Mandalay’s Miracle Mile

Oct 1, 2002 5:09 AM

   Building the “world’s largest integrated resort complex,” Mandalay Resorts is betting on the south end of the Las Vegas Strip.

   The “Mandalay Mile,’’ anchored by a new 1.5 million-square-foot convention center just north of Russell Road, will fuel the next round of growth, says President and CEO Glenn Schaeffer.

   “Mandalay has the most rooms and, on average, the youngest rooms on the Strip,’’ he says. “We’re a reborn and rebuilt company.’’

   Mandalay’s strategy employs conventional wisdom. Deriving a larger percentage of its revenues from non-gaming business than its other major competitors, the company once known as Circus Circus has gone decidedly upscale.

   “We won’t build a room we can’t rent for at least $200 a night,’’ Schaeffer told investment analysts at Global Gaming Expo. Amenities such as the upcoming Bay Club will cultivate exclusivity in Mandalay’s additions.

   “Baby Boomers will never save. They’ll always find a way to pay for their pleasures and with 50 being the average age of a Strip customer, we’re just hitting the sweet spot,’’ he added.

   The convention center, the nation’s fifth largest, is expected to raise room rates during midweek periods. Execs estimate that the facility could be running at full capacity within a year. That, in turn, will be served by a new 1,200-room Mandalay complex now being developed under the title of “Project Z.’’

            Despite the bullish outlook along the Mandalay Mile, Goldman Sachs remains cautious for the near term. Citing “weaker credit statistics, lack of absolute debt reduction and limited geographic diversification,’’ the analysts see only limited return on Mandalay bonds and have maintained a “neutral” rating of the firm.