Additionally, having your company’s future growth hang in the balance on whether a particular jurisdiction legalizes gaming is no way to run a business in the long term.

It’s something MGM MIRAGE Corp. has been thinking about for some time, and during the last year it has been quietly cutting deals that will see the company mastermind and build projects that have no casinos at all. While it may sound like a bold and unusual move on the surface, it makes perfect sense to Gamal Aziz President and COO of the MGM Grand in Las Vegas. In fact, MGM Mirage created a new company dubbed MGM MIRAGE Hospitality and Aziz now serves a dual role as that newly created group’s President and CEO.

While some still try to pigeonhole companies that make money from casinos, gambling represents an ever decreasing share of revenue. At MGM MIRAGE, Aziz said 67 percent of its revenue in 2006 was generated off the casino floor. Today’s modern casinos are the epitome of the destination resort and that’s because about 15 years ago there was a sea change in the gaming industry: Executives stopped seeing their holdings as casinos that happened to have other amenities such as restaurants and hotel rooms and flipped the equation. Now they see the casino as just one component of the myriad amenities available. And that perception shift has made all the difference in the quality of product that’s been produced.

“It is so hard to grow in the gaming business because of the limited number of jurisdictions. For a [public] company, we are about the future and creating shareholder value and launching MGM MIRAGE Hospitality is a natural growth opportunity,” Aziz said. “We create experiences better than everything else.”

The move puts the destiny of the company firmly back in their hands and out of the politicos who are looking to deride the gaming business or legalize casinos just to tax it so onerously it starts to become not worthwhile to build a project. In Pennsylvania, for example, the state gets 55 percent of all revenue.  That’s a lot to give away.

Now the company has an outlet to expand without being dependant on slot machines and craps tables. MGM MIRAGE first started entertaining this concept last summer and has already cut several deals. One is a joint venture with Mubadala Development Company of Abu Dhabi, which is exploring opportunities in Abu Dhabi, the United Kingdom and Las Vegas. Another is with the Diaoyutai State Guesthouse of Beijing, where it is looking to claim a stake in China. Also part of MGM MIRAGE Hospitality is a $700 million resort currently being built as a joint venture with the Mashantucket Pequot Tribal Nation in Connecticut (who already own Foxwoods, one of the two largest casino resorts in the world). 

Aziz said their core strategy is about tourism in different parts of the world, both in emerging and established destinations. Abu Dhabi is in the midst of a major transformation to become a tourism destination, while China is seeing an astounding rise in the middle class that will enable more than 100 million citizens to travel, in many cases, far from home for the first time. In each situation the company is looking to develop mixed use facilities, not just a freestanding hotel.

“We go beyond the typical hotel company. We can deliver entertainment, retail, restaurants, nightclubs and bars better than anyone else,” said Aziz. “My focus is on the hotel resort business. I really am not gong into any destination with an eye on gaming. These are pure non gaming hotels and resort experiences without a casino.”

Aziz has been President of MGM Grand and has nearly revamped all aspects of the property. The resort has debuted more than 36 major new venues since 2001 and has seven AAA Four Diamond restaurants and one AAA Five Diamond restaurant. The property itself brings in more revenue than many hotel companies, more than $1 billion a year.

Additionally, Aziz said the company has been thinking about developing non casino gaming projects for some time; years in fact. However, they never felt there was a good fit with potential partners.

Finally, MGM MIRAGE Hospitality may cut deals to simply manage other developments or will take a stake in the project.

“The more we realized the MGM MIRAGE brand carries extraordinary recognition, the more we realized it was time to make this move,” said Aziz.