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MGM Resorts Shares Rise as Loss Narrows on Macau, Las Vegas

MGM Resorts International, the biggest casino operator on the Las Vegas Strip, rose the most since November in New York trading as its first-quarter loss narrowed on a recovery in the Nevada city and higher earnings in Macau.

The net loss shrank to $89.9 million, or 18 cents a share, from $96.7 million, or 22 cents a share, a year earlier, the Las Vegas-based company said today in a statement. Excluding some items, the loss was 16 cents, smaller than the 19-cent average of 24 analysts’ estimates compiled by Bloomberg.

Most of MGM’s 10 Las Vegas Strip resorts exceeded analyst expectations, signaling a firming of the recovery from a record two-year slump in gambling and conventions. In Macau, the world’s biggest casino market where total gambling revenue rose 43 percent in the quarter, MGM’s joint venture in the Chinese region more than doubled its income.

“The recovery is clearly under way right now and it’s gaining traction,” Chairman and Chief Executive Officer Jim Murren said in a telephone interview. “It was really across the portfolio in leisure and retail travelers and conventions.”

He forecast that the convention business growth rate will be in “double digits” this year and in 2012.

MGM climbed $1.33, or 10 percent, to $14.22 at 4:15 p.m. in New York Stock Exchange composite trading, the biggest daily percentage gain since Nov. 3. The shares have fallen 4.2 percent this year.

Sales Increase

Revenue rose 3.3 percent from a year earlier to $1.5 billion, in line with the average estimate of analysts. Cash flow at wholly owned casinos, or adjusted earnings before interest, taxes, depreciation and amortization, rose 12 percent to $301 million.

In Las Vegas, Revpar, a measure of room rates and occupancy, rose 16 percent, as occupancy climbed to 87 percent from 85 percent and as the company charged resort fees. Excluding daily resort fees, Revpar increased 11 percent. The pace of bookings is ahead of last year across conventions and events, and the usually soft summer period, Murren said.

Convention room nights, which often fetch higher prices than vacationer nights, will be 14 percent of MGM’s Las Vegas bookings this year, rising from 12 percent in 2010, and exceeded 20 percent in the first quarter, the company said.

Macau Venture

Total operating income from MGM’s Macau joint venture rose to $126 million from $49 million a year earlier, the company said. MGM plans to take 51 percent control of its China Holdings Ltd. when partner Pansy Ho sells part of her stake in a Hong Kong initial public offering this year.

Resort Ebitda at the $8.5 billion CityCenter joint venture of hotels, condominiums, a casino and mall on the Las Vegas Strip was $64 million in the first quarter, on revenue of $262 million.

MGM and partner Dubai World opened CityCenter in December 2009 after the project skirted bankruptcy. The partners replaced most of the property’s $1.8 billion loan with bonds with later maturities this year.

MGM Resorts has signed up more than 1 million customers to its new M Life loyalty program, Murren said. The company has formed alliances with rental-car company Avis Budget Group Inc., Delaware casino owner Dover Downs Gaming & Entertainment Inc., and Rank Group Plc, the U.K. operator of casinos and bingo clubs, the CEO said on a conference call today.

MGM is negotiating marketing alliances to offer reciprocal rewards with other companies including casino owners outside Nevada to draw more visitors, build its loyalty database and reduce marketing costs.

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