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MGM Hakkasan Hospitality Unplugged

By Chuckmonster on Tuesday, 28th July 2015 5:40pm
  » filed under Las Vegas  comments: 4

   

In February 2014, we posted that MGM Resorts International would be partnering with Hakkasan Group to build a Hakkasan Hotel at MGM Grand. We obtained renderings of the project shortly thereafter. Someday, these renderings will be collectors items.

Four months later, MGM Resorts International publicly announced MGM Hakkasan Hospitality, a new version of MGM Mirage Hospitality but with the addition of Hakkasan Group as partner in the joint venture.

Gamal Aziz quit his job as international development chief barely a month before we spilled the beans on the Hakkasan deal. I'm inclined to think that these events are related. Mr. Aziz now works at President of Wynn Macau LTD..

The strategic alliance will focus on the design, development and management of luxury non-gaming hotels, resorts and residential offerings under the Bellagio, Hakkasan, MGM Grand and SKYLOFTS brands in key international gateway cities and prime resort destinations across the globe.

MGM Resorts International CEO Jim Murren commented in the press release:

Our partnership with the team at Hakkasan began with the incredibly successful opening of Hakkasan Las Vegas Restaurant and Nightclub at MGM Grand in April 2013. Growing that relationship to form MGM Hakkasan Hospitality provides us both with access to capital as well as the opportunity to join their internationally renowned lifestyle brand with iconic brands such as Bellagio and MGM Grand as we seek to create resort destinations and lifestyle experiences around the globe.

Khadem Al Qubaisi, Chairman of Hakkasan Group had this to say:

This joint venture exemplifies one of our stated strategies of developing Hakkasan Group into a multifaceted global lifestyle company. While hotel and resort projects have been part of our business plan for some time, it was crucial for us to find the best possible partner that could bring a wealth of experience and skill to the development and operation of branded products, and we believe there is no better choice than MGM Resorts International."

Remember when Murren said that the deal "provides us both with access to capital."

That sound you just heard was Jim Murren tearing a page out of previous MGM CEO Terry Lanni's playbook. Like a master financier, they set up the Hakkasan Group to play a high stakes shell game designed lure a wide-eyed hyper-eager investor, flush with big money, and get the guy to make it rain blank checks all over the floor of Jimbo's office at Bellagio.

In January 2008, MGM Sold $8 billion dollars in shares to Dubai World, an investment arm of the Dubai government. MGM stock plummeted 88% in eight months, City Center nearly went bankrupt and a steady succession of massive write downs, write offs and huge dump of real estate began to right MGM's listing ship. The stock still hasn't recovered, trading at $18, compared to $21 in October 2008.

It has been 16 months since the Hakkasan deal was announced, yet nothing has happened. No deals. No buildings. No Bellagio Hakkasan Bombay. No word about the Hakkasan Hotel at MGM, no demolition. No construction walls. No relocation of the MGM marquee. The West Wing is accepting reservations for as far out as April 2016. Nothing.

Something has definitely happened. Here's a clue:

That big MGM Hakkasan Hospitality announcement they made? With all those words and announcements and promotional stuff? The international brand growth and access to capital? Well, the website for that big project (mgmhk.com) was terminated in May 2015.

This isn't an "our site is down" or "that page is missing" error with a graceful landing page. This is a "we unplugged this shit completely, goodbye yellow brick road" error. Holy Gansevoort!

If I were a betting man - which I most certainly am - I'd put a $8 dollars on the possibility that MGM Hakkasan Hospitality deal is DOA.

Anybody know a financial analyst who can ask Jimbo a question about this on the next MGM earnings call?








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Comments & Discussion:

Nice catch.

Some of those listed on the MGMHK site recently changed their LinkedIn profiles too. No more mention of MGMHK or the email address with @mgmhk.com

Michael Evans
Joseph Polito
Deborah Négrel

It just seems like the continuing floundering chapter of MGM's "hotels without casinos" saga. So far, they opened an MGM Grand in Sanya, PRC; but the majority of their other projects were stalled when the economic bubble burst years ago. For instance, the Dubai Pearl complex that was supposed to house a "Bellagio" and Skylofts laid dormant from 2010 until 2014, looking a lot like the Echelon site has for many years.

All of this as well as HK trying to separate from 1OAK, The Bank, Lily, and Life definitely says something is going on. Non of this surprises me - the flagship HK at MGM is barely in the top 5 of the venues in the city, only to have just been knocked down a peg by a slightly better version of itself, OMNIA. Wynncore and Cosmo wipe the floor when it comes to longevity with their clubs, especially XS and Marquee. I suspect that the next to change is Tryst, when new management starts up and they want to make a statement that they are still strong in the game, or so I would hope. We shall see what (doesn't) happen.



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