Monte Carlo Hotel-Casino Fire Loss Estimated to be Near $100 Million

February 15, 2008

A fire that sent gamblers fleeing from the Monte Carlo hotel-casino on the Las Vegas Strip in January will cost close to $100 million in repairs and lost business, casino operator MGM Mirage Inc. said.

The company has insurance, but it’s not clear how much of the claim will be paid, MGM Mirage spokesman Alan Feldman said as the hotel-casino moved closer to reopening.

“While we do have insurance and we are confident we will not lose all of that $100 million, how much we get back remains to be seen,” he said.

Hundreds of workers are at the Monte Carlo around the clock completing repairs needed to reopen Friday. Crews were replacing carpeting, wallpaper and drywall that suffered water damage, and repairing the exterior facade damaged in the Jan. 25 blaze.

The company said it will reopen at least 1,200 of the hotel’s 3,000-plus rooms Friday, the eve of the President’s Day three-day weekend, and an additional 1,300 rooms by Feb. 22. The last 500 rooms, mostly suites on the upper floors where damage was more extensive, will undergo complete renovations and will take longer to reopen.

MGM Mirage has been transferring guests with bookings to its nine other properties on the Las Vegas Strip, and its casino has remained closed since the three-alarm fire forced thousands of guests and employees to evacuate.

Seventeen people were taken to hospitals with what ambulance officials described as minor injuries.

Fire investigators have blamed workers using a cutting torch on the roof for sparking the blaze, which then spread to the foam-based exterior sculpting on the hotel’s facade.

Clark County fire officials haven’t decided whether to cite the contractor blamed for setting off the fire, Union Erectors LLC, with misdemeanors which could result in fines of $1,000 and up to six months in jail per citation.

Analysts said the fire’s cost would not affect the overall outlook for the casino company, which has experienced similar disruptions in the past, such as the closure of its Beau Rivage property in Mississippi due to Hurricane Katrina and its later recovery of $635 million in insurance proceeds.

“Fundamentally, it’s not an issue,” said Deutsche Bank analyst Bill Lerner of the fire. He estimated the company would have $20 million to $30 million in lost revenue, but that would not drastically hurt its earnings in the first quarter.

Susquehanna Financial Group analyst Robert LaFleur said the closure occurred as the U.S. economy weakened and casino operators had trouble filling hotel rooms.

“It’s not as bad as it could have been in a more robust market,” LaFleur said.

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