While MGM Resorts International’s CEO Jim Murren hasn’t been making headlines in South Florida like some of his competitors, don’t interpret that as any lack of interest in this market.
If the Florida legislature approves gambling, Murren’s company intends to make a play for one of the potential two licenses that could be allotted for Miami-Dade County, he said Thursday during a visit to Miami. And he may build a hotel here even without gaming. Las Vegas-based MGM is focusing its search on the downtown area and Miami Beach.
MGM won’t be coming in with a massive plan like the Genting Group’s proposal to build a $3.8 billion destination resort with 5,200 rooms and one of the largest casinos in the United States on the site of The Miami Herald, he said. That would be slightly larger than the biggest hotel in Vegas the MGM Grand.
Murren, who is also MGM’s chairman, said he thinks that opening a Las Vegas style mega-resort in South Florida with between 3,000 and 4,000 rooms, plus a casino of up to 200,000-square-feet or more, would be the wrong move.
“Florida doesn’t want Las Vegas and I think they’re absolutely right,” Murren said during a wide-ranging interview Thursday with The Miami Herald. “To take a Las Vegas program and drop it into South Florida is a mistake. I think it would cannibalize existing business and cause tremendous traffic congestion. It would impact the cultural fabric of South Florida.”
As a business model it could be successful, but to me it does not sound like the right approach,” he said. Murren’s goal is to “create a hospitality project that complements what is already one of the best hospitality markets in the world. There is so much that South Florida already has. You’re trying to find ways of fitting in and making a difference.”
MGM already has over 500,000 customers in Florida that visit its U.S. resorts in Nevada, Michigan and Mississippi, plus more at its newest ventures in Asia. That’s why whether casinos pass or not, Murren says he would like to open an MGM hotel in the Miami area with between 300 and 500 rooms. A potential casino hotel in the market would likely use either the Bellagio or MGM brands, which would appeal to a middle to higher-end demographic, including international and business travelers.
Murren and his team have been watching the Florida market since the 1990’s and ramped up its efforts in the last year as gambling heated up in Tallahassee. They’re intensely following this year’s legislative proposal to allow up to two destination resorts in Miami-Dade County and one in Broward County with a minimum of a $2 billion investment.
While MGM hasn’t narrowed its search to any one site, based on the current specifications of the bill, Murren has decided what markets make the most sense. Broward County is out and Miami-Dade County is in, particularly the areas of Downtown Miami and Miami Beach.
“If it remains a $2 billion investment, it moves you into Dade County because of the concentration of the population, the airport and the infrastructure,” Murren said. “Broward doesn’t lend itself to getting a return on the $2 billion investment.”
Murren thinks there’s room for more than one player in the South Florida casino market. Not all his competitors agree. Las Vegas Sands CEO Sheldon Adelson thinks the area can handle only one destination resort, while Steve Wynn of Wynn Resorts has predicted Miami could become one of the two or three top destination resort cities in the world. Genting has also said it welcomes the competition.
Before determining exactly what a Miami MGM resort might look like, Murren and his team are completing a detailed review of market conditions. They’re talking to local community leaders, business leaders and the Department of Transportation.
“Where people get into trouble is when they come in and tell a community what it should do, as opposed to evaluating what the community wants,” Murren said. “We will never go anywhere that we are not wanted. It would not be a good outcome for anyone.”
What Murren can say at this point is that the $2 billion proposed minimum investment will require a project of more than 1,000 rooms, multiple restaurants, conference facilities and a casino larger than 100,000-square-feet. The company’s resorts typically generate a minimum of 5,000 new jobs, with an average salary before tips of about $35,000.
MGM has rebounded from a near-bankruptcy in 2009 that was driven by a heavy debt load. The company today has more hotel brands than any of its competitors. In Las Vegas alone the company owns 10 different resorts spanning all price points, including Bellagio, Aria at CityCenter, Mandalay Bay, MGM Grand, New York New York and Circus Circus adding up to about one-third of the rooms on the Las Vegas Strip.
While any Miami project would probably be built from the ground up, MGM is likely to team up with a hotel partner that has experience in the South Florida market. Murren’s company has relationships with the Soffer family of Turnberry Associates, which owns the Fontainebleau, and the Morgans Hotel Group, which manages the Delano, Mondrian and Shore Club.
“Whatever we do, I predict we’ll have a local partner,” Murren said. “It’s presumptuous from anyone coming from another place to assume they know how a community works and what the community needs.”