The Next Las Vegas Megaresort Could Shift Power on The Strip

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<section class="article-header"> <header> The Next Las Vegas Megaresort Could Shift Power on The Strip

The north end of the Las Vegas Strip is now the hottest spot in town.

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Venetian and Wynn Las Vegas used to be alone on the north end of the Las Vegas Strip. Now they're becoming the center of the action. Image owned by The Motley Fool.


A decade and a half ago, the land north of Caesars Palace and The Flamingo was the forgotten section of the Las Vegas Strip. Mirage was there, and Las Vegas Sands' (NYSE:LVS) The Venetian was just opening, and while the latter drew convention business it felt like it was a world away from The Strip's hottest hotels. Bellagio, Mandalay Bay, MGM Grand, and even New York-New York were the city's hottest properties, and the south end of The Strip seemed like it would be the center of Las Vegas for decades, especially with all of its development potential.
But the north end of The Strip got a boost from Wynn Resorts' (NASDAQ:WYNN) Wynn Las Vegas and Encore, and Las Vegas Sands added Palazzo to its property. Meanwhile, some of the casinos on the south side slowly deteriorated; now if you have a lot of money to spend in Las Vegas, you are more than likely going to stay at the Bellagio or north.
The tectonic shift in The Strip's core may not be over, either. The next megaresort is being built across the street and a block north of Wynn Las Vegas, pulling most well heeled visitors even further north. And it's shifting the power on the Las Vegas Strip. For investors, the trend is worth keeping an eye on.


Location, location, location
The truth in Las Vegas is that a single resort's potential is only as good as its surroundings. The Palms, which was the hottest resort in town for a few years, didn't have much staying power and ran into financial trouble in 2010. Stratosphere has gone through bankruptcy, and Downtown Las Vegas has had a long history of financial trouble. So being in the center of the action is key for casinos.

In the 1990s and early 2000s, MGM Resorts (NYSE:MGM) and Caesars Entertainment (NASDAQ:CZR) merged with competitors and acquired as many resorts as they could from the intersection of Flamingo Road and Las Vegas Boulevard south. The result was a critical mass of casinos from Treasure Island to Mandalay Bay.

But that critical mass of resorts soon began aging, and while the consolidation was going on, Wynn Resorts and Las Vegas Sands were building the new high-end future of Las Vegas on the north end of The Strip. If the numbers below are any indication, they're putting the south end of The Strip to shame.

 

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	Location	2009 EBITDA	2014 EBITDA	Change
Mandalay Bay	South	$159.9 million	$175.6 million	9.8%
Luxor	South	$76.2 million	$70.1 million	(8%)
Excalibur	South	$72.1 million	$68.2 million	(5.4%
New York-New York	South	$78.6 million	$95.1 million	21%
MGM Grand	South	$214.4 million	$252.9 million	18%
The Venetian-Palazzo	North	$259.2 million	$314.0 million	21%
Wynn Las Vegas	North	$244.1 million	$515.2 million	111.1%

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Source: Company earnings releases and SEC filings.


Not only have The Venetian/Palazzo and Wynn Las Vegas outgrown their southern counterparts, their absolute numbers crush them. Those two resorts generated $829.2 million in EBITDA -- a proxy for cash flow generated by a resort -- last year, beating the five most southern resorts owned by MGM Resorts by $167.3 million. And that gap is about to get worse.

Resorts World Las Vegas as seen from the Las Vegas Strip. Image source: Genting Group.


The megaresort that will change The Strip
These trends are important, because the next megaresort on the Las Vegas Strip is now finally under construction. Genting Group is building Resorts World Las Vegas on the site of the abandoned Echelon Place on the northeast corner of Desert Inn Road and Las Vegas Boulevard. The $4 billion resort will have 3,500 rooms, 100,000 square feet of gaming space, and an amphitheater among its features. And James Packer of Crown Entertainment purchased the land directly across from Wynn Encore for a planned resort that hasn't yet been announced.
These projects will pull even more visitors to the north side of The Strip, away from MGM Resorts' center of gravity and toward Wynn Las Vegas and The Venetian/Palazzo complex. It will be a critical mass of resorts with high-end rooms, convention space, nightclubs, and all the gaming you could want.
If the center of Gravity in Las Vegas does shift from south of Flamingo Road to north of it there could be long-term consequences for the companies with resorts in the area.


A reason to be cautious about Las Vegas today
The table above shows just how the trends in Las Vegas can change, and if you're looking at shares of MGM Resorts, you should keep in mind that nearly all of its properties are on the south side of The Strip. That could be on the long-term decline as visitors trend to the north side where newer resorts are located.
For Wynn Resorts and Las Vegas Sands, Genting's resort is likely a welcome sight. It should bring more visitors to that end of The Strip, although early on it could also dilute the high-end visitors they already draw to The Strip.
Bottom line, the balance of power is shifting to the north side of the Las Vegas Strip, something that once seemed improbable.
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[DrunkenHorseplayer]

The South end will be for the riff-raff and MGM/Mirage, with so many properties, will have to close a few. De-consolidation could happen in a decade.

 

[tanner12oz]

Property in that area looks like mad max beyond thunderdome

 

[thekeyman]

did they say how long its going to take to get this megaresort built

 

[NFLTrends]

That property has been sitting exactly like that for years... Not 1 working has gone in and out. Just a couple of security guards

 

[Fishhead]

The South end will be for the riff-raff and MGM/Mirage, with so many properties, will have to close a few. De-consolidation could happen in a decade.

The new hockey arena is soon to being completed.....it sits behind the Monte Carlo and is going to be one of the best hockey venues in the NHL

 

[Fishhead]

The SLS on the north end is improving greatly.....nice venue now.

 

[Akillies]

idk anything about the SLS, is it brand new or a remodel of the sahara?

 

[arniesarmy]

We should book an RX bash in the new joint.

 

[tanner12oz]

The SLS on the north end is improving greatly.....nice venue now.

I didn't go in but this place had a weird vibe from the outside. Like a cult church or something

 

[5teamparlay]

https://www.yahoo.com/lifestyle/casino-project-among-largest-vegas-130036824.html

<header style="margin: 0px 0px 10px; caret-color: rgb(35, 42, 49); color: rgb(35, 42, 49); font-family: YahooSans, "Helvetica Neue", Helvetica, Arial, sans-serif; -webkit-text-size-adjust: 100%;">[h=1]Casino project among largest on Vegas Strip sets opening day[/h]</header>KEN RITTER
<time class="caas-attr-meta-time" datetime="2021-04-19T13:00:36.000Z"><amp-date-display class="i-amphtml-layout-flex-item i-amphtml-layout-size-defined i-amphtml-element i-amphtml-built i-amphtml-layout" datetime="2021-04-19T13:00:36.000Z" i-amphtml-layout="flex-item" layout="flex-item" locale="en-US" style="display: block; position: relative; flex: 1 1 auto; overflow: hidden !important;">April 19, 2021, 9:00 a</amp-date-display></time>



LAS VEGAS (AP) — One of the biggest casino projects ever on the Las Vegas Strip has set a date to open, after more than seven years of planning and building.
Resorts World Las Vegas announced Monday that it will open to the public June 24 and began taking reservations for more than 3,500 rooms at its three Hilton-branded hotels.
The first ground-up resort built on the Strip in more than a decade will open during a pandemic that has upended the Las Vegas economy with business restrictions intended to slow the spread of COVID-19. Nevada Gov. Steve Sisolak has set a June 1 goal for 100% reopening of businesses shuttered in March 2020.