Betting on the Vegas Boom

MGM Mirage CEO doubles down on Project CityCenter, a 66-acre retail and casino complex set for a 2009 completion.

Over the past decade, the Las Vegas Strip has boomed, with luxury hotels sprouting like mushrooms in a rainstorm, replete with restaurants featuring superstar chefs, Rodeo Drive-style shopping and a sometimes overwhelming opulence.

Growth on the strip has in turn sent real-estate prices soaring, to as much as $32 million an acre in a price run-up that isn't done yet, said J. Terrence Lanni, chairman and CEO of the Strip's biggest property owner, MGM Mirage Inc.

Lanni, a USC Marshall School of Business alumnus and father of another graduate, was the featured speaker at the recent Dean's Business Breakfast, held before more than 200 business leaders at the Omni Hotel in downtown Los Angeles.

Lanni heads the world's second-largest hotel and casino company, which is well-positioned to exploit that boom with the $7 billion Project CityCenter, a 66-acre complex of hotels, condominiums, retail and casinos that is the largest private development in U.S. history.

Project CityCenter, slated for completion in 2009, is an urban-style mixed-use mega-resort with seven high-rise towers of hotel and condo units, a 155,000-square-foot casino, a theater for a new Elvis-themed Cirque du Soleil show and a vast retail center, all designed by of top architects.

For all its vast scope, the project seeks to earn at least a Silver Leadership in Energy and Environmental Design rating as a sustainable or "green" development. The rating is the benchmark for design, construction and operation of high-performance green buildings.

"Las Vegas must think vertically," said Lanni, championing the benefits of creating a compactly designed environment that reduces driving and urban sprawl. "One of the reasons we like CityCenter is that it's one-stop shopping: Once you're there, you don't have to go anywhere else."

Under Lanni, who has been at the company's helm since 1995, MGM Mirage has positioned itself to capitalize on this vertical growth as the owner of 800 acres of land on the Strip, pieced together in major mergers with Steve Wynn and the Mandalay Bay Resort Group, among other moves.

A number of high-profile residential projects announced in Las Vegas have failed in recent years, but Lanni said the CityCenter project has succeeded in part because of MGM Mirage's knowledge of the market and brand name. With sales only recently begun, nearly two-thirds of the project's condominium space already has been sold or reserved.

During his time at the helm, Lanni has helped build MGM Mirage from a single hotel and casino with 7,000 employees and $700 million in revenues to an industry leader with 24 properties in five states, more than 70,000 employees and revenues of $7.5 billion.

And growth for this gaming and resort giant extends well beyond the Strip,. The company holds real estate in California and casinos elsewhere in Nevada as well as Michigan, Mississippi and Macau. It currently is laying plans for non-casino hotels in five cities in the People's Republic of China, hoping to gain a foothold in the country if gambling is ever allowed there.

Lanni credited the company's success to hiring and acquiring great people, particularly up and down its leadership ranks.

"You talk to analysts in our industry, and they say we have the greatest depth of management," he said. "Seriously, we have really good people. I have no problem bringing on people who are brighter than I am, more competent than I am and more knowledgeable than I am. I believe in a 50-50 proposition: 70,000 people do all the work, and I take all the credit."

USC Marshall Dean Thomas W. Gilligan said the story of MGM's success sets an example for businesses in any industry.

"It's a classic example of the kind of leadership that a company like MGM Mirage provides to an entire city and an entire industry," Gilligan said. "They're setting the tone for how you do gaming and how you do entertainment around gaming, and they're the unquestioned leaders." - University of Southern California