Paul Szydelko
MGM Resorts International's $1.63 billion acquisition of the Cosmopolitan of Las Vegas is now complete.
MGM Resorts closed the transaction with New York-based real estate conglomerate Blackstone Group to acquire the Cosmopolitan's operations on May 17. Before the sale closing, Blackstone thanked all Cosmopolitan employees with a surprise $5,000 bonus -- a $27 million expense.
MGM Resorts also entered into a 30-year lease agreement, with three 10-year renewal options, in a partnership that includes Stonepeak, the Cherng Family Trust and Blackstone Real Estate Income Trust, which acquired the Cosmopolitan's real estate assets last year. MGM Resorts will pay $200 million a year to the landlord group.
• Related: Now in its second decade, the Cosmopolitan still dazzles
"This is a big moment for our company and for the Las Vegas Strip," MGM Resorts CEO and president Bill Hornbuckle said. "The Cosmopolitan of Las Vegas has already established itself as one of the Strip's premier resorts with an iconic brand, well-curated experiences and a loyal customer base. We couldn't be more excited to bring them into our portfolio of world-class operations."
Guests of the Cosmopolitan likely won't see many immediate changes at the 3,033-key mid-Strip resort. The Cosmopolitan remains a part of the Marriott Autograph Collection, for example. And while Marriott Bonvoy Points can still be used at the Cosmopolitan, they cannot be used at any MGM properties. Guests will not be able charge MGM Resorts-specific bills to their room at the Cosmopolitan.
Identity Membership & Rewards is still the players' loyalty program at the Cosmopolitan; the MGM Rewards program remains separate for the time being. The sports book's operations, however, are expected to switch from William Hill to BetMGM within 90 days.
An FAQ on the resort's website handles many other questions guests might have.
No changes … for now
MGM Resorts officials have been tight-lipped about any changes they might be considering or their timing. However, any change at the resort can be expected to be incremental as MGM Resorts takes the helm and learns about the operations amid continuing pandemic uncertainty and supply chain challenges.
Unlike acquisitions that involve a distressed asset, Cosmopolitan appears to be doing well. In the 12-month period that ended March 31, the Cosmopolitan generated $1.1 billion of net revenue and $416 million of adjusted EBITDAR (earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs), according to a press release announcing the transaction's completion.
MGM officials, who have long sought to acquire Cosmopolitan, have repeatedly assured employees and guests that it doesn't plan on making wholesale changes as the resort is integrated into its system.
"We've met with key leaders at the Cosmopolitan over the last weeks and months, and are impressed by the quality of their team as well as the culture and the brand that they have built," Hornbuckle said during MGM Resorts' first-quarter earnings conference call.
Its evocative brand is something MGM obviously cherishes as much as its customers.
"Even though it's a large property, it has a reputation as something of a boutique hotel simply by virtue of not being part of one of the major Strip players,"
said David M. Schwartz, former longtime director of the Center for Gaming Research at the
University of Nevada, Las Vegas, and now the university’s ombuds.
Now it is part of MGM Resorts, with its nine Las Vegas properties (after its sale of the Mirage to Hard Rock is completed) controlling about 40% of the Strip's rooms.