Mandarin Oriental not expecting quick return on Vegas hotel
19 May 2011
The Mandarin Oriental Hotel Group isn’t expecting a quick return on its first Las Vegas hotel, which it opened at CityCenter in December 2009.
The company sees it as a long-term investment, Mandarin Oriental Hotel Group CEO Edouard Ettedgui said during a panel at the World Travel and Tourism Council Summit on Wednesday.
“You have different life horizons in multi-use developments like CityCenter. Residences are an immediate return for a developer. Hotels are longer,” Ettedgui said.
Mandarin Oriental Las Vegas at CityCenter is owned by MGM Resorts International and Infinity World Corp. and managed by the Mandarin Oriental Hotel Group. The 47-story building includes 392 hotel rooms and 227 condos. MGM does not break out information for the hotel in its earnings reports.
Ettedgui said the biggest risk for the hotel industry is overcapacity. In terms of investments over the past 15 years, Mandarin Oriental seen the least return in places where there is overcapacity, he said.
“For stand-alone hotels in the luxury market to make double-digit returns today is nearly impossible. What makes a difference is that you put your hotel in a mixed-use development. Not just a hotel that is built on top of residences or a retail center, but so that it becomes complimentary and an integral part of the development. Then you have a different rate of return,” Ettedgui said.
That was the main reason the Hong Kong-based company was attracted to CityCenter and areas such as Boston and New York City.
“Here in the CityCenter development, you have hotels casino residences and a Mandarin Oriental Hotel. It’s not a coincidence that you not only have other luxury hotels near Mandarin, but you also have brands like Gucci next door. They compliment each other,” Ettedgui said.
The World Travel and Tourism Council Summit runs through Thursday at Aria.
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