Casinos Join Hotels on Asset-Light Strategy: What Took Them so Long?

The owners of gaming resorts are taking a page from the hotel operations playbook when it comes to owning — or not owning — real estate. But the motive is a little different. MGM Resorts revealed plans early this month to sell its CityCenter complex — comprised of the Aria Resort and Casino and Vdara Hotel and Spa — in Las Vegas to Blackstone for nearly $4 billion. The deal, part of MGM’s ongoing asset-light strategy, would keep MGM in charge of operations while Blackstone owns the property just as it acquired other MGM properties in recent years like the MGM Grand, Mandalay Bay, and the Bellagio Hotel & Casino. MGM executives were talking about going asset-light as far back as 14 years ago but only pulled the trigger in recent years. Why so long? Unlike hotels, casino companies now appear to want to deploy the money for other revenue streams. One of those revenue streams — online gaming — only just began to show its popularity on scale. Splitting Differences: Hotel companies often use the capital saved on development to focus on guest experience or other areas typically directly involved in the property. Casinos are a bit different, as the major gaming companies are still very much invested in the idea of owning real estate. MGM’s asset-light strategy so far has been targeted to Las Vegas to capitalize on soaring real estate values and use that cash to pump money into higher growth and return opportunities in Asia or, even more importantly, online gaming. Las Vegas Sands plans to vacate the market altogether in a $6.25 billion sale for Macau and other growth opportunities, and Wynn Resorts — which has not sold any of its Vegas properties — has similarly expanded