At one time, Las Vegas casino operators like MGM Resorts International had placed their biggest bets on gambling. These companies are now pouring more investment into non-gaming segments like hotel and convention space. In 2014, Las Vegas welcomed a record 41 million visitors, with nearly 6,000 conventions and business meetings hosting over five million convention attendees.
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An advertisement for business professionals to use Las Vegas as a meeting hub. Source: Las Vegas Convention and Visitors Authority
This growing number of guests is driving up convention space and hotel revenue for the city. A key development for casino operators and their shareholders is a $10 million investment in the Las Vegas Convention Center, or LVCC. Surprisingly, the investor is a privately held cable and Internet company, Cox Communications.
A big tech upgrade for the LVCC
After winning the contract in 2013, Cox Enterprises has committed to making the LVCC one of the most technologically advanced and connected convention centers in the U.S. With over 2 million square feet of space, it is no easy task to develop the necessary infrastructure to host thousands of guests, all seamlessly connected at the same time.
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Cox is adding 7,500 fiber terminations, while replacing old network equipment with more advanced 5.0 GHz replacements and other tech upgrades. By the end of the overhaul, the Wi-Fi coverage at the LVCC will be boosted by tenfold, ensuring 99.9% "uptime" without interruptions in service.
The LVCC is the third largest convention center in the country and a shining example of the route Las Vegas is taking to move away from a primary focus on gaming revenue. In fact, the portion of city revenue that comes from gambling is at a historic low of just 34%.
MGM follows suit
MGM is undergoing its own convention space overhaul. Its Mandalay Bay Convention Center, already offering 1.7 million square feet of meeting space, will get anadditional 350,000 square feet to rival the LVCC as the biggest space in Vegas. The upgraded convention center is expected to open by early 2016.
MGM Mandalay Bay Convention Center in Las Vegas. Photo: MGM
One more bullish point for MGM
From Rossi Ralenkotter, president of theLas Vegas Convention and Visitors Authority:
Breaking the 40 million visitor mark has been a goal of ours, and reaching beyond that to more than 41 million is a testament to the hard work of our resort partners and everyone who works in the industry. Tourism drives our local economy, and the growth in recent years is a positive sign for both the industry and our community. With more than $9 billion in recent and planned developments, we are poised to continue that growth and march toward our next goal of 45 million visitors in the coming years.
Another reason to be bullish on MGM Resorts is its hotel revenue growth in Las Vegas. MGM owns and operates approximately 27% of all hotel rooms in the city. The record number of visitors, as well as an increased number of convention and business guests, is driving this segment higher. In 2014, MGM saw revenue per available room increase 8% at its Las Vegas properties.
So even though theLas Vegas Convention Centeris owned and operated by the LVCVA, itstech overhaul is another sign of how non-gaming segments are driving growth in the city.MGM Resorts is making the strongest bet on this growth and to back it up, has the most promising hotel segment growth as well.
The article Las Vegas Moves Away From Gaming With Growing Convention Attendance originally appeared on Fool.com.
Bradley Seth McNew has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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