates at Aria in February and March, the first time we’ve seen reductions in asking rates for these periods since we began tracking them. MGM management publicly said last week that occupancies were high at CityCenter. Our findings in this week’s survey suggest that MGM may have to engage in more aggressive price discounting to achieve these high occupancy levels."
Whom to believe? Well, at the moment the edge must go to LaFleur because he has actual data and Lerner says their analysis is based on, essentially, eyeballing the scene "across a significant number of days and day-parts," whatever that means. So they've come out of the best weekend in their HISTORY, per Lerner, only to cut room rates two weeks in a row?
Also, Lerner was happy to cite as fact things he can't know any other way than from publicists. For instance, from Monday's e-blast: "The combination of CES and AVN’s (Adult Video News award show) at the Palms this weekend generated incomparable volumes at the casino resort while The Hard Rock’s recently opened expansion is driving record gaming volumes at the property." Says who? What data supports such dramatic claims? Also, assuming the Hard Rock claim is true, wouldn't this volume spike just be the logical outcome of DOUBLED their gaming floor? Isn't win-per-machine or similar data more valuable than such a broad remark?
Meanwhile, LaFleur showed actual data and it is damning. Aria room rates fell $90 for Saturday, Feb. 6? That's 25 percent! It also means that Aria that night, at $269, is less than Bellagio, which is presently at $299. The place has only been open a month; surely if there's as much excitement about it as Lerner believes, Aria would be able to stay at least even with her own older sister?
So is CityCenter an out-of-the-box homer? Lerner would have us think so and, having had more than a decade as a top analyst for Deutsche Bank, he's no newbie. But then how about some real data to back up his exuberance?
