MGM MGM Resorts International

MGM Hospitality, a wholly owned subsidiary of MGM Resorts International (MGM) recently inked definitive agreements to develop and operate a Bellagio hotel, an MGM Grand hotel, and a Skylofts hotel in Maker Maxity, a mixed-use development complex in Mumbai, India. 

Maker Maxity is strategically located close to Bandra Kurla Complex, the city's new Central Business District as well as International Finance Center. The venture will cater to the growing number of Indian business travelers and affluent Mumbai residents. Apart from these three hotels, the complex will include various other luxury amenities.  

Since the U.S. market is somewhat saturated, hoteliers are exploring  opportunities overseas. The emerging markets offer greater potential based on their current higher pace of economic growth.

The Asia-Pacific region has been delivering stellar performances in recent months. It was the only region to report double-digit revenue per available room (RevPAR) growth last year. The key growth markets in the Asia-Pacific were China and India. The company also has significant presence in Abu Dhabi and Dubai.

India offers a compelling investment proposition given its growing importance as a global business hub, where  the demand for moderate-tier as well as upscale branded hotels will considerably outpace supply for the next three to four years.

According to a study by Knight Frank India, a real estate and property service firm, the Indian hotel room market for 10 metros will increase at a 17% compounded annual growth rate (CAGR) between 2010 and 2013.

Moreover, the built-cost to operating returns is also favorable for these western hoteliers. All these factors testify to MGM’s inclination for development in India. The country is expected to experience a meaningful growth in gross domestic product (GDP) within the next few years.

Various U.S. hotel companies like Marriott International Inc. (MAR) and Starwood Hotels & Resorts Worldwide Inc. (HOT) are beefing up their Indian portfolio. MGM Resort currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. We are maintaining our Neutral recommendation on the stock over the long term.

 
STARWOOD HOTELS (HOT): Free Stock Analysis Report
 
MARRIOTT INTL-A (MAR): Free Stock Analysis Report
 
MGM RESORTS INT (MGM): Free Stock Analysis Report
 
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