Las Vegas Strip braces for CityCenter impact

By Deena Beasley - Analysis

LAS VEGAS (Reuters) - CityCenter's glittering high rises have forever altered the Las Vegas skyline, but there is concern about the project's impact on already-discounted hotel room rates along the world's most famous gambling corridor.

The nearly 6,000-room, $8.5 billion signature project for MGM Mirage (MGM.N) opens in December with rates up and down the Strip slashed during a recession that has forced consumers and businesses to cut spending and hold out for bargains.

A night at one of CityCenter's luxury towers can be had for as little as $129 in mid-December. The average daily room rate in Las Vegas had fallen 25 percent through August.

"People are coming to Vegas, but they're just smarter and a little bit more finicky about what they spend money on," admitted Phil Shalala, marketing chief at the Hard Rock Hotel & Casino.

CityCenter partners MGM Mirage and Dubai World DBWLD.UL are betting on customers being picky enough to choose top-notch venues like the Mandarin Oriental in an environmentally conscious setting designed by world-renowned architects.

Mapped out like a mini-metropolis, CityCenter encompasses slanting condominium towers and a windows-laden shopping center. An entrance the width of New York's Park Avenue allows an upward gaze at the surrounding skyscrapers.

Other features include colorful sculptures from cutting-edge artists like Claes Oldenburg and Nancy Rubins.

Rivals are hoping CityCenter will draw new visitors and spur growth, benefiting all and averting a price war.

"We hope it grows the market," said Steve Wynn, chief executive at Wynn Resorts Ltd (WYNN.O). "But so far, the talk has been about its problems, instead of about what an incredible, unusual place it will be."

FROM EDGE OF BANKRUPTCY

MGM hopes the ambitious project -- whose entire future was once in doubt because of financing issues -- will help revive its fortunes as an economic recovery gets underway.

Dubai World, the development arm of Dubai, last year sued MGM as credit dried up and CityCenter teetered near bankruptcy. Construction problems, including a number of worker deaths, have also plagued the project.

But funding eventually came through and towers from noted architects like Cesar Pelli and Rafael Vinoly now look to be opening on schedule in December.

Rival Las Vegas Sands Corp (LVS.N) is also rooting for MGM. "It think it will succeed," said Sands CEO Sheldon Adelson. "If it doesn't, they will lower the room rates and that will affect everyone."

Wynn said he is unable to predict 2010 hotel rates "with any degree of confidence," given the wide number of market variables related to CityCenter and the general economy.