The Mirage Resorts Essay Research Paper The

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The Mirage Resorts Essay, Research Paper The Mirage Resorts At Mirage Resorts, we dream our guests’, address their desires and build resorts to accommodate the experience. Over this past year, we have fulfilled some dreams ourselves, including the opening of two spectacular new resorts- Bellagio on the Las Vegas Strip and Beau Rivage in Biloxi, Mississippi. Mirage Resorts is the world’s leading developer and operator of casino-based resorts. Bellagio, a spectacular $1.6 billion resort inspired by the drama and elegance of fine art, opened in October 1998. Its sister property, The Mirage, ranks first in operating income in the State of Nevada. Treasure Island, located adjacent to The Mirage, is one of the state’s most profitable resorts. In addition, the company owns 50%

of the very successful Monte Carlo hotel-casino. Each of these resorts is located on the Las Veags Strip and ranks among the world’s largest hotels. Mirage Resorts also owns the Golden Nugget, the largest and most profitable hotel in downtown Las Vegas, and the Golden Nugget-Laughlin, which is located approximately 90 miles south of Las Vegas. In March of 1999, the company opened Beau Rivage, a luxurious $685 million reort in Biloxi, Mississippi that captures the vitality and grace of the New South. The company also intends to build a destination resort in Atlantic City, New Jersey, and recently has assembled another development site at the heart of the Las Vegas Strip. Financially speaking, 1998 was a transitional year. We incurred a great deal of costs associated with the

successful launch of Bellagio. We also were affected by the financial turmoil in the Far East, which hurt our high-end business. The costs of opening Bellagio are now behind us and the Beau Rivage opening costs will be expensed in the first quarter of 1999. As for the Far East, we have seen considerable improvements in our high-end business in recent months. Our progress during 1998 really is best demonstrated by the success of the new resorts. Both are now accommodating guests and setting new records in their respective markets. The simultaneous development and construction of two such remarkable resorts was perhaps the biggest challenge ever undertaken by our company. Mirage Resorts 1998 revenues after promotional allowances grew by $105.2 million, or 7%, over 1997, primarily

reflecting the October 15 opening of Bellagio. Our casino revenues increased by $35.5 million, or 5%, and our non-casino revenues were up $70.1 million, or 12%. During its 77 days of operation in 1998, Bellagio achieved net revenues of $220.7 million and operating profit before preopening expense of $34.1 million. Bellagio’s depreciation expense for this period was $18.9 million. These strong initial results were achieved despite high staffing levels and other inefficiencies historically associated with the opening periods of new facilities. We expensed all $83.3 million of Bellagio’s previously capitalized preopening costs in the 1998 fourth quarter. These costs include the costs associated with hiring and training some 9,300 employees, operating the reservation and

marketing offices and various other costs incurred before opening this $1.6 billion resort. After tax, the charge for Bellagio’s preopening costs reduced our 1998 earnings by approximately $0.30 per share. The international business declined during 1998 due to the economic difficulties that have been experienced by certain Asian countries. The devaluation of certain Asian currencies and subsequent declines in certain Asian stock and real estate markets that occurred primarily in the second half of 1997 began affecting the baccarat component of our revenues in the first quarter of 1998. Including Bellagio’s partial-year contribution, out table games revenues declined 2% compared with 1997. Excluding Bellagio’s contribution, our table games revenue declined 22%. Luck was also