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by Michael J. Shapiro | April 01, 2010

Opening the gargantuan Las Vegas Strip development known as CityCenter was a major accomplishment for owners MGM Mirage and Dubai World. But a great many others in the economically beleaguered city of Vegas are feeling the impact of that accomplishment and are pulling for the development's success.

"It has been an extremely difficult time in Las Vegas," acknowledges Maya Holmes, research director for the Culinary Workers Union Local 226, "and we're at the top of the lists you don't want to be on the top of now, in terms of unemployment and foreclosures. But having CityCenter open at this time has been extremely helpful. It employed thousands of construction workers, and now it's supporting thousands of long-term jobs. We have 4,000 members there who are under contract and have good wages and great benefits. It's definitely been a shot in the arm for the work force here."

Likewise, the development's competitors welcome CityCenter's success, at least to an extent. "I believe it's going to bring more people to Las Vegas," says Michael Massari, vice president of meeting sales and operations for Las Vegas Meetings by Harrah's Entertainment, one of MGM's primary rivals. "In the short run, it's a new and exciting product that people want to see and experience. But in the long term, and this is a much more compelling line of thought, it's going to cause all of us to get better -- to execute better meetings and to figure out more ways to differentiate our businesses.

"Getting better is going to be our best salvation," Massari adds. "You got a new kid that comes in and joins the basketball team, and he's 6-foot 7 with a 40-inch vertical, you better go work on your jump shot."

During CityCenter's development, MGM Mirage execs repeatedly denied that the new properties would cut into the company's existing business -- despite the fact MGM Mirage owns nine additional hotels on the Strip. With the project finally completed and open for business, CEO Jim Murren addressed the issue again and echoed the sentiment. In the company's fourth quarter earnings call, Murren said that Bellagio, which is next to CityCenter, has benefited from the opening by being on the tram route that connects Bellagio, CityCenter and Monte Carlo, another MGM property. Bellagio's fourth-quarter occupancy rate was the highest of any MGM property (and higher than competing properties from Wynn and Las Vegas Sands), and its room rates have gone up and are in line with Aria's, the largest hotel in CityCenter.

As for the other oft-voiced concern that CityCenter's new room supply would further drive down the already low room rates on the Strip, Massari of Harrah's doesn't believe that will happen. "If anything, I think the incremental people that are coming to see it -- and how that causes the marketplace to react -- will probably help us to grow the rate in some way, shape or form."