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Tue 9 Aug 2011 08:33 AM

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Dubai-linked MGM Resorts rides Vegas boom to profit

Casino firm sees revenue at Dubai-backed CityCenter venture hit $275m in Q2

Dubai-linked MGM Resorts rides Vegas boom to profit
CityCenter Holdings is a joint venture between MGM Resorts International and Dubai World subsidiary Infinity World Development Corp

MGM Resorts International, the biggest casino operator on
the Las Vegas Strip, reported better than expected second- quarter earnings as
it took control of a Macau joint venture and a recovery strengthened in Nevada.

Net income was $3.44bn, or $6.22 a share, boosted by a
$3.5bn gain from consolidating Macau on its books. That compares to a loss of
$883.5m, or $2 a share, a year earlier when earnings were hit by CityCenter
development writedowns, the Las Vegas-based company said Monday.

Macau is booming while Las Vegas stages a broad-based
recovery from its steepest gambling and convention decline. Room rates have
increased at most of MGM’s 10 Las Vegas Strip resorts and visitors are spending
more on food and entertainment as tourists and conventions return. MGM took a controlling
stake in its Macau joint venture in the quarter, consolidating onto its books a
resort in the world’s biggest gambling market, where casino betting surged 58
percent last year and 45 percent in the six months ended June 30.

Spending by tourists who book their vacations independently
or online is strengthening faster than anticipated, adding to improved
conventions and meetings where prices are higher and the pace of reservations
has risen since last year, chairman and chief executive officer Jim Murren said
today in a phone interview.

 “If you’re getting
growth in the Luxors and Monte Carlos and New York New Yorks, that’s telling
you that the US customer is spending more money,” Murren said. “That’s encouraging
to us.”

Revenue rose 17 percent to $1.81bn, beating the $1.61bn
analysts expected. Second-quarter cash flow at wholly-owned casinos - measured
as adjusted earnings before interest, taxes, depreciation and amortization, or
Ebitda - rose 7 percent to $331m.

Resort Ebitda at the $8.5bn CityCenter joint venture of
hotels, condominiums, a casino and mall on the Las Vegas Strip was $64m in the
second quarter, on revenue of $275m.

MGM and partner Dubai World opened CityCenter in December

Ebitda from MGM’s Macau joint venture rose to $170m from
$61m a year earlier as sales more than doubled, the company said. MGM took 51
percent control of the venture, MGM China Holdings, in June when partner Pansy
Ho sold part of her stake in a $1.5bn Hong Kong initial public offering.

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