Source AP ©

MGM Mirage Inc to take part in building of hotel resort in Abu Dhabi

Casino operator MGM Mirage Inc. will participate in building of a $3 billion (2.04 billion EUR) non-gambling hotel resort in Abu Dhabi with that government's development firm, Mubadala Development Co. The property is expected to open in 2012.

The project, planned for 50 acres (20 hectares) on a downtown waterfront site on Abu Dhabi Island, will consist of an MGM Grand hotel and two other MGM branded luxury hotels with more than 1,200 rooms.

It will also feature an arena with up to 12,000 seats, retail shops and restaurants, waterfront residences and private yacht berths, said Gamal Aziz, president of the companies' joint venture firm, MGM Mirage Hospitality.

The arena will likely host regional performers along with Western acts that often appear at MGM Mirage's casino properties in Las Vegas such as headline pop stars and Cirque du Soleil, Aziz said.

"When I left Abu Dhabi, they had Justin Timberlake playing at one of the properties there," he said. "They sold 15,000 tickets in less than an hour, so it's a similar dynamic to what we have in the MGM Grand."

MGM Mirage will develop and manage the project for a fee while Mubadala will own it. The property, aimed at the high-end market, will have "unparalleled views of the city skyline" and "stunning panoramic views of the waterfront," the companies said in a release.

The development is the first phase of a three-phase project that could eventually cover 150 acres (61 hectares), Aziz said.

The companies are also planning to develop luxury residential apartments and villas, sales of which would offset construction costs, much like at MGM Mirage's $7.8 billion (5.3 billion EUR) CityCenter project to open in late 2009 in Las Vegas. Condo sales at CityCenter are expected to cut nearly $3 billion (2.04 billion EUR) from the cost outlay.

The MGM Grand Abu Dhabi is the first project of MGM Mirage Hospitality, a joint venture firm the companies set up in April to develop non-gambling hotels and resorts around the world. Aziz said the group is looking for other sites to develop.

It also marks MGM Mirage's first venture into the Muslim world.

Abu Dhabi, the richest of the oil-laden United Arab Emirates, has a large expatriate population and is aiming to transform itself into a global tourist destination.

Alcohol will be served throughout the complex, but some Las Vegas offerings, such as the Crazy Horse Paris topless revue at MGM Grand, will not be part of the plan, Aziz said.

"We will introduce our products and services with complete understanding and respect for the local and the regional culture," he said. "We don't have to enforce or display what's successful in Las Vegas in order for us to succeed."

Demand is high among international visitors to Las Vegas for the mix of luxury hotel rooms, nightlife and entertainment that MGM Mirage plans to offer "in their backyard," Aziz said.

"They will get the experience they will look for - extraordinary entertainment, great spas, a great retail experience, great restaurants and nightclubs," he said.

The property will allow MGM Mirage to expand its database of customers and cross-market them to other properties. Casino players who rack up frequent stays in Las Vegas, however, will not be offered complementary stays in Abu Dhabi, where gambling is illegal.

Analyst Robert LaFleur of Susquehanna Financial Group approved of the project, which he noted will be built "on Mubadala's dime."

"The nature of the deal will allow MGM to continue to grow financially and brand-wise in a very capital-efficient manner," he said in a research note.

MGM Mirage shares were down $1.55, or 1.7 percent, to $90.55 in afternoon trading.

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