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Sayonara THEhotel!!!

By Chuckmonster on Monday, 6th August 2012 4:56pm
  » filed under Las Vegas  comments: 8


Here's a surprise, that isn't a surprise: MGM Resorts International has signed an agreement with Morgans Hotel Group to turn Mandalay Bay's THEhotel into a Delano Las Vegas property next year.

This is yet another move in MGM Resorts International's transition from true hospitality and gaming play to real estate baron, offloading risk and responsibility to anyone willing to pay rent in exchanged for a steady stream of spoils.

Currently, a portion of Mandalay Bay is already leased to the Four Seasons hotel chain who control operations, standards and pricing for the portion of the hotel which they are appropriated.

The upside is that those who like the soon-to-be-former THEhotel can now enjoy it without being held hostage by MGM's often inept inn keeping practices. The insertion of new management means that the entire staff will probably be reviewed, retrained or replaced. There is also the possibility that the stupid resort fee will go away.

The downside is that now the hotel (nee THEhotel) will offer 1117 suites worth of further service fragmentation at the resort level. Delano Las Vegas will not be equal to, have the same standards of, or have a unifying responsible party to deal with any property wide issues that may arise. "Oh, you'll have to call Mandalay Bay to talk to them about your car being stolen from the parking lot" OR "I'm sorry sir, Mandalay Bay doesn't accept the dining credits offered by Morgans Hotel Group bookings" are two examples of how these types of agreements can screw the guest experience.

Some might remember that Delano Las Vegas and Mondrian hotels were both scheduled to become part of the Echelon Place project way back before the sky opened up and rained blood upon the desert floor. In 2006, Morgans Hotel Group purchased the Hard Rock Hotel & Casino until they jumped ship on the debt laden hotel in March 2011, surrendering it to debtors. In November 2011, Morgans Hotel Group purchased Las Vegas dining and nightlife operator Light Group for $47m. Light Group has a long standing relationship with MGM Resorts, and was making preparations to open the Harmon Hotel inside CityCenter before it was found that the building was structurally deficient.

Perhaps it is time for MGM to change its name to MGM Landlord International?


Comments & Discussion:


But fair's fair, at least MGM aren't allowing Morgans near the gambling operations.

Having never darkened the doorway of a Morgan's Hotel Group property, I have no idea what changes, if any, one can expect once this is completed. It has been a few years since my last stay at THEhotel, but aside from the hard product (which was quite good) there was really nothing to differentiate it service-wise from Mandalay Bay, and the long walk to the pool complex was a negative to me. It will be interesting to see how THEdelano works out; M-B could use some new blood.

One plus from this could be that that poor coffee place and cafe get some tending. That walk from The Lion King theatre to the reception desk is a wasteland of Kafka-esque proportions.

Don't get too excited about dramatic changes just yet. The latest news is that the Delano deal is strictly a licensing/branding arrangement, NOT a lease or management contract. Unlike Four Seasons and MO, it's still going to be run by MGM. So Morgans isn't really going to be moving in, they're just going to help pick out the new drapes.




So I assume they will not be giving out comp offers for THEhotel under the new agreement?

This is a sensible move for MGM from both a business and financial perspective. From a financial perspective it gives them up-front cash (lord knows they need that to pay off their excessive debt burden) and a highly-valuable stream of 100% margin fee-based income from Morgans for the brand. But for the property, you can simply expect Morgans to do a better job with THEhotel, which has a wonderful set of rooms but paired with low-quality service, a suboptimal location and a really dumb brand has not performed for MGM. I'll be really curious to see if the rebranded hotel is a property worth staying at.

Interesting move. THEHotel was our Vegas home for 5 years when it first opened, prior to defection to WynnCore. We always loved the peace of the lobby, the fab rooms and the Cafe. Mix was fab in its time too. Moorea beach in its first two seasons was great, until it became a pathetic frat-party.
Two major issues for the takeover:
- operating a Delano brand without its own pool? - they could rename Moorea but it is frigging miles away
- Does Mix get a rebrand / relaunch - if needs it!!

I actually think this makes sense.

Delano in South Beach caters to the hipster/trendy young crowd with lots of money.

THEhotel catered to the Vegas equivalent... at least before Cosmo made a play for that market.

Perhaps this rebranding is a response to Cosmo and an attempt to get more Rich Young Douchebags back into Mandalay Bay?

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