In Las Vegas, which faces new competition as casino gambling spreads to such locales as riverboats and Indian reservations, Kirk Kerkorian is the closest thing to a rainmaker.
With the MGM Grand Hotel & Theme Park, which breaks ground today, Kerkorian is betting that he can transform Las Vegas from what some consider a den of iniquity to the kind of place where a den mother would feel at home.
In short, locals hope that the massive project--with more than 5,000 rooms and a 33-acre theme park--will do for the gaming capital what Disney World did for Orlando, Fla.
The MGM Grand will be the world's biggest hotel when it opens in 1994. It may also be the most ambitious. Its amenities will include 6,000-square-foot suites for high rollers and a 15,000-seat sports and concert arena.
For lovers of excess, there's a replica of the Emerald City from the "Wizard of Oz"--perhaps the all-time classic musical produced by the MGM studio, which Kerkorian used to own. Visitors will enter through the paws of an 88-foot-tall lion and proceed down a yellow brick road.
The $1-billion complex--whose motion picture theme park is in the early stages of planning--represents the biggest gamble yet on Las Vegas' future.
Kerkorian, 74, the reclusive Beverly Hills-based financier whose MGM Grand Inc. owns the luxury airline of the same name, said in a brief interview last week that he's confident the city will survive an onslaught of competition from casinos in neighboring states. His aides, in fact, downplay gambling's importance to the hotel's success.
"This takes Las Vegas to the next level," said MGM Grand President Robert R. Maxey. "We are building the world's greatest traffic machine that just happens to have casino gaming."
MGM Grand Inc., 86% owned by Kerkorian, has $450 million in equity committed to the hotel project. Its hopes are buoyed by the fact that Las Vegas has been on a roll since the late 1980s.
Las Vegas is the country's fastest-growing metropolitan area, with 6,000 new arrivals a month. Countywide gaming revenues surpassed $4 billion for the first time last fiscal year, and more than 20 million visitors passed through the area, according to tourism officials.
The city owes much of its recent success to two new mega-resorts on the Las Vegas Strip: the luxurious, $600-million Mirage, with its man-made, erupting volcano and its rare white tigers; and the whimsical, $300-million Excalibur, designed around a medieval theme.
Both projects were considered risky at the outset but have garnered strong business in the face of the recession and the Persian Gulf War. With more than 7,000 rooms between them, occupancy stands around 90% and profit margins have exceeded 25% in the first year, according to the Las Vegas Convention & Visitors Authority.
The response to those hotels has boosted Kerkorian's confidence. "Now is the right time," he says. "The extreme success of the Mirage and Excalibur proves our point."
Stephen A. Wynn, the brash entrepreneur behind the Mirage and Golden Nugget hotels, says he welcomes the addition of the MGM Grand. "Any time someone puts a billion dollars into the market, it's value added," he said.
But Wynn is dubious of MGM Grand's contention that the theme park is one of the driving forces behind the hotel, since Las Vegas remains almost solely geared to adults. "A casino is not an appropriate place for kids," Wynn said. "But MGM knows that at any given moment, there are thousands of kids in town. This gives them a place to go."
By aggressively marketing itself to a broad-based audience that includes families, foreign travelers and resort-goers, MGM Grand continues the trend started by Circus Circus in the late 1960s and taken to new heights by the Mirage and Excalibur. Kerkorian says the project adds a "new dimension" to the city.
Indeed, some argue that the new mega-resorts are Las Vegas' best protection against rival gambling casinos planned outside Nevada. New laws will allow riverboat casinos on the Mississippi. Recent court rulings have cleared the way for casino gambling on Indian reservations in half a dozen states.
A state legislative panel chaired by Sen. Dina Titus (D-Las Vegas) will begin hearings this month on ways to protect Nevada's gaming business, which accounts for 44% of the state's revenue.
The organizations that represent the major casinos--the Nevada Resort Assn. and the Gaming Industry Assn. of Nevada--have characterized the industry as "fragile." One of the gambling industry's goals is dissuading the legislature from raising gaming taxes in 1993.
One person who professes not to be concerned about the competition is Wynn. He maintains that more casinos only breed more gamblers. "There is nothing that remotely threatens Las Vegas," he said. Kerkorian agrees, saying other casinos will pale next to the mega-resorts.
Yet Las Vegas' older casinos seem to face some hard times in the near term. When Kerkorian put the Desert Inn Hotel & Casino on the auction block this year to raise funds for the MGM Grand project, there were no outside bidders, even though 300 possible buyers were contacted.
Kerkorian's Tracinda Corp. ended up buying the property from MGM Grand Corp. for $130 million, far below the $200 million the company sought when the Desert Inn went on the market in the summer of 1990.
Other small hotels have also languished on the real estate market for months. Some blame the problem on the worldwide credit crunch, which has hurt real estate everywhere. Others say the older hotels have lost some of their luster with the opening of the Mirage and Excalibur.
At the same time, some hoteliers argue that the MGM Grand may ultimately benefit them by attracting thousands of additional visitors.
"Once this thing opens, and it's the cat's meow, it can't help but rub off on others," McDonald said. "This will give people more reason to come to Las Vegas. They'll have to sleep somewhere, and we're just down the street."