There is a stronger buzz in the shops and restaurants at CityCenter in Las Vegas as more tourists are flooding in with money to spend and looking for a good night out.
The fortunes of the development part-owned by Dubai World reflect a broader rebound in a city that was hit hard by the economic downturn in the United States.
Hotels struggled to fill rooms and construction projects were halted as the money ran out. But now development is picking up again.
MGM International Resorts received a boost in 2007 when Dubai World bought a 9.5 per cent stake in the company for US2.4 billion. Together they built CityCenter, an entertainment, shopping and hotel complex.
In the first quarter of this year CityCenter's adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda) related to resort operations was $93 million, almost three times the $32m reported in the same period last year. The company is now planning to build a 20,000-seat indoor sports and events arena just off the strip.
Despite MGM's recent turnaround, Dubai World may exit its investment. Last month, Sheikh Ahmed bin Saeed Al Maktoum, the chairman of Dubai's Supreme Fiscal Committee, stated that Dubai World would be willing to sell its stake for the right price. The conglomerate's first debt repayment is due in September 2015 and it has come under pressure from creditors to sell some of its assets to avoid faltering on its first instalment of $4.5bn.
Caesars Entertainment, meanwhile, is working on its $550m Ling project, which includes the world's largest Ferris wheel as well as a dining, shopping and entertainment district. Malaysia's Genting Group, which has bought the 35-hectare site of the former Stardust Casino, is planning to invest $2bn in the project, which includes a replica of the Great Wall of China and terracotta warriors as well as an area for live pandas.
The Las Vegas Global Business District, a $2.5bn project to build a convention centre just off the strip, has also had plans approved, while the entrepreneur Tony Hsieh is developing a high-tech internet hub he hopes will be a cheaper alternative to Silicon Valley for start-ups.
Last year close to 40 million visitors arrived in Las Vegas. Revenue from gamblers has been on the rise, with casinos on the strip recording $696m in gambling revenues in February, the largest ever recorded in one month.
"We have been coming to Vegas every year for the past 10 years," says Eugene Maddox, on a holiday with his wife. "It's become our tradition, we come for the entertainment, the shows, restaurants and the hope of making a little money." The prospect of ending a holiday with more money than starting out is one that keeps on luring visitors to the modern world's original Sin City.
Conventions also help to bring in visitors. There are more conventions and trade shows held in Las Vegas than any other American city.
These events bring in billions of dollars to Nevada state and nowadays delegates and visitors to Las Vegas are spending on average $673 per trip - an improvement on recent years, but well short of the pre-recession spending levels of $750 per trip.
"Conventions draw a lot of business to the property," says a duty manager at The Palazzo hotel who asked not to be identified. "We're running at top occupancy at the moment."
The unemployment rate stands at 9.6 per cent as of last April, down from 12.1 per cent last year according to the Center of Business and Economic Research. While it is still higher than the national average of 7.5 per cent, Las Vegas has proved to be one of the better-performing cities across the US.
Despite the growth activity, not everyone is experiencing the improvement.
"Some of the conventions could pull in upwards of 100,000 delegates back in the '80s and '90s, there wasn't any time to go from one place to another. You'd drop off one passenger and there would be a queue waiting to get in straight away," says Albert Peterson, a taxi driver. "Now, you are lucky if you have two jobs an hour … They say things have improved, but I haven't seen it."
thamid@thenational.ae
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
Du Football Champions
The fourth season of du Football Champions was launched at Gitex on Wednesday alongside the Middle East’s first sports-tech scouting platform.“du Talents”, which enables aspiring footballers to upload their profiles and highlights reels and communicate directly with coaches, is designed to extend the reach of the programme, which has already attracted more than 21,500 players in its first three years.
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